' SYED MANSOOR ALI SHAH, J.---Legal questions that require determination in this case are whether compensation awarded under West Pakistan Requisitioning of Immovable Property (Temporary Powers) Act, 1956 ("Act") can be subsequently enhanced. Secondly, can the said enhancement be strictly in terms of section 5-A of the Punjab Urban Rent Restriction Ordinance, 1959 ("Ordinance") as of right. Thirdly, whether the Arbitrator under the Act can grant enhancement of compensation retrospectively for previous years. Fourthly, whether claim for recovery of arrears of compensation can be granted by the Arbitrator under the Act. Arid lastly, whether law of limitation applies to a claim for arrears of compensation.
2. In order to answer the above questions, brief narration of essential facts is necessary.
3. The property of the predecessor-in-interest of the respondent (Mst. Ghulam Fatima) i.e,, House No,6, Street No,16, Rehman Pura, Ichhra, Lahore was requisitioned by the appellants under the Act in the year, 1977.
4. The predecessor-in-interest of the respondent moved an application under section 6 of the Act for determination of compensation which was decided by the learned District Judge, Lahore acting as an Arbitrator under the Act on 7-1-1985 in the following terms:-- "I, therefore, hold that the land under the building in question was worth Rs,5000 per marla in the year, 1971. At that rate the value of the land in the year, 1971 was Rs,67500. Adding to it the initial cost of construction viz 47525 the total initial cost of construction comes to Rs,1,15025. As the cost of construction and value of land have considerably increased since 1971, I hold that the applicant is entitled to 10 per centum of Rs,1,15,025 which comes to Rs,11500 per annum or Rs,958/P.N. I decide the issue accordingly."
5. Subsequently, successor-in-interest of Mst. Ghulam Fatima i.e,, the present respondent moved an application under section. 6 for enhancement of compensation/rent since the year, 1980, as well as, for arrears of compensation for the said period. It is, however, admitted position between the parties that compensation settled in the year 1985 in the sum of Rs,958 is being regularly paid to the respondent since 1977, therefore, claim of the respondent before the learned Additional District Judge, Lahore was regarding enhancement of compensation as well as the recovery of arrears of the enhanced compensation starting from 1980. The application of the respondent was allowed vide impugned judgment dated 3-3-2009 of the learned Additional District Judge, Lahore and the respondent was allowed retrospective increase of enhancement of compensation at the rate of 25% every three years since 1977 and also for the recovery of arrears of the said period.
6. Learned Law Officer appearing for the appellants submits. That the impugned judgment has failed to address legal, as well as, factual questions. He further elaborated by submitting that an application for enhancement of compensation is made after 19 years of its original assessment and is, therefore, time-barred. He placed reliance on Ashfaqur-Rehman v. Chaudhri Muhammad Afzal (PLD 1968 SC 230), Abdul Majeed v. Wazir Begum and 5 others (1996 SCMR 1681) and Sher Zaman v. Home Department and others (PLD 1996 Lahore 37).
7. Respondent who appeared in person submitted that section 5-A of the Ordinance fully applies in this case and therefore, respondent is automatically entitled to increase of 25% in compensation
(rent) every three years as mandated in the said Ordinance. In support of his contention he relied on Province of the Punjab v. Amin Jan Naeem and 4 others (PLD 1994 SC 141), Sher Zaman v. Home Department and others (PLD 1996 Lahore 37) and Government of the Punjab through Secretary, Education, Lahore v. Shahida Begum (1994 SCMR 1488).
8. According to the respondent the property was requisitioned in the year 1977 and the facility under section 5-A of the Ordinance becomes available to the respondent in the year, 1980 i.e,, automatic increase in rent after three years @ 25%. He further submitted that the current rent/compensation per month is Rs,11,153 (as on 7-4-2010) and the total arrears since 1980 inclusive of the 25% enhancement under section 5-A of the Ordinance comes out to Rs,11,39,354. He, therefore, supports the impugned judgment.
9. Arguments heard. Record perused.
10. In order to answer the questions framed in the beginning of this judgment, it is important to refer to the relevant law for ready reference. Sections 2(ii), 6 and 7 of the Act are as follow:-- Section 2(ii): "Court" means the principal Court of original civil jurisdiction in the district."
' Section 6: Compensation to be assessed in accordance with certain principles:--Where any building is requisitioned there shall Le paid to the owner compensation for its use and occupation, and the amount thereof shall be determined in the manner and in accordance with the principles hereinafter set out:
(a) Where the amount of compensation can be fixed by agreement it shall be paid in accordance with such agreement.
(b) Where no such agreement can be reached the Provincial Government shall by a general or special order for any case or class of cases, appoint as arbitrator a person qualified under Article 167 of the Constitution for appointment as a Judge of a High Court.
(c) The Provincial Government may, in any particular case, nominate a person having expert knowledge as to the nature of the building requisitioned to assist the arbitrator and where such nomination is made, the owner may also nominate an assessor for the said purpose.
(d) At the commencement of the proceedings before the arbitrator the Provincial Government and the owner shall state what, in their respective opinions, is a fair amount of compensation.
(e) The arbitrator in making his award shall take into consideration the following factors:-
(i) In the case of a building which was in existence before the Ist January, 1939, the rent of the same or of similar accommodation in similar circumstances prevailing in the locality during 12 months prior to the Ist January, 1939;
(ii) In the case of a building which was constructed after the Ist January, 1939, the rent at which such building was let out for the first time after its construction or the rent of similar accommodation in similar circumstances prevailing in the locality during 12 months prior to the construction of that building;
(iii) If the building was constructed after the 14th August, 1947, the initial cost of construction of that building.
(2) If the building was constructed after the 14th August, 1947, the compensation awarded shall in no case, after deducting the taxes and insurance premium for insurance against fire and earthquake, be less than eight per centum or exceed in amount ten per centum of the initial cost of the construction of that building. (the portion in bold was declared un-Islamic in Amin Jan Naeem's case ibid).
' Section 7.
Payment of compensation:---As soon as possible after an order of requisition is passed, the Provincial Government shall determine the amount of compensation payable monthly to the owner for the use and occupation of the requisitioned building and deposit by the 5th of each succeeding month such compensation in the Court and if the amount of compensation assessed is enhanced by the arbitrator or by the High Court on appeal, the excess amount shall also be similarly deposited. In case the amount is not deposited within a period of three months from the date of requisitioning or the date of the order of the arbitrator or of the High Court, as the case may be, the Provincial Government shall be liable to pay interest on the principal amount at the rate of six per centum per annum till the date of deposit or payment, as the case may be." (the portion in bold was declared un-islamic in Amin Jan Naeem's case [ibid]).
10. The Rules framed under the Act are the West Pakistan Requisitioning of Immovable Properties (Temporary Powers) Rules, 1962 ("Rules"):-- ' Rule 8 Determination of compensation:---(1) The owner of a requisitioned building shall, as soon as possible, after the requisitioning thereof, negotiate with the Requisitioning Authority or its representative for fixing, by agreement, the amount of compensation payable to the owner for the use and occupation of his property.
(2) If the owner does not within a fortnight of the Service on him of the order requisitioning his building move the Requisitioning Authority for fixation of compensation for the use and occupation of the building, the said Authority shall proceed to determine under section 7 of the Act, the amount of compensation payable to him.
(3) An offer of the compensation assessed under sub-rule (2) shall be made to the person or persons interested in the property, and if not accepted within thirty days of the making thereof shall be deemed to have been refused....
' Rule 10 Reference to the Arbitrator about the fixation of compensation---(1) Within thirty days of the receipt of such statement, the party contesting the assessment may make an application to the Arbitrator for assessing the proper compensation due to him and supply simultaneously a copy thereof to the Requisitioning Authority.
(2) Where no application is made within the prescribed time limit, the compensation fixed under sub-rule (2) of rule 8 shall remain operative.
' Rule 17 Limitations of Arbitrator---The. Arbitrator shall confine his enquiry and -award to the determination of the amount of compensation due in respect of the building requisitioned and the party entitled to receive the same."
11. The Act was challenged before the Hon'ble Federal Shariat Court, which finally culminated in the judgment rendered by the Shariat Appellate Bench of august Supreme Court of Pakistan in the Province of the Punjab v. Amin Jan Naeem and 4 others (PLD 1994 SC 141) wherein it was inter alia declared that:-- "(4) The whole of clause (e) of subsection (1) of section 6 and the whole of subsection (2) of section 6, as they do not provide for the assessment of compensation on the basis of current market rent, and do not provide for a periodical increase in the rent or compensation in accordance with the current custom.
(5) Section 7 to the extent that it provides for interest in case the amount of compensation is not paid within three months, and does not provide that if the amount of compensation is not paid within three months the order of requisition shall be deemed to be terminated and the requisitioned building shall be deemed to have been released."
12. The aforesaid judgment was to take effect on 30-3-1993, whereby the above provisions declared to be repugnant of Injunction of Islam would cease to have effect to the extent of their repugnance. Nothing has been placed on the record by the Provincial Government (appellant) to show that fresh legislation has been brought about on the subject, in line with the judgment in Amin Jan Naeem 's case (ibid).
13. Subsequently, another matter under the Act came up before the august Supreme Court of Pakistan in Government of the Punjab through Secretary, Education, Lahore v. Shahida (PLD 1994 SCMR 1488) where Saleem Akhtar J. Speaking for the court applied general principles of valuation for assessing compensation in the light of Amin Jan Naeem (ibid) in the following manner:- "(5) Before considering these provisions of law, it is pertinent to note that on general principles compensation awarded should be just, fair and adequate taking into consideration the building, its use and condition. If any compensation is awarded which is ridiculous, fantastic or disproportionate having no nexus with the nature and use of the property, it cannot be treated as a just and proper determination of compensation, section 6 itself provides for a fair amount of compensation as in sub-clause (1)(d) of section 6 it is provided that before the Arbitrator, the Government and the owner shall state what in their respective opinions is a fair amount of compensation. In case of different claims by the parties, the Arbitrator has to decide as to what is the "fair amount of compensation". The guiding principle provided by section 6 for determining a fair amount of compensation is not exhaustive... While assessing the value of a building one must take into consideration the market value of the building at the material time, rental value of similar building in the neighbourhood, the locality and location and the advantages, if any, it commands due to its location... Another consideration which should weigh while fixing the rent/compensation is that it is not being determined for limited/fixed period. The rent will be for an unlimited period and considering the fact that the rent laws provide for appreciation of rent after regular intervals, the rent is bound to increase from time 'to time. A person cannot be expected to receive rent at a fixed rate for an unlimited period...A very important factor which has persuaded us to assess the rental value on general principles for valuation in addition to provisions of sections 6 (1) (e) (iii) and
(2) of the Act is that in Province of Punjab v. Amin Jan (PLD 1994 SC 141) the whole of sections 6(1)
(e), (i), (ii) (iii) and (2) of the Act have been held to be repugnant to the Injunctions of Islam because "it does not provide the compensation based on the current market rate" and "it does not provide a periodical increase in the monthly rent or compensation". This judgment was to take effect on 30-6-1993 when these provisions were to cease to have effect to the extent of repugnancy and no amendment has been brought to our notice." (Emphasis supplied)
14. Once again in the year, 1996 the matter of enhancement of compensation came up before this Court in Sher Zaman v. Home Department and others (PLD 1996 Lahore 37). This Court held:-- "14 The answer lies in the judgment of the Hon'ble Shariat Appellate Bench of the Supreme Court.
[(Amin Jan Naeem's case)]. The Compensation should be based on the current market rent of the property and the compensation so fixed should be liable to periodically (sic) increase, as is provided in the laws of rent restriction. This will ensure that the owner of the property is dealt with fairly and he is not deprived of his property without compensation/rent at the market rates.
15....The owner of the property can approach the District Judge/Arbitrator for re-fixation of the compensation/rent on the basis of the market rent of the property as on the said date. While fixing the compensation the District Judge/Arbitrator can also order periodical increase in the compensation in the light of the para meteria provisions contained in section 5-A of the Punjab Urban Rent Restriction Ordinance... "(emphasis supplied)
15. Relying on the above judgments, in the year, 2004 respondent moved an application before the learned Additional District Judge, Lahore for enhancement of rent/compensation and for recovery of arrears of enhanced rent/compensation since 1980. This application was allowed vide impugned judgment dated 3-3-2009 of the learned Additional District Judge, Lahore whereby enhanced claim of the petitioner from 7-1-1980 to 7-1-2004 was allowed, (the compensation was retrospectively enhanced on incremental basis in the light of section 5-A of the Ordinance) and arrears on the basis of enhanced rent/compensation for the past 19 yeats were also allowed.
16. Now addressing the question framed in the beginning of this judgment. On the basis of Amin Jan Naeem's case (ibid) read with Shahida Begum's case (ibid), it appears that even in absence of section 6(e) and section 6 subsection (2) of the Act, they having been declared un-Islamic in Amin Jan Naeem's case, the principle settled by the august Supreme Court of Pakistan was that the compensation has to be on the basis of the market rates with a periodical increase in the said compensation as envisaged in section 6(1)(d) of the Act. It is, however, clarified that Amin Jan Naeem's case did not hold that the compensation ought to be increased in terms of section 5-A of the Ordinance. The relevant passage of the judgment (Amin Jan Naeem's case) is as follows:--
(4) The whole of clause (e) of subsection (1) of section 6 and the whole of subsection (2) of section 6, as they do not provide for the assessment of compensation on the basis of current market rent, and do not provide for a periodical increase in the rent or compensation in accordance with the current custom. (emphasis supplied)
' The "current custom" was taken to mean section 5-A of the Ordinance by this Court in Sher Zaman's case (ibid).
17. As far as application of section 5-A of the Ordinance is concerned, it can best be used as a guideline for the Arbitrator while assessing the market rate or the periodical increase and each case will turn on its own facts. Section 5-A of the Ordinance, however, is not available as of right to the petitioner claiming enhancement of compensation under the Act.
18. Wisdom can also be drawn from the new legislation of rent law i.e,, The Punjab Rented Premises Act, 2009 which supports the freedom of contract between the parties and there is no statutory enhancement prescribed in the periodical rent. I, therefore, hold in the light of Amin Jan Naeem's case read with Shahida Begum's case (ibid) that enhancement of compensation/rent is permissible in order to arrive at fair amount of compensation which is synchronized with the prevalent market rate. This periodical increase in compensation shall continue on the principles of fairness and equity which also finds support from Articles 9, 18, 23 and 24 of the Constitution of the Islamic Republic of Pakistan, 1973.
19. The Arbitrator can only enhance compensation when such an application is moved before the Arbitrator. Rule 17 of the Rules clearly spells out the limited role of the Arbitrator which is to hold inquiry and determine through an award the compensation due to the owner. Therefore, in the present case, the Arbitrator could re-assess the current fair compensation (reliance is placed on Amin Jan Naeem and Shahida Begum's cases [ibid]) on the market rate at the time when the petitioner filed the application i.e, in the year, 2004. The Arbitrator can also fix the percentage of periodical increase in future for the convenience of the owner. Needless to say that the said percentage of periodical increase is subject to re-assessment, if the owner is of the view, later in time, that the said percentage of increase is not commensurate with the market rate. However, the scheme of the Act and the judgments referred to above, do not permit for retrospective enhancement of compensation. I, therefore, hold that the Arbitrator cannot grant retrospective compensation as it is against the scheme of Act and the judgments referred to above.
20. It is also clarified that the role of the Arbitrator as mentioned above is only to determine the amount of compensation or the enhancement thereof and not to grant arrears of compensation which is a matter which falls within the plenary jurisdiction of the Civil. Courts. I, therefore, hold that the impugned order to the extent of granting arrears for the previous years is without any lawful authority. The respondent is, however, free to approach the Court of competent jurisdiction for the recovery of arrears of compensation.
21. It is also pointed out that the recovery of arrears is subject to the law of limitation i.e,, Article 110 of the Limitation Act, 1908. The law C does not envisage that the owner gets out of deep slumber after 19 years and prays for enhancement of compensation for the years gone by. The law of limitation is, therefore, fully applicable.
22. Another aspect of the matter is that award of compensation and the enhancement of compensation in the light of Amin Jan Naeem's case (ibid) is the prerogative of the Arbitrator appointed under the Act. The appellants have placed on record notification dated 10-8-1977 bearing No,SO(R&B)ADG.NA(P/S.BOYS) wherein District Judge, Lahore has been appointed as Arbitrator .Under the Act for the purposes of assessing the compensation. The application of the respondent for enhancement of compensation was, however, placed before the learned Additional District Judge, Lahore who has passed the impugned order. The parties have failed to place on record any notification under the Act authorizing learned Additional District Judge to assess the compensation or its enhancement. Therefore, on the face of it, it appears that learned Additional District Judge has no lawful authority to deal with the matter of enhancement of compensation or the arrears of rent.
23. For the above reasons I, therefore, hold that the learned Additional District Judge, Lahore has failed to assess the market rate of compensation/rent and has unlawfully enhanced compensation of the previous years, as well as, granted arrears of compensation. The impugned judgment is, therefore, set aside. The case is remanded to the learned District Judge, Lahore who after verifying his authority to act as an Arbitrator under the Act shall decide the application of the petitioner moved in the year, 2004 for enhancement of compensation/rent. The enhancement can only be prospective i.e,, from 2004 onwards, strictly in accordance with market rate prevalent in-.The area. The learned District Judge, if so authorized, will also assess the rate of periodical increase of the said compensation/rent on annual basis so that the respondent is not burdened with the task of approaching the Arbitrator time and again. It is also held that for recovery of arrears of rent post, 2004, the respondent can approach the Court of plenary jurisdiction, if so advised any such recovery will be subject to Article 110 of the Limitation Act, 1908.
24. This petition is, therefore, allowed in the above terms.