SHAKEEL AHMAD, J.- This judgment shall also decide connected writ petitions No.1895-P/2019, 1991- P/2019, 3127-P/2019, 3201-P/2019, 3261-P/2019, 3830-P/2019, 4529-P/2019, 4842-P/2019, 5101-P/ 2019, 5108-P/2019, 5135-P/2019, 5136-P/2019, 5149- P/2019, 5344-P/2019, 5566-P/2019, 5776-P/2019, 5869-P/2019, 5947-P/2019, 5977-P/2019, 6123-P/ 2019, 6221-P/2019, 6287-P/2019, 6826-P/2019, 7257-P/2019, 7282-P/2019, 7348-P/2019, 68-P/2020, 79-P/ 2020, 1325-P/2020, 1603-P/2020, 3059-P/2020 & 4287-P/2020, as common question of law and facts are involved therein.
2. The subject writ petition as well as connected matters can conveniently be classified into two categories. The first category of the writ petitioners are of those persons who claimed that they have never got any water supply from WSSP or Municipal Corporation (MC), University Town Committee (UTC) and Peshawar Development Authority (PDA). They claimed that for their daily consumption, they extract water from underneath soil, they occupy , and claimed complete immunity from any kind of fee and charge as demanded from them by the WSSP . It was pleaded by them that fee by its nature can only be levied for the service actually rendered and not otherwise.
3. The second category of the writ petitioners are those persons, who have obtaine d water supply connection from the Erstwhile Municipal Corporation (MC), University Town Committee (UTC) and Peshawar Development Authority
(PDA) and WSSP and water is being supplied to them by the concerned local council or Government or WSSP since from the very inception. The writ petitioners in such like cases claim that they had been charged for water charges/fee, which they had also been paying to the concerned authority . They are aggrieved from the impugned notification dated 10th February , 2017. They seek annulment of Notification No. WSSP/Revenue-T ariff/2017 dated 10th February , 2017, issued by the Chief Executive Officer, Water and Sanitation Services, Peshawar , whereby , revenue tariff, for water supply and sanitation was revised and annual increase in tariff at the rate of 10% was given effect since 1st July , 2017, followed by each financial year .
4. The respondents in their parawise comments contended that the water supply rate had been notified with sanction of Government under Section 115-A of the Khyber Pakhtunkhwa Local Government Act, 2013 and that the WSSP is competent to collect the charges for supply of water and prayed for dismissal of the instant writ petitions.
5. All these writ petitions were heard at length and disposed of on 07.10.2021, however, at the time of writing of the judgment, the following questions cropped up, which require determination after re-hearing the learned counsel for the parties; i. Whether the water is being supplied / provided by WSSP to the petitioners? ii. Whether the claim of the respondents is legally valid? iii. Whether the petitioners are liable to be charged only for the services rendered by the respondents? iv. Whether the Chief Executive Officer, Water and Sanitation is competent to revise revenue tariff in water supply , thereby increasing 10% annual increase in tarif f with ef fect from July each financial year through a notification? v. Whether the writ petitions are maintainable against the public limited company or not?
M/s Qazi Jawad Ehsanullah, Advocate, Supreme Court of Pakistan and Barrister Muhammad Ibrahim were appointed as amicus curiae to assist the Court on the questions formulated hereinabove and the case was fixed for re-hearing for 04.11.2021, however , on the said date the arguments of the learned counsel for the parties could not be materialized and the case was finally fixed for hearing for today .
6. We have re-heard learned counsel for the parties and learned amicus curiae at length, and examined the provisions of relevant law and record appended with the writ petitions and comments with their valuable assistance.
7. An objection has been raised by the respondents that WSSP is a Public Limited Company , therefore, writ is not maintainable against such Company . No doubt, writ in the nature of Certiorari or mandamus can only be issued to, inter alia, persons performing functions in connection with the affairs of the Federation or Province as the case may be. However , it is by now settled that besides this a limited company having legal entity , is a person and it is a pre- requisite for determining as to whether a limited company can be treated for the purpose of exercising writ jurisdiction over it by a High Court, as performing functions of Federal or Provincial Government, must always be whether functions entrusted to it are indeed functions of the State involving some exercise of sovereign or public power . Before attending this question, it would be advantageous to reproduce section 115-A of the Khyber Pakhtunkhwa Local Government Act, 2013, which reads as under:- "S.115-A. Outsourcing of functions: Government may, by notification, exclude any of the functions assigned to the [City Local Government or Tehsil Local Government] as the case may be, and outsource these functions to any authority , firm or company on such terms and conditions as it may determine in accordance with the existing laws or rules in force in the province]"
We also deem it appropriate to reproduce clause `r.' of section 2 of the Act of 2013 for the sake of convenience, which defines Municipal Service as follows: "Municipal Services", include intra city network of water supply , sanitatio n, conservancy , removal and disposal of sullage, refuse, garbage, sewer or storm water , solid or liquid waste, drainage, public toilets, express ways, bridges, flyovers, public roads, streets, footpaths, traffic signals, pavements and lighting thereof, public parks, gardens, or arbo riculture, landscaping, bill boards, hoardings, fire fighting, land use control, zoning, master planning, classification, declassification or reclassification of commercial or residential areas, markets, housing, urban or rural infrastructure, environment and construction, maintenance or development thereof and enforcement of any law or rule relating thereto."
Local Government was constituted under section 5 of the Act of 2013, which consists of (i) a City Local Government (ii) Tehsil Government (iii) a village council for a village in the rural areas and (iv) a neighbourhood council for neighbourhood in areas with urban characteristics.
The Government of Khyber Pakhtunkhwa Local Government, Elections and Rural Development Department vide Notification No. PO(LG)WSSP/2016-17 dated 07.09.2016, in exercise of powers conferred under section 123 read with section 42, 117, and Sections 66 and 73 of the Act ibid with respective schedule authorized WSSP to device, fix, levy and to recover rates, charges and taxes from the service specified in the notification in its area of jurisdiction from the date of establishment of the Company in September , 2014. It will be advantageous to reproduce the said notification as under: "Notification No. PO(LG)WSSP/2016-17: Whereas the WSSP , a Public Sector Company has assumed responsibility for Water Supply , Drainage/Sewerage and Solid Waste Management under the Services and Assets Management Agreement (SAM A) in the jurisdiction of erstwhile Municipal Corporation Peshawar (MCP), University Town Committee (UTC) and Peshawar Development Authority (PDA) and whereas on the strength of SAMA agreement, WSSP has assumed the responsibility to improve these services and their delivery to the beneficiaries / recipient of these services in its area of jurisdi ction and whereas WSSP has also assumed responsibility for annual maintenance, repair and operation of these services and as a sequel to the agreement, the receipts from these services constitute, component of receipts for WSSP in addition to the grant provided by Govt. of Khyber Pakhtunkhwa, City District Govt and four Town Municipal Administration (TMA-I, II, Ill and IV) as successors of the defunct MCP/UTC and PDA and whereas WSSP requires a regulatory instrument to devise, fix, levy and recover rates, charges and taxes for these services in its area of jurisdiction.
2. Now therefore, in terms of section 123 read with section 42 and 117 of LGA 2013 and section 66 and 73 read with respective schedules of LGA 2013, the Govt. of Khyber Pakhtun khwa is pleased to authorize WSSP to devise, fix, levy and recover rates, charges and taxes for these services in its area of jurisdiction w.e.f. establishment of the Company in September 2014."
8. According to the memorandum of Association of the Company , (WSSP) Secretary Finance, Government of KPK, Secretary Local Government KPK and Deputy Commissioner/Mayor of the Municipal Corporation are ex-of ficio Directors of the Company , and if any of the aforesaid director ceases to hold office or is transferred to another official position, a new person assuming any of the above office or successor or successors, as the case may be, shall be deemed to be an ex-of ficio director of the Company . It is important to mention here that the Directors are the nominees of the Government of Khyber Pakhtunkhwa in terms of Section 183 of the Companies Ordinance, 1984. In the present case, after going through the Services and Assets Management Agreement (SAMA) executed between Water and Sanitation Services Peshawar (WSSP), MCP , PDA and UTC and other documents, we come to the conclusion that the Company does fulfill the above test to qualify as a perso n performing functions of a City Local Government or Tehsil Local Gover nment. The company was, thus, set up for performing functions, which indeed were primarily of those of the State or the local Government or Provincial Government. Besides, the writ petitioners have challenged the action of the WSSP to levy tax/fee and the notifications issued by the official respondents, purportedly authorizing the WSSP to do that is very much amenable to judicial review . The preliminary objection as to the maintain ability of writ petition on this score is not sustainable, therefore, it is overruled.
9. Now adverting to the issue whether the petitioners are liable to be charged only for the services rendered to them, it was claimed by the writ petitione rs that they have erected the Tube Well of their own and are extracting water from underneath the soil for their personal consumption and use, and WSSP is neither supplying water nor rendering any service to them in this respect thereby disentitled it from claiming water charges from the writ petitioners classified in first category . We hold that the demand in dispute by the respondents/WSSP is admittedly , fee, and it can only be demanded/charged against some specific service to be rendered to those writ petitioners, if no service in the nature of water supply is being provided to them, no water tariff could be imposed. Nevertheless, if some specific permission/license is required against payment of some prescribed fee or charge under some other law, in the form of Khyber Pakhtunkhwa Water Act, 2020, for extraction of water from underneath the soil, that would be an independent issue, which on the face of it, has no nexus with the notifications relied upon and referred to by the respondents in their para-wise comments filed in these cases.
10. It is by now settled that a fee is a charge for the services rendered by the Government or Company , or organization or any other person to the person or persons from whom the fee is received. It is a consideration for the services provided by the Government or its agencies or company or an organization or any person, as the case may be, to the persons from whom it is collected. In this behalf, reference may be made to the case reported as `Commissioner of Hindu Religious Endowments, Madras Vs Sri Lakshmindra Thirtha Swamiar' (AIR 1954 SC 282), wherein, it was held as under: "No doubt, both taxes and fee are compulsory exaction. But, the difference between the two lies in the fact that a tax is not co-related to particular service rendered but it is intended to meet expenses of Govt. and a fee is meant to compensate the Govt. for expenses incurred in rendering service of a special nature."
In this context, further reliance can be placed on the judgment reported as 'Government Of Andhra Pradesh V.
Hindustan Machine T ools' (AIR 1975 SC 2037), wherein, it was observed as follows: "It is quite clear that "fee" can be levied by any authority only for some service rendered by it to the person from whom the levy is exacted. Fee levied by any local authority can be justified only if there is some special service rendered to the person from whom fee is collected and the sum total of the activities of the public body like the Municipal Council cannot be taken into account for this purpose. Expenses by the Municipality in discharging its obligatory functions are usually met by imposition of a variety of taxes and on that basis the levy of the fee could not be justified.
It is no doubt that in some cases it will not be possible to show with mathematical exactitude the precise co-relation between the amount realized as fee from one particular person and the services rendered' to him. In a given case, it is also possible that the fee is realized from hundreds or thousands of persons and the corresponding services is also rendered to hundreds or thousands. In that situation it may not be possible to show any strict correlation qua an individual except to indicate that the person who had paid the fee has derived a benefit in return. In such a case correlation between the fee levied and the service rendered may have to be determined having regard to the services rendered to the various persons and the benefit derived by an individual factory ."
6. This Court in Muhammad Ismail & Co. v. The Chief Cotton Inspector , Multan Division, Multan PLD 1966 SC 388 has observed as hereunder:- "It is not necessary that the realizations made by way of fee for the servicing of the Act, should correspond exactly with the expenditure incurred by Government on the services rendered."
It was further observed as follows:-- "Mere forms of accounting however not be regarded as conclusive in this regard. So long as the levy is raised for the purpose contemplated by an enactment designed to, serve a particular trade or commodity production and the realizations made are expended actually for those purposes, the levy would remain a fee, whatever method of keeping accounts for other Governmental purposes may be adopted."
11. In this respect we are also fortified by the most celebrated judgment of the August Supreme Court of Pakistan reported as `Workers Welfare Funds Mlo Human Resources Development, Islamabad through Secretary & others Vs East Pakistan Chrome T annery through GM (Finance) and others' (PLD 1917 SC 28).
12. In this context, reliance can also be placed on the judgments reported as Nazir Ali Vs. Karachi Water and Sewerage Board' (2004 CLC 578) and Seven-up Bottling Co Vs. LDA' (2003 CLC 513), wherein, it was held that authority disentitles itself from recovering water charges without making them supp ly available to the consumer , as such, charges are not tax but charges for supply of water .
13. We, therefore, hold that the respondents/WSSP are not entitled to claim water charges from those writ petitioners who are not getting water supply from the company .
14. All the remaining questions are inter-connected and interlinked, therefore, they are taken for discussion, conjointly .
15. It is reflected from the pleading of the parties that petitioners of second category are mainly aggrieved of levy, imposition and/or enhancement of water charges fee as revised and enha nced through Notification No. WSSP/Revenue-T ariff/2017 dated 10.02.2017, published in the official gazette on 15.02.2019 whereby the WSSP and the government have gone on to approve and levy the impugned water tariff and its annual increase as specified therein. In support of their contention, the respondents seek support from another Notification No. PO(LG)
WSSP/2016-17 dated 07.09.2016, which in its context refers to an agreement called Services & Asset Management Agreement (SAMA) execute d by erstwhile Municipal Corporation Peshawar (MCP) University Town
(UT) & Peshawar Development Authority (PDA) with Water & Sanitation Services Peshawar (WSSP). This agreement was also signed by the Secretary to the Local Government Department, Government of KPK on 11.09.2014.
16. Scanning of the above mentioned notification reveals that WSSP was assig ned the responsibility for water supply , drainage / sewerage & solid waste management under the ibid SAMA Agreement, in this perspective, the Government of Khyber Pakhtunkhwa authorized WSSP to device, fix levy and to recover rate charges and taxes for these services in the area of jurisdiction from the date of establishment of the company in September , 2014.
17. It is in the afore-stated backdrop, the respondents in general and WSSP in particular are claiming water charges/fee and its annual increase as well as revision tracing its mandate and validity from these notifications.
18. To adjudge the legality and substance of the claim thrown by respondents, particularly , the WSSP , we deem it appropriate to examine the relevant sections of law referred to and mentioned in the Notifications dated 10.02.2017 & 25.01.2019 (both published in the official gazette). We find that basis for said notifications has been stated to be sections 42, 66,113,123 read with schedu le of the Khyber Pakhtunkhwa Local Government Act, 2013 (hereinafter referred to as " Act").
19. A plain reading of all these sections conjointly , clearly indicate that they do not cover or deal the situation in hand, where the core power of the State functionary in the form of Local Government to impose, levy and increase tax or fee as envisaged in section 42 of the Act, could be outsourced or delegated to someone, who is not a local government as defined in clause (I-i) of section 2 of the Act, which reads as under:- "Local Government" means the local government as pointed in sub-section (i) of section 5 of this Act.
It will be advantageous to reproduce sub-section (i) of section 5 of the Act, as follows: -
5. Constitution of local governments. -(1) Subject to other provisions of this Act, local governments constituted under this Act shall be:
(a) a City District Government for District Peshawar;
(b) a District Government for a district other than Peshawar;
(c) a T ehsil Municipal Administration for a T ehsil;
(d) a T own Municipal Administration for a T own in the City District;
(e) a V illage Council for a village in the rural areas; and
(f) a Neighbourhood Council for a Neighbourhood in areas with urban characteristics.
(2) Government may, by notification in official Gazette, specify the name by which a local government shall be known and unless so specified, it shall be known as the local governmen t of the place where its office is situated. '
(3) Save as otherwise provided in this Act, every local government shall be competent to acquire, hold or transfer any property , movable and immovable, to enter into contract and to sue or be sued in its name, through officer designated in this regard.
(4) Government shall prescribe rules of business for local governments notifying structure and working of local government administration, groups of offices, allocation of business, appointment, posting, promotion and transfer of officers and officials, performance evaluation, channels of communication, coordination of local council business, consultation between offices and incidental matters for smooth and efficient disposal of official business.
For the sake of convenience Section 42 of the Act is also reproduced as under: - "42. Imposition, notification and enforcement of Taxes. - (1) A local government subject to the provisions of any other law may, and if directed by Government shall, levy all or any of the taxes and levies specified in the Third Schedule.
(2) No tax shall be levied without previous publication of the tax proposal inviting and hearing public objections and approval of the respective local council.
(3) A local government may reduce, suspend or abolish a tax.
(4) Where a tax is levied or modified, the local government shall specify the date for the enforcement thereof, and such tax or the modification shall come into force on such date.
(5) Government shall have power to direct a local government to levy any tax, increase or reduce any such tax or the assessment thereof and suspend or abolish the levy of any tax.
20. Upon perusal of the section 42 of the Act, as referred in the notification, it becomes crystal clear that it relates to the power of taxation, which empowers a Local Government to impose levy, increase or abolish a tax in matters as provided in III Schedule of the Act. This section nowhere authorizes an entity , not being a local government, to exercise powers conferred upon by this provision of law. So for as sections 66 & 73 of the Act are concerned, they deal with the matter with enforcement measures to be taken by the local government. Whereas, section 123 deals with the powers of Provincial Government (now Chief Minister) to remove dif ficulty as and when arises.
21. In our view, all these provisions of law do not deal with the case in hand where powers to impose and enhance tax & fee are being exercised by the company called WSSP .
22. Regardless of whether or not correct sections of law were referred to in the notifications, in order to trace the statutory backing or origin of powers and authority of WSSP to impose and enhance water tariff, under the garb of section 115-A of the Act, inserted in the statute vide Khyber Pakhtunkhwa Act No. XXV of 2019, we, therefore, proceed to examine the same. A plain reading of Section 115-A of the Act, reveals that the Provincial Government is competent to exclude any function(s) assigned to the city or tehsil local gover nment and could outsource the same to any authority , firm and company on such terms & conditions as it may determine.
23. We also examined the contents of SAMA Agreement executed on 11.09.2014 and came to the conclusion that there was no statutory provisions in the Act, which had empowered the Provincial Government or the Local Government to outsource any of the functions of the local government including power to levy or impose tax or fee, when the agreement was executed. However , by the time notifications dated 07.09.2016, 10.2017 & 25.01.2019 (both published in the official gazette on 19.02.2019) were issued by exercising the powers conferred under section 115-A, was there in the statute book, when these notifications were issued. In this perspective we are to see as to whether endeavor of the provincial gover nment in form of notifications ibid to empower the WSSP to impose levy and enhance taxes and fees etc. is sustainable on the touchstone of the said provisions of law or not.
24. As, discussed in the preceding paras that it is the mandate of section 42 of the Act that a local government was empowered by the legislature to impose, levy any tax or fee etc. Likewise, in matters relating to taxation fee etc. and powers regarding its collection and enforcement have also been vested with the department of local government, who may, under the provisio ns of sections 45 & 46 of the Act ibid, empower any local government to take certain enforcement measures as enumerated therein for recovery and collection of taxes. In exercise of powers conferred under section 49 of the Act, the provincial government of Khyber Pakhtunkhwa has framed Khyber Pakhtunkhwa Local Government Taxation Rules, 2016, for the purpose of taxation. Turning to the outsourcing of these particular functions vested in the local government, we seek guidance from the judgment of the Apex Court rendered in the case reported as "Lahore Development Authority through DG and others vs. Ms. lmrana Tiwana & others" (2015 SCMR 1739 ) wherein, it was held that although the provincial government has powers to amend the local government laws in the manner that it may take away or amend powers devolved and conferred upon the local government that whenever , legislative or executive measures are taken in the manner that they tend to render the local government, powerless, then such exercise could fall foul to the provisions of Article 140-A of the Constitution of the Islamic Republic of Pakistan, 1973. We deem it appropriate to reproduce relevant paragraphs of 55 & 56 of the judgment, as under: - "55. The creation of a Local Government System, and the conferment upon the Local Government of certain political, administrative and financial responsibilities does not deprive the Province of authority over its citizens and deny it all role in the progress, prosperity and development of the Province. The creation of a Local Government System does not spell the end of the Provincial Government in the Province. To the contrary it strengthe ns the Provincial Government by entrenching democracy at grass root level.
56. That even after the insertion of Article 140A the Provincial Government would continue to have the authority to enact and amend statutes, make general or special laws with regard to Local Government and local authorities, enlarge or diminish the authority of Local Government and extend or curtail municipal boundaries. This power of amendment has, however , to be informed by the fact that if the Provincial Government oversteps its legislative or executive authority to make the Loca l Government powerless such exercise would fall foul of Article 140A of the Constitution. An excessive or abusive exercise of such authority would not be countenanced by this Court. It would be struck down".
25. For the foregoing reasons, we are of the considered opinion that entrustment of powers to impose levy and enhance water tariff upon the WSSP through impugned notification, is in conflict with the express provisions of section 42 of the Local Government Act, 2013, and the impugned notification relied upon by the respondents lacks statutory backing, imposition of tax and fee for specific services as mentioned in the third schedule, and its enhancement is a specific statutory power of the local government/T ehsil Loca l Government and it cannot be delegated or outsourced to any other entity or company , it could only be done by state functionary and that too, under the command of law, therefore, we while allowing this and the connected writ petitions (detailed above), hold that the respondent/WSSP is not entitle d to claim water charges from the writ petitioners who fall in the first category and declare the impugned notification No.WSSP/Revenue-T ariff/ 2017 dated 10th February , 2017 as illegal, ultra vires of section 42 r/w third schedule of the Local Government Act, 2013, therefore, the same is laid to rest.