1. ' The plaintiff has filed this suit against the defendants for declaration and injunction. The following facts are alleged in the plaint.
2. ' The Cotton Ginning and Pressing Factory known as Haji Soomar H. Hajjan Cotton and Ginning and Pressing Factory, Tando Allahyar, (I will hereinafter refer it as "the factory" only for the sake of convenience) was taken over by the Government under the provision of Cotton Ginning Control and Development Act, 1976 Act (LXIX of 1976) on or about 17-7-1976: That at the time of taking over the factory the current assets of the factory were also taken over. That the plaintiff was entitled to receive compensation assessed under section 10 of Act LXIX of 1976 in respect of the factory but before compensation could be determined Martial Law was enforced in the country and Cotton Ginning Control and Developement (Repeal) Ordinance (Ordinance XXXI of 1977) was promulgated which repealed Act LXIX of 1976, w.e.f. 12th November, 1977 and provided for return of the taken over establishments to the previous managements. That on 5-10-1977 the plaintiff's partner was called in the Factory in late hours of the night and was asked to take its possession against a bank guarantee of Rs.2,25,000. That the plaintiff refused to accept the offer on the ground that neither they had the opportunity of inspecting the goods alleged to be left in the factory nor had they opportunity of verifying the correctness of the statement prepared by defendant No.1. The plaintiff was, however, insisted upon by the team of the officer who came to deliver possession of the factory, to sign the undertaking and in good faith the plaintiff singed the same. The plaintiff on the following day inspected the stores left by defendant No.1 and discovered that burkies and packing material left in the factory was in a very bad condition. The plaintiff's partner accordingly informed the Manager of defendant No.1 that the plaintiff cannot furnish any bank guarantee or pay the amount. The plaintiff later also discovered on inspect on, that the hessain cloth, gunny bags and motta burkies were totally damaged by rain and were of no use. It was also .discovered that the stores left by the plaintiff at the time of taking over of the undertaking and mentioned in the inventory were not available. The plaintiff made several representations to the Asstt. Sub-Martial Law Administrator Sector 3, complaining that the value of goods left by the defendant No.1 was exaggerated and the condition of the stores was such that it had no value. The Assistant Sub- Martial Law Administrator Sector 3, vide his letter dated 12th November, 1977, informed the plaintiff that the valuation of the Government store was to be done by the Cotton Trading Corporation defendant 1 and matter could be referred to the Federal Government under section 3(6) of the Ordinance, 1977 if the plaintiff is dissatisfied. That defendant 1 served the plaintiff with notice dated 29-12-1977 purporting to be under section 6 of the Cotton Ginning Control and Developement (Repeal) Ordinance, 1977, demanding a sum of Rs.2,20,000 payable by the plaintiff to the defendant No.1. Again on 18-4-1978 the petitioner was served with another notice asking the plaintiff to pay a sum of Rs.2,69,448. That plaintiff intimated defendant 1 that they were not liable to pay the amount demanded and that with regard to compensation of the factory the plaintiff was not aware as to what amount was sanctioned and they had right of appeal against the compensation order. The plaintiff requested defendant No.1 to supply a statement of account showing the value of the goods, list of the goods of C. T. C. lying with the plaintiff and a copy of the compensation order. The defendant No.1 vide its letter dated 9-7-1978, sent to the plaintiff the details of the final account (compensation) which related to the demand of Rs.2,69,448 raised by defendant No.1 earlier. On 14-3-1979 plaintiff was served with a notice by Mukhtiarkar, Tando Allahyar, under section 81 of the Land Revenue Act, 1967, calling upon the plaintiff to pay the sum of Rs.2,69,448. The plaintiff has challenged the order dated 9-7-1978 and the notice of the Mukhtiarkar dated 13-3-1979 as avoid and unenforcible under the law. In the written statement filed on behalf of defendant No.1 in the suit, several preliminary objections regarding non-maintainability of the suit were raised, and on merits it was contended that the assessment made by the defendant is legal and valid and is in accordance with law. It is specifically contended that after the details of the assessment were supplied to the plaintiff he did not raise any objection as to the working of valuation. On the basis of the above controversy the following consent issues were adopted by the Court:-
(1) Whether suit is barred under section 69 of the Partnership Act?
(2) Whether suit is barred under sections 3 and 10 of the Cotton, Ginning Control and Development (Repeal) Ordinance?
(3) Whether suit is barred under sections 42, 54 and 56 of the Specific Relief Act?
(4) Whether any dispute in regard to dues exists between plaintiff and defendant No.1, if so, than what was the duty of the defendants in Law?
(5) Whether defendant No.1 has power to determine the dues? If so, has the claim been converted into established dues?
(6) Whether the defendant No.1 can determine the claim without associating or hearing the plaintiff unilaterally and arbitrarily?
(7) Whether the defendant No.1 can recover the dues from the plaintiff without first establishing the claim and by adopting coercive process and by passing the procedure laid down by law?
(8) Whether the defendants can compell tho plaintiff to purchase the goods left at the time of handing back the possession at the price unilaterally fixed by them?
(9) Whether it was mandatory under the Repealing Ordinance, 1977 to hear the plaintiffs before determining the present value of the establishment? In case the answer is in the affirmative, is the present value determined by the defendant No.2 is illegal and not enforceable?
(10) Whether the plaintiffs failed to contest/dispute the determination of present value of the plaintiffs establishment and/or the claim made by the defendants, before the defendants No.1 and or the Federal Government, as prescribed, notwithstanding the demand notices and supply of detailed account? If so, what is the effect?
(11) What the order of the Court should be?
3. ' The parties have not led any oral evidence on the above issues and have relied only on the documentary evidence which they filed with the plaint and written statement. The defendant has also produced originals of those documents which are filed with the written statement. I have heard the learned counsel for the parties at length on the above issues and my findings thereon are as follows:- Issue No.1: ' This issue is not pressed by the learned counsel for the defendants and is accordingly dropped.
4. Issue No.2: ' Learned counsel for the defendants contends that the present suit is barred both under section 3 and 10 of the Cotton Ginning, Control and Development (Repeal) Ordinance. Subsection (3) of section 3 provides that no claim, suit prosecution or other legal proceedings arising out of the acquisition or return of establishment shall lie against the Federal Government or the Corporation or any other officer or employee of the Federal Government or the Corporation. This provision to be read with section 10 of the Ordinance which provides that no Court shall call into question or permit to be called into question any provision of this Ordinance or any of the rules or order made or anything done or action taken thereunder. It is, therefore, quite clear that the jurisdiction of Court is barred under section 10 of the Ordinance of 1977 in cases where either provisions of the Ordinance or rules made thereunder are challenged or any order made or anything done or any action taken under the Act or the rules made thereunder are impugned. This ouster clause however, does not extend to cases where it is alleged that the action taken is not inconformity with the Act, or the Rules made thereunder or that the action is in excess of the authority confirmed by the Act or is without jurisdiction. In the present case the plaintiff has challenged the determination of dues payable the plaintiff on the grounds that defendant No.1 had no authority under the law namely the Ordinance XXXI of 1977, to assess the compensation or to make a demand of the sum alleged to be due against them. As the demand made by the defendant No.1 against the plaintiff is alleged to be in excess of the authority conferred on defendant No.1 under Ordinance XXXI of 1977, the bar contained in section 10 read with subsection (3) of section 3 of the Ordinance of 1977 is not applicable. I accordingly hold that the suit as framed is maintainable.
5. Issue No.3: ' The learned counsel for the defendants contends that the suit is not maintainable under section 42 of the Specific Relief Act as plaintiff is neither entitled to any legal character nor to any right to any property which is in dispute. The plaintiff has specifically mentioned in his plaint that the order of the defendant No.1 dated 9-7-1978 and the notice issued by Mukhtiarkar, Tando Allahyar, dated 13-3-1979 are void unenforcible under the law. Although, such a declaration does not strictly fall within the provisions of section 42 of the Specific Relief Act but in appropriate case the Court may grant declaratory relief independent of that section where it is statisfied that by some order passed by a functionary in excess of the authority conferred on it by a statutes a plaintiff stands deprived of certain present rights to a property and by declaring the offending act or order as null and void such right of the plaintiff would be restored. In the present case, the defendants are attempting to realise from the plaintiff certain sum of money as ascertained dues under the provisions of the Ordinance XXXI of 1977, by coercive process. The plaintiff has challenged the notice dated 13-3- 1979, issued by Mukhtiarkar for realising the dues of defendant as without lawful authority on the ground that the amount mentioned therein is not the established dues but only a claim; and that the defendant No.1 had no authority under the law to assess the same and in any case the defendant No.1 could not determine the same without hearing the plaintiff and without affording him an opportunity of hearing. If the plaintiff succeeds in proving these allegations, the action could be declared as without lawful authority by the Court. This issue is accordingly decided in the negative.
6. Issue No.4: ' It is an admitted position that at the time of handing over of the factory to the plaintiff on 5th October, 1977, only inventory of stores and goods lying in the factory were prepared by defendant No.1, but their value was not fixed. It is also an admitted position that two separate undertakings were obtained by defendant No.1 from the plaintiff which are Annexure "D" and "D-1" to the Written Statement, at that time. By Annexure "D" the plaintiff undertook to provide a Bank Guarantee or to pay in cash a sum of Rs.2,25,000 to the defendant No.1 within 2 days and until such payment was made or Bank Guarantee was furnished the stores were to lie in trust with the plaintiff at his risk and the ownership of the goods rested with defendant. By the second undertaking the plaintiff undertook to pay all dues in respect of stocks supplied by C.T.C. which may not have been paid for and adjusted, after due verification and demand by defendant No.l. It is alleged in the plaint that by notice dated 29-12-1977, defendant No.1 demanded Rs.2,50,825 which was enhanced to Rs.2,69,448 by notice dated 18-4-1978 and both the demands were purported to be under section 6 of the Ordinance of 1977. None of these notices are, however, filed by the plaintiff alongwith the plaint or produced in evidence. The plaintiff has produced with the plaint as Annexure "A" a letter of defendant No.1 dated 9-7-1978 with which it forwarded to the plaintiff the details of the final accounts (Compensation) worked out by defendant No.1. The-plaintiff has not produced in evidence any letter or documents to show that they disputed these details. The letter dated 12-11- 1977 Exh."C" filed by the plaintiff alongwith the plaint which is a reply from Asstt. Sub-Martial Law Administrator to the plaintiff's petition dated 30-10-1977 only shows that they had only represented against the incorrect valuation of the stores by defendant No.1 and prayed for extension of time to furnish bank guarantee which was extended upto 1-12-1977. Apart from this document Annexure 'C' there is no other document to show that the plaintiff at any time represented against any of the demands of defendant No.1. The plaintiff did not lead any oral evidence to show that they contested or objected to the dues demanded by defendant No.1. 1 accordingly hold that the plaintiff failed to prove that there existed any dispue between the plaintiff and defendant No.1, with regard to the dues claimed by defendant No.1. In these circumstances no action was called for by defendant No.1. The issue is accordingly decided in the negative.
7. Issue No.5: ' The learned counsel for the plaintiff contends that defendant 1 had no power under section 6 of the Ordinance of 1977 to determine the dues, while defendant No.1 contends that such a power was available. In order to appreciate the respective contentions of the parties, it will be advantageous to reproduce here the provisions of section 6 of the Repealing Ordinance of 1977 which reads as under:- "6. Compensation.--(1) The corporation shall pay compensation in respect of an establishment at the rate of eleven per cent. per annum of the amount determined as payable in accordance with paragraphs 1 and 2 of the Schedule to the Repealed Act for the period to ownership and management of the establishment remained with the corporation.
(2) In a case in which the Net Worth Value is higher than the present value, the Corporation shall pay the difference between the Net Worth Value and the present value of the assets and liabilities transferred to the previous owners, both such difference and the present value to be determined by the Corporation.
(3) Where the present value is higher than the Net Value, the Corporation may recover from the previous owners, in accordance with the provisions of section 7 of in any other manner it may deem fit, the amount representing the difference between the Net Worth Value and the present value.
(4) Where a previous owner has received payment of compensation assessed in accordance with the paragraphs 1 and 2 of the Schedule to the repealed Act, such compensation shall be recovered from him in the same manner as is provided in subsection (3): ' Provided that any interest which has accrued on any compensation bonds given to such previous owner shall not be withheld or, as the case may be, recovered and shall be deemed to be the compensation payable under subsection (1)" A reading of the above provision will show that the defendant No.1 was required to pay compensation to the previous management of the factory at the time of handing over possession of the factory at the rate of 11% per annum of the amount determined as compensation by the Government under Act LXIX of 1976 for the period the ownership and management of the establishment remained with defendant No.l. It is further provided, that if the net worth of the undertaking or establishment is higher than the present value, then the corporation will also pay to the previous management the difference between net worth value and the present value of assets and liabilities transferred to the previous management.
8. However, in case, the present value of the establishment is higher than the net worth value then the corporation is entitled to recover from the previous owner the difference between net worth value and the present value. It is not in dispute that the net worth value was to be determined by the Federal Government in accordance with the provisions of repealed Act LXIX of 1976. The plaintiff has alleged in para. 3 of the plaint that before compensation payable to plaintiff could be determined under the Act LXIX of 1976 it was repealed by Ordinance XXXI of 1977 and the factory was handed back to plaintiff. The defendant in their written statement have denied this assertion and has stated that before compensation assessed under Act IX of 1976 could be paid to plaintiff the Act was repealed by Ordinance XXXI of 1977. The defendant No.1 has shown the net worth value determined as on 17-7-1976, as Rs.1,41,518 in the document Annexure "A", to the plaint. This document was forwarded to plaintiff by defendant No.1 on 9-7-1978 and there is nothing on record to show that plaintiff at any stage challenged the correctness of statement regarding determination of Net Worth Value made therein. The burden of proving that the Federal Government failed to assess the compensation under section 10 of Act LXIX of 1976 in these circumstances, was on plaintiff who failed to discharge the same. Under subsection (2) of section 6 of the Ordinance XXXI of 1977, the defendant No.1 is authorised to determine the present value of the assets and liabilities and to calculate the difference between net worth value and the present value. The contention of the learned counsel for the plaintiff is that unlike subsection (2) of section
(6) of the Ordinance of 1977, there is no power available to the corporation defendant No.1 under subsection (3) to assess the present value and the difference between the net worth value and the present value. The contention of the learned counsel has not impressed me. No doubt in subsection (3) of section 6 ibid there is no specific mention about the power of corporation defendant No.1 to assess the present value and the difference between the net worth value and the present value, but this was quite necessary in the scheme of that section as in the earlier subsection namely subsection (2) of section 6 ibid the corporation defendant No.1 was specifically given power to determine both, the present value as well as the difference between the net worth value and present value. The present value is defined in section 2(a) of the Ordinance, as follows:- "2.(a):"Present value" means the Net Worth Value out of which shall be deducted the value of any fixed Tangible Assets and Current Assets as shown in the Balance Sheet which are not handed over and to which shall be added(i) the value of the Fixed Tangible Assets and Current Assets which do not appear in the Balance Sheet by the possession of which is handed over at cost, and (ii) the decrease in the outstanding liabilities as shown in the Balance Sheet, out of which shall be deducted the value of any new liabilities handed over."
9. ' From reading the above definition it is quite clear that in so far process of determination of 'present value' under section 6 (whether it be under subsection (2) or subsection (3) ibid) is concerned it is same in every case. It is also noteworthy that it is only when the 'present value' is determined then it can be said whether the case falls under subsection (2) or subsection (3) of section 6 of the Ordinance. I, therefore, see no substance in the submission of learned counsel for the plaintiff that the defendant No.1 could not determine the present value and the difference between the "net worth value" and the present value if the case fell under subsection (3) of section 6 ibid, while it could do so if the case is covered under subsection (2) of the said section.
10. ' I, therefore, held that defendant No.1 had the power to determine the dues and accordingly answer the first part of this issue in affirmative. The latter part of this issue will be dealt with more appropriately alongwith issue No.6 and 9.
11. Issue No. 6 & 9: ' Both these issues are interconnected and can be conveniently dealt with together. It is an admitted position that at the time of handing over possession of the factory to the plaintiff only inventory of stock was prepared but no valuation therefore was fixed. The plaintiff in his plaint has specifically alleged that he was not associated in any manner in the process of determination of value of the stocks etc. and the dues. The defendant No.1 has made the following reply to the above assertion of plaintiff in its written statement:-- "Re-sub-para. (e).-- The contents are denied. It is submitted that nowhere in the relatable statute it is provided that the former owners would be heard before the liability was determined. However, it is further submitted that the entire liability was determined on the basis of the record of the establishment and the net worth value of Rs.1,41,518 already determined by the Auditors appointed by the Government under the provision of the 1976 Statute."
12. ' It cannot be disputed that the determination of present value and difference between the net worth value and the present value is likely to affect the interest of the previous management to whom the taken over establishment is to be returned under Ordinance XXXI of 1977. In these circumstances, there can be no affective, legal and binding determination of either the present value or the difference between the net worth value and the present value by the Corporation, unless the previous management is also associated with such determi nation. The word "determine" is defined in the concise Oxford Dictionary as follows:- "Determine.--Settle, decide (dispute, person's fate, what it to be done that whether etc.) come to a conclusion give decision; be the decisive factor in regard to (demand determines supply) ascertain precisely fix (arch) direct, impel to 2. Decide (person) to do; resolve (to 3. (esp law) bring or come to an end 4. limit in scope; define ; fix (date) before hand 5. Hence determine BLE a. (ME)"
13. In Stroud's Judicial Dictionarey (Fourth Edition) while dealing with the meaning of word "determine" it is commented as follows":- "(10)- A statutory power to a Government department to determine question does not enable it to legislate or make it an autocrate free to act as it pleases; it must exercise, and act with direction, and if that be not done in a bona fide manner the King's Bench can and will interfere.
14. "(15)- "Determine by the Commissioners" "Determination of the Commissioner" (Income-tax Act, 1952 (C.10) S. 50(2) meant "decided" and "decision" (Munir v. I.R.C.(1966) I W.L.R. 1269)".
15. ' The word "determine", therefore, both in its ordinary meaning and also as interpreted by the Courts of Law, import some element of adjudication which could not take place one sided if it is likely to effect the interest of another, person. It is true that section 6 of the Ordinance 1977, makes no provision for giving notice to the previous management or hearing them at the time of determination of "present value" or the difference between the present value and the net worth value but mere absence of such provision in the section or the Ordinance is not sufficient to exclude the application of the principles of audi alteram partem. It is not well-settled law that the principles of audi alterm partem are deemed to be part of every statutes which effects the rights of the Citizen unless its application is excluded by express words or by necessary implication in the stature. If any authority is needed in this regard reference may be made to the case of the Abdus Saboor v. Karachi University PLD 1966 SC 536. 1, therefore, find no difficulty in holding that the defendant No.1 could not determine the present value of the assets and liabilities of the factory and the difference between the present value and net worth value without notice and without affording the plaintiff, an opportunity of hearing. Issue No.6 is accordingly decided in the negative and issue No.9 is answered in the affirmative. As a result of the above findings the last part of issue No.5 is decided in the negative.
16. Issue No.7: ' This issue does not arise on the pleadings of the parties and is wrongly framed. It is not pleaded by the defendants that they could recover the dues without establishing their claim. In fact, defendant No.1 has pleaded that it legally determined the present value as well as the dues under the Act. Whether the determination of present value and the dues by defendant No.1 under the Ordinance of 1977 was legal or not has been dealt with under issue No.6 and 9.
17. Issue No.8: ' This issue is also wrongly framed as no such plea is raised by the plaintiff in the arguments. The demand of defendants is challenged in the suit on the ground that the demand had not ripen into dues so as to become recoverable under the provision of Ordinance XXXI, of 1977. Although, it is stated in the undertaking executed by the plaintiff at the time of taking over of the factory that until such time payment is made or bank guarantee is provided the store will lie in trust with them at their risk and cost and the ownership shall rest with the defendant No.1 but it is an admitted position in the case that subsequent demand made by defendant No.1 is based on the alleged calculation of present value and difference between present value and the net worth value. It is not the case of the plaintiff that the amount threatened to be recovered from them is for the value of the goods. In fact no such argument was at all raised before me. This issue is also accordingly dropped.
18. Issue No.10: ' I have already held while dealing with issue 4 that the planitiff has failed to establish that the disputed the determination of the present value of the assets and liabilities by defendant 1 in spite of having been communicated the same vide defendant letter dated 9th July, 1978. In case the plaintiff is aggrieved by the determination of the present value by the defendant No.1 he could make reference to the Federal Government under subsection (6) of section 31 of Ordinance XXXI of 1977. Such a reference could also be made by the defendant No.1 if there is any dispute between it and the plaintiff regarding assets and liabilities of the establishment. As the plaintiff has failed to contest or dispute the determination of the present value made by the defendant No.1, in spite of findings in favour of plaintiff on Issue No.6 and 9. I hold that the present suit is not maintainable. I accordingly dismiss the suit but there will be no order as to costs in the circum stances of the case.