' This writ petition is directed against the orders of the respondents demanding penal interest on the unpaid balance of the transfer price in respect of an evacuee property.
2. The brief facts of the case are that the petitioner is a claimant displaced person Who abandoned industrial concerns in India. On migration to. Pakistan he was allotted Mercantile Printing Press, a registered evacuee industrial concern in the year 1955 in the city of Lahore. The petitioner filed his claim for two industrial .Concerns and according to him it was verified for Rs,54,652 under Schedule III and for Rs,60,115 under Schedule VI. The deferred payment of the claim was worked out at Rs,28,826 in his compensation book No,60096 issued by the Deputy Settlement Commissioner Circle-I, Lahore. The petitioner utilised Rs,5,768 and paisa twenty-nine for purchase of machinery which left an available balance in the said compensation book as ,Rs,23,057.71.
3. There was some litigation between the petitioner and a co-allottee Muhammad Bukhsh both of Whom tried for the exclusive transfer of the industrial concern in dispute. The litigation between them was finally resolved vide judgment of the Supreme Court of Pakistan dated 10-9-1975 in Civil Appeal. No,275 of 1969 and Civil Appeal No,3 of 1970.
4. After the question of entitlement was resolved as aforesaid, it is the case of the petitioner that the Additional Settlement Commissioner (Industries) vide order dated 8-5-1976 evaluated the price of the indus,trial concern in dispute at Rs,1,93,819 and directed the petitioner to pay the same within thirty days failing which his entitlement will be cancelled and the property resumed. The petitioner feeling aggrieved by the aforesaid order preferred a revision petition before the Settlement Commissioner, Punjab which was dismissed vide order dated 15-6-1976 being incompetent.
5. The petitioner thereafter felt obliged to assail the two orders vide Writ Petition No,36/R of 1976 in the Lahore High Court at Lahore. In the course of the writ petition, the petitioner was able to obtain interim relief on 23-6-1976 in terms that the operation of the impugned orders was suspended subject to notice. This interim stay was confirmed on 15-7-1976. The said writ petition was finally dismissed on 29-4-1985.
6. After the above event, the petitioner approached the Member, Board of Revenue (S & R)/Chief Settlement Commissioner requesting for a demand notice and challan to be prepared after adjustment of the available deferred amount in his compensation book amounting to Rs,23,057.71 which was lying with the department itself.
7. According to the petitioner in pursuance of his request he received challan form for the payment of Rs,1,70,761 towards transfer price and Rs,997 as settlement fee which was prepared by respondent No,2 and intimation dated 24th July, 1985 was issued to the petitioner. The petitioner claims to have deposited both the amounts in the State Bank of Pakistan on 27-5-1985. Photostat copies of the deposit challans are Annexs. 'D' and 'E'.
8. The petitioner thereafter applied for issuance of transfer order on payment of transfer price and settlement fee but instead he received a letter from respondent No,2 dated 4-8-1985 requiring the indemnity bond. The requirement of this letter was complied with, according to the petitioner.
Respondent No,2 thereafter submitted report dated 17-10-1985 to respondent No,1 seeking orders for issuance of transfer order who returned the file with the order dated 29-10-1985 saying that the compensation book was not acceptable. The office again put up the case to respondent No,1 who vide his order dated 6-11-1985 directed charging of compound interest on the total transfer price with effect from 1976. In the light of the aforesaid order, respondent No,2 issued a memorandum dated 2nd February, 1986 directing the petitioner to pay a sum or Rs,2,06,812.32 as penal interest for nine years for withholding department's money on the basis that the concurrent findings of the Addl: Settlement Commissioner (Land) and of the Settlement Commissioner pertaining to the assessm ent of price was upheld by the High Court. The petitioner was also directed to pay in cash a sum of Rs,23,057 as balance of transfer price, thus, refusing to adjust the deferred payment available out of his compensation book. It was further stated that in case of failure of the petitioner to pay the demanded amount within thirty days the property would be resumed. Annexure 'G' in that behalf has been relied upon.
9. When this case came up for hearing before this Bench the learned Legal Adviser for the Settlement Department was called upon to be of assistance at limine stage in view of the peculiar features and a copy of the writ petition was supplied to the learned counsel. Mr. Shahzad Jehangir, learned counsel for the respondent after receiving instructions from the department submitted that in so far as the compensation book of the petitioner was concerned it was mandatory under para 21 of the Schedule to the Displaced Persons (Compensation and Rehabilitation) Act that the deferred amount available in the compensation book of a claimant must be adjusted towards the transfer price of the property transferred to such a claimant. This submission is recorded in the interim order of this Court dated 7-5-1986. To this extent, therefore, the grievance of the petitioner can be said to have been conceded. This by itself would constitute infraction of an absolute provision of law and bring about a vitiative infirmity in the impugned proceedings.
10. The principal ground which has been taken in the petition and raised at the hearing relates to burdening the petitioner with the liability of penal interest on the pleas mentioned in Annexure 'G' In order to justify this course, the learned Advocate for the respondent states that the department felt that in the absence of any prohibition in law it had the permission to do whatever they liked. This stand of the department was seriously contested on behalf of the petitioner. The case was accordingly admitted to a regular hearing. Both the parties were called upon,inter alia, to argue with particularity the powers and jurisdiction of the Settlement Department to burden a transferee with penal interest in the absence of any statutory provision or backing of law.
11. The learned counsel for the petitioner emphatically argued that the action of the respondents in charging penal interest was flagrantly violative of the provisions of the Displaced Persons (Compensation and Rehabilitation) Act, 1958 and the schemes framed thereunder. It was additionally argued that even under the general law no interest could have been charged in terms of Interest Act, 1839.
12. Before I proceed to deal with other aspects of the matter it would be advantageous to observe here that it is a common ground between both the sides that Settlement Scheme No,VIII framed under the Displaced Persons (Compensatiort and Rehabilitation) Act, 1958 (since repealed) applied to the case of the industrial concern in dispute.
13. This Court has been able to lay its hands on Settlement Scheme No,VIII (Re-constituted) relating to Province of Punjab published in Gazette of Punjab Extraordinary, 13th August, 1973. The Displaced Persons (C & R) Act was repealed firstly by an Ordinance in 1974 and thereafter it was repealed by Act XIV of 1975. It is nobody's case that the provisions of Settlement Scheme No,VIII (Re-constituted) were further altered after- its promulgation in relevant respects in 1973.
14. The matter in controversy can also be resolved by a reference to the provisions of Chapter IV of Settlement Scheme No,VIII (Reconstituted). The provisions which are being reproduced below appear to be relevant:- "9. The outstanding amount of transfer price/rent of properties already transferred or which may be transferred under this Scheme, may be paid in full by adjustment against the deferred value available in the Compensation/Rehabilitation Books of Other claimants through association.
10. The association of claims shall be restricted to a Provinces from which the Compensation/Rehabilitation Books have been issued.
11. No Provisional Transfer Order or Permanent Transfer Document will henceforth be issued to the transferees. Instead, a Transfer Order, with all the benefits as were allowed by virtue of Provisional Transfer Order, will be issued in all cases where properties have already been transferred but P.T.Ds.
Have not been issued and in respect of properties to be disposed of under this Scheme, indicating thereon;
(i) a particular Account No, to be assigned to each case;
(ii) total transfer price, rent or public dues, if any;
(iii) amount already paid through association or in cash;
(iv) balance to be paid;
(v) schedule of payment of the balance amount; and
(vi) The Provincial Head of Account to which the balance amount is to be credited.
12. The transferee shall pay the outstanding amount according to the Schedule or payment through Treasury Challan (s), creditable to the proper Head of Account.
13. A copy of the Transfer Order shall be sent to the Board of Revenue. The transferee shall furnish a copy of the Receipted Challan to the Board of Revenue in token of payment.
14.' 10 per cent rebate shall be allowed to the transferees who pay the entire outstanding amount in lump sum in cash.
15. The Board of Revenue shall keep a proper account of payment(s) against each property individually and will also ensure regular payment according to this Schedule.
16. On payment having been made in full, a certificate to this effect shall be. Issued by the Board of Revenue which shall form part of the Transfer Order and serve as a Permanent Transfer Document.
17. In case of default in payment according to the Schedule, the Board of Revenue may effect recovery as Arrears of Land Revenue."
15. A perusal of the above scheme of law clearly brings out that in respect of the properties already tansferred or which may be transferred under this Scheme, the outstanding amount of the transfer price may be paid in full by adjustment against the deferred value available in the Compensation/Rehabilitation Books of other claimants through association. This is subject to the proviso that the Compensation/Rehabilitation Books utilised must be restricted to the Province of the Punjab. Another significant feature introduced was that no Provisional Transfer Order or Permanent Transfer Document would be issued henceforth to the transferees and instead a Transfer Order will be issued in all cases where properties have already been transferred but P.T.Ds.
Have not been issued. Moreover a particular account number is to be assigned to each case. The total transfer price, rent or public dues, if any, are to be worked out. The amount already paid through association or in cash is to be taken into account. The balance to be paid is also to be shown. A schedule of payment of balance amount is to be worked out and the Provincial Head of account to which the balance amount is to be credited will also be indicated. Then under para 12 of the Scheme, the transferee is to pay outstanding amount according to the Schedule of payment through Treasury challans creditable to the proper head of account. This having been done, a copy of the Transfer Order shall be sent to the Board of Revenue with receipted challan in token of payment. Para 14 gives incentive of 10 per cent rebate to the transferee who pays the entire outstanding amount in lump Sum in cash. Thereafter Board of Revenue is charged with a duty to ensure maintenance of proper account of payments against each property individually and also to ensure regular payment according to the Schedule. Under para 16, on payment having been made in full, a certificate to that effect shall be issued by the Board of Revenue which shall form part of the Transfer Order and serve as a Permanent Transfer Document. Then last of all is para-17 which appears to be of significant importance in the facts and circumstances of this case. It deals with penalty clause. The penal provision is to the effect that in case of default in payment according to the Schedule, the Board of Revenue may effect recovery as arrears of land revenue. In the passing I may also observe that under the same very Scheme where a transferee was found defaulter, on application being made within 15 days of the date of the order of cancellation, the Authority concerned may allow him to pay in lump sum the whole of the transfer price payable by him within a period of thirty days-from the date of order of cancellation or by monthly instalments not exceeding 12 as may be allowed on merit by the Additional Settlement Commissioner, if by then the property has not been transferred to any other person.
16. After having examined the broad scheme of Settlement Scheme No,VIII which was the legal dispensation in force at the time of promulgation of the Evacuee Property Displaced Persons Laws (Repeal) Ordinance, 1974, it appears desirable to notice the provisions of section 4 of the Repealing Act No,XIV of 1975 which reads as under:-
4. Disposal of residual work.--All the work regarding documentation, both for the urban and rural properties, recovery of outstanding transfer price, rent or mortgage money of 'such property already disposed of and discharge of miscellaneous liabilities out of these recoveries, which may remain pending immediately before the repeal of the aforesaid Acts and Regulations shall stand transferred to the Board of Revenue of the Province.".
17. The proposition which now needs to be resolved is whether in exercise of its powers under section 4 of Act XIV of 1975 read in the light of Settlement Scheme No,VIII (Re-constituted) which at the relevant time applied to, this case, the Board of Revenue was clothed with any powers or jurisdiction to burden the petitioner with the imposition of penal interest.
18. After having given my anxious consideration to the scheme of law which governed the case 'at the time when the learned Member, Board of Revenue passed the impugned order, I am unable to sustain it for various reasons and infractions of law mentioned hereinafter.
19. It already stands conceded that the petitioner had in his compensation book an available entitlement to the tune of Rs,23,057.27. This amount was to be adjusted against the transfer price under the mandatory provisions of para 21 of the Schedule to the Displaced Persons (C & R) Act which reads as under:- "21. A claimant to whom any property is transferred under this Act shall pay the amount due from him after adjustment of the total amount of deferred payment admissible to him as follows:-
(i) if the property is transferred to him on payment of the price determined on evaluation basis, within three years in equal monthly instalments;
(ii) if the property is transferred to him on payment of the prevailing market value, within three years in equal monthly instalments, unless such payment is required under the other provisions of the Act to be made immediately and
(iii) if the property is transferred to him by means of auction in accordance with the terms and conditions of auction.", No other provision has been cited requiring such payment to be made immediately. The refusal of the department, therefore, to adjust the available deferred amount from the compensation book of the petitioner towards transfer price was a patent illegality and violation of the mandatory provision of law. Under the mandate of law, the liability of payment of balance of transfer price by instalments could be lawfully worked out only after the deferred amount available in the compensation book of a claimant had been adjusted. In such a situation the petitioner was therefore fully justified in protesting against the illegal action of the department and in not making the payment of the balance amount without adjustment of the deferred payment available in his compensation book. The petitioner could not therefore be visited with any penalty or penal consequences. It is undeniable that the petitioner is a claimant to whom the property was transferred under the Displaced Persons (C and R) Act who had to pay the amount due from him after adjustment of the total amount of deferred payment admissible to him under para 21(i) of the Schedule to Displaced Persons (C & R) Act, 1958. Unless the fundamental requirement of adjustment from his compensation book was satisfied there arose no question of taking any action detrimental to his interest for no fault on his part but on account of excess of jurisdiction committed by the Board of Revenue itself.
20. It is a settled proposition in law that the act of Court shall not prejudice any one. It cannot be overlooked that the petitioner felt aggrieved by the orders of the Additional Settlement Commissioner dated 8-5-1976 read with order of the Settlement Commissioner dated 15-6-1976 and then approached this Court by way of Writ Petition No,36/R of 1976. The High Court was pleased to suspend the operation of the orders on 15-7-1976 which remained operative till 29-4- 1985. During this interregnum, the orders impugned in that writ petition remained under suspension and thus temporarily ceased to exist. This period could not have been counted against the petitioner or to his prejudice on any conceivable legal principle.
21. It cannot also be overlooked that the Board of Revenue/ Settlement Department itself after adjusting petitioner's deferred payment available in his compensation book to the tune of Rs,23,057.27 had issued to the petitioner a challan for the payment of Rs,1,70,761.83 towards the transfer price and Rs,997 as settlement fee. The petitioner deposited these amounts in the State Bank of Pakistan on 27-5-1985. The deposit is not being disputed.
' It is not understandable how after the price as indicated by the department itself had been paid by the transferee, the Board of Revenue could have unilaterally increased this amount in violation of the law and also impose penal interest. A reference to the provisions of para 17 of the Settlement Scheme No,VIII (Re-constituted) would clearly show that the intention of law was that in a case where the transferee failed to observe the Schedule of instalments all that could be done by the department was to recover the amount due as arrears of land revenue. This procedure of recovery of dues is well-known in this country because similar provisions are to be found in various statutes.
The provisions of paras 9 to 17 of Settlement Scheme No,VIII (Re-constituted) do not spell out a power in the Member Board of Revenue (S & R) to assume to himself the jurisdiction to charge penal interest which was not specifically sanctioned by law. In so doing the learned Member stepped beyond the limits of law which conferred powers upon him. He being a statutory functionary could not have assumed powers or jurisdiction which the statute had specifically not conferred upon him and in fact on a reference to the other provisions, there were fetters placed on his powers to remain within the four corners of law creating him.
22. In this background and legal position noted above, it does, not appear necessary to deal with question of charging of penal interest in the light of Interest Act, 1839 but since this point was argued at length by the learned counsel for the petitioner in all fairness I think few words about it would do. A bare perusal of section 1 of the Interest Act, 1839 brings out that upon all debts or sums certain payable at a certain time or otherwise the Court before whom such debts or sums may be recovered may if thinks fit allow interest to the creditors at a rate not exceeding the current rate of interest. The Member, Board of Revenue or a notified officer is not a Court of general jurisdiction but are statutory functionaries conferred powers persons designata by virtue of section 4. The power conferred on the Board of Revenue is also not of a Court but it has been assigned executive functions in the matter of recovery of dues and other matters. The powers under the Interest Act therefore per se do not appear to be available to the Board of Revenue for making of recoveries under the Settlement Laws. Even the requirements of section 1 of the Interest Act in other relevant aspects do not appear to have been met because it contemplates a notice to the debtor that the interest will be claimed from the date of such demand until the time of payment. Nothing of the sort has been done in the present case.
23. It would be advantageous to refer here to the decision of Karachi High Court in a case reported as PLD 1980 Kar.70 wherein section 1 of the Interest Act had been considered and interpreted. The High Court observed:- "This section has two parts. The first part allows interest if the amount is certain and is payable under a written instrument."
' It was further observed:- "The second part refers to the sum payable otherwise and no interest can be paid unless a demand for interest has been made. This, however, carries a proviso allowing the interest, if payable by law.
' Reading the aforesaid provision of law, I find considerable force in the contention raised before me. The correspondence does not show that demand for interest was math'. Reliance wai, however, placed by the learned counsel for the plaintiff upon section 61 of the Sale of Goods Act but this section has no application as it applies to the seller and buyer inter se and not to a third person as in the present case. No other law has been pointed out allowing interest. So, the claim for interest for the period prior to the institution of the suit is clearly hit by the Interest Act."
' In the present case, both the requirements of section 1 of the Interest Act are not fulfilled. Therefore reliance on this provision could not have been made. In fact this is not the case of the Member Board of Revenue/Chief Settlement Commissioner that he had jurisdiction to deal with the matter in terms of the Interest Act but all that the learned counsel for the Settlement Department submitted was that what was not prohibited was permissible. This is too wide a statement. In the matter of statutory functionaries they are to follow the steps and methods laid down by the statute by which they are governed. It is well settled that every action of a statutory functionary G must be backed by law. The Member, Board of Revenue is not claiming inherent jurisdiction and none can be spelt out for him. The impugned order, therefore, appears to be in excess of his jurisdiction.
' In the precedent case, the Karachi High Court had noticed the conflict of opinion which prevailed amongst various High Courts in pre-partition India as reflected in decision of the Privy Council in the case of B.N. Railway v. Ruttlanji Ranji (AIR 1938 PC 67). According to the Karachi High Court the rule which can be spelt out from the decision of the Privy. Council is that in the absence of an express or implied contract to pay interest or a usage of trade, interest can be allowed only under the Interest Act. It was lastly held that in a case where there was no contract or any usage, the allowing of interest was not permissible.
24. I may also refer with advantage to the case of Province of. West Pakistan v. Messrs Asghar All Muhammad All and Co. (PLD 1968 Kar. 196) decided by a Division Bench of the West Pakistan High Court comprising Mr. Justice A.S.Faruqui and Mr. Justice Anwarul Haq wherein it was laid down after consideration of the provisions of the Interest Act 1839 that interest can be granted only when there is a stipulation for it or where there is no stipulation where mercantile usage is pleaded or where interest is payable under any statute, such as section 80 of the Negotiable Instruments Act or the Interest Act 1893.
' These requirements are conspicuous by their absence in the instant case. Therefore, there was no foundation laid for burdening the petitioner with penal interest- by the Member, Board of Revenue.
25. Lastly, I may refer here with advantage to the case of Messrs A.Z. Company v. Messrs S. Maula Bukhsh Muhammad Bashir (PLD 1965 SC 505). The following observations occurring at pages 515 and 519 of the report would be relevant.
"It is true that a great number of decisions under the Interest Act are not easily reconcilable. But so far as grant of interest by way of damages is concerned there is not much divergence of judicial opinion. Hence in the light of the aforesaid decisions I am of the opinion that generally in the absence of an express or implied contract to pay interest, or usage of trade, interest cannot be allowed on damages for breach of a contract."
' As per B.Z. Kaikaus, J. At page 519 of the report the following useful enunciation appears apt:- "Now it may be urged that if for the failure to discharge a contractual obligation compensation can be claimed it should also be allowed to be claimed for failure to discharge a statutory obligation.
But on the other hand it can be contended that in respect of a failure to discharge a contractual obligation there exists section 73, but there is no law which provides for compensation to be claimed in respect of failure to discharge a statutory obligation. In the absence of any statutory provision there should at least be the practice of the Courts allowing compensation to be claimed in respect of failure to discharge statutory obligations. It is to be remembered that in accordance with section 1 of the Interest Act no interest could be claimed in cases not covered by that section unless at the time of the enactment of that Act such interest was payable by law. Even if the word 'law' is not to be confined to statutes, but it is to be extended to principles of equity and justice laid down by Courts., still the judgments of Courts to this effect should have been in existence at the time when the Interest Act was enacted. It has not been contended that there were any such judgments of Indian Courts in existence on that date. Section 1 of the Interest Act does not in cases where interest was not already payable by law permit interest where the sum claimed is not a sum certain. It only allows interest apart from contract in cases where a sum certain is due and a notice has been given that interest will be charged. In the present case it was not a sum certain. It has been argued that the sum was easily ascertainable in the market price and the contract price on the date of breach of contract. That, however, does not make it a sum certain."
26. Respectfully following the above dictas, I am of the considered view that the Member, Board of Revenue (S & R) was not clothed with any power to order interest by way of damages for breach of contract or otherwise.
27. Lastly but not leastly the order of the Member, Board of Revenue is otherwise not sustainable because he has burdened the petitioner with 'financial liability without giving him a reasonable opportunity to show cause and to defend himself as is evident from Annexure 'G' to the writ petition.
In fact this is not a case of mere interest but a case of penal interest.I am afraid under the Constitution of this country or the laws in force a statutory functionary like the Member, Board of Revenue (S & R) under Act XIV of 1975 has not been clothed with any power to impose penal interest for the payment of transfer price and no such provision was available under the Displaced Persons (C & R) Act, 1958 or the Rules framed thereunder.
' It may pertinently be pointed out at this stage that pare 14 of Settlement Scheme No:VIII (Re- constituted) provides that 10 per cent rebate. Shall be allowed to a transferee who pays the entire outstanding amount in lump sum in cash. The incentive was to give rebate and not to burden the claimants with penal interest. If the intention would have been otherwise then a clear stipulation would have been made either in the Act or Settlement Scheme No, VIII (Re-constituted) authorising the Member, Board of Revenue (S & R) or the relevant authorities to burden a claimant with penal interest or award of damages as compensation for delayed payment. The view of the learned Member, therefore appears to be arbitrary and capricious. It may have been done with the best of intentions to add to the compensation pool but 1 am sorry to say that even with best of intentions one cannot be deprived of his lawful rights and made to suffer the agony of being penalised in complete breach and violation of law which a statutory functionary is bound to follow.
28. One of the grounds mentioned in the Annexure' 'G' for the imposition of penal interest appears to be the dismissal of the previous writ petition by the High Court. This by itself could not have furnished a ground to arm the Member, Board of Revenue with a power which he otherwise did not enjoy. It cannot be overlooked at the same time that it was the High Court which suspended the operation of the impugned orders of the Additional and the Settlement Commissioner which stay order came to an end on dismissal of the writ, petition.
' For all these reasons I am clear in my view that the,order of the Member, Board of Revenue (S & R) is without lawful authority and of no legal effect. It is further directed that if the petitioner has paid up the transfer price of the property as determined by the Additional Settlement Commissioner after the adjustment of deferred payment available in his compensation book he shall be issued the transfer documents. For removal of doubts it is made clear that the amount available in the compensation book of the petitioner may be ascertained in that behalf and if it is not found to be available in the compensation book the petitioner shall pay such an amount in cash. There arises no question of burdening the petitioner with any penal interest as it is outside the perview of the law or the powers of the Member, Board of Revenue (S & R) or any Settlement Authority.
' There shall however be no order as to costs.