' ANWAR ZAHEER JAMALI, J.---The Karachi International Container Terminal Limited an unlisted public limited company, having hundred per cent foreign equity and engaged to construct common user container terminal at berths 28-30 situated at Dockyard Road, have preferred this Constitutional petition to challenge the recovery notice dated 18-8-2004 under section 14 of Sindh Urban Immovable Property Tax, 1958 (hereinafter referred as the Act of 1958), thereby raising demand for payment of property tax in the sum of Rs,15,92,10,616 from the petitioner in their capacity as lessee of respondent No,3 in respect of the property referred above, which was followed by attachment notice dated 27-8-2004 issued from the office of respondent No,2.
2. In brief, the case of the petitioner is that under the two agreements between the petitioner and respondent No,3 they are lessee of respondent No,3 in respect of the container terminal at berths 28-30 situated at Dockyard Road, for a period of 20 years; In terms of the Indenture of Lease, petitioners are not required to pay any lease money/rent to respondent No,3, therefore, impugned action of respondent No,2 against the petitioner is beyond the scope of section 14 of the Act of 1958 and without jurisdiction. Further case of the petitioner is that in respect of the similar claim of respondent No,2, Civil Suit No,1255 of 2003 instituted by respondent No,3, wherein petitioner is also party, is sub judice in High Court. In the said suit, liability of property tax is yet to be adjudicated, therefore, action of issuance of notice under section 14 and subsequent attachment notice by respondent No,2 is premature. In the memo. Of petition, the petitioner has proposed some questions of law in this context and has sought declaration that the attachment notice dated 27- 8-2004 is hasty, mala fide and dishonest in view of the fact that earlier notice, dated 18-8-2004 prescribes period of payment up till 4-9-2004. The proposed questions of law read as under:--
(i) Whether respondent Nos.1 and 2 are not justified under section 14 of Sindh Immovable Property Act, 1958 to serve recovery notice on petitioner without meeting the mandatory provisions of section 16 ibid?
(2) Whether action impugned is improper and illegal particularly during pendency of lis, notice served under Order 39, Rules 1 and 2, C.P.C. In Suit No,1355 of 2003 by this Honourable Court as well as under section 10 of Immovable Property Act, 1958 for hearing of appeal preferred by respondent No,3?
(3) Whether provision of section 14 of the Act, 1958 is not attracted nor exposes the petitioner to financial consequences when no relationship of landlord and tenant exists between petitioner and respondent No,3?
3. In reply to this petition, parawise comments have been submitted on behalf of the respondents Nos.1 and 2 wherein they have justified their demand of property tax from the petitioner by having recourse of section 14 of the Act and also further action for attachment taken against the petitioner by invoking section 16 of the Act. On facts, the case of the respondents Nos.1 and 2 is that admittedly the petitioner is holding 20 years lease-hold rights in respect of property against which arrears of property tax are due, which entitles them to enforce recovery in terms of section 14 of the Act subject to the right of petitioner for adjustment of such sums in the account of lessor:
4. The respondent No,3 in their counter-affidavit have not only strongly disputed the claim of the petitioner that they are not liable to pay the arrears of property tax to the respondents Nos.1 and 2 in terms of section 14 of the Act of 1958, but they have gone one step further and have held the petitioner responsible for payment of property tax in their own account. For this purpose they have made reference and relied upon Articles 14.3(c) and 18 of the implementation agreement dated 1- 6-1996 and Clauses 2 and 3 of the Indenture of Lease, which read thus:-- "Article 14.3 Terms of Lease Agreement ' The lease Agreement shall, inter alia, incorporate provisions to the effect that:-- (a)
(b) ______________
(c) TOC shall be responsible for the payment of all taxes, duties surcharge and levies if and when levied by any Government agency/authorities, whether provincial or federal."
"Article 18 Taxes ' All present and future federal, provincial, municipal or other lawful income and other taxes, duties, levies other impositions whatsoever applicable to the TOC, its contractors, sub-contractors, the Terminal, T employees and dock .Labours, or TOC's other assets shall be paid by TOC, its contractors, sub-contractors their employees and dock labour, respectively as the case may be in accordance with the requirements of Laws of Pakistan. KPT will not 'assume any tax liability, whatsoever on behalf of TOC, nor will TOC assume any tax liability on behalf of KPT."
' Clauses 2 and 3 ofthe Indenture of Lease "2. The KICT shall pay to KPT as Handing, Marshaling and Storage Charges for containers/other specified cargo (hereinafter referred to as HMS charges) at a unit rate of Rs,292 (Rupees two hundred and ninety two only) per square meter per annum payable within the first week of July each . Year. The HMS charges will be subject to an indexation upto of 15% escalation every three years in accordance with Article 8.2.2 of the Implementation Agreement. The average annual rent comes to Rs,61,430,189.
3. The KICT shall pay all rates, taxes and outgoing whatsoever now levied on or that may during the term of this Lease become legally due and levied in respect of said Premises to KPT, or not (herein above collectively referred to as any agency) as per Article 14.3(c) of the Implementation Agreement."
5. Mr. Aziz A. Shaikh, learned counsel for the petitioner, in his arguments vehemently contended that though the petitioner is lessee of respondent No,3 for a period of 20 years on the basis of implementation agreement and indenture of lease dated 1-10-1996, but, for this purpose, they are not required to pay any rent to the respondent No,3, therefore, the provisions of sections 14 and 16 of the Act of 1958 cannot be pressed into service against them. To fortify his submissions, learned counsel placed reliance upon the judgment of this Court dated 28-9-2002 passed in C.P. No,1930 of 2002 wherein it was opined that the tax under the Act of 1958 can only be recovered from the owner of the building.
6. On the other hand, Mr. M.S. Sulehri, learned counsel for the respondent No,3, critically examined the terms. And conditions of implementation agreement and the indenture of lease dated 1-10- 1996 with specific reference to Articles 14.3(c) and 18 of the implementation agreement and also Clauses 2 and 3 of the indenture of lease. Relying on these terms of undisputed documents, he contended that on the basis of above referred terms of the implementation agreement and indenture of lease executed between petitioner and respondent No,3, it is the exclusive liability of the petitioner to make the payment of the property tax liability or, without prejudice to the claim of respondent No,3, in the alternative being admitted lessee of the property against which impugned tax is outstanding, the petitioner is liable to pay property tax in terms of section 14 of the Act of 1958.
He further contended that it is for this reason that to seek proper adjudication regarding the liability of payment of property tax, respondent No,3 has filed a declaratory suit against respondents Nos.1 and 2 and the petitioner, which is pending before this Court for adjudication. Learned counsel for respondent No,3, thus, conceded to the action of respondents Nos.1 and 2 to the extent of recovery of property tax. From the petitioner.
7. Mr. Ahmed Pirzada, A.A.-G. Sindh for respondents Nos.1 and 2, strongly questioned the maintainability of this petition on the ground that civil suit involving similar controversy is already pending before this Court. Making reference to the impugned notices under sections 14 and 16 of the Act of 1958 issued to the petitioner, he contended that by playing the game of shifting the liability of property tax upon each other in a collusive manner, the petitioner and respondent No,3 have already successfully avoided the payment of such tax liability for a period of more than eight years, therefore, this petition is liable to be dismissed with costs being without substance and frivolous.
8. We have carefully considered the arguments advanced by the learned counsel for the parties and minutely gone through the material placed on record. Before we proceed further to examine respective contentions of the learned counsel, we deem it fit to reproduce hereunder section 14 of the Act of 1958 as the purported action against the petitioner has been taken by respondents Nos.1 and 2 under this provision of law:-- "14. Recovery of tax from tenants.--- ' Where the tax due from any person on account of any building or land is in arrears, it shall be lawful for the prescribed authority to serve upon any person paying rent in respect of'that building or land, or' any part thereof, to the person from whom the arrears are due, a notice stating the amount of such arrears of tax and requiring all future payments of rent (whether the same have already accrued due or not) by the person paying the rent to be made direct to the prescribed authority until such arrears shall have been duly paid, and such notice shall operate to transfer to the prescribed authority the right to recover, receive and give a discharge for such rent. If the person paying rent wilfully fails or neglects to comply with the notice aforementioned, the prescribed authority may, after giving him an opportunity of being heard, proceed against him as it would have proceeded under the provisions of this Act against the owner of the building or land in respect of which the tax is in arrears."
9. From a plain reading of section 14 of the Act of 1958, it is evident that it does not absolve owner of the building or land from his liability towards the payment of property tax, but only empowers the concerned authority to enforce recovery of such arrears of property tax from the person paying rent in respect of that building or land, after service of notice in the prescribed form (Form PT-14) calling upon said person and requiring him to pay all future payment of rents to the concerned authority until such arrears of property tax have been duly paid. It further provides that service of such notice shall transfer to the prescribed authority the right to recover and receive such rent and that in case the person paying rent wilfully fails and neglects to comply with the notice issued by the prescribed authority, after due opportunity, the prescribed authority can proceed against him in the same manner as against the owner of the building or land in respect of which tax is in arrears. It is significant to note that word "owner" has been defined under section 2(e) of the Act of 1958 by giving it very wide meaning but the word "rent" used under this section has not been defined under the Act of 1958. In Blacks Law Dictionary 7th Edition, word "rent" has been defined as consideration paid periodically for the use or occupancy of the property. Thus, it is evident that definition of word "rent" cannot be narrowly interpreted in favour of a lessee to absolve him of any action against him in terms of sections 14 and 16 of the Act of 1958 on the pretext that the payment of occupancy consideration to the owner of the property is under any other head though primarily attached to the letting out/leasing of the building/ plot of land, as referred above, and not for any other purpose, as admittedly respondent No,3 (KPT) has nothing to do with handling, marshalling and storage of cargo work undertaken by the petitioner.
10. It will be pertinent to mention here that levy of property tax over the disputed property has not been disputed before us by the parties. 'Even otherwise, the issue whether the properties owned/vested with respondent No,3 (KPT) leased to private parties/companies, can be subjected to the levy of property tax, stands decided by this Court vide its judgment dated 15-8-1989 in the case of Trustees of Port of Karachi v. Secretary (Excise) Officio Director General, Excise and Taxation and another (C.P. No,D-1209 of 1986); which was also maintained by the Honourable Supreme Court of Pakistan in its judgment dated 18-12-1992 in Civil Appeal No,791-K of 1990. Thus, the only short point for consideration before us in this petition is that whether, in the given facts and circumstances, recovery of property tax can be enforced by respondents Nos.1 and 2 against the petitioner by invoking provisions of section 14 of the Act of 1958 or not.
11. To our query, Mr. Aziz A. Shaikh, learned counsel for the petitioner, did not dispute the status of the petitioner being lessee of respondent No,3 in respect of container terminals Berth 28-30, Dockyard Road, for a period of 20 years, but despite this position, he disputed the liability of the petitioner for payment of disputed property tax to the respondent Nos.1 and 2 on the ground that the petitioner is not paying any rent to the respondent No,3 in respect of the land provided to them for their use.
However, when' confronted with Clause 2 of the indenture of lease as reproduced herein above, which makes reference of average annual rent payable by the petitioner to KPT (respondent No,3) at Rs,61,430,189, learned counsel submitted that the payment of this sum is not towards rent but under the head of handling, marshalling and storage charges for the containers and other specified cargo, which have been worked out at the rate of Rs,292 per square meter per annum, therefore, the payment of such sum cannot be termed as payment of rent. In our view, such submission of the learned counsel is fallacious and baseless in as much as from the language of clause 2 of indenture of lease it is clear that the liability of payment of aforesaid sum payable by the petitioner to the respondent No,3 has been worked out on the basis of area of land provided to the petitioner, on per square meter basis and even the reference of this amount has been made in the document under the heading "average annual Rent". Learned counsel, when asked to show that if the status of the petitioner, despite indenture of lease, is not that of a lessee/tenant, then what otherwise, he was unable to give any plausible reply, rather he stated that if the payment of annual sum made by the petitioner to respondent No,3 is held/considered as rent then the petitioner will be willing to pay the disputed liability of the property tax in the account of respondent No,3. In our view, such submission of the learned counsel is absolutely misdirected in the present case for the reason that apart from being lessee of the respondent No,3, the petitioner, in terms of Articles 14.3(c) and 18 of the implementation agreement and Clauses 2 and 3 of the indenture of lease (supra), have undertaken payment of all such tax liabilities of the Federal or Provincial Government or any other autonomous body on their shoulder, besides payment of annual rent to the respondent No3. In such circumstances, the crucial issue i.e, whether in terms of such agreement B between the petitioner and respondent No,3, the petitioner is liable to pay property tax to the respondents Nos.1 and 2, is to be adjudicated in the pending civil suit, after recording of evidence or in any other appropriate proceedings, but the fact remains that the claim of respondents Nos.1 and 2 against the petitioner in either of the two capacities of the petitioner is fully justified so also the impugned action taken under sections 14 and 16 of the Act 1958. The framing of questions of law in this Constitutional petition and seeking its adjudication through this petition is also equally misdirected as the question of payment of property tax on the basis of mutual agreement between the parties cannot be summarily adjudged in these. Proceedings. To sum up, we are of the considered view that not only the impugned action taken by the respondents Nos.1 and 2 against the petitioner is within the four corners of the relevant provisions of the Act of 1958, but this petition is frivolous and aimed to avoid liability of payment of legitimate claim of property tax to respondents Nos 1 and 2.
12. With reference to the solitary case cited by Mr. Aziz A. Shaikh, we may further add that there is no cavil to this legal proposition that the liability of payment of property tax under the Act of 1958 is upon the owner of the property. However, the observations of this Court in its judgment dated 29- 8-2002 in C.P. No,1930 of 2002 to this effect do not help the petitioner to escape their liability regarding payment of property tax as the import of section 14 of the Act of 1958 was not touched in that case which makes the petitioner liable for payment of arrears of property tax in. Their capacity as lessee of respondent No,3, subject to its adjustment/ discharge in the account of lessor/owner of the property.
13. In view of the above discussion, we find no substance in this petition, which is accordingly dismissed in limine along with listed application.