' The plaintiff has filed this suit for declaration, permanent injunction and recovery of octroi duty.
The plaintiff is an octroi Contractor for recovery of octroi on the import of goods in the territorial jurisdiction of the Union Council Darsana Chana for the year 1982-83. The plaintiff was awarded this contract by the defendant No, 2 which provided that the goods imported by the Pakistan Steel Mills and the goods of defendant No, 1 namely the rice shall not be Charged with octroi duty. The defendant No, 1 imported 6997 bales of jute and hessian bags from Bangladesh out of which 60 bales were taker across the octroi post between 16th and 18th September, 1 1982 on payment of Rs, 22,979 as octroi duty to the plaintiff. Thereafter the defendant No, 1 applied to the Government of Sind for exemption from the payment of octroi on jute/hessian bags and undertook to pay the octroi duty if exemption is not granted. On such representation and undertaking made by the defendant No, 1, the plaintiff allowed 47,997 bags through the octroi post without recovering octroi duty. Defendant No, 1 by an application dated 22-9-1982 to the Sind Government sought exemption from levy of octroi by K. M. C. And the Union Council Darsana Chana the defendant No,
2. Althought the exemption was not granted, the plaintiff allowed the defendant No, I to take 11,992 bales of jute bags on its undertaking to pay it if exemption is not granted. The last undertaking was given by the defendant No, 1 on 25th October, 1982 in the following terms :- "We undertake to pay the octroi tax on the above consignment as well as on 4,797 bales of Bengal Tower on which permission already allowed by you in case Sind Government does not allow exemption on octroi tax by 20-11-1982."
' As no exemption seems to have been granted by the Sind Government on 21st November, 1981 the plaintiff called upon the defendant No, 1 to make payment of the octroi duty. Thereafter, it is alleged that the defendant No, 1 imported milling machinery and on plaintiff's refusal to allow the said cases to pass the octroi post without prior payment of octroi duty the defendant No, I paid octroi duty thereon on 30th November, 1982 and cleared the said cases. However, the defendant No, 1 while making payment had made it clear that it has paying duty as it required the machinery urgently and if exemption was granted the amount would be refunded. It seems that the defendant No, 1 took up the stand that as the defendant No, 1 is controlled and all its shares are owned by the Federal Government it is not liable to pay octopi duty. The plaintiff therefore, filed this suit for declaration that he is entitled, to recover the octopi duty and permanent injunction restraining the defendant No, 1 from taking its goods through the check post without payment of duty and for recovery of Rs, 3,50,000. The plaintiff also applied application for interim injunction praying that the defendant No, 1 may be restrained acting directly or indirectly from importing goods or permitting others to import goods into or within the territorial limits of the Corporation/Union Council without prior payment of octopi to the plaintiff. The defendant No, I has appeared and filed counter-affidavit. The notice of this application was served on the Chowkidar of defendant No, 2 and copy was supplied to him but none has appeared on its behalf. However, both the counsel agree that as the order is sought only against defendant No, 1 it would be proper to proceed with the matter.
' In the counter-affidavit the defendant No, 1 has taken the stand that it is a Company owned by the Federal Government of Pakistan and t is performing the job of clearing, forwarding and shipment of rice on behalf of the Federal Government. It has been further stated that jute bags imported from Bangladesh are also the property of the Federal Government as defendant No, 1 is a Government Department and the bags are meant for export of rice. In these premises it is pleaded that the hessian bags are not liable to octroi duty.
' Mr. Arif Hussain the learned counsel for the defendant No, 1 has contended that the defendant No, 1 is exclusively owned by the Federal Government. All its shares belong to the Government and it is performing the functions of the Federal Government by exporting rice. On the basis of these facts the learned counsel bas contended that in view of Article 165. Of the Constitution of Pakistan the plaintiff and defendant No, 2 cannot recover octopi duty from the defendant No,
1. Mr. Khalid Anwar the learned counsel has contended that the defendant No, 1 is a Company incorporated under the Companies Act and although the entire shares belong to the Federal Government, as a Company has a separate and distinct legal entity from its share-holders the defendant No, 1 is liable to pay octopi duty.
' From the pleading of the parties it is clear that the contract between the plaintiff and the defendant No, 2 does not authorise the plaintiff to recover octopi duty on rice. The dispute has arisen only in respect of jute bags which were imported by the defendant No, 1 and have been carried to its go down passing through the octopi post of defendant No,
2. The learned counsel for the defendant No, 1 stated that this property also belongs to the Federal Government as Corporation itself belongs to the Federal Government. From the facts stated in the plaint and the counter-affidavit, although the defendant No, 1 has taken a stand that it is owned by the Federal Government it has paid octopi duty on machinery imported by it. Further, the undertaking given by the defendant No, 1 will not operate as an estoppel against it if it is held that the defendant-No, 1 is a department of the Government and is not liable to pay the octopi duty. There can be no estoppel against law and the undertaking given by the defendant No, 1 cannot override the provision of the constitution or any other Law exempting the Federal Government from payment of the octroi duty.
However, before such determination is made it will be necessary to make enquiry into the establishment of defendant No, 1, its incorporation, the memorandum and Articles of Association.
This question, therefore, can be decided only at the time of final hearing. Mr. Arif Hussain, the learned counsel for the defendant No, 1 has referred to Sind Industrial Trading Estate Ltd., Karachi v.
Central Board of Revenue and 3 others, where it was held that Sind Industrial Trading Estate which was a limited Company was performing the function of Provincial Government and was, therefore, exempted from payment of income-tax. In this case the matter was being dealt with, in a Constitutional petition filed by Sind Industrial Trading Estate Ltd. And judgment was passed on merits after final hearing of the case. The Company (SITE) was formed and incorporated under the Sind Government's resolution passed under the Constitutional powers conferred on the Province with regard to the development of industries and trade. It was held that "The Sind Government instead of discharging its Constitutional functions for the development of Industries in the Province resorted to the device of a corporation or a Company under the Companies Act, 1913 instead of discharging these functions directly through a department of the Government. Thus, the Government of Sind clothed the activities entrusted to it under the Constitution for the development of trade and Industries in the Province with a corporate personality." It was further held that "The Government may discharge its functions through a Corporation, but the Corporation may still, in substance, operate as a department of the Government." It was, therefore, held that SITE was discharging the functions of the Government of Sind. In the present case the defendant No, 1 has alleged that all its shares are owned by the Federal Government, but in the articles of Association there are provisions for transfer of share to any other limited Company and therefore possibility that in future it may be transferred to other persons cannot be ruled out. It is also to be considered, whether export of rice by defendant No, 1 will amount to performance of Constitutional functions of the Federal Government. The defendant No, 1 has contended that it is exporting rice on behalf of the Federal Government and for that purpose it has imported jute bags which is taken to its go down for rice bagging and then the packed rice is exported. From the documents placed on record, the defendant No, 1 has stated before the Customs Authority that these bags are meant for re-export. This situation can hardly improve the defendant's case and at this interlocutory stage as the Court cannot enter into the merits of the case, the pleas raised by the defendant No, 1 can properly, be determined at the final hearing.
' The plaintiff's case is that in view of the undertaking given by the defendant No, 1 he has made out a prima facie case for recovery of octopi duty.
' The prayer in the application filed by the plaintiff though couched in a negative form amounts to seeking a mandatory injunction directing the defendant No, 1 to pay the octopi duty before crossing the octopi post set up by the defendant No,
2. In fact this is the prayer_ of the plaintiff in the suit also.A mandatory injunction in ad interim form is granted in rare and exceptional cases where there is imminent and gray danger to life or property. It is granted for restoring or maintaining statu quo and not to create a new state of things which did not exist at the time of institution of the suit. The defendant No, 1 has been taking hessian bags without payment of duty perhaps on the undertaking and assurance given by it from time to time. The defendant No, 1 at some time had paid duty on other goods. There is no allegation in the plaint o affidavit that the defendant No, 1 is using force or coercive methods in carrying the goods through the check post without payment of duty. The plaintiff has been permitting the defendant No, 1 to carry the goods on c assurances. It is on record that when the plaintiff did not allow the defendant No, 1 to take the machinery without payment of duty it has paid it. Therefore it cannot be ruled out that if the plaintiff insists on recovery of octopi duty on hessian bags and following the procedure provided for such situation the defendant No, 1 will refuse to Pay it to carry it by force. In these circumstances I am not inclined to grant ad interim injunction as prayed by the plaintiff. However, considering the fact that the plaintiff as Contractor is entitled to collect octopi duty only up to June, 1983 which too has been disputed by another Contractor in respect of which a petition is pending in this Court and1 also considering the conduct of the dafendant No, 1 inasmuch as it has given undertaking to pay the octopi duty, it will be just and proper that order should be passed which may protect the interest of both the parties. This can be achieved if the defendant No, 1 furnishes a bank guarantee in the sum of Rs, 75,000 to the satisfaction of the Nazir of this Court within three weeks. PLD 1975 Kar. 128