JUDGMENT MIAN HAMID FAROOQ, J.-The appellant/judgment debtor, through the filing of the instant first appeal, under Section 21 of Banking Companies (Recovery of Loans, Advances, Credits and Finances) Act, 1997, has called in question judgment and decree dated 25-9-2000, whereby the learned Judge Banking Court, Faisalabad, proceeded to pass the exparte decree for the recovery of Rs. 72,28,818/-, with costs and mark-up, in favour of respondent No.1, and against M/s. Akram Enterprises (Pvt.) Limited and others, including the appellant.
2. Briefly stated the facts, culminating to the filing of the present appeal, are that respondent-Bank filed the suit for recovery of Rs. 86.74,581/-, against M/s. Akram Enterprises (Pvt.) Limited and others, before the then Banking Tribunal, Faisalabad, wherein the appellant was arrayed as defenetarTTNo.3. During the pendency of the suit, pursuant to the special resolution, passed by the Company, i. e. M/s. Akram Enterprises. (Pvt.) Limited on 7-5-1994, it filed the petition (C.O. No.51 of 1.994), under Sections 305 and 309 of the Companies Ordinance, for the winding up of the company on the ground that it is unable to run its affairs. On 22-11-1994, the Hon'ble Company Judge of this Court appointed provisional Manager, who was directed to take over the possession and control of the factory and its other assets. Subsequently, on 16-12-1996, the company was ordered to be wound- up and the provisional Manager, already appointed by this Court, was appointed as official liquidator, in the final analysis, the company was dissolved by the Hon'ble Company Judge, under Section 350 of the Companies Ordinance, vide order dated 11-10-2001, which is the subject-matter of the appeal (ICA No.11/2001), filed by the appellant. As regards the suit for recovery, the notices, as per the terms of Section 6(2) of Banking Tribunals Ordinance, 1984, (now repealed) were issued to the defendants and in response thereto they filed the reply to show-cause notice. Subsequently, they absented from the proceedings, thus, they were proceeded exparte, vide order dated 17-7- 2000 and their reply to show-cause notice was dismissed. Pursuant thereto learned Judge Banking Court passed a decree for recovery of Rs. 72,28,818/-, after excluding the amount of liquidated damages from the suit amount, with costs and mark-up, in favour of respondents- Bank, and against the defendants, including the appellant, jointly and severally, vide impugned judgment and decree dated 25-9-2000, hence the present appeal.
3. Despite various calls made, none has entered appearance to represent respondents No.2 to 4, thus, they are proceeded .Exparte.
4. Leamed counsel for the appellant, while referring to para. 4 of order dated 16-12-1996, passed by the Hon'ble Company Jude in winding up petition (C.O. No.51/94), has submitted that although the Hon'ble Company Judge permitted respondent-Bank to file the suit, yet no such like application, seeking requisite permission to continue with the suit was filed after that date, therefore, the judgment and decree, passed by the learned Judge Banking Court, is without jurisdiction. He has added that the learned Judge Banking Court was not competent to proceed and continue with the recovery suit, unless specifically allowed b the Hon'ble Company Judge. Conversely, the learned counsel for respondent-Bank, while referring to order dated 16-9- 1996, passed in the same winding up petition, has submitted that the Hon'ble Company Judge specifically permitted the learned Judge Banking Court to constitute with the proceedings in the suit, therefore, there was no legal hurdle before the learned Banking Court to decide the suit. He has further submitted that the learned Company Judge, without noticing order dated 16-9-1996, has observed in order dated 16-9-1996 that the Bank can seek permission to continue with the proceedings in the suit.
5. Both the learned counsel admit that orders dated 16-9-1996 and 16-12-1996, rejied upon by them, were passed by the Hon'ble Company Judge in one and the same winding-up petition (C.O.
No.51/94). Lt would be appropriate to produce relevant portion of order dated 16-9-1996, relied upon by the learned counsel of the respondent-Bank, which reads as follow:- "Learned counsel for respondent No.1 says that the suit filed by the said respondent against the company before the Banking Tribunal is pending and the proceedings in the same have been stayed by the , said Tribunal on account of pendency of this petition.
Ln this petition no order has been passed for staying the proceedings in the said suit. The proceedings in the said suit are permitted to be continued. The provisional Manager appointed by this Court in this case shall defend the said suit alongwith the order defendants already impleaded in the said suit. The provisional Manage shall approach the said Court and make application for this purpose. Learned counsel for respondent No.1 wants to file reply to C.M. No. 72/L-96."
(Underlining is ours) lt is evident from the bare reading of the aforenoted order that the Hon'ble Judge specifically allowed the proceedings in the suit for recovery to be continued and already appointed provisional Manager was directed to defend the suit.
6. Section 316(1) of the Companies Ordinance, 1984 envisages that when a winding up order has been made or a provisional Manager has been appointed, no suit or other legal proceeding shall proceed against the company except by the leave of the Court. The said provision of law is reproduced below for ready reference:- 316(1). "Suits stayed on winding up order:- (1)
When a winding up. Order has been made or a provisional Manager has been appointed, no suit or other legal proceedings shall be proceeded with or commenced against the company except by leave of the Court, and subject to such terms as the Court may impose.
Lt flows from the perusal of the ^foresaid provision of law that when winding-up order has been made or a provisional Manager has been appointed, the proceedings in the suit or other legal proceedings shall remain stayed only against the company and cannot further proceed except with the leave of the Court. If any party wishes to commence or continue with the proceedings, then it has to file the application under * Section 316(1) of the Companies Ordinance, 1984, before the learned Company Judge seeking his permission to proceed, continue and commence with the proceedings against the company and the Court may grant such permission, subject to certain.Terms. Placing the said provision of law in juxta position with the order dated 16-9-1996, we are of the firm view that the learned Company Judge through a specific and conscious order permitted the Banking Court to continue with the proceedings in the recovery suit, filed by the respondent-Bank inasmuch as the Provisional Manager was directed by the learned Company Judge to approach the Court and make application, ln view whereof, we are firm in our views that the learned Company Judge granted permission to the respondent-Bank and the leamed Banking Court, which was seized of the suit for recovery, to continue and proceed with the proceedings, thus, the learned Banking Court was justified in passing the impugned judgment and decree.
7. There is another aspect of the case. As noted above, Section 316(1) of Companies Ordinance, 1984, provides that after the passing of the winding-up order or the appointment of Provisional Manager, no suit or legal proceedings shall proceed with or commence against the company.
Thus, Upon the. Happening of aforesaid two eventualities, the proceedings cannot commence or proceed only against the company, while the proceedings against the other persons arrayed in the suit as defendants in the capacity of guarantors/mortgagers/ benefteiaries, apart from the company, can be proceeded with, continued and commenced even without the leave of .The Court. The appellant did not represent the company at any stage, although she was one of the directors. Admittedly, she did not file winding-up petition. The present appeal has only been filed by Mst. Tanis Akhtar, the appellant, who was arrayed as defendant No.3 in the suit for recovery.
Even it be conceded for the sake of arguments that no permission was granted to continue with the^uit, at best, the said argument, now canvassed by the leamed counsel of the appellant, was available to the company, who choose not to file the appeal in hand and instead thereof it has been arrayed as one of the respondents. The appellant, being one of the defendants, cannot raise the said plea, because in any case the proceedings had to be continued against her, even if no permission was granted to the respondent-Bank to continue with the proceedings in the suit, it does not lie in tho mouth of the appellant, being the defendant in the suit. To say that the decree passed against her is without jurisdiction, as in any case proceeding against the appellant and other defendants wore to proceed and continue notwithstanding the fact that the company was ordered to be wound up, that? Provisional/Manager was appointed or/and itd permission was granted to continue with the proceedings. The* solitary contention raised, by the learned counsel of the appellant is without any substance, hence repelled;
8. Now coming to order dated 16-12-1996, passed by the learned Company Judge and relied upon by the learned counsel for the appellant. Para. 4 of the said order is reproduced below:- "This apprehension of the learned counsel is ill- founded as no such consequences follow from winding-up of the company, ln any event, if the respondent No.1 wishes to continue with the suit filed by it, it can seek permission from this Court." lt is evident from the above that the learned Company Judge, while passing the aforenoted order did not consider, review or recall his earlier order dated 16-9-1996, wherein, permission to continue with the suit already stood granted, as held above, the observations of the Hon'ble Company Judge, that if respondent No.1 wishes to continue with the suit, it can seek permission from this Court, does not mean that the previous order, granting permission to continue with the proceedings in the suit for recovery, has been recalled, superseded or rescinded, automatically, lt appears from the tenor of order dated 16-12-1996, that order dated 16-9-1996, was not brought to the notice of learned Company Judge at the time of the passing of the latest order on the same subject, ln any eyent, this order does not require the respondent-Bank to seek fresh permission for the Court to continue with the proceedings in the suit. Had the learned Company Judge, in order dated 16-12-1996, taken note of the earlier order dated 16-9-1996 and observed that after winding- up of the company, fresh order to continue with the proceedings is required, in that case the position would have been different, ln the said perspective, we are of the considered view that once the order dated 16-9-1996, specifically permitting the learned Banking Court to continue and commence with the proceedings in the suit for recovery, was passed, there was no need to pass a fresh order on the same subject. Order dated 16-12-1996, was passed without taking into consideration the pervious order on the same issue. Undeniably, order dated 16-12-1996, does not supersede, recall, review or set aside the earlier order, passed by the Court. Furthermore, as held above, the appellant cannot take benefit nf the afnrennteH nncitien anrl the company has not filed any appeal against the impugned judgment and decree.
9. Seeing from any angle, the appellant has comprehensively failed to make out a case calling for interference by this Court in the impugned judgment and decree in exercise of its appellate jurisdiction. The impugned judgment and decree was legally passed by the learned Banking Court, having the jurisdiction in the matter. We do not find any legal infirmity in the impugned judgment and decree, thus, the same are hereby maintained.
10. Upshot of the above discussion is that the present appeal is devoid of merits, hence the same stands dismissed with no order as to costs.
Regular First Appeal Dismissed.
2005 P.C.T.R. 605 [Lahore] Present: ALI NAWAZ CHOWHAN, J.
Data Electronics (Pvt.) Limited, Lahore.
Versus Federation of Pakistan through Secretary Finance Division, Islamabad and 3 others.
Writ Petition No. 4749 of 2003, decided on 19th January, 2005.
(a) Constitution of Pakistan (1973)- -Art. 199-Income Tax Ordinance, 1979, S. 129(5)-Nondisposal of Appeal by Income Tax Commissioner of-Benefit of-Writ petition in High Court seeking indulgence that due to failure of respondent/Commissioner to decide appeal within three months, relief sought through the said relief deemed to have been given-Validity-Service of notice which was since qua non for the said benefit was served- Writ .
(Para 14,25)
(b) Income Tax Ordinance (XXXl of 1979)- -S. 129(5)--Notice of-Format stated-What ought to have been format of-the notice? This question was not answered by the Ordinance. Therefore, the lav^expects a notice to be couched in a reasonable language easily understandable conveying a warning if not acted upon.
(Para 15)
(c) Tax statutes- -Provisions of-Effect-lt must be understood that in tax statutes those provisions which are enacted for the benefit of a taxpayer are mandatory and those provisions enacted merely to secure the orderly transaction of business are directory.
(Para 22)
(d) Income Tax Ordinance (XXXl of 1979)- -S. 129(5) (6) (7)-Provision of-Effect-Provision of said section of the Ordinance are mandatory and not directory or regulatory.
(Para 24)
For the Petitioner. Ch. Anwar-ul-Haq, Advocate.
For the Respondent: Shahid Jamil Khan, Advocate*, Date of hearing: 14th January, 2005.
* ALI NAWAZ CHOWHAN, J.- Through this -writ petition, the petitioner is making the following prayer:- "In view of the circumstances narrated above, it is respectfully prayed that this Honourable Court rftay graciously declare that due to the failure on the part of the respondent No.3 to dispose of the appeals of the petitioner filed on 30-07-2002 for the assessment years 1998-1999 and 1999-2000) within three months ended on 31-10-2002 in terms of sub-section (1), (5) and (6) of Section 132 of the repealed Income Tax Ordinance, 1979, has given rise to a valuable right in 2005 favour of the petitioner that the relief sought through the appeals shall be deemed to have been given and all the provisions of the Ordinance shall effect accordingly."
The matter, therefore, relates to an extraordinary relief provided by Section 132 to the repealed Income Tax Ordinance, 1939, which has been now incorporated in Section 129 of the Income Tax Ordinance, 2001.
2. The relevant provisions of Section 132 of the repealed law read as follows:- "Decision in appeal: (1).................................................. - (2)
(3)
(4)
(2) Where no order under sub-section (1) is made before the expiration of three months from the end of the month n which the appeal is presented, the relief .Sought through the said appeal shall be deemed to have been given and all the provisions of this Ordinance shall have effect accordingly: Provided that, where the hearing of appeal is adjourned for any period on the request of the appellant, the said period shall be excluded while computing the aforesaid period of three month: Provided further that nothing contained in this sub-section shall apply to any appeal presented before the first day of January, 1992.
(3) The p/ovisions of sub-section .(5) shall not apply unless a notice by the appellant stating that no order under sub-section (1) has been made is, personally served by the appellant on the Appellate Additional Commissioner not less than thirty days before the expiration of the period of three months."
3. The relevant provisions of Section 129 of the Income Tax Ordinance, 2001 read as follows:- "Decision in appeal: (1)------------------------------------------- (2) ---------------------- ----------------------------------------------------------------- (3)
(4)
(3) Where the Commissioner (Appeals) has not made on order an on an appeal before the expiration of three months from the end of the month in which the appeal was lodged, the relief sought by the appellant in the appeal shall be treated as having been given and all the provisions of this Ordinance shall have effect accordingly.
(4) For the purpose of sub-section (5), any period during which the hearing of an appeal is adjourned on the request of the appellant shall be excluded in the computation of the period of three months referred to in that sub-section.
(5) . The provisions of sub-section (5) shall not apply unless a notice by the appellant stating that no order under sub-section (1) has been made is personally served by the appellant on the Commissioner Appeals (not less than thirty days before the expiration of the period of three months."
Hereinafter Income Tax Ordinance, 2001 shall be referred to as the Ordinance.
4. Section 129 (5) of the Ordinance enjoins upon the Commissioner of Appeals to take a decision in appeal before the expiration of 3 months from the end of the month in which the appeal was lodged and if he fails to act a law requires him and there is noted delay through adjournment or otherwise caused bv the appellant in this connection, the 2005 relief sought by the appellant was to be construed having been granted to him under the Ordinance.
5* However, Section 129(7) of the Ordinance was stipulated to put the Commissioner on notice for purposes of fulfilment of his obligations under the provisions of Section 129(5) and in case a notice is served to him informing him that the order which was required to be made within the periphery of time so* prescribed, has not been made, he should take action within the next 30 days of this notice for passing such an order in appeal.
6. Obviously, where no notice under the provisions of Section 129(7) of the Ordinance is given, the benefits as prescribed by Section 129(5) cannot be availed. Reference in this connection may be made to the case of Messrs Aasmi Packages Pvt Ltd. Vs. Commissioner of Income Tax (Appeals)
Zone-A, Lahore, and three others (2000 PTD 39) and CH. Irshad Ahmad Virk Vs. Commissioner Appeals Income Tax and others (1996 PTD 279).
7. Therefore, the legal position being absolutely clear, we have now to see factually the eligibility of the petitioner in asking for the relief under the provisions of Section 129(5) of the Ordinance.
8. The petitioner has placed on record as notice dated 25th September, 2002, served by their Chartered Accountants on the Commissioner Income Tax (Appeals) Company Zone-ll, Lahore, saying as follows:- "On behalf of our above named client we refer to the captioned subject and in this connection we are pleased to submit as under: -
1. We had filed an appeal u/s 129 of Income Ta^< Ordinance, 1979 on 30-07-2002 in respect of assessm ent years 1998-99 and 1999-2000 and so far, no date for hearing ha been fixed.
2. The assessee is being harassed by Deputy Commissioner of Income Tax adopting coercive recovery measure i.e. Appointment of ln view of the above facts and circumstances of the case you are kindly requested to fix an early hearing of appeal in term of Section 132(6) of the Income Tax Ordinance, 1979, and oblige."
9. The caption of the notice says:- " REQUEST FOR EARLY HEARING OF APPEAL ASSESSMENT YEAR 1998-99 AND 1999-2000."
10. This notice has a scribed notice of the Zonal Commissioner Income Tax saying:- , "Approach the Zonal Cr. T"
11. Learned counsel for the petitioner further refers to a letter which has been, issued to the petitioner-Company by the Taxation Officer, Income Tax Circle 03, Company Zone II of Lahore on 22-1-2004 in the following words:- "Please refer to your letter No.Tax/03 dated 20-05- 2003 on the above noted subject.
Lt is requested that your request for giving effect to deemed order in terms of Section 132(5) of the Income Tax Ordinance, 1979 cannot be acceded to forthe reasons that: 1 No such instructions have been received from office of the leamed CIT (Appeals).
2. Alleged notice under Section 132*6) was in fact a request for early.Hearing. This is clear from the instructions ofdhe learned CIT (Appeals) on the said application wherein your, nave been advised" to approach the Zonal CIT of recommending your case for out of turn hearing>as per practice bf the Department.
This letter was placed on record to establishdhatdhe notice was received by the Commissioner.
12. Before this Court, the learned counsel appearing on behalf of the respondent's side took the view that the notice ought to have been diarized according to the procedure as laid for filing the appeals, otherwise this is no the factum of notice against which he could not take a very definite position especially after seeing the letter of the Taxation Officer of 22-1-2004. But went on to say that the letter having been given directly to the Commissioner, he may not have studied , it and understood its implications particularly, when the caption of the rrotice did not sufficiently carry the word "notice"
13. But a perusal of the letter dated 25th September shows that the provisions, of the old Ordinance i. e. Section 132(6) do find a mention in the last paragraph of the letter which was efficient enough to convey a warning to the Commissioner to act within the next 30 days as envisaged in law or suffer the consequences.
14. So the service for notice which is a sine qua non for the benefit to be given under the provisions of Section 129(5) was served.
15. What ought to have been the format of the notice?. This question is not answered by the Ordinance, whereas the Ordinance while referring to the appeals in paragraph 127 lays down what we the requirements to be fulfiled before an appeal is lodged and mentions about a prescribed form to be used for filing the appeals where as no such form is prescribed by the provisions of Section 129 of the Ordinance or 132 of the repealed Ordinance. Therefore, the law expects a notice as such to be couched in a reasonable language easily understandable conveying a warning if not acted upon. Keeping this test in view and the fact that the Ordinance was destitute of prescribing any model of such a form and going through the notice itself, this Court is of the view that is sufficiently conveys the intention of the appellant against the relief he was to ask upon failure of the Commissioner to act in accordance with law.
16. Procedures are even otherwise, not meant to defeat the end of justice or to put traps for the litigants as if a game of chess.Was going played in which the consequences were related.Only to the moves made during the game and where the playing of the game was its own end nor can a cause be defeated merely because of any defect in! The language and as long as it is able to convey what is intended to an authority concerned.
17. . Inaptitude, laxity and careless working at the end of our senior officers particularly working in the fiscal areas where the laws are to be stringently interpreted, cannot be pressed as an excuse or any lapse. Therefore, the argument that unless this documents had been diarized it may have been them fully attended to has no impact.
18. The Commissioner immediately on the receipt of the letter should have opened the statute book to appreciate the implications showing a complete sensitivity which was required to him and if he has not done so, excuses are of no avail for defeating the benefits which the law has consciously given to the taxpayers.
19. Ln fact the rationale behind these provisions of law was based on a desire to activate the Tax Authorities so that they adjudicated the case in appeal with convenient dispatch particularly when a taxpayer is required to pay the amount for tax due from him before he files an appeal and gives a due notice.
20. According to the learned counsel, when there is a failure to fulfil an explicit legal requirement and there is no default on the part of a taxpayer, what the law proposes for him as a benefit as is the case of Section 129(5) of the Ordinance, it becomes a vested right. There is force in this argument. Reference in this connection may be made to the following case-law:- "1. 1993 PTD 332
2. 2000 PT D 2872 (AJK)
3. PTD 1974 SC 134
4. 1995 SCM R 1249
5. 2000 SCM R 1305
6. 1992 ITR 548 (Ind.HC)
8. 2002 CLD 557
10. 2002 CLD 1018." ^ 21. So it is obvious that the petitioner did fulfil the requirements of Section 132* of the otd law and Section 129 of the fresh law and no default on his part has been cogently pointed out and, therefore, a vested right accrues to him as is bestowed by the provisions of Section 129(5) of the Ordinance and which is a ricfftt complete and consummate and of such a character that it cannot be divested without the consent of the person to whom it belongs and it no longer open to any controversy, therefore, the relief he sought in the appeal shall be deemed to have been given to him under the law without any further question. Reference may be made to the following case: State ex rel. Milligan V. Ritter's Estate, lnd. App., 46 N.E. 736.
22. Lt has also been argued that the provisions of Section 129(6) were not mandatory, lt must be understood ^ that in tax statutes those provisions which are enacted for the benefit of a taxpayer are mandatory and that provisions enacted merely to secure the orderly transactions of business are directory. Reference in this connection may be made to the followings: Corpus Juris Secundum Vol. 82 Pg. 875 U.S Cohn V. Little, D.C Ark., 101 F. Supp. 683, affirmed, . C.A.. 199 F 2d 28;Cal. Skelly Estate Co. v. City and County of San Francisco, 69 P. 2d 171, 9 Cal.. Sd 28- Rayan v. Byram, 51 P.2d 872, 4 Cal. 2d 296: ln the case'Of-C/Yy of Scranton VO' Malley Mfg. Co. 19 A.
2d 269, 341 Pa. 200, it was held that whenever the law-requires a thing to be done for the protection of the taxpayer it is usually mandatory.
23. Ln the case of Pears Vs. Morrice (1834) 2-A, E.84, 96) it was said that a clause is directory where the provisions contain a mere direction and nothing more, but in case they are followed by such words as "that anything done ^ contrary to these provisions shall be of no effect" then they are no longer director but mandatory.
Where a mandatory provisions is invoked, the Courts are left with no discretion in their administration except to enforce.
24. Ln this particular case, it is obvious that when the given periphery of time is not followed, the department is then at a loss because his appeal in terms o the relief sought it to be accepted which obviously indicates that the failure in accomplishing what is envisaged' by Section 129 of the Ordinance results in penalizing the department through the statutory grant of relief sought. I, therefore, hold that the provisions of Sections 129(5) (6) & (7) of the Ordinance are mandatory and not directory or regulatory.
25. The writ petition, under the circumstances, is accepted but there will be no order a to costs.
Petition Accepted: 2005 P.C.T.R. 614 [Lahore] Present: SYED HAMID ALI SHAH, J.
Sheikh Saadat Ali Versus Federation of Pakistan Finance Division (Internal Finance Wing) Directorate of National Savings CDA Block No. 1, Islamabad and 3 others Writ Petition No. 19415 of 2004, decided on 24th December, 2004.
(a) Exemption from levy of Tax- -Provisions of-Interpretation-The provisions regarding exemption from levy of tax are not required to be interpreted liberally rather such provisions are to be interpreted and complied strictly.
(Para 8)
(b) Constitution of Pakistan (1973)- -Art.199-Repealed Income Tax Ordinance, 1979, Ss.14(1), 50(2), w/r clause 78-E, Part I, Second Schedule- C.B.R. U.O No. 4/321 TP-1/Qn HatoH oo.K-onno- out of the foreign currency account of-Exemption from levy of tax of-Question.Of-Petitioner, in writ petition challenged the deduction of withholding tax on subsequent investment- validity-Petitioner had invested the encashment of, the amount, converted and yield thereon* in purchase of special saving certificate-Later investment could not be termed as. Conversion of a foreign currency account-Writ Petition dismissed.
(Para 7,9)
For the Petitioner Siraj-ud-Din Khalid, Advocate.
On Court Call: Pervez Ahmad Malik DeputyAttorney v General.
Tahir Mehmood Gondah Assistant Advocate GeneraL For the Respondent No. 3: Muhammadllyas Khan; Legal Advisor.
Date of hearing: 13th December, 2004.
SVED HAMID Akl SHAHy J:- The petitioner maintained foreign currency account, which was frozen on May 28, 1998. Ln response to the option of Government of Pakistan, the petitioner gdt the frozen foreign currency accounts converted into Pak Rupees at stipulated rate. The petitioner opened special saving accounts and invested the encashment for a period of three years. There is no controversy with regard to the fact that the investments and profits derived therefrom, by the petitioner out of the encashment of foreign currency are exempted from levy and charge of withholding tax, under Section 14(1) of Income Tax Ordinance, 1979 read with Clause 78-E of Part-1 of the Section schedule. Similar exemptions are also available to a foreign currency account holder in new law i.e. Income Tax Ordinance. 2001.
2. The petitioner, at the time of maturity ofc the investments, against purchased Special Saving Certificates out of encashment.Of principal amount and the profit yield: thereon. The petitioner claims exemption of Income Tax on these investments as well but the respondent No.3 declined the issuance of exemption certificate under Section 50(2) of the Repealed Ordinance, 1979, on the score that it is available only to the first investment after conversion of foreign currency account.
3. J"he petitioner has challenged, in this petitioner, the deduction of withholding tax on subsequent investment. Learned counsel for the petitioner has argued that as long as clause 78-E of Part-1 of Section Schedule is in the field, any income, which has been derived from investment originated from a foreign currency account, is exempted and that such income remains exempted without any limitation. He has contended further that the Central Board of Revenue is not vested with the power to interpret the iaw and curtail judicial adjudication power by issuing S.O.R. Ln support of his contentions he has referred to: .
(1) Central Insurance Company Versus Centra* Board of Revenue (1993) 68 Tax 86 (SC Pak)
(2) The Central Board of Revenue Versus Sheikh Spinning Mills (1999) 80 Tax (Ss Pak.)
(3) Union Bank Limited Versus Federation of Pakistan (1998) 77 Tax 125 (HC Lah.)
Word used is conversion in Pak Rupees
4. Respondent No.3 filed para wise comments and learned counsel appearing on behalf of respondent No.3 submitted that the petitioner has availed one time exemption at the time of encashment of his certificates and subsequent investments of the petitioner in Emirates Bank are not exempted from deduction of withholding tax in terms of C.B.R. U.O.No.4(32) TP. 1/90-PTf dated 28-05-2002. The Deputy Attorney-General has also assisted this Court with regard to the proposition under reference.
5. Heard learned counsel for the parties at length- Perused the relevant record.
6. Clause 78-E, Part 1 of the Second Schedule is reproduced as under:- "Any profit of interest derived from Pak. Rupee account or certificates of deposit which have been created by conversation of a foreign currency account or deposit held on the 28th day of May, 1998, with a bank authorized under the Foreign Currency Accounts Scheme of State Bank Pakistan.
7. Bare perusal of the said clause manifests that the profit or interest derived from Pak. Rupees account or certificate or deposit which have been created by conversion of the foreign currency account are exempted. The petitioner has converted the foreign currency accounts made investment out ot the encashment of the foreign currency account. The said conversion was exempted which was enjoyed by the petitioner. The petitioner has now invested the encashment of, the amount converted and yield thereon, in purchase of special saving certificate. Later investment cannot be termed as conversion of a foreign currency account.
8. Taxes are means by which state maintains its existence and anyone who claims exemption from such tax must on that account be clearly defined and founded on plain language. There must not be any doubt or any ambiguity upon which the claim to an exemption is founded. Where claim Js based upon plain and clarity expressed intention of the legislature, it will not be justified to construe liberal interpretation. The provisions regarding exemption from levy of tax are not required to be interpreted liberally rather such provisions are to be interpreted and complied strictly. There is no ambiguity that the exemption relates to the conversion of a foreign currency account, and after conversion if such amount is re-invested then it shall not fall within the ambit of clause 78-E ibid.
9. For what been discussed above, the instant petition is without any merit, therefore, the same stands dismissed in limine.
Petition dismissed.
2005 PjC/TR. 618 [Lahore} Present: MIAN- HAMID: FAROOD', J..
Nazir Ahmad Versus HouseBuilding FinanceCorporation Karachi through its Manager Director and>2 others Writ Petition No. 26478 of 1997, decided on 28th January, 2005:
(a) Service of Notice- -Office report of-Presumption-Office report shows that notices were issued to both the parties/counsel and presumption is that the same were served upon the persons.
(Para 2)
(b) Guarantor -Status of-Determining factor-By simply executing affidavit a person does not become guarantor unless he has executed the letter of guarantee.
(Para 8)
(c) ConstitutionsiotPakistan^1973)- 1-Art. 199-Recovery of "dues'1 of deceased by H.B.F.C of- Liability pf-Question of- Respondent/Corporation- through* the impugned notice required petitionehson of the deceased loanee to discharge said Jiabiiity*--Writ petition thereagainst in High Court -Valklity-r-Amount "due" in the deceased father of petitioner could only be recovered from the mortgaged property or/and from the estate left by the deceased.-Petitioner was not personally liable to pay the demanded amount-Impugned notice set aside-Writ .
(Para 10,11)
For the Petitioner. In-person Date of hearing: 28th January, 200S.
MIAN HAMID FAROOQ, J.-Briefly stated the facts, as discernible from the available record, are that on 1-10-81, Muhammad Hussain son of Fahd Bakhsh (deceased), the father of the petitioner, availed financial facility, for a sum of Rs. 50,000/-, from the respondent-corporation which was secured through the mortgage of plot, effected by Mutation No.2351 dated 17-02-81, however, the father of the petitioner died on 8-6-84, without liquidating his liabilities. The petitioner previously filed the Constitutional Petition (W.P No.5038 of 96), before this Court, and the same was disposed of with certain observations. Subsequently the petitioner, as one of the legal heirs of the deceased, was called upon by the respondent-corporation through the issuance of demand notice to liquidate the outstanding liability in the account of his deceased father. Faced with the coercive measures adopted by the corporation, the petitioner, .Statedly, deposited the total amount of Rs.
50,000/- with the respondent-corporation. The respondent- corporation, feeling dissatisfied, again issued a notice dated 16-12-96 to petitioner, thereby demanding additional amount of Rs. 67,576/-, otherwise it was threatened that the petitioner will be arrested, ln the said backdrop, the petitioner filed the present Constitutional petition, thereby challenging the aforesaid notice dated 16-12-96 and all subsequent.Proceedings.
2. Petitioner is present in person and states that his learned counsel is not available. Office report shows that notices were issued to both the parties/counsel and the presumption is that the same were served upon the said persons. Despite service, none has entered appearance on behalf of the respondents, hence they are proceeded exparte.
3. Admitted facts of the case are that deceased father of the petitioner availed financial facility, on the basis of' assignment and partnership, from the* respondent- corporation. The petitioner did not avail any financial facility himself from the respondent-corporation and that after the death of petitioner s father, the respondent-corporation by adopting coercive measures recovered a sum of R.50,000/- from the petitioner..To my mind, the questions, involved in the present case, are: (i) as to whether the outstanding amount, in the amount of the deceased father of the petitioner, could be recovered from the petitioner, as one of his legal heirs, (ii) whether for the recovery of the said amount, the respondent-corporation is allowed, under the law, to adopt coercive measures against the petitioner and
(iii) whether the action of the respondent-corporation of recovering the amount of Rs.50,000/- and its further demand from the petitioner is leally justified.
5. The Hon'ble Supreme Court of Pakistan in a case reported as_Agricultural Development Bank of Pakistan Vs. Sanaullah Khan and others (1988 PLD SC 67), while dilating upon the identical controversies, has held as under:- "From this a general principal has arisen that a pecuniary obligation arising out of the contract by a deceased party will bind his legal representative to the extent of the estate of the deceased coming to his hands. This principle has been statutorily recognized in Section 50 of the Civil Procedure Code which lays down the extent to which a decree passed against judgment-debtor how dies before the decree has been fully satisfied, against his legal representative.
Subsection (2) of Section 50 provides as under;- "Where the decree is executed against such legal extent of the property of the deceased which has come to his hands and has no been duiy disposed of; and, for the purpose of ascertaining such liability, the Court executing the decree may, of its own motion or on the application of the decree- holder, compel such legal representative to produce such accounts as it thinks fit."
Similarly in the case of money decree the liability of the legal representatives of a party who has died after the passing of the decree extends under Section 52 of the C.P.C, to such property of the deceased as it proved to have come into their possession or to the extent of the property of the deceased in respect of which such legal representatives have failed to satisfy the Court thaMhey have duly applied such property of the deceased which came to heir possession, ln this context of the law, without proving that any property has come into the hands of the son and to what extent in value compared with the pecuniary liability of the deceased-father, it cannot be recovered from the son. This aspect was completely overlooked by the Trial Court and the first Appellate Court and no such inquiry was made or any proof furnished by the appellarit-Bank so as to make respondent No.1 liable for the debts of his deceased father." lt is thus clear from the principles of law laid down in the afornoted judgment that pecuniary obligation undertaken by the deceased would bind his legal-representative to the extent of the estate of the deceased, which they inherited; they are not personally liable to liquidate the liabilities of their predecessor-in-interest and that powers of adoption coercive measures cannot be invoked against a person, who did not secure the loan himself.
7. Placing the principles laid down in the aforesaid judgment of Agricultural Development Bank of Pakistan Vs. Sanaullah Khan and others (1988 PLD SC 67) the view that the petitioner is not personally liable to liquidate the pecuniary liabilities/obligations undertaken by his deceased father, it will bind him only to the extent of estate which he has inherited from his father and as the petitioner did not obtain financial facility himself from the respondent- corporation therefore, no coercive measures could be adopted against the petitioner for the recovery of the outstanding amounts in the account of the deceased-father of the petitioner. Needless to add that the outstanding amount, of course, can be recovered from the estate left by the deceased, which came in the hands of his legal representatives, including the petitioner, and from the mortgaged property. The record of the case does not indicate as to whether the respondent-corporation has undertaken any exercise for the sale of the mortgaged plot or not.
8. I have examined the written reply, filed by the respondent-corporation to this Constitutional petition, and find that one of the pleas raised by the corporation is that as the petitioner is the guarantor of his father, therefore, outstanding amount can be recovered from his person and property. However, the respondent-corporation failed to bring on record any letter of guarantee, executed by the petitioner, in order to show that' he stood guarantor to liquidate the financial facility availed by the petitioner's father. Respondent's corporation appears to be relying upon the affidavit, reportedly signed by the petitioner, wherein, it has been stated that the petitioner is the guarantor. Even the said affidavit is of no help to the respondent on the grounds that the execution whereof has been denied by the petitioner, it has not been proved in accordance with law and that by simply executing affidavit, a person does not become guarantor unless he has executed the letter of guarantee within the contemplation of law of guarantee. On the basis so simpliciter affidavit, it can neither be urged nor held that the petitioner stood guarantor for liquidating the liabilities outstanding in the account of his father.
9. From the above, it may not be construed that the respondent-corporation is remediless and cannot recover its dues outstanding in the account of the deceased. Of course even after the death of the deceased loanee, law permits the respondent-corporation to recover the outstanding amount from the estate of the deceased and the sale of the mortgaged property, lt is not understandable as to why the respondent-corporation did not initiate any proceedings for the recovery of the outstanding amount from the sale of the mortgaged plot, which, even according to the petitioner, was security in the hands of the Corporation. Still the corporation is within its rights to recover the outstanding amount by resorting.To the legal remedies available to it, qua the sale for the plot.
10. Next question would be as what is the fate of the amount of Rs.50,000/-, which was recovered by the respondent-corporation from the petitioner under the threat of arrest and other coercive measures. Obviously, the said amount could not have been recovered from the petitioner, as in view of "the. Above findings he'wasmot personally liable to pay the demanded amount to the corporation and the amount "due" in the account of deceased-father of the petitioner could only be recovered from the mortgaged property or/and from the'estate left by the deceased, ln view whereof, I am constrained to hold that the amount of Rs.50,000/- was illegally recovered from the petitioner under the threat of arrest and adoption of other coercive measures, thus; he is held entitled to recover the said amount from the respondent-corporation, which is bound to refund the said amount to the petitioner. The petitioner may approach the competent authority for the refund of the said amount of Rs.50,000/-
11. Upshot of the above discussion is that the present petition is allowed and the impugned notice dated 16-12-96 and all the subsequent proceedings and actions, taken by the respondent- corporation on the basis of said notice^ are declared, to be illegal, without lawful authority and without jurisdiction. Respondents No.1 and 2 are directed to refund the amount Rs. 50,000/- to the petitioner within a period of one month from today. No order as to costs.
Let a copy of this petition be immediately transmitted to the# District Manager House Buildings Finance Corporation,, Sahiwal.
2005 P.C.T.R. 624 [Lahore] Present: M.BILAL KHAN and SH. AZAMAT SAEED, JJ.
Mousa Khan Versus Deputy Superintendent Custom (ASO) Sargodha and 2 others 1 Customs Appeal No. 69 of 2004, decided on 28th January, * 2005.
(a) Customs Act (IV of 1969)- -S. 196-S.R.O 506(1/88), dated 26-6-1998-Import free of custom duty of vehicle ":Pr sro Jeep" by Diplomat of- Seizure of-Further disposed < --Factual controversy of- Question of exercise of jurisdiction-Appeal against seizure of vehicle in question imported free of custom duty by appellant was dismissed by Tribunal below maintaining the order of Adjudication Officer, and further appeal thereagainst in High Court-Validity-There was a finding of Tribunal as well as by the Adjudicating Officer that the vehicle in question had been disposed of/sold to said other person who in fact was stated to have raised the plea that he was owner of the vehicle and was ready to pay all the custom duty and j other taxes due upon the said vehicle-Said person did not challenged the order of Adjudicating Officer-ln pith and substance the contentions of appellant raised a factual controversy which was beyond the jurisdiction and scope revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.