This Miscellaneous Appeal has arisen as a result of the report given by the liquidators about the distribution of assets of the company under liquidation.
2. The PICIC had filed before this Court application No.3 of 1986 against Ali Gul Khan Packages Industries Limited for the liquidation of the latter under the provisions of the Companies Ordinance, 1984. The respondent of the said petition did not object to its liquidation and had no objection to the winding up of the company, As such the company was ordered to be wound up and Mr. Tahir Abbas Deputy Managing Director of the PICIC and Haji Maqsood Ahmad, Advocate Peshawar were appointed as Joint Liquidators with the consent of the parties. The said liquidators submitted their report with regard to the sale of the respondent company and distribution of the sale price to the creditors thereof. WAPDA had also filed a claim before the Joint Liquidators for Rs.71,423 due and outstanding against the company under liquidation for the supply of electricity. The said claim of the WAPDA was not entertained by the Joint Liquidators. WAPDA represented by Superintending Engineer and others claims in the appeal in hand that it being a local authority under clause (a) of subsection (1) of section 405 of the Companies Ordinance, 1984 is entitled to be paid in priority the aforesaid amount. It has been contended that it is a statutory body and falls within the definition of local bodies and its dues are liable to be paid first on preferential basis out of the sale proceeds of the assets of the company under liquidation.
3. I have heard the learned counsel for the appellant and Haji Maqsood Ahmad one of the joint Liquidators.
4. The contention of the learned counsel for the appellant is two-fold: firstly, it is claimed that under Article 7 of the Constitution WAPDA comes within the definition of the State as being an authority in Pakistan which is by law empowered to impose cess and secondly, that under section 54-A of the Electricity Act, 1910 the charges for the supply of energy or any other sum outstanding against a consumer arc recoverable as an arrear of land revenue.
5.In so far as the `first point is concerned the Water and Power Development Authority Act, 1958 nowhere lays down that the authority is empowered to levy any cess. Actually the authority is empowered to charge the consumers of electricity for the energy supplied to them and that is also the position under section 54-A of the Electricity Act, 1910. Neither the Water and Power Development Authority Act, 1958 nor the Electricity Act, 1910 empower the WAPDA to levy any tax or cess. In this connection it was contended by the learned counsel for the appellant that the WAPDA was levying fuel adjustment charges for the supply of electricity to the consumers but when asked to further explain this contention the learned counsel frankly admitted that actually it was not a cess but a charge on account of extra fuel consumed in the production of electricity. It shall thus be seen that the charges of WAPDA for the supply of electricity do not come within the definition of a tax or a cess. The amounts I recoverable by WAPDA may well be said as charges for services rendered. Consequently the WAPDA does not come within the definition of the term `State' under Article 7 of the Constitution.
6. In so far as the second point is concerned it has to be borne in mind that the charges of WAPDA are neither land revenue nor arrears of land revenue but simply under the provisions of section 54- A of the Electricity Act these charges have been made recoverable as arrears of land revenue. The mere fact that the charges of WAPDA have been made recoverable as arrears of land revenue does, not mean that such sums have become land revenue or any Government due. It' would be of benefit to further dilate on what is a land revenue. For the first time the term `land revenue' was defined in the Punjab Land Revenue Act, 1887. According to clause (6) of section 3 of the said Act, land revenue included assigned land revenue and any sum payable in respect of land by way of quit-rent or commutation for service to the Government or to a person to whom the Government has assigned the right to receive the payment. This Act was subsequently repealed and re- enacted by the West Pakistan Land Revenue Act, 1967 and according to clause (14) of section 4 of the said Act, Land revenue; means land-revenue assessed or assessable under this Act, or under any other law for the time being in force relating to land revenue, and includes any rates f imposed on account of increase in the value of land due to irrigation. The process ; for the recovery of arrears of land revenue is specified in section 80 of the ' aforesaid Act. In so far as a sum recoverable as an arrear of land revenue is concerned, procedure for its recovery has been specified in section 5 of the' Revenue Recovery Act, 1890. For the sake of convenience the said section is reproduced below:- "5. Where any sum is recoverable as an arrear of land-revenue by any public officer other than a Collector or by any local authority, the Collector of the district in which the office of that officer or authority is situate shall, on the request of the officer or authority, proceed to recover the sum as if it were an arrear of land revenue which has accrued in his own district, and may send a certificate of the amount to be recovered to the Collector of another district under the foregoing provisions of this Act, as if the sum were payable to himself."
7. From the above it shall thus be seen that the mere fact that the dues of WAPDA have been made recoverable as arrears of land revenue would not mean that such sum has become a Government due. The minute perusal of the provisions of clause (a) of subsection (1) of section 405 of the Companies Ordinance, 1984 would reveal that reference to a local authority therein along with the Federal Government or a Provincial Government is in respect of revenues, taxes, cesses and rates.
This would mean that the local authority mentioned in the aforesaid provisions of the Companies Ordinance would be that local authority which is competent to collect any revenues or is empowered to impose any taxes, cesses or rates. Even from that angle WAPDA is not that local authority which would have preference in respect of its sums over all other debts of a company under liquidation.
8. The net result of the above discussion is that the sums recoverable by the g WAPDA in respect of charges for supply of energy, although recoverable as . Arrears of land revenue, are not sums which are specified in clause (a) of subsection (1) of section 405 of the Companies Ordinance and shall not be able to claim priority over all other debts. The appeal is, therefore, dismissed.