1. AJMAL MIAN, J.-(a) Since in the above two writ petitions the petitioners have challenged the Vires of Ordinance XIX of 1979 and have prayed for identical reliefs, we intend to dispose of the same by this common judgment.
(b) The brief facts leading to be filing of the above two petitionsare that the petitioner in Petition No. 937/80 under an agreement dated 29-.12-1969 obtained a loan in foreign currencies from respondent No. 3 equivalent to Rs. 1.40 lacs, which was to be utilised by the petitioner for the execution of its investment project fully described in Schedule 11 to the said agreement. Because of the rise in prices respondent No. 3 agreed to increase the amount of the aforesaid sanctioned loan to Rs. 1,51,80,000. Consequently, the original agreement was amended on 10-3-1973 and 7-6-1978. It seems that certain disputes arose between the parties. The petitioner on 21-4-1980 filed Suit No. 389180 in this Court, for account with consequential relief to the effect that the respondent No. 3 be directed to refund to the petitioner such amount of money as may be found due. The above suit is still pending. It further seems that respondent No. 3 filed a suit under Ordinance XIX of 1979 for the recovery of the balance amount of the above loan and the interest thereon, before respondent No. 2, i. e. the Special Court constituted under Ordinance XIX of 1979. The petitioner in order to assail the filing of the above suit filed by respondent No. 3 has filed the present petition for challenging the vires of the aforesaid Ordinance XIX of 1979.
(c) The petitioner in Petition No. 938/80 also obtained foreign currency loan from respondent No. 3 under an agreement dated 29-1-1969 supplemented by a supplementary agreement dated 31-12- 1971. It may be observed that neither the petitioner nor the respondents have brought anything on record to indicate the amount of the loan, which was the subject-matter of the above two agreements. Be that as it may, it further seems that in the above case also differences arose between the petitioner and respondent No. 3 resulting in filing of the Suit No. 390/80 on 21-4-1980 in this Court for account and for consequential relief in the form of refund of the amount if any found due and payable by respondent No. 3 to the petitioner. It also seems that respondent No. 3 also filed a suit for recovery of the balance amount of loan with interest thereon in the respondent No. 2 Court. The petitioner being aggrieved by the above act on the part of respondent No. 3 to file the aforesaid suit in respondent No. 2 Court has also filed the present petition challenging the vises of the Ordinance XIX of 1979.
2. (a) It may be observed that the Supreme Court while dismissing the petition for leave by an order dated 2-12-1980 (which was filed against the interlocutory order, dated 10-9-1980 passed by a Division Bench of this Court) directed this Court to decide the two petitions before the commence--ment of the winter vacation of 1980. However, from the diary of the petitions, it appears that the learned counsel for the parties on one ground or the other obtained adjournments. On 1-9-1981 when the above petitions came up for regular hearing, Mr. Aziz Munshi, learned Deputy Attorney--General, appearing for respondents Nos. I and 2 raised a preliminary objec--tion, namely, that in view of Article 15(1) of the P. C. O.; this Court cannot examine the question of validity of the aforesaid Ordinance. It may be observed that none of the respondents has filed any counter-affidavit. Since on 1-9-1981 the above preliminary objection was raised for the first time, learned counsel for the petitioners requested for time to prepare the cases on the above point, we accordingly adjourned the cases to 22-9-1981. On the above date and on 23rd and 24th the arguments were heard on the above preliminary objection as well as on merits, and the cases were reserved for judgment.
(b) It may be proper to refer to the above preliminary objection raised by the learned Deputy Attorney-General, Mr. Aziz Munshi, before dealing with the contentions advanced on merits of the case. It has been urged by Mr. Munshi that under clause (1) of Article 15 of the P. C. O. All President's orders, orders of the Chief Martial Law Administrator, including orders of amending the Constitution made by the President or the Chief Martial Law Administrator, Martial Law Regulations and all other Laws made on or after the 5th day of July, 1977, have been declared notwithstanding any judgment of any Court, to have been validly made by a competent authority and that it has been provided that the same shall not be called in question in any Court on any ground whatsoever and shall continue in force until altered, repealed, reconstituted or amended by the competent authority and, therefore, it is not open to this Court to examine the vires of the above Ordinance XIX of 1979, hereinafter referred to the Ordinance.
2. On the other hand, Mr. Mumtaz Hussain, learned counsel for the petitioners has urged that under Article 2 of the P. C. O. Inter alia Article 142 of the Constitution (which demarcates the Federal, Provincial, concurrent legislative competence) has been incorporated as a part of the P. C. O. And, therefore, this Court is competent to examine the vires of the impugned Ordinance. It has been further urged by him that money lending being a provincial subject, the President was not competent to legislate and to provide a forum for the recovery of loans advanced by a financial institution acting/functioning as a money-lender Mr. Mumtaz has referred to the case of United Provinces v. Mst. Atiqa Begum and others AIR1941FC16the case of Piare Dusadh and others v.
3. Emperor AIR1944FCI and the case of Province of East Pakistan and others v. Muhammad Mehdi Ali Khan and others PLD 1959 SC (Pak.) 387,, in order to contend that if a law is not made by a competent Legislature, it remains unauthorised on the statute took and it cannot be validated, but it is to be re-enacted by a competent Legislature. He has also referred to a book, namely, Judicial Review of Legislative Acts by Dr. Jha, 1974 Edition, p. 266 on the above point. Mr. Mumtaz Hussain has also invited our attention to the difference in the language employed in clauses (1) and (5) of Article 15 of the P. C. O. In furtherance of his contention that this Court is entitled to examine the vires of an Act. It has been pointed out by him that in clause (5), it has been provided that any Court including the Supreme Court and the High Court shall not make an order relating to the validity of an order or Martial Law Regulation or other acts mentioned therein, whereas in clause (1) of Article 15 the High Court and the Supreme Court have been deliberately omitted and only the words "any Court" have been mentioned. According to him this deliberate variation in the language used in the above two clauses of Article 15 of the P. C. O. Clearly indicates that the High Court and the Supreme Court are not divested of their powers to examine the vires of an act which is necessary and inherent for the purpose of giving proper effect to Article 142 of the Constitution we may observe that very learned arguments were advanced by the learned counsel for the petitioners on the above question, but since we are inclined to hold that the Ordinance has been validly made even without referring to clause (1) of Article 15 of the P. C. O., in our view it is not necessary to examine the above question, namely, whether clause (1) of Article 15 could have validated the Ordinance if it would not have been validly made by a competent authority, We, therefore, propose to examine the validity of the Ordinance without any reference to Article 55 of the P. C. O.
3. (a) Mr. Mumtaz Hussain's main contention was that entry 28 of the Fourth Schedule to the Constitution of Pakistan, (1973) does not empower the Federal Legislature to enact an Ordinance of the nature in question for provid--ing for the recovery of loans advanced by a financial institution whose business is money-lending, as money lending is a provincial subject. On the other hand, it was urged by - Messrs Khalid Anwar and Aziz Munshi that the word `Banking' used in Entry 26 is of wide connotation susceptible to a meaning which will include a financial institution like respondent No. 3 i. e. PICIC. It was further urged by them that in any event from Entries Nos. 10, 31 and 55 of the Federal List of Part I of the Fourth Schedule and Entries Nos. 2 and 3 of the concurrent Legislative List of Fourth Schedule to the Constitution, the requisite power to legislate the Ordinance can be spelt out. However, it was urged by Mr. Mumtaz Hussain that the above entries have no bearing.
(b) In order to examine the contentions advanced by the :earned counsel for the parties, it may be advantageous to reproduce herein below Entry 28 of Part I of the Fourth Schedule to the Constitution, which reads as follows :- Entry 28.-"State Bank of Pakistan : banking that is to say, the conduct of banking business by corporations other than corporations owned or controlled by a Province and carrying on business only within that Province."
4. It may be noticed that under the above entry the Federal Legislature is empowered to legislate in respect of State Bank of Pakistan banking that is to say, the conduct of the banking business by corporations other than corporations owned or controlled by a province and carrying on business only within that province.
5. On the basis of the language employed in the above entry, it was contended by Mr. Mumtaz Hussain that the banking business has a definite connotation, which does not cover financial institutions doing money-lending business. In support of his above contention he has referred to the definition of the term `banking' and `banking-company' given in section 5(b) & (c) of the Banking Companies Ordinance, 1962 and also the definition of the word `bank' given in section 3(1) of the Banks (Nationalization) Act, 1974 (Act XIX of 1974) and also to the definition of the term `banking company' given in section 2(a) of the Banking Companies (Recovery of Loans) Ordi-- nance, 1979. (1. e. In the Ordinance). He has also invited our attention to the case of The Bank of Chettinad Ltd., Kolombo v. The Commissioner of Income-lax, Colombo PLD 1948 P C 107the case of N. M. N. Duraiswami Chettiar v. Dindigul Urban Co-operative Bank Ltd. And another AIR 1957 Mad.
6. 745and Halsbury's Laws of England, 4th Edn., Vol. III, para. 38.
7. On the other hand Mr. Khalid Anwer, Learned counsel for respondent No. 3, has referred to the Law of Banking by Lord Chorley, 5th Edn., p. 2, and also the case of Chargola Tea Co. Ltd. v. The Assam Financial Corp., Shillong and others AIR 1973 Gohatti 136and section 2(l)(m) of the West Pakistan Money Lenders Ordinance, 1960.
(c) It may be advantageous to reproduce hereinbelow the definitions of the aforesaid terms/words given in the aforesaid Ordinances, which read as follows :-
(b) Section S(b) and (c) of Banking Companies Ordinance, 1962 (Ordinance L VII of 1962).- "Banking" means the accepting for the purpose of lend--ing or investment, of deposits of money from the public, repayable on demand or otherwise, and withdrawable by cheque, draft, order or otherwise ;
(c) `banking-Company' means any company which transacts the business of banking in Pakistan ; Explanation.-Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or tender shall not be deemed to transact the business of banking within the meaning of this clause.
8. Section 3(1) of the Banks (Nationalisation) Act, 1974 (XIX of 1974):- "(1) `bank' means - (al A company registered under the Companies Act, 1913 (VII of 1913), and transacting, in or outside Pakistan, the business of banking as defined in clause (b) of section 5 of the Banking Companies Ordinance, 1962 (LVII of 1962), in respect of which no proceedings under Part III or Part IV of the said Ordinance have been taken or are pending immediately before the commencing day ; and
(b) a banking company incorporated by or under any law within the legislative competence of parliament, including the State Bank, the National Bank of Pakistan, the Industrial Development Bank of Pakistan and the Agricultural Development Bank of Pakistan, but does not include.
(i) a bank which is an enemy firm within the meaning of the Defence of Pakistan Rules, or
(ii) a banking company incorporated outside Pakistan and transacting banking business in Pakistan, or
(iii) a cooperative bank. Registered under the Co-operative Societies Act, 1925 (VII of 19251, or any other law for the time being in force relating to cooperative societies, not being a Co-operative Bank which is a scheduled bank, or
(iv) a Government Saving Bank to which the Government Saving Bank Act, 1873 (V of 1873) applies, or
(v) a corporation or company owned or controlled by a Province and carrying on banking business only within that Province".
9. "(a) Section 2(a) of the Banking Companies (Recovery of Loans) Ordinance. 1979. "Banking company" means a bank as defined in the Banks (Nationalization) Act, 1974 (XIX of 1974), and includes, a banking company incorporated outside Pakistan and transacting banking business in Pakistan and a financial institution which the Federal Government may, by notification in the official 'Gazette declare to be a banking company for the purposes of this Ordinance but does not include the State Bank of Pakistan."
(d) It may be noticed that the term `banking' has been defined in the Banking Companies Ordinance, 1962, means the acceptance, for the purpose of lending or investment of deposits of money from the public, repayable on demand or otherwise and withdrawable by cheque, draft, order or otherwise, whereas banking company has been defined in the aforesaid Ordinance as any -company which transacts the business of banking in Pakistan. It may also be noticed that the explanation given after clause (c) of section 5 of the aforesaid Ordinance clarifies that any company which is engaged in manufacture of goods or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to transact the business of banking within the meaning of the aforesaid clause.
10. Whereas in the Banks (Nationalisation) Act, 1974 the word "bank" has been defined as meaning a company registered under the Companies Act, 1913 (VII of 1913) and transacting in or outside Pakistan, the business of banking as defined in clause (b) of section 5 of Banking Companies Ordinance, 1962 in respect of which no proceedings under Part III or Part IV of the said Ordinance have been taken or are pending immediately before the commencing day. The above definition also includes a banking company incorporated by or under any law, within the legislative competence of Parliament including the State Bank, the National Bank of Pakistan, Industrial Development Bank of Pakistan and the Agricultural Development Bank of Pakistan, but does not include a bank which is an enemy firm within the definition the Defence of Pakistan Rules or a banking company incorporated outside Pakistan and transacting business in Pakistan or a Co- operative Bank registered under the Co-operative Societies Act, 1925, or under any other law for the time being in force.
11. Whereas the definition of a banking company given in the Ordinance, includes a bank as defined in the Banks (Nationalisation) Act, 1974 and includes a banking company incorporated outside Pakistan and transacting banking business , in Pakistan and a financial institution which the Federal Government may by notification in the official Gazette declare to be a banking company for the purpose of Ordinance, but does not include the State Bank of Pakistan. It may be noticed that the definition of the banking company given in the Ordinance is wide in its scope as compared to the definition given in the Banks (Nationalisation) Act, 1974, or in the Banking Companies.
12. Ordinance, 1962, inasmuch as that a banking company incorporated outside Pakistan is also included. Furthermore, a financial institution can be declared as a banking company for the purposes of the Ordinance by a Notification in the official Gazette by the Federal Government.
4. (a) (i) With reference to the case reported in PLD 1948 P C 107, it may be observed that the question before the Privy Council was, as to whether the appellant-Company was liable to be assessed for income--tax under the Income-tax Ordinance of Ceylon in respect of the income and profit of its Ceylon branch, which had an office in Colombo and further question was, whether in computing the amount of said income and profit a deduction should be allowed in respect of a sum of Rs. 53,226 debited to the Ceylon branch by way of interest on the balance due to the Head Office during the year ending 31-3-1940. While considering the above question Lord Morton of Henryton observed that the word "banking and banker" may bear different shades of meaning at different periods of history, and their meaning may not be uniform today in countries of different habits of life and of different degrees of civilization". It was further observed that for the purpose of deciding, as to whether appellant's Ceylon branch carried on business of banking at the material time, what is to be seen is whether the branch at that time could be described as "a company which carries on as its principal business the accepting of deposits of money on current account or others, subject to withdrawal of by cheque, draft or order."
(ii) With reference to the case, reported in AIR 1957 Mad. 745 it may be observed that a learned Single Judge of the Madras High Court while considering the relationship of a banker and its customer observed that any person or body corporate or otherwise- can be a banker who (1) takes deposit of accounts, (2) takes current accounts, (3) issues and pay cheques (4) collects cheques crossed and uncrossed for its customers.
(iii) With reference to Halsbury's Laws of England, it will suffice to quote para. 38, which reads as follows;-- "38. Banker.-The Bills of Exchange Act, 1882 deals exclusively with a "banker", and the word `bank' does not appear in that Act or in the Cheques Act, 1957. A `banker' is an individual, partnership or corporation, whose sole or predominating business is banking, that is the receipt of money on current of deposit account and the payment of cheques drawn by and the collection of cheques paid in by a customer.
13. The characteristics usually found in bankers are (1) that they accept money from, and collect cheques for, their customers and place them to their credit ; (2) that they honour cheques or orders drawn on them by their customers when presented for payment and debit their customers accordingly ; and (3) that they keep current accounts in their books in which the credits and debits are entered.
14. Any person carrying on in good faith the business of banking or any business of banking having for its primary object the lending of money, in the course of which and for the purposes of which he lends money, is excluded from the expression "money lender" in the Money Lenders Act, 1900.
15. The judicial recognition of the banker's lies implies the .Inclusion in banking business of the making of advances or the granting of over--drafts to customers.
16. Clearing bankers are such as are entitled to the privileges of the London Bankers' Clearing House.
17. The Post Office is deemed to be a Bank and a banker and to be carrying on the business of banking and a banking undertaking."
(iv) Reverting to the Law of Banking by Lord Chorley, it may be advantageous to reproduce hereinbelow the description of the commercial banks given in the above book, which reads as follows;- "Commercial Banks.-Commercial banks may be divided into banks of deposit and merchant banks. The object of a bank of deposit, of which the well known joint-stock banks called the `Big Five' are examples, is to collect large aggregations or deposits of money by borrowing from the mercantile and general community, and to lend it out again at interest for short periods to those requiring money for finance of their business, whether in commerce, industry, or agriculture. -The merchant banker, on the other hand, uses his own and borrowed money for the purposes of financing business of a type with which he makes himself especially familiar, such as overseas commerce, loans to foreign municipalities the issue of industrial securities, etc. The business of the merchant banker merges into that of the issue houses, and indeed it is hardly possible to give an exclusive description of it. It overlaps to some extent with that of the deposit banks, but they may be distinguished in that the merchant banks do not open account for any member of the public who choose to apply, and do not ordinarily issue cheque books to their customers. It is with the legal aspects of the business of the deposit banks that this volume is concerned, though something of what we have to say wile apply also to the merchant banks in so far as they are concerned with the same type of business.
18. Formerly deposit banks were contrasted with hanks of issue, i.e. Banks which issued bank notes, that is, promissory Dotes payable to bearer on demand."
19. It may, be noticed that a distinction has been made between a Commercial Banker and a Merchant Banker. The function of a merchant banker described in the above para. Is to use his own or borrowed money for the purpose of financing business of a type, with which he makes himself especially familiar, such as overseas commerce, loan to foreign municipalities, the issue of industrial securities etc. It has also been pointed out that to some extent the function of a merchant banker overlaps with a deposit bank and that the distinction between the two is that the merchant banks do not open account of any member of public and do not ordinarily issue cheque books to their customers.
(v) With reference to the case reported in AIR 1973 Gohatti 136, it may be stated that the facts of the above case were that the respondent a Finance Corporation filed proceeding before the District Judge for the enforcement of a registered mortgage under section 31 of the State Finance Corporation Act, 1951. The above prayer was allowed. The appellant being aggrieved by the above judgment filed first appeal in the High Court of Gohatti. It was urged before the High Court by the learned counsel for the appellant that the Assam Money Lenders Act was applicable to the respondent-Corporation and, therefore, the loan transaction was illegal as is contemplated payment of compound interest. Whereas it was urged by the respondent-Corporation that under section 2(3) (c) of the said Finance Corporation Act, 1951, a loan advanced by the Life Insurance Corporation of India, the Finance Corporation of India, or any other corporated body was exempted from the provisions of the Money Lenders Act. In that context, it was urged by the learned counsel for the appellant that money lending being the subject within the provincial legislative competence, the above provision of the said Finance Corporation Act was ultra vires. The High Court while repelling the above contention held that the Parliament was competent to enact the Corporation Act as it could be traced out not only to entry 43 but also to Entry 45 of list 1, namely, `banking'. In the above case though the Financing Corporation was not strictly performing the function of a banking company as it was not receiving deposits or opening current accounts etc. But it was treated as a banking corporation.
(vi) Section 2(1) of the West Pakistan Money Lenders Ordinance, 1960 defines a loan, whereas clause (ml defines a money lender as a person carrying on business of advancing loans.
(b) From the above cited provisions of law and the case law, it is evident that banking business normally means accepting deposits of money from the public for the purpose of lending or investment, repayable on demand, or otherwise and withdrawable by cheque, draft, order or otherwise. However, at the same time, as pointed out by the Privy Council in the aforesaid case reported in PLD 1948 P C 107 that the word 'banking' and 'banker' may bear different meanings in different periods of history and their meanings may not be uniform in different countries of different habits of life and of different degrees of civilization.
20. The extension of meaning of a word used in an organic document, like constitution or in enactments is not a new phenomenon. There are numerous instances in legislative history. In this regard, it may be pertinent to refer to the case of Pakistan Investment Limited v. Pakistan and 2 others PLD 1980 Kar. 275,(which was decided by one of us). In the above case it was contended that the levy of excise duty under Finance Ordinance, 1970 under Entry 43(b) of the III Schedule to the late Constitution 1962 on the services rendered/provided in a hotel was ultra vires the Federal Legislature. The above contention was repelled and it was pointed out that the term `excise duty' had gone into material change gradually and that though since 19th century in the United Kingdom the word `excise' had acquired primary meaning as a tax on certain articles of luxury produced or manufactured in the United Kingdom, but the scope of the above term has been extended to intangible items, which do not involve manufacturing or producing of goods even in United Kingdom. It was held that since the term excise duty being susceptible to tangible and intangible items, it covers the levy on services rendered or provided in a hotel.
21. It cannot be denied that on account of tremendous growth in the National and International commerce and industries new financing institutions have emerged throughout the world specialising in special branch of financial dealings. The Government of Pakistan with the object to develop industry and commerce etc. Has caused the establishment of numerous financial institutions like IDBP and PICIC etc. Strictly speaking it can be urged that respondent No. 3 is not carrying on Banking business. In this regard it may be pertinent to observe that the very fact that under sec--tion 3-A of the Banking Companies Ordinance, 1962 the provisions of sections 25 and 41 of the said Ordinance have been made applicable to financial institutions named therein and the fact that the definition of `Banking Company' given in section 2(a) of the Ordinance separately mentions a financial institution supports Mr. Mumtaz Hussain's contention that a financial institution is not a banking company in strict sense. However, at the same time, it cannot be denied that there is nexus between a financial institution like respondent No. 3 and a banking company inasmuch as that the former also lends money against security. A banking company ordinarily receives deposits from public, which it in turn loans out to public and the relationship between a banker and its customer is that of a debtor and of a creditor, respectively, whereas respondent No. 3 receives loan in the form of foreign exchange with the object to loan out the same for the developing industries in Pakistan.
(c) It may also be pertinent to refer to section 3-A of the Banking-- Companies Ordinance, 1962, which reads as follows :-- "3-A. The provisions of sections 25 and 41 of this Ordinance shall, with such modifications as the State Bank may determine from time to time in relation to activities which have implications for the monetary or credit policies of the State Bank, apply to the Investment Corporation of Pakistan, National Investment Unit Trust, the Pakistan Industrial Credit and Investment Corporation, the House Building Finance Corporation and such other companies, corporations or institutions, or class of companies, corporations or institutions, as the Federal Government may from time to time, by notification in the official Gazette, specify in this behalf."
22. It may be noticed that under the above quoted section, which was enacted by the Banking Companies (Amendment) Act 1972 , (XXX of 1972), the provisions of sections 25 and 41 of the said Ordinance with such modifica--tions as the State Bank may determine from time to time in relation to activities which may have implications of the monetary or credit policies of l the State Bank, were made applicable to the financial institutions named in the above quoted section, which include PICIC i.e. respondent No. 3. It may be pertinent to observe that section 25 empowers the State Bank to determine the policy in relation to advances to be followed by the Banking Companies generally or by any banking company in particular. It also empowers the State Bank under section 25(2) to impose penalty of Rs. 2,000 or in the case of continuing default a penalty of Rs. 50) per day for non---observance of the policy framed by the State Bank under section 25(1).
23. Moreover, subsections (2) to (6) of the above section further empowers the State Bank to provide loan ceiling etc. And other measures. The effect of subsections (1) to (6) of section 25 is to give effective financial control to the State Bank of Pakistan over the Banking Companies, whereas section 41 of the said Ordinance empowers the State Bank to give direction from time to time to the banking companies generally or a banking company in particular on the subject-matters mentioned therein. The accumulative effect of sections 25 and 41 of the aforesaid Ordinance is to bring in effective control of the State Bank all the banking-companies. The application of sections 25 and 41 of the Ordinance to financial institutions mentioned in the above quoted section 3-A, which includes PICIC indicates that the' said financial institutions are equated with the banking companies for the purpose of inter alia effective financial and administrative control of the State Bank of Pakistan. In other words, even the above banking companies Ordinance has established nexus between the banking companies and the aforesaid financial institutions as to their working.
24. In our view the word `banking' is susceptible to cover financial institutions dealing with or specializing in a special branch of banking. What is to be seen is as to whether in pith and substance the impugned Ordinance is with respect to particular category covered by the above Entry 28.
(d) It may be observed that a money lender has a definite connotation in India and Pakistan. It has a chequered history inasmuch as private money lenders used to charge exhorbitant rates of interest and used to exploit the poor masses. In order to meet the above situation, throughout India the various enactments were enacted by the provincial Legislatures. This was the reason for providing an entry relating to money lending in the provincial legislative list in the Government of India Act, 1935. After the independence of Indo-Pak., the above entry is retained in the provincial legislative list in India as well as in Pakistan Constitution. In our view a financial institution like respondent No. 3, cannot be equated with a money lender" as known in India and Pakistan..
5. (a) It was also urged by Mr. Mumtaz Hussain, that since 1973 Constitution was passed by the Parliament at the time, when the Banking Companies, 1962 was already in the field, it should be presumed that the banking business referred to in Entry 28 of part of the 4th Schedule to the Constitution was referred to in the same connotation and meaning as defined in the Banking Companies Ordinance, 1962. In support of his above conten--tion Mr. Mumtaz Hussain has referred to the case of Sales tax Officer Pilibhit v. Budh Prakash Jai Prakash AIR 1954 SC 459 the case of Instalment Supply Ltd. New Delhi v. State of Delhi and others AIR 1956 Ph. 177, the case of The State of Madras v. Messrs Gannon Dunkerby & Co. (Madras) Ltd. AIR 1958 SC 560.
25. On the other hand it was urged by Mr. Khalid Anwar that nothing can be imported in Entry No. 28 from the Banking Companies Ordinance, 1962 and that narrow interpretation to a constitutional provision is not warranted by law. In support of his above contention, he has referred to the case of United Province v. Mst. Atiqa Begum and others AIR 1941 FC 16the case of State of Hajistan v. G.
26. Chawla and another AIR 1959 SC 544the case of Banarasidas v. Wealth Tax Officer AIR 1965 SC 1387, the case of The Check Post Officer Coimbatore etc. v. Messrs K. P. Abdullah and brothers AIR 1971 SC792, the case of Navinchandra Mufatlal v. Com--missioner of Income-tax, Bombay City (1954) 26 1 T R 758and the case of Vishnu Agencies (Put.) v. Commercial Tax- Officer and others AIR 1978 SC 449
(i) Referring to the case of AIR 1954 SC 459, it may be observed that in the above case under the Sales Tax Act, sale tax was imposed even on forward contracts of sales. It was held by the Supreme Court of India that the State Legislature cannot by enlarging the definition of `sale' include forward contracts and to arrogate to itself the power, which is not conferred upon it by the Constitution and the definition of `sale' in section 2(h) of the U. P. Sales Tax Act must to that extent be declared ultra vires. It was further held that the words `sale of goods' appearing in entry 48 in the schedule to the Government of India Act, 1935 should be understood as having the same meaning as given in section 4 of the Sale of Goods Act.
(ii) Reverting to AIR 1956 Pb. 177, it may be stated that in the above case the question for consideration before a D. B. Of the Punjab High Court at Delhi was, whether Explanation to section 2(g) of the West Bengal Sales Tax Act (which was extended to Delhi State) including the power to tax hire purchase agreements was ultra vires the provincial Legislature. It was held that above explanation was unconstitutional in as much as it sought to bring within the meaning of word `sale' a hire purchase agreement containing an option to purchase. Reliance was placed on the above cited Supreme Court case reported in AIR 1954 SC 459. It was held in the above Punjab case that a Provincial Legislature while acting under Entry No. 48 of List 11 of the Government of India Act 1935 was incompetent to enlarge the definition of the word `sale' as to include hire purchase agreements which were not admittedly sales.
(iii) As regards, AIR 1958 SC 560, it may be observed that the facts of the above case were that the respondent was a private limited Company registered under the provisions of the Indian Companies Act doing business in the construction of buildings, roads and other works and in the sale of sanitary wares and other sundry goods. The sales tax authorities purported to levy sale tax on a sum of Rs. 29,51,528-7-4 representing the value of the materials used by the respondent in the execution of their works contracts and also on a sum of Rs. 1,98,921 being the price of food-grains supplied by the respondent to their workmen. The definition of sale under section 2(h) given in the Madras General Sales Tax (Amendment) Act, 1947 was enlarged so as to include a transfer of property in goods involved in the execution of the work contract. It was urged by the respondent that the provincial Legislature under Entry 48 in List II Schedule VII of the Government of India Act, 1935 providing `taxes on the sale of goods' was not empowered to levy sale tax on the material used in the execution of the building contract. The above contention was accepted by the High Court of Madras on a civil revision petition. The appellant (i.e. the Madras State) filed an appeal before the Supreme Court. The latter while dismissing the appeal held that the enlargement of the above definition is ultra vires the provincial Legislature. It was further held that the provincial Legislature cannot in the exercise of its power to levy sale-tax, make transactions sales, which are not sales by merely enacting that they shall be sales. It was also held, that true Legislature intent is that the expression `sale of goods' in entry 48 should bear the precise and definits meaning it has in law and no inference to the contrary can be drawn from the fact of the absence of works linking up, the meaning of the word `sale' with what it might bear in the Sale of Goods Act.
(iv) With reference to AIR 1941 FC 16, it may be stated that the question before the Federal Court of India was, whether the Regulation of Remissions Act, 1938 (XIV of 1938) (which was an Act of the Legislature of the United Provinces) was within the competence of the Legislature which enacted it.
27. Prior to the passing of the above Act certain remissions were made in pursuance of the Government order in respect of rent of agricultural land. The lessors challenged the above remissions given on the basis of the Government order, but the trial Court and the District Judge found in favour of the defendant. The lessors filed appeal before the High Court. While it was pending a D. B. Of the Allahabad High Court held in the case, reported in I L R 1938 All. 114, that the remissions made in pursuance of the Government order had no legal effect. Before the disposal of the above appeal the Regularization of Remission Act 1938 was enacted. The appellant i.e. The Provincial Government sought to take refuge under the above Act and it was urged that the respondents could no longer challenge the validity of the remission order. Thereupon, the respondents challenged the new Act itself. This point was referred to a Full Bench, which held that the Act was beyond the competency of the Legislature. The appeal filed before the Federal Court of India was dismissed. While commenting on Lists II and III in Schedule VII of the Government of India Act, 1935, it was observed by the Supreme Court that none of the items of the list is to be read in a narrow or restricted sense and that each general word should be held to extend to all or ancillary or subsidiary matters, which can fairly and reasonably be said to be comprehended in it. It was further held that the question is, whether the impugned Act is within any of the three lists of Schedule VII to the Government of India Act. It was also observed that it is the duty of the Court to consider the Act as a whole and decide whether in pith and substance the Act is with respect to particular categories or not and that this can be inferred from design and purport of the Act as disclosed by its language and the effect which it would in its actual operation produce.
(v) Referring to A 1 R 1959 SC 544, it may be stated that in the above case the facts were that the respondents were prosecuted under section 3 of the Ajmer (Sound Amplifiers Control) Act, 1952.
28. This Act was successfully impugned by the respondents before the learned Judicial Commissioner at Ajmer, who held that it was in excess of the power conferred on the State Legislature under section 21 of the Government of Part C States Act, 1951 (LIX of 1951) and, therefore, ultra vires the State Legislature. The State being aggrieved filed the appeal before the Supreme Court of India, which was allowed. It was urged before the Supreme Court of India that Entry No. 31 of the Union List providing post and telegraph, telephones, wireless, broad casting and other like forms of communication covered the subject-matter of the above provincial Act, whereas it was urged by the State that Entry No. 6 of the said list providing for public health and sanitation, hospitals and dispensaries gives the requisite power to the provincial Legislature to regulate the use of amplifiers.
29. It was held by the Supreme Court that the power to legislate in relation to public health includes the power to regulate the use of amplifiers as the excessive use of which may cause public nuisance. In the course of discussion, it was also observed by the Supreme Court that Legislature in India possesses plenary powers of legislation in spite of a division of legislative power and subject to this the supremacy of the Legislature is confined to topics mentioned as entries in the list conferring respectively power on them. It was further observed that these entries though meant to be mutually exclusive but sometime it is not really so, and that in order to examine whether there is any conflict between rival lists, it is necessary to examine the impugned Legislation and its spirits and piths and substance and if on examination, it is found that in pith and substance the impugned Legislation is covered by an entry or entries conferring legislative power, the Legislation is valid notwithstanding a slight transgression upon a rival list.
(vi) Reverting to AIR 1965 SC,, 1387, it may be observed that the question before the Supreme Court of India was the vires of section 3 of the Wealth Tax Act, 1957, which purported to tax net wealth of Hindu undivided family. It was held that the word 'individuals' in Entry 86 in list 1, Schedule VII of the Constitution includes Hindu undivided family and that it was a valid piece of legislation. In the course of the judgment, it was pointed out that the fact that the legislative history in the matter of tax legislation supports distinction between individuals and Hindu undivided family, but the above distinction cannot have a material hearing on the construction of the. Word 'individuals' in Entry 86. It was observed that the tax legislations, may for convenience or other valid reasons have made a distinction between individuals and Hindu undivided family, but it would not be legitimate to suggest that the word 'individuals' occurring in an organic document like Constitution must necessarily receive the same construction.
(vii) With reference to AIR 1971 SC 160 it may be observed that the facts of the case were that the respondent owned a motor-lorry which was driven along a highway from Cimbatore in the State of Madras towards border of the State of Kerala. When searched by the check post officer, 85 bags of foodstuffs were found. The above goods were confiscated under section 42(3) of the Madras General Sales Tax Act. The above action was challanged through a writ petition, which was dismissed by a Single Judge, but upon appeal it was allowed by a Division Bench. The State filed an appeal, which was dismissed by the Supreme Court. During the course of discussion of the judgment, it was observed by the Supreme Court that a legislative entry does not merely enunciate powers, but it specifies a field of Legislation of the widest import and significance "should be attached to it. It was further observed that the power to legislate on a specific topic includes power to legislate in respect of matters which may fairly and reasonably be said to comprehend thereunder. It was held that under Entry 54 of list No. II of VII Schedule to the Constitution, the State Legislature has been given the power to legislate in respect of taxes on the sale or purchase of goods, which does not entitle them to legislate and to provide confiscation of the goods carried in a vehicle.
(viii) Reverting to 1954 I T R 26, it may be observed that before the Supreme Court the question was, whether the word `income' appearing in Entry 54 in List I of the VII Schedule to the Government of India Act, 1935 would include `capital gain'. It was urged before the Supreme Court that capital- gain was not an income and, therefore, the Indian Income-tax Act and Excess Profits Tax (Amendment) Act (XXII of 1947) which amended the Indian Income-tax Act by enlarging the definition of the term `income' given in section 2(6) (c) as to include the capital gain was ultra vires the Central Legislature. The above contention was repelled by the Supreme Court and it was held that the word 'income' was of a wide connotation and according to the dictionary meaning it means 'a thing that comes in' and, therefore, the word 'income' shall include the capital gain. It was held that the above amendment was intra vires the Central Legislature under the above Entry 54.
(ix) Referring to AIR 1978 SC 449, it may be observed that in the above case the appellant was a Cement Depot-holder under the Cement Control Order. Under the above order no person could dispose of or agree to dispose of any cement except in accordance with the conditions contained in a written order of the Director of Consumers or the authority specified in para. 2 of the Order, whereas under paragraph 3 no person could acquire or agree to acquire cement from any person except in accordance with the conditions contained in a written order of the Director of Consumers or the authorities specified in the aforesaid paragraph. Furthermore, paragraph 8 of the order imposed on the dealer the obligation to supply cement by providing that no person or stockist, who had any stock of cement in his possession and to whom a written order had been issued under paragraph 2 shall refuse to sell the same at a price not exceeding the notified price. The contravention of the above paras. Entailed criminal prosecution. It was contended by the appellant that the Provincial Legislature was not competent to levy sale tax under Entry No. 48 List 11 of Schedule V11 in respect of the above transactions as there was no violation on the part of the parties. However, the Supreme Court of India held that these limitations on the normal right of the innocent consumers does not militate against the position that eventually the parties must be deemed to have completed the transaction under an agreement by which one party binds himself to supply the stated quantity of goods to the other at a price not higher than the notified price. In other words, in the above case the Supreme Court has taken a different view than the view that found favour with it in the case of Gannon Dunkorly AIR 1958 SC 460,relied upon by the learned counsel for the petitioners, Mr. Mumtaz Hussain, referred to hereinabove. It was also observed by the Supreme Court that the view found favour with it in the above case of 1958 may require further consideration at a more suitable occasion.
(b) From the above cited cases the following principles are deducible;
(f) That if a word used in an entry in an organic document like Constitu--tion, has acquired a definite meaning under some other relevant Act, the legislature cannot by enlarging the definition of the said word include some--thing which is foreign to the well established meaning of such word.
30. In AIR 1954 SC 459, it was held that forward contracts cannot be covered by enlarging the definition of the word 'sale', whereas in AIR 1956 Pb. 177, it was held that a hire purchase agreement cannot be converted into a sale by extending the meaning of the word 'sale', further, in AIR 1958 SC 560 the view found favour with the Supreme Court was that the building materials used in the construction of a building cannot be made subject to tax under the entry 'tax on sale of goods'.
(ii) That the Supreme Court of India. In a recent case, namely, AIR 1978 SC 449, has taken somewhat different view than found favour with it, in the above 2 cases, namely, AIR 1954 SC 459 and AIR 1958 SC 560, by holding that even a transaction in which the parties have no violation as to the terms of the agreement can be covered by definition of 'sale' for the purpose of levy of sale- tax as eventually the parties agree to the com--pletion of the transaction on certain terms resulting into a contract.
(iii) That the fact that legislative history in the matter of tax legislation supports distinction between individuals and a hindu undivided family, would not warrant placing of narrow interpretation on the word 'individuals' used in Entry 86 of the Federal Legislative List given in the Indian Constitution, as to make section 3 of the Indian Wealth Tax Act 1957 as ultra vires the Federal Legislature because it provides tax on the net wealth of a Hindu undivided family.
(iv) That none of the entries in an organic document like construction can be read in a narrow or restricted sense and that each word should be construed to extend to all or ancilliary or subsidiary matters which can fairly and reasonably be said to be comprehended thereunder.
(v) That while deciding the vires of an enactment the Court is required to consider the Act as a whole and decide, whether in pith and substance the Act in with respect to particular categories which the relevant eatery/entries cover.
(vi) That if the subject-matter of an Act is covered by an entry or entries conferring legislative power on the Legislature, the Act is valid notwithstand--ing a slight transgression upon arrival list.
6. (a) It may be advantageous to refer to the other entries relied upon by the learned counsel for the respondents in addition to Entry No. 28, namely, Entries Nos. 10, 31, 55 of Part I of the IV Schedule to the Constitu--tion and Entries Nos. 2 and 3 of the Concurrent Legislative List of the 4th Schedule to the Constitution, which read as follows Entry No. 10.-"Public debt of the Federation, including the borrowing of money on the security of the Federal Consolidated Fund ; foreign loans and foreign aid".
31. Entry No. 31.-"Corporations, that is to say, the incorporation, regulation and winding-up of trading corporations, including backing, insurance and financial corporations, but not including corporations owned or controlled by a province and carrying on business only within that province, or co-operative societies, and of corporations, whether trading or not, with objects not confined to a Province, but not includ--ing universities."
32. Entry No. 95. -"Jurisdiction and powers of all Courts except the Supreme Court, with respect to any of the matters in this list and, to such extent as is expressly authorised by or under the Constitution, the enlargement of the jurisdiction of the Supreme Court, and the conferring thereon of supplemental powers.
33. Entries from Concurrent List 2.-Criminal procedure, including all matters included in the Code of Criminal Procedure, on the commenc--ing day.
3. Civil procedure, including the law of limitation and all matters included in the Code of Civil Procedure on the commencing day ;the recovery in a Province or the Federal Capital of claims in respect of taxes and other public demands, including arrears of land revenue and sums recoverable as such, arising outside that Province."
(b) The learned counsel for the parties have vehemently urged and again as to the scope of above Entries 10, 31 and 55, Part I of the 4tb Schedule to the Constitution. In our view, it is not necessary to examine in detail the above contentions as even if we were to hold that the aforesaid entry 28 does not empower the Federal Legislature to enact the impugned Ordinance, in our view in any case the power to legislate the impugned Ordinance can be spelt out from Entries Nos. 2 and 3 of the Concurrent Legislative List quoted here--inabove particularly Entry No. 3, which empowers the Federal Legislature to F legislate in respect of civil procedure including law of limitation in all matters) included in the Civil Procedure Code on the commencing day, the recovery' in a province or the Federal Capital of claims in respect of taxes and other public demands including arrears of land revenue and some recoverable as such, arising outside the province. Section 9, C. P. C., provides that the Courts shall have jurisdiction over suits of a civil nature excepting suits of which their cognizance is expressly or impliedly barred. Further--more, there are other provisions in the C.
34. P. C., providing the mode of trial etc. Order XXXIV, C. P. C., deals with the trial of mortgage suits, whereas order XXXVII enters for trial of suits based on a negotiable instrument. The impugned Ordinance is a procedural law providing forum for the recovery of the dues of a banking company or a financial institution notified by the Government through a gazette as a banking company.
35. Section 5 of the Ordinance contemplates establishment of as many special Courts as the Federal Government considers necessary, whereas section 6 deals with the jurisdiction of a special Court. It provides that a special Court in exercise of its civil jurisdiction shall have in respect of a claim filed by a banking company against a borrower and or by a borrower against a banking company in respect of claim arising out of a loan, the powers vested in the civil Courts under the Civil Procedure Code. It further provide that in exercise of its criminal jurisdiction, it shall for the purpose of the Ordinance have the same power as vested in the Court of Assistant Sessions Judge under the Cr. P.
36. C., 1898. It also provides that for the purpose of trial Court before a special Court provi--sions of Chapter XVIII of the said Code shall not apply. Furthermore, section 7 inter alia provides that in the exercise of civil jurisdiction the special Court shall in all suits before it including suits based on mortgages of all kinds, on a statement of account for recovery of money paid to or to the order of defendant follow the summary procedure provided for in Order XXXVII C. P. C., in the First Schedule to the Civil Procedure Code, whereas section 8, contemplates pronouncement of a judgment and the preparation of a decree in terms of judgment. Section 9 relates to the trial of offences mentioned in the above section. Section 12 contemplates filing of an appeal by aggrieved party against the judgment or sentence of a special Court within 30 days to the High Court, which is to be heard by a Division Bench.
(c) In our view, there cannot be any doubt that the impugned Ordinance provides for the recovery of the claim of a banking company or a financial institution which is notified by the Federal Government as a banking company and the trial of offences committed in connection or respect of loans transac--tions. The above power can be spelt out from above Entry No. 3 read I with Entry No. 2 of the Concurrent Legislative List. It may be pertinent to observe that the impugned Ordinance has re-enacted with certain modifications the banking companies (Recovery of Loans) Ordinance, 197e (XXIII of 1978). The object :n the above Ordinance was given in its preamble as follows;-- "Whereas it is expedient to provide for a summary procedure for recovery of loans of banking companies and for matters connected therewith or incidental thereto."
37. The learned counsel for the petitioners in reply to the Court query that if in the above preamble after the words `banking companies' the words 'financial institutions' would have been mentioned, whether the impugned Ordinance would have been intra vires the Federal Legislature, candidly gave the answer in the affirmative. In our view, the fact that in the preamble the words 'financial institution' were not mentioned does not make any difference as the definition of a banking company given in section (2) (a) includes a financial institution which may be notified by the Federal Government as a e banking company. Since the power of the Federal Legislature to legislate the impugned Ordinance can be spelt out from the above two entries of the Concurrent Legislative List, the same is intra vires the Federal Legislature and, therefore, cannot be impugned.
7. Before parting with the discussion of the above judgment, it may be observed that though no ground was taken in the petitions, but Mr. Mumtaz Hussain, learned counsel for the petitioners, has urged an addi--tional ground, namely, that since section (2) (a) of the Ordinance does not provide any guideline as to the Financial institution, which can be declared by the Federal Government by a notification in the official Gazette to be a banking company for the purposes of the Ordinance, it is a case of excessive delegation of legislative power and hence the above proviso to the extent of empowering the Federal Government to pick and choose any financial institution without any guideline is to be struck down. In support of his above contention, he has referred to the case of Mehreen Zaibunnissa and others v. Land Commissioner, Multan and others PLD1975SC397In our view, the above contention is devoid of any force. The guideline is provided in the above section 2
(a) itself by using the word 'financial institution'. A financial institution has a definite cannotation.
38. Under the above section only a financial institution can be declared as banking company for the pur--poses of the Ordinance. It is not the case of the petitioner that respondent No. 3 is not a financial institution.
8. The upshot of the above discussion is that the above two petitions have no merit, and, therefore, they are dismissed. However, in the circum--stances of the case, there will be no order as to costs.