NISHAT (CHUNIAN) LTD. VS PROVINCE OF PUNJAB through Secretary Local Government Provincial Secretariat, 2012 PTD-LAHORE-HIGH-COURT-LAHORE 1447 (2012)

(a) Punjab Local Government Ordinance (XIII of 2001)---

----Sixth Sched., Para 44---Punjab Local Government (Fee for Licensing and Permits and Licensing of Professions and Vocations) Rules, 2002, R.3(iii)(f)---Constitution of Pakistan, Arts. 189 & 199---Constitutional petition---License fee, demand of---Manufacturing of textile products---Supreme Court, decision of---Judgment in rem---Petitioner was a textile manufacturing company and was aggrieved of notice of demand issued by authorities for recovery ofprofessionalfee---Plea raised by authorities was that notice was rightly issued as the matter had already been decided by Supreme Court---Validity---Business of manufacturing textile products fell within the purview of paragraph 44 of Sixth Schedule to Punjab Local Government Ordinance, 2001, read with R. 3(iii)(f) of Punjab Local Government (Fee for Licensing and Permits and Licensing of Professions and Vocations) Rules, 2002, therefore, notice for demand of licence fee was lawfully issued by authorities---Earlier petition filed by petitioner was disposed of in terms of judgment passed in main petition and the same was set aside by Supreme Court, which was judgment in rem, and binding on all in view of Art.189 of the Constitution---Non-filing of appeal in other cases was of no legal consequence---Judgment settling proposition of law and declaring legal position was binding upon petitioner company and as such demand notice was legally issued by authorities under Punjab Local Government Ordinance, 2001---Petitioner failed to make out a case for holding notice as illegal and without lawful authority---Petition was dismissed in circumstances.

Quetta Textile Mills Limited, Nadir House, G/F-I, I.I. Chundrigar Road, Karachi v. Pakistan through Secretary, Ministry of Finance, Government of Pakistan Islamabad and 2 others 2000 YLR 2683; Income-Tax Officer, Central Circle II, Karachi and another v. Cement Agencies Ltd. PLD 1969 SC 322; Mian M. Azam Chaila v. Wajid Ali Khan and others PLD 2009 Lah. 449; Koh-i-Noor Sugar Mills Limited v. Pakistan through Secretary, Ministry of Finance and 2 others 1989 SCMR 2044 and Muhammad Idrees v. Agricultural Development Bank of Pakistan and others PLD 2007 SC 681 distinguished.

(b) Constitution of Pakistan---

----Art. 199---Civil Procedure Code (V of 1908), O.XXIX, R.1---Constitutional petition---Corporation/company, locus standi---Pre-condition---Company is not competent to file Constitutional petition in absence of certified true copy of resolution and Memorandum of Articles and Association---Such deficiency is fatal and subsequent rectification cannot fill up such lacuna.

Messrs Syed Bhais (Pvt.) Ltd. through Director v. Government of Punjab through Secretary Local Government and 3 others PLD 2012 Lah. 52; Messrs Sargodha Jute Mills Limited v. Federation of Pakistan and others; Writ Petition No.13784 of 2008; Tara Chand and others v. Karachi Water and Sewerage Board, Karachi and others 2005 SCMR 499; Words and Phrases (Volume 23) published by West Publishing Co.; Justice Khurshid Anwar Bhinder and others v. Federation of Pakistan and another PLD 2010 SC 483; Trustees of the Port of Karachi v. Karachi International Container Terminal Limited 2010 CLC 1666; Messrs Sandal Dye Stuff Industries Ltd. v. Federation of Pakistan through Secretary Finance, Pakistan Secretariat, Islamabad and 5 others 2000 CLC 661 and Pir Bakhsh represented by his Legal Heirs and others v. The Chairman, Allotment Committee and others PLD 1987 SC 145 rel.

Malik Ahsan Mahmood for Petitioner.

Ch. Abrar Ahmad and Hafiz Muhammad Naeem for Respondent No.1.

Rana Shamshad Khan, A.A.-G.

ORDER

C.M. 2050 of 2012

SHUJAAT ALI KHAN, J.---This is an application for replacement of Zila Council, Kasur (respondent No.3) with District Government Kasur through its Administrator. Allowed subject to all just and legal exceptions.

Main case

2.Through the present constitutional petition Messrs Nishat Chunian Limited-petitioner has challenged the levy of license fee demanded through the impugned notice by the respondents.

3.Briefly, facts of the case are that the petitioner-company was issued a notice by respondent No.2 demanding Rs.140,000 as arrears of license fee for the years 2000-2001 to 2007-2008. Earlier the petitioner-company challenged a similar notice dated 19-1-2002 issued by the respondents demanding therein license/professional tax for the years 2000-2001 and 2001-2002 through Writ Petition No.5077 of 2002. Similar 52 other writ petitions in the selfsame factual and legal position were already pending before this court. All the writ petitions were heard and disposed of through a common judgment dated 28-7-2005 by declaring the said demand notice just bald one and having been issued on the basis of resolutions without keeping in view the requirements and policy of law under the new dispensation. In fact, this Court was referring to prerequisites for imposition of the license fee under the Punjab Local Government Ordinance, 2001 (PLGO 2001). It is notable that Writ Petition No.5077 of 2002, filed by the petitioner-company, stood at serial No.5 in the schedule-A attached to the judgment.

4.The respondents challenged the aforementioned judgment through Civil Appeals Nos.1764 to 1782 of 2005, which were allowed by the August Supreme Court vide judgment dated 10-7-2006 and judgment of this Court was set aside on the ground that owing to availability of alternate remedy, constitutional jurisdiction could not have been invoked because there were certain questions involving the facts of the case which could only be disposed of by the authority having original jurisdiction that too after providing opportunity of hearing to both the parties. However, the respondents were allowed to submit reply to the notices to the respective local councils within two weeks and the competent authority of the council concerned was directed to dispose of the objections so raised in accordance with law.

5.Learned counsel for the petitioner contends that since judgment dated 28-7-2005 passed in Writ Petition No.5077 of 2002 was not assailed by the Government of Punjab, hence the concluded rights of the petitioner-company, which otherwise is past and closed transaction, could not be reopened even if the impugned judgment had been set aside by the Supreme Court in another petition to which it was not a party; that the Hon'ble Supreme Court has not finally decided the question of levy of impugned license fee and the demand notice has been issued without following the procedure given in Rules 10 and 11 of the Punjab Local Government Taxation Rules, 2001. Learned counsel for the petitioner has referred to certain judgments in cases of "Quetta Textile Mills Limited, Nadir House, G/F-I, I.I. Chundrigar Road, Karachi v. Pakistan through Secretary Ministry of Finance, Government of Pakistan Islamabad and 2 others (2000 YLR 2683)", "Income-Tax Officer, Central Circle II, Karachi and another v. Cement Agencies Ltd. (PLD 1969 SC 322)", "Mian M. Azam Chaila v. Wajid Ali Khan and others (PLD 2009 Lahore 449)", "Koh-i-Noor Sugar Mills Limited v. Pakistan through Secretary, Ministry of Finance and 2 others (1989 SCMR 2044)" and "Muhammad Idrees v. Agricultural Development Bank of Pakistan and others (PLD 2007 SC 681)".

6.Learned counsel for the respondents have opposed the contentions of the petitioner by submitting that District Government is competent under section 116 of the PLGO 2001 to levy various taxes, fees, rates etc. specified in the Second Schedule by way of their publication in Official Gazette; that the District Government had adopted all codal formalities prescribed in the Rules for imposition of the license fee inviting the suggestions and objections from all the concerned through publication of prior notice in the press; that levy of the fee was notified in the Official Gazette vide Notification No.1755 dated 8-6-2000 and amendedNotificationNo.DO(A) 2004/LicenceFees/56dated11-2-2004; that the writ petition filed by the petitioner-company was also included in the 53 writ petition and same was at Serial No.5 in the schedule-A attached to the judgment passed in Writ Petition No.1914 of 2004; that the petitioner's case is identical one and does not fall in the nature of "past and closed transaction", as the impugned judgment of this Court has been set aside by the Hon'ble Supreme Court; that the petitioner-company has failed to comply with the order of the Hon'ble Supreme Court by filing the objections and suggestions within the stipulated period. Learned counsel have also argued that the present writ petition is hit by the principle of laches. Learned counsel for the respondents also raised objection qua the competency of the petitioner-company to file the instant petition as according to them certified true copy of resolution (Annex.B) is not in accordance with law as neither names of the Directors of the petitioner-company have been mentioned therein nor has it been signed by any one of them, as required by law. Further adds that no Memorandum of Article and Association was filed with the writ petition. In this respect, they place reliance upon "Messrs Syed Bhais (Pvt.) Ltd. through Director v. Government of Punjab through Secretary Local Government and 3 others (PLD 2012 Lahore 52)".

7.I have heard the learned counsel for the parties and also perused the available record with their assistance.

8.Issue to be resolved in the first instance is the competency of the respondent District Government to levy license fee. The enabling statutory provisions are contained under sections 39(b) and 116 of PLGO 2001, which authorizes the respondent District Government to approve and levy taxes, cesses, fees rates, rents, tolls, charges, surcharge and levies as specified in the Second Schedule. The District Government is a body corporate in terms of section 13(2) of the Ordinance ibid. In the wake of devolution under Article 140-A of the Constitution of Islamic Republic of Pakistan, 1973, the Government through section 14 of the PLGO 2001 has devolved administrative and financial authority for the management of its offices, set up in the districts and specified in Part-A of the First Schedule of the Ordinance and, thus, the District Government is bound to exercise such authority within the district in accordance with the general policy of the Government. The District Government apart from funds, provided by the Government, bears out the expenses of management of the above offices by imposing certain taxes, fees, rates, charges enumerated in the Second Schedule. Item No.6 of Part-I of the Second Schedule clearly shows that District Government is competent to levy fees for licenses or permits or fines for violations. It is note worthy that this Court vide judgment dated 1-7-2010 passed in Writ Petition No.13784 of 2008 titled "Messrs SargodhaJute Mills Limited v. Federation of Pakistan and others" has already upheld the competency of the District Government to impose license fee under the PLGO, 2001, and the ancillary rules framed thereunder.

9.However, imposition of license fee is regulated under the Punjab Local Governments (Fee for Licensing and Permits and Licensing of Professions and Vocations) Rules, 2002 and such imposition is further subject to fulfillment of certain criteria before notification of tax in the Official Gazette which includes publication of Preliminary Taxation and Proposal (Rule 4), Notice for objections and suggestions (Rule 5), sanction of tax (Rule 8), Post Publication sanction (Rule 9), Taxation Bill (Rule 10) and Notice of demand (Rule 11).

10.Perusal of the above Rules vis-a-vis the available record categorically shows that business of manufacturing textile products squarely falls within the purview of Paragraph 44 of the Sixth Schedule of the PLGO, 2001 read with Rule 3, Clause (iii) Paragraph (f) of the Punjab Local Governments (Fee for Licensing and Permits and Licensing of Professions and Vocations) Rules, 2002, and, therefore, the impugned notice for demand of license fee was lawfully issued by the respondent-District Government. The record further transpires that tax/fee was also notified vide Notifications dated 8-6-2000 and 10-3-2004 after adopting all the codal formalities required under the Ordinance. This fact further establishes the validity of the impugned notice.

11.Insofar as contention of the petitioner-company that since it was not made a party before the Supreme Court in, Civil Appeals Nos.1764 to 1782 of 2005 the concluded rights of the petitioner-company could not be reopened even if it has been set aside by the Supreme Court is concerned, it is observed that Writ Petition No.5077 of 2002 was disposed of along with other 52 petitions which are duly reflected in schedule-A attached to the main judgment dated 28-7-2005, hence the said judgment was pervasive upon disposing of subject matter of all the writ petitions. The concluding paragraph No.49 of the judgment reads as under:--

"The demand notices are just bald notices which have been issued on the basis of resolutions without keeping in view the requirements and policy of law under the new dispensation. We also find that the local bodies have as yet to make their own by-laws specific to the licence for dangerous trade while either adopting the model given or formulating their own. So, therefore, this Court holds that in the area where the fee under reference is chargeable, it can only be charged after observance of the exercise pointed out above, and which exercise maybe performed as early as possible for regulating and streamlining the entire system envisaged under the new dispensation." (underlining is mine).

12.Further, Writ Petition No.5077 of 2002 was simply disposed of in view of the legal position clarified in the judgment dated 28-7-2005 with the following text:--

"These 53 Wit Petitions reflected in Schedule-A attached to this judgment, are, therefore, disposed of in these terms with no order as to cost."

13.It is clear from the above that the petitioner-company's writ petition was not accepted but simply disposed of for the reasons recorded in the main judgment and the subject matter of the petition was left with the respondent to reconcile their procedure of imposition of taxation with the procedure prescribed under the new dispensation of the Punjab Local Government Ordinance, 2001. Moreover, this Court disposed of the petitioner company's writ petition, along with others, by declaring the legal position without referring to the individual cases, and thus, the rights of the petitioner-company's cannot be treated as concluded for the reason that the same was not a "judgment in personam" rather it was "judgment in rem". In this respect reference can easily be made to the case of "Tara Chand and others v. Karachi Water and Sewerage Board, Karachi and others (2005 SCMR 499)", wherein the Hon'ble Supreme Court of Pakistan has categorically thrashed out the concept of "judgmentin personam" and "judgment in rem" in very classified terms:--

"As to whether impugned judgment is 'judgment in personam' or 'judgment in rem', it would be appropriate to reproduce their definitions as defined in various dictionaries:

(I)The Oxford Companion to Law by David M. Walker

Judgment in personam.---A judgment determining the rights of persons inter se in or to any money or property in dispute, but not affecting the status of persons or things or determining any interest in property except between the parties. They include all judgments for money.

Rem, Judgment in.---A legal determination binding not only the parties but all persons. It applies particularly to judgments in Admiralty, declaring the status of a ship, matrimonial causes, grants of probate and administration and condemnation of goods by a competent Court.

(II)K.J. Aikyar's Judicial Dictionary (10th Edition 1988)

Normally a judgment binds only those who are parties to it. Such judgments are known as Judgments in personam.

Rem, Judgment in.---A judgment which gives to the successful party possession or declaration of some definite right which right is available against the whole word.

(III)Words and Phrases legally defined (Vol.3 I-N)

Judgment, In personam.---A judgment in personam or inter parties are those which determine the rights of parties inter se to or in the subject-matter in dispute, whether it be corporeal property of any kind whatever or a liquidated or unliquidated demand, but do not affect the status of either persons or things, or make any disposition of property or declare or determine any interest in it except as between the parties litigant. They include all judgments which are not judgments in rem.

A judgment in personam determines the rights of the parties inter se to or in the subject-matter in dispute, whether it be corporeal property of any kind whatever or a liquidated or unliquidated demand, but does not affect the status of either persons or things, or make any disposition of property, or declare or determine any interest in it except as between the parties litigant. Judgments in personam include all judgments which are not judgments in rem, but as many judgments in the latter class deal with the status of persons and not of things, the description "Judgment inter parties" is preferably to 'Judgment in personam'.

Judgment, In Rem.---A judgment in rem may be defined as the judgment of a Court of competent jurisdiction determining the status of a person or thing, or the disposition of a thing (as distinct from the particular interest in it of a party to the litigation). Apart from the application of the term to persons, it must affect the res in the way of condemnation, forfeiture, declaration of status or title, or order for sale or transfer.

(IV)Black's Law Dictionary with pronunciations (6th Edition).

Judgment in personam or inter parties. A judgment against a particular person, as distinguished from a judgment against a thing or a right or status.

Judgment in rem. An adjudication pronounced upon the status of some particular thing or subject-matter, by a Tribunal, having competent authority."

The said two terms have been defined in Corpus Juris Secundum (Volume 50) in the following words:--

Nature and Characteristics.---It is characteristic of a judgment in rem that it operates on a thing or status rather than against the person, and binds all persons to the extent of their interest in the thing whether or not they were parties to the proceedings.

Further, in the Halsbury's Laws of England Fourth Edition both the said terms have been differentiated in the following words--

A judgment in rem may be defined as the judgment of a court of competent jurisdiction determining the status or the disposition of a thing, as distinct from the particular interest in it of a party to the litigation. A judgment in personam determines the rights of the parties among themselves to or in the subject matter in dispute, whether it be corporeal property of any kind whatever, or a liquidated or unliquidated demand, but does not affect the status of either persons or things, or make any disposition of property, or declare or determine any interest in it except as between the parties litigant. Judgments in personam include all judgments which are not judgments in rem, but, as many judgments in rem deal with the status of persons and not of things, the description "judgment inter parties" is preferable to "judgment in personam".

Likewise in the book Words and Phrases (Volume23) published by West Publishing Co. the terms, under discussion, have been defined in the following words:--

A "judgment in personam" imposes a personal liability or obligation on one person in favour of another.

Judgment in personam distinguished.

A "judgment in rem," as distinguished from a "judgment in personam," is an adjudication pronounced upon the status upon some particular thing or subject matter.

A "judgment in rem" is a judgment against a thing as contradistinguished from a judgment against a person or a judgment whereby a status is determined.

"A judgment in rem' is an adjudication pronounced upon the status of some particular subject matter by a tribunal having competent authority for that purpose. It differs from a judgment in personam in this: that the latter judgment is in form as well as substance between the parties claiming the right, and that it is so inter parties appears by the record itself. A judgment in rem is founded on a proceeding instituted, not against the person as such, but against or upon the thing or subject-matter itself whose state or condition is to be determined. It is a proceeding to determine the state or condition of the thing itself, and the judgment is a solemn declaration of the status of the thing, and it ipso facto renders it what it declares it to be."

The above concept was further strengthened in the case reported as "Justice Khurshid Anwar Bhinder and others v. Federation of Pakistan and another (PLD 2010 SC 483)" in the following manner:--

"We have considered this argument advanced by learned counsel butfindlittle force to commend it. Firstly,itistobenotedthat the removal of the petitioners from the office being occupiedbythemwasadirectconsequenceofthefindingthat the actions of General (Retd.) Pervez Musharraftakenon3-11-2007 were void ab initio and secondly that the Notifications of those petitioners who were appointed Judges of the High Courts between 3-11-2007 and 23-3-2009 had not been issued after "consultation" with the Chief Justice of Pakistan as mandated by Article 193 of the Constitution. These findings enunciate a principle of law and are based on the interpretation of the relevant provisions in Part-VII of the Constitution including Article 193, supra relating to the Judicature. The same are binding in view of the provisions as envisaged in Article 189 of the constitution which, inter alia, provide that any decision of the Supreme Court shall, to the extent that it decides a question of law or is based upon or enunciates a principle of law shall be binding on all other Courts in Pakistan.

Whether the Supreme Court deliberately and with the intention of settling the law, pronounces upon a question, such pronouncement is the law declared by the Supreme Court within the meaning of this Article and is binding on all Courts in Pakistan. It cannot be treated as mere obiter dictum. Even obiter dictum of the Supreme Court, due to the high place which the Court holds in the hierarchy of courts in the country, enjoy a highly respected position as if it contains a definite expression of the Court's view on a legal principle, or the meaning of a law."

Further, reference can also be made to "Trustees of the Port of Karachi v. Karachi International Container Terminal Limited (2010 CLC 1666)", wherein it is held as under:--

"According to the dictum of superior Courts every judgment has two classifications one is "judgment in personam" or "inter parties" and "judgment in rem". According to Black's Law Dictionary 6th Edition, a "judgment in personam" means a judgment against a particular person, as distinguished from a judgment against a thing or a right or status. While "Judgment in rem" means adjudication pronounced upon the status of some particular thing or subject-matter, by a Tribunal, having competent authority. It is founded on a proceeding instituted against or on something or subject-matter whose status or condition is to be determined."

Similar view has also been taken by this Court in "MessrsSandal Dye Stuff Industries Ltd. v. Federation of Pakistan through Secretary Finance, Pakistan Secretariat, Islamabad and 5 others (2000 CLC 661)", wherein with reference to the case of "Pir Bakhsh represented by his Legal Heirs and others v. The Chairman, Allotment Committee and others (PLD 1987 SC 145)" held as under:--

"It is clear from the above that a general decision becomes an authority in like-case and the Judges are bound to follow the same so long as it stands unreversed. There is another very strict condition that the binding effect would disappear if it is shown that the law was misunderstood or misapplied in that particular case. Now in the case in hand the honourable Supreme Court has reversed the judgment of High Court, so nothing is left in the judgment of High Court to follow. The controversy as to 'judgment in personam' and 'judgment in rem' is, therefore, not relevant beyond this stage."

It is admitted fact that the writ petition filed by the petitioner-company was disposed of in terms of judgment passed in main Writ Petition No.1914 of 2004 and the same was set aside by the Hon'ble Supreme Court. If we consider the contention of the petitioner-company on the touchstone of the dictum laid down in the judgments quoted above, the definite conclusion is that the same is judgment in rem, and thus is binding on all in view of Article 189 of the Constitution. Non-filing of appeals in other cases is of no legal consequence which has been clearly established by the case-law discussed above.

14.Now while attending to the respondents' objection that the petitioner-company was not competent to file the writ petition in absence of certified true copy of resolution and Memorandum of Article and Association I am of the view that the said deficiency is fatal. Even any subsequent rectification cannot fill up the said lacunae. In the case of Messrs Syed Bhais (Pvt.) (supra), while relying on 2005 CLD 1208 it has inter alia been held as under:--

"I have given anxious consideration to the arguments and the precedents cited in this behalf and my opinion is that since petition has not been filed on the basis of resolution as the attached resolution is not for filing of this petition against the impugned letter in the petition and Mansoor Ahmad Khan has no authority to file this petition. There is no cavil to the proposition that when law requires a thing to be done in a particular manner, the same must be done accordingly and if prescribed procedure is not followed, it is presumed that the same has not been legally done. As regards the subsequent resolution, that will not resolve the issue as for that matter there should have been some powers vesting in the Directors to ratify the wrong. Since no power has been provided in the Memorandum and Articles of Association attached with the C.M. No.2301 of 2011 the Directors had no authority to issue this subsequent resolution."

If we adjudge the competency of the petitioner-company to file the present petition on the touchstone of the afore-quoted judgment the answer would be in negative as the Certified True Copy of the Resolution, attached with this petition, does not commemorate with the law on the subject.

15.Insofar as the case-law cited by the learned counsel for the petitioner is concerned, I am of the view that the same is not applicable in the present case due to peculiarity of the facts and circumstances of the present case and the those involved in the cases referred to by the learned counsel for the petitioner inasmuch as in the case of Quetta Textile Mills Limited (Supra) it was held that a judgment of personam could not be reopened in view of bar of res judicata thus the same is inapplicable in the instant case as I have already concluded that the order passed by this court in the writ petition, filed by the petitioner, was judgment in rem. Likewise, in the matter of Income Tax Officer (supra) the question decided by the apex court relates to the question of past and closed transaction as in the said case, the Income Tax Department did not take any further steps to challenge the impugned orders whereas in the instant case the respondents duly filed appeals before the august Supreme Court and as a result of the decision on the said appeals fresh notices were issued to the petitioner and others. Insofar as the case of Koh-i-Noor Sugar Mills Limited (supra) is concerned, the point involved was qua different views in two separate cases, thus it is not apt to apply the said case-law in the instant petition. Similarly, in the matter of Muhammad Idrees (supra) the point in pith and substance was qua the definition and applicability of section 2-A of the Service Tribunals Act, 1973, but no such question is involved in this petition, hence the same is not applicable in the instant case. As far as the view taken in the case of Mian M. Azam Chaila (supra) is concerned, I am of the humble view that the proposition resolved through the said case was to the effect that new law cannot reopen and apply to a past and closed transaction unless expressly intended. During the course of going through the said judgment I have come across that the term past and closed transaction has been defined in the following words:--

"For the purposes of the present discussion the law presumes a controversy to be a past and closed transaction where no appeal by either party is pending against the original order."

A bare reading of the afore-quoted portion of the judgment makes it more than clear that cases wherein no appeal has been filed against the original order would fall within the definition of past and closed transaction but in the instant matter the original order was passed in Writ Petition No.1914 of 2004 and the same was challenged before the Hon'ble Supreme Court of Pakistan and the order passed by this Court was set aside, thus the petitioner's case does not fall within the meaning of past and closed transaction.

16.In view of the discussion made in the foregoing paragraphs it is held that the judgment of the Hon'ble Supreme Court settling the position of law and declaring the legal position is binding upon the petitioner-company and as such the impugned demand notice has legally been issued by the District Government under the Punjab Local Government Ordinance, 2001. Moreover, the petitioner company has not been able to make out a case for holding the said notice as illegal and without lawful authority.

17.For what has been discussed above, this writ petition having no merit is hereby dismissed with no order as to costs.

M.H./N-37/LPetition dismisse