Z. A. CHANNA, J.-This petition, by the, Karachi development Authority a statutory body constituted under the Karachi Devc1upwient Authority, Order, 1957, challenges the validity of the levy upon it of education cess with effect from 1-12-1972 to 30-11-1974.
2. The Workers' Children (Education) Ordinance, 1972, hereinafter referred to as the Ordinance, was promulgated by the President of Pakistan on 13-4-1972. It was amended by Ordinance of 1972 rind later by Act XXIV of 1973. Subsection (1) of section 3 of the Ordinance provides for the levy by the Provincial Government of education cess upon every employee of an establishment in which the number of workers employed at any time during a year is 20 or more. The term 'establishment' has been defined in the Ordinance as- "' . . . . . . . any office, firm, industrial unit, undertaking, shop or premises in which workers are employed for the purpose of carrying on any business, trade, manufacture, calling, service, employment or occupation"
Clams (c) of subsection (2) of the Ordinance defines worker thus:- "(c) 'Worker' means any person employed, whether directly or through any other person, in any establishment to do any skilled, or unskilled manual or clerical work for hire or reward whose monthly wages do not exceed one thousand rupees, but does not include-
(i) persons in the service of the State including members of the Armed Forces, Police Force, railway servants;
(ii) persons employed in any undertaking under the control of any defence organisation or railway administration;
(iii) persons in the service of a Local Council, a Municipal Committee, a Cantonment Board or any other Local authority."
3. It was contended by Mr. Imam Ali Kazi, the learned counsel for the petitioner that the Karachi Development Authority, hereinafter for the sake of brevity referred to as the K. D. A., is exempt from the levy and the payment of the education cess as it is a lucal authority for the purposes of the Ordinance. Elaborating his arguments, the learned counsel submitted that since the expression 'local authority' has not been defined in the Ordinance, the definition of this term as contained in the General Clauses Act, 1897, has to be adopted and that the K. D. A. falls within the said definition inasmuch as it performs the functions of municipal nature, exercises powers and performs functions of the Province in relation to Local Self-Government, and administers a 'local fund' as defined in the compilation of the Treasury Rules (Volume 1), of the Government of Pakistan.
4. The expression 'local authority' has been defined in clause (28) of section 3 of the General Clauses Act, 1897, as follows:- "'local authority' shall mean a Municipal Committee, District Board, body of Port Commissioner or other authority legally entitled to, or entrusted by the Government with, the control or management of a Municipal or local fund."
5. The essential requirements of a 'local authority', which is not a Municipal Committee, District Board, or body of Port Commissioner appear to be (i) that it should be an 'authority', (ii) that it should control or manage a Municipal or local fund, and (iii) that it should be legally entitled so to do or should be entrusted by the Government with such control or manage--ment.
6. In Deputy Managing Director, National Bank, of Pakistan v. Ataul Hague (1) PLD 1965 SC 201, their Lordships of the Supreme Court considered the question as to what were the essential characteristics of a local authority. Cornelius, C. J., while repelling the contention that the National Bank of Pakistan was a `local authority', observed as follows.- "The expression 'local authority' has been used in statutory phraseology in the Indian sub-continent for a great many years, and is always understood to mean an authority which is entrusted with the administration of a local fund. Local authorities are bodies exercising within limited territories including in a Province, Powers which belong to the Province, but which by statute are delegated to the local authority. A local authority is ordinarily charged with functions of self. Government, and has power of making bye-laws, of imposing taxation, and of maintaining and administering a local fund."
7. An examination of the various provisions of the Karachi Develop--ment Authority Order, 1957, shows that the K. D. A. is empowered by law to exercise certain Municipal functions, has been entrusted with certain powers and functions of the Province in relation to Local Self-Government, has the power to frame regulations and also administers a fund. The purpose for which the order was promulgated, as disclosed, in its Preamble, is:-- ". . . to make provision for the development and improvement of certain areas in the Karachi Division by opening up congested areas laying out or altering streets providing public amenities like parks, gardens and playgrounds, executing works for water supply and sewerage or by demolishing, improving or constructing buildings; for the acquisition of land for such development or improvement, including the re-housing of persons affected thereby and certain other persons, for the preparation and execution of development or improvement schemes, building research schemes, and similar other schemes; and for matters connected therewith or incidental thereto."
8. Article 11 of the Order requires the K. D. A. to prepare an outline programme for the development and improvement of such areas within Karachi, as it may consider necessary, outlining the proposed improvements, including, water supply, sewerage and buildings required for residential, commercial and other purposes. Clause (3) of the said Article requires the K. D. A. to prepare specific schemes. Article 13 empowers the K. D. A. to prepare or arrange for preparation of land u3e and Master Plans, to establish and maintain Housing Research Stations, to sponsor limited liability companies under the Companies Act, Co-operative Societies under the Cooperative Societies Act, or Registered Societies under the Literary, Scientific and Chartable Societies Act, and to undertake any work connected with or incidental to the K. D. A. order, that may be assigned to it by the Provincial Government. Article 13-.A empowers the K. D. A. to undertake and execute any housing scheme the Central Government entrusted to it. Article 15 empowers she K. D. A. to make regulations. Article 17 provides that necessary funds required by the K. D. A. for execution of its schemes shall be placed at its disposal by the Provincial Government, and that further the Karachi Municipal Corporation will contribute to the K. D. A. a percentage of its proceeds of property taxes.
The K. D. A. also been empowered to borrow money, to open Deposit Accounts with Banks, to invest its funds to establish a Sinking Fund and also to set up a Renewal and Replacement Fund. The accounts of the K. D. A. are to be audited by Chartered Accountants and the Provincial Government may authorise the Comptroller and Auditor-General of Pakistan to conduct test or other audit of the K. D. A. accounts: The K. D. A., is further required, under Article 27, to submit to the Government an annual report on the conduct of its affairs and also proposals and budget estimates. The Statement of Accounts of the K. D. A., together with the report of the Comptroller and Auditor- General of Pakistan, are required to be laid before the Provincial Assembly of West Pakistan and such accounts are to be scrutinized and examined by the Committee of public Accounts of the Provincial Assembly. The K. D. A. has been empowered to frame and implement various types of schemes, including a street scheme, transport scheme, housing accommodation scheme, drainage and sewerage disposal scheme, health and welfare scheme and a general improvement scheme. The K. D. A. is also empowered under Article 40 to make Zonal Plans showing the purpose for which any land in an area shall be primarily used and to reserve any areas for residential purposes, commercial purposes, industrial purposes agricultural purposes and open spaces. All plan; for the erection of buildings or structures in any area covered by a Zonal Plan scheme are to be submitted for approval to the K. D. A. The K. D. A. is also empowered to take over any street or open Space which is needed for executing any improvement scheme, and to alter or close any street. The permission of the K. D. A. is required for erecting or re-erecting any building in Karachi or making any material external alteration to an existing building. A Completion Certificate and permission to occupy for use is also required in the case of any building in a controlled area. The K D. A. has also been empowered to declare buildings unfit for human habitation, to remove any building in ruinous or dangerous state, to remove unauthorised buildings and to demolish unauthorised constructions. The K. D. A has also been empowered under Article 85 to prescribe street lights, and building lines beyond which no building or construc--tion can be raised. The K. D.
A. has further been empowered to purchase or lease land by agreement and also to acquire land under the Land Acquisition Act, 1;
94. The K. D. A. has further been empowered to levy a Betterment fee payable by the owners of the land within any improvement schema, the value whereof has increased due to the implementation of the scheme. Such Betterment tax is to be recovered as arrears of land revenue. The K. D. A. is also required to supply water to the K. M. C., the Cantonment Board, K. P. T. and the Railways and also to individual consumers. Under Article 121, the members of the Governing Body and officers and servants of the K. D. A. are to be deemed to be public servants.
The K. D. A. can also be empowered by the Government to exercise the powers and functions of the Karachi Municipal Corporation under the Bombay Town Planning Act, 1950.
Article 124 is important as under it the Provincial Government can empower the K. D. A., in any area in respect of which an improvement scheme is in force, to exerctse the powers and the functions of the Karachi Municipal Corporation, including the power to levy taxes. The K. D. A. has further been given certain powers for facilitating movement of population in Karachi.
9. It will thus be been that the K. D. A, is an authority established by law and under its charter it is charged with functions of self-Government has the power of malting regulations and imposing fees and even taxes in certain cases. The K. D. A. is also by law entitled to the- control and management of its fund. '
10. It next falls to be considered whether the fund administered by the K. D. A. is a 'local fund'. The learned Advocate-General referred us to the definition of 'local fund' as contained in the Sind Local Fund Audit Act, 1530. The said definition runs as follows:- " 'Local Fund' means any fund to the control or management of which a local authority is legally entitled and includes the proceeds of any cess, rate, duty or tax which such authority is legally entitled to impose, and any property vested in such authority."
11. The above definition is not of any material help as it refers to a fund controlled or managed by a 'local authority' and the proceeds of taxes imposed by it and the property vested in it. Furthermore, the local Fund Audit Act, 1930, was repealed by the Municipal Administration Ordinance, 1960, which in turn has been repealed by the Siad Peoples Local Government Ordinance, 1972. The expression "local fund"; however, has also been defined in the compilation of the Treasury Rules, Government of Pakistan, Volume I. The said definition is a follows:- "652. The expression 'Local Fund' denotes-
(i) revenues administered by bodies which by law or rule having the force of law come under the control of the Government, whether in regard to the proceedings generally, or to specific matters such as the sanctioning of their budgets, sanction to the creation or filling up of particular appointments, the encashment of leave, pension or similar rules;
(ii) the revenues of any body which may be specially notified by the Government as such."
12. The K. D. A. by law is under the effective control of Government, inasmuch as its Governing Body and its Officers and servants holding posts, the monthly salary whereof exceeds Rs. 1,500, are appointed by the Government, which also has the power to sanction, reject or revise schemes prepared by the K. D. A., to give directions to it, to sanction its budget, to examine its accounts, and in other ways to exercise control and supervision over it. The fund controlled by the K. D. A. thus falls within definition of 'local fund' as contained in the Treasury Rules. The said Rules have been framed by the Government of Pakistan under section 151 (1) of the Government of India Act and hence have statutory force.
13. In Chief Secretary, Government of Punjab v. Commissioner of income-tax (1) PLD 1976 Lab. 258, a Division Bench of the Lahore High Court relied upon the above definition of 'local fund' and held, on an examination of the various provisions of the Thal Development Authority Act, 1949, that the fund administered by the Thai Development Authority was a 'local fund' and the said Authority was a local authority for the purposes of the General Clauses Act, 1897.
14. The learned Advocate-General sought to distinguish this case on the ground that under section 43 of the Thal Development Authority Act, 1949, the Thal Development Authority is empowered, with the previous sanction of the Provincial Government, to levy on any local area by tax which the Provincial Legislature has power to impose in the Province, whereas tile K. D. A. has only the power to impose a Betterment fee, which cannot be equated with a tax. We have already referred to the provisions of Article 124 of the K. D. A. Order, 1957, under which the Provincial Government can empower the K. D. A., within area in respect of which an improvement scheme is in force, to levy taxes which may be imposed by the Karachi Municipal Corporation. The K. D. A. Order thus does make provision for levy of taxes by the K. D. A. though this power can only be exercised in respect of an area in which an improvement scheme is in force and on a notification being issued by the Provincial Government, authorising the K. D. A. to exercise such powers. It thus appears to us that the K. D. A. fulfils the essential characteristics of a 'local authority' which have been laid down by Cornelius, C. J., in the case of the Deputy Managing Director, National Rank of Pakistan.
15. The learned Advocate-General contended that local fund: as n aged in the General Clauses Act, must be the fruit of the exercise of the sovereign powers of the State in relation to Local Government.
We are unable to accept this narrow interpretation, because a 'local fund' may ba financed frown several sources, such as grants from the Government, contributions, from local authorities, loans raised in the country or abroad, imposition of fees and taxes, sale of land, realisation from fines and composition of offences, etc.
16. The learned Advocate-General finally contended that the legislative intent clearly was that the K. D. A. should be deemed to be a 'local authority' for only a specific purpose, and the necessary inference therefore to be drawn was that it could not be deemed to be a 'local authority' for other purposes or generally. In support of this contention he invited our attention to Article 95 of, and clause (1) of the Schedule to the K. C). A. Order. Article 95 provides that for the purposes relating to the acquiring of land by the K. D. A. under the Land Acquisition -Act, the said Act shall be subject to the modifications specified in the Schedule. Clause (1) of the Sche--dule adds a new clause, namely, Clause (ee) to section 3 of the Land Acquisi--tion Act. The said new clause reads as follows t- "(ee) The expression 'local authority' includes the Karachi Develop--ment authority, established under Article 3 of the Karachi Develop--ment Authority Order, 19557."
17. The declaring of the K. D. A. to be a 'local authority' for the purposes of the Land Acquisition Act, 1894, in our opinion can in no way be considered to indicate the legislative intent that the K. D. A. is not a 'local authority' for the purpose of the General Clauses Act, 1897. It may be pointed out that the definitions contained in the General Clauses Act, 1.897, are only applicable to the Acts and regulations which have been enacted or promulgated after the coming into force of the aforesaid Act. Since the Land Acquisition Act, 1894, came into force prior to the enactment of the General Clauses Act, 1897, the definitions of the various terms and expressions given in the latter Act, including the definition of 'local authority', would not apply to this expression as used in the former Act. It was therefore necessary, in order that the K. D. A. should be deemed to be a `local authority' for the purposes of that Act, that the Land Acquisition Act be amended accordingly.
18. On these considerations, we are satisfied that the petitioner is e 'local authority' for the purposes of the Ordinance and is therefore entitled to exemption from the payment of the education ce3s levied there under. We accordingly allow this petition and declare that the impugned orders passed by respondents 2 to 5 levying the education cess on the petitioner are without lawful authority. In the circumstances of the case, there would be no order as to costs.