1. FAZLE-AKBAR, J.-In this appeal, by special leave, the appel--lants are challenging validity of cotton fees imposed by the Provincial Government under the provisions of the West Punjab Cotton (Control) Act IV of 1949.
2. The facts briefly are as follows. On 10th October 1952, the Governor of West Punjab, in exercise of the powers conferred upon him by section 30 of the West Punjab Cotton Control Act, 1949 (hereinafter referred to as the Act) issued notification No. 5678(.x) reducing the cotton fee of Re. 1 per maund which had been imposed on the occupiers of cotton ginning factories in certain named Districts of West Pakistan under an earlier notification dated 26th February 1951, to annas 4 per maund.
3. On 29th December 1960, the Governor in supersession of the above notification of 1952 issued a series of four notifications levying cotton fee on the occupiers of the ginning factories in certain Districts of Punjab at the rate of annas 12 per maund on unginned cotton received by them during the cotton year 1955-56, annas 7 per maund during the cotton year 1956-57 and annas 9 per maund during the cotton years 1957-58 and 1958-59. These notifications were published in the gazette on 13th January 1961. The Government then demanded Rs. 4,27,112-15-9 from the appellants being the cotton fees at the above rates for the years 1949-50 to 1958-59.
4. The appellants filed a writ petition in the High Court, challenging the validity of imposition of cotton fee at enhanced rate with retrospective effect. A Division Bench of the High Court dismissed the writ petition on a number of grounds only three of which are raised before us by Dr. Nasitn Hasan Shah, the learned counsel for the appellants. All other questions arising in the case are said to have been resolved by a judgment of this Court in the case of Sh. Muhammad Ismail & Company Ltd. (PLD 1966 SC 388).
5. The learned counsel has contended that as since 1150-51 Messrs S. M. Ilahi & Company were running the ginning factory exclusively by diesel engine it would not fall within the definition of cotton ginning factory as given in section 2(f) of the Act and as such its occupies would not be liable to pay cotton fee under clause(P) of section 30 of the Act. It was further contended that the amendment of section 2(f) by Ordinance XII of 1961 could not have retrospective effect.
6. The learned counsel has, however, conceded that this factory was originally installed to work with steam engine and that later on the occupiers worked it with diesel engine. It seems that they made the above change without prior permission of the Govern--ment as required under section 16(3) of the Act and that for this default penal action was also taken against them and they were fined by a competent Court. The High Court therefore, while dealing with this contention rightly observed :-- "In spite of it, the petitioners did not regularize this illegal alteration and since the original steam engine is intact and in working order, whenever any defect occurs in the diesel engine they run the factory with the steam engine. No material has been placed before us by the petitioners to controvert the above averments contained in the written statement of the Govern--ment. We are, therefore, not in a position to find that the petitioners have from 1950-51 to 1958-59 run their factory exclusively by a diesel engine and that, on this account, they are not liable to pay fee at the rates prescribed in Notifications Nos. 155(2)-SOA-VI/58-P, 155(2)-SOA-VI/58-- SOA-VI/58-R and 155 2)-, 155(2) SOA-VI/58-5., dated the 13th ofJanuary 1961."
7. It was then contended that the Government was not entitled to revise the rate with retrospective effect. Under a notification issued on 10th October 1952, such cotton fee was fixed at annas 4 per maund.
8. It is no doubt true that the Government has power to revise, the said rate every years. As was pointed out in the case of Muhammad Ismail & Company that "The fixation of the fee has, of necessity, to be left to the executive authority because of the variability of the schemes which may be taken in hand from year to year under the Act and thus entailing differences in the expenditure incurred thereon." The question, however, is: Can the Govern--ment by revising the rates with retrospective effect prejudicially affect the legality of past transactions or impair the existing contracts ? In our opinion, they cannot do so.
9. This Court while dealing with a similar question in the case of Nagina Silk Mill, Lyallpur v. The Income-tax Officer, Lyallpur and another (PLD 1963 SC 322) observed : "The Courts must lean against giving a statute retrospective operation on the presumption that the Legislature does not intend what is unjust. It is chiefly where the enactment would prejudicially affect vested rights, or the legality of past transac--tions, or impair existing contracts, that the rule- in question prevails. Reference may be made in this connection to page 206 of Maxwell on the Interpretation of Statutes, Eleventh Edition."
10. Again, in the case of Sh. Rahmatullah v. The Deputy Settlement Commissioner, Karachi and others (PLD 1963S C 633), this Court observed "It is true that if in the interval between the two dates vested rights had accrued in consequence of the first notification, those could not be annulled by a mere notification of a later date."
11. Similar observations were also made in the case of Sheikh Fazal Ahmad v. Raja Ziaullah Khan and another (PLD 1964 SC 494). Thus, there is great fore in the contention of the learned counsel that on the basis of notification of 1952 they had concluded business transac--tions and the Government therefore, by notifications of 1961 was not entitled to revise rates in respect of such past and closed transactions. In view of the decision of this Court in the case of B Muhammad Ismail & Company, the learned counsel, however; has found it difficult to challenge the powers of the Government to realize cotton fee at the rate of annas 4 per maund for the period in question.
12. Lastly, it was contended that during the year 1958-59 the occupiers of the factory were Messrs Riaz & Company and as such the appellant-company could not be made liable for the fees of that year. The Government was, however, not informed about this change. The learned Advocate- General has therefore rightly contended that the appellant being recorded as occupier of the `factory could not by their own wilful default claim a right to_ be exonerated from the levy of the fee for the year 1958-59.
13. In the result, we allow this appeal and declare that the demand of cotton fees for the period in question at an enhanced rate was illegal and without lawful authority. We may, however, add that the Government is entitled to realize fee for the said period at the rate of annas 4 per maund.
14. There will, however, be no order as to costs.