' This judgment shall dispose of the instant Writ Petition No,5541 of 1997/BWP., as well as Writ Petition No,5542 of 1997/BWP, as almost similar questions of facts and law are involved in them.
2. The undisputed facts of the matter between the parties are that there was an open auction and after adopting all the legal formalities the collection rights of the income (in case of Malik Sakhi Muhammad and another, the exit tax and in the case of Allah Ditta the transfer of immovable property fees) for the period from 1-7-1997 to 30-6-1998 were leased out to the respective highest bidders for various amounts. The auction/leases were approved by respondent No,1 and the approval letters were accordingly issued on 24-10-1997, but the possession of leases was handed over to the writ petitioners on 4-11-1997 and 6-11-1997 and thereafter, they started the collection of the amount of the said taxes. During the intervening period from 1-7-1997 till 3-11-1997/5-11-1997, respondents Nos.1 and 2 collected the taxes through their own staff. The writ petitioners maintained that the respondents were entitled to claim lease money from 4-11-1997/6-11-1997 and not from 1- 7-1997. They had approached respondent No,1 in this regard through applications, dated 27-10- 1997, which were probably not accepted. The petitioners alleged that they were not liable to pay the lease money for the period prior to their actually taking over the charge/possession to collect taxes under the leases. They further alleged that late delivery of possession of leases to them was due to the fault of the respondents. They finally prayed that the lease period be counted from 4-11- 1997 in the case of Malik Sakhi Muhammad and another and from 6-11-1997 in the case of Allah Ditta to 30-6-1998. They further prayed that the respondents be restrained from claiming, receiving, demanding and recovering any amount in the garb of the lease money for the period from 1-7-1997 till 4-11-1997/6-11-1997 and from taking any coercive measures against them in respect of any liability for the abovementioned period.
3. Respondents Nos.1 and 2 filed parawise comments in both the writ petitions and raised various preliminary objections regarding non-maintainability of the petitions in view of---
(i) the existence of clause (25/27) of the agreement regarding mandatory reference to the Arbitrator,
(ii) the petitioners being estopped by their words and conduct, and
(iii) approaching the Court by suppressing material facts and with unclean hands to avoid payment of remaining instalments o(lease money.
' They also claimed compensatory costs of Rs,25,000 in each case.
4. On merits, it was alleged that the lease agreements were duly executed between the parties with their free-will and consent and without any duress or pressure on 4-11-1997/6-11-1997, which were binding upon the parties. In this regard much stress was laid on Condition No,45/46 regarding the adjustment of the taxes received by the staff of the respondents during the period starting from 1- 7-1997 till actually handing over the charge to collect the taxes to the lessees and the adjustment of the money collected during this period against the lease money. It was further alleged that as adequate and efficacious remedy by way of appeal under the provisions of the Punjab Local Government Ordinance, 1979 and recourse to the Civil Court because of the existence of valid contracts between the parties were available, the Constitutional petitions were not maintainable in law.
5. The learned counsel for the respondents while objecting to the maintainability of these petitions under Article 199 of the Constitution of the Islamic Republic of Pakistan, 1973 submitted that the petitioners had not come to the High Court with clean hands as they had suppressed a very material fact about the execution of contracts regarding the disputed leases. According to him, these petitions were liable to dismissal on this short ground and being mala fide.
6. The learned counsel for the respondents vehemently contended that as there existed valid contracts between the parties, the Constitutional petitions were not maintainable to enforce contractual obligations. He submitted that the parties were bound by the terms and conditions of the contracts. In this regard he relied upon the following cases:---
(1) The Chandpur Mills Ltd. v. The District Magistrate, Tippera and another (PLD 1958 SC (Pak) 267),
(2) Messrs Momin Motor Company v. The Regional Transport Authority, Dacca and others (PLD 1962 SC 108),
(3) M. Muzaffar-ud-Din Industries Ltd. v. The Chief Settlement and Rehabilitation Commissioner, Lahore and another (1968 SCMR 1136),
(4) Pakistan Mineral Development Corporation Ltd. v. Pakistan Water and Power Development Authority and 2 others (PLD 1986 Quetta 181), and
(5) Hafiz Sharafatullah and others v. Federation of Pakistan and others (1995 CLC 1790).
7. The learned counsel for the writ petitioners, in response to the above objections regarding the maintainability of the writ petitions, submitted that it was not a universal rule that in the presence of a contract the jurisdiction of the Court under Article 199 of the Constitution could not be invoked.
He submitted that, in fact, the illegal orders of the respondents had been challenged. However, he did not dispute the execution of the agreements/contracts between the parties. In support of his contentions he relied upon the cases of:---
(1) Muhammad Fiaz Abbasi and another v. Public Works Department through Secretary, PWD. AJ&K, Muzaffarabad and 4 others (1993 CLC 159),
(2) Ch. Anwar Muhammad Khan and 6 others v. The Director of Industries and Mineral Development, Government of Pakistan, Islamabad Capital Territory, Islamabad and another (PLD 1994 Lahore 70),
(3) Messrs Muhammad Safdar & Company through Muhammad Safdar Sole Proprietor of the Company, Okara v. The Province of the Punjab through Secretary, Local Government of Rural Development Department, Government of the Punjab, Lahore and 4 others (PLD 1996 Lahore 22),
(4) Malik Muhammad Sarwar and others v. Town Committee, Chak Jhumra (1997 CLC 485).
(5) Abdul Hameed v. Deputy Commissioner/Administrator, Zila Council, Mandi Bahauddin and 4 others (1997 CLC 540 (D.B.). and especially the case of Rustam All and another v. The Administrator, Zila Council, Sialkot and 2 others (1997 CLC 747), wherein it was held as under:-- "The reading of the aforesaid provisions demonstrates that the execution of the formal agreement is necessary before any party is permitted under the law to embark upon the collection of goods exit, tax. Simply because the supervision of the collection as alleged by the learned counsel for the respondent was given to the petitioner the same in these circumstances would not clothe the respondent Zila Council with any authority to demand payment from 1-9-1995 particularly so when the learned counsel for the petitioner has totally denied any such supervision. The stance of the petitioner that he was not granted any supervision gets further support from the subsequent application, dated 14-9-1995 in which be repeated his earlier request made through application, dated 31-8-1995 for the grant of work order."
8. There is much force in the objections raised by the learned counsel for the respondents. The petitioners evidently concealed the factum of execution of contracts, dated 4-11-1997 and 6-11- 1997. There are no allegations that the said agreements were result of fraud, misunderstanding, duress or any pressure. As a matter of fact these agreements being enforceable by law are contracts within the meaning of section 2(h) of the Contract Act, 1872. These agreements/contracts were made according to the provisions of section 39 of the Punjab Local Government Ordinance, 1979 read with the Punjab Local Councils (Contract) Rules, 1981, the Punjab Local Councils (Lease) Rules, 1990 and the Punjab Zila Council Goods (Exit) Tax Rules, 1990. The relevant provisions of the Ordinance/Rules referred above are reproduced below for better appreciation of the legal nature of the contracts.
' The Punjab Local Government Ordinance, 1979: "39. Contracts.---(1) All contracts made by or on behalf of a local council shall be---
(a) in writing and expressed to be made in the name of the local council;
(b) executed in such manner as may be prescribed; and
(c) reported to the local council by the Chairman at the meeting next following the execution of the contract.
(2) No contract executed otherwise than in conformity with the provision of this section shall be binding on the local council."
' The Punjab Local Councils (Contract) Rules, 1981: "2. Definitions.---(1) In these rules, unless the subject or context otherwise requires, the following expressions shall have the meanings hereby respectively assigned to them, that is to say--
(a) 'agreement' means any kind of undertaking expressed or implied, made between a local council and any other person for consideration, for the purchase or supply of goods or materials, or for the acquisition, purchase or transfer by grant, gift, sale, mortgage, lease, exchange or otherwise of any movable or immovable property or for the execution of any work or for the performance of any service;
(b) ' contract' means an agreement enforceable by law;
(c) ' contractor' means a person entering into a contract with a local council, and shall include a person submitting a tender under Rule 7;
(d) ............................................................................................
(e) ....................................
"5. Manner of making contracts.---(1) A formal deed of agreement shall be executed between the local council and the contractor for every contract---
(a) the performance whereof is subject to such conditions as may be specified;
(b) which is to be made after inviting tenders; or
(c) for the acquisition, purchase, lease, sale or transfer of any immovable property.
(2) All agreements by or on behalf.Of a local council shall be signed by the Chairman and attested by two witnesses and shall bear the seal of the local council and shall be executed in such form as would bind him if it were made on his own behalf and may in the like manner and form be varied and discharged.
(3) All agreement shall be written on a stamped paper of the appropriate value and shall, where necessary be registered under the law for the time being in force.
(4) .
(5)
6. Personal responsibility of the person approving or making contracts.--- ' The Chairman making or approving a contract shall b e personallyresponsible for ensuring that-- -
(i) the contract is made without coercion, under influence, fraud or misrepresentation;
(ii) the parties are competent to make the contract;
(iii) .
(iv)
(v) ..
(vi) ....................................................................................
' The Punjab Local,Councils (Lease) Rules, 1990 "2. Lease of collection rights.---A Local Council may lease out by public auction for a period not exceeding one year, the collection rights of tax, fee, rate, toll, cess or other charges levied by a Local Council."
' The Punjab Zila Council Goods (Exit) Tax Rules, 1990: "(10) The successful bidder shall execute a formal deed in favour of the Zila Council the cost of which shall be borne by him containing the terms and conditions of the lease before exercising rights thereunder."
9. The intentional suppression of the fact that there existed contracts between the parties disentitles the petitioners to any relief under the Constitutional jurisdiction by this Court. Reliance is placed on the case of Abdur Rashid v. Pakistan and others (1969 SCMR 141), wherein it was held by the apex Court as under:--- "But in view of the fact that he did not come before the High Court with clean hands we did not allow him to do so. We are satisfied that the petitioner did not state all the relevant facts before High Court; that he deliberately suppressed the facts that he had been arrested by the Iranian Authorities for abetting his brother in a smuggling case and that for that reason he was considered an undesirable person. In these circumstances, the High Court rightly held that he was not entitled to get any relief in the writ jurisdiction."
10. The agreements contain a clause (Condition No,45/46) regarding adjustment of the recovered taxes for the period the supervision remained with the respondents in the account of the petitioners regarding lease money. It is clearly mentioned that the lease period was one year starting from 1-7-1997 till 30-6-1998. The petitioners knew it well while executing the contracts/ agreements, dated 4-11-1997/6-11-1997. This condition was not new for the petitioners. This was already mentioned in the advertisements for auction of leases appeared in various newspapers, which amounted to an offer for lease of these taxes. The petitioners accepted this offer, took part in the auction and finally being successful bidders executed by abovesaid agreements. So, the petitioners as well as the respondents are bound by the terms and conditions of the agreements. In the case of Bashir Ahmad v. Muhammad Yousaf through Legal Heir (1993 SCMR 183), the Supreme Court laid down as follows:- "As agreement or contract made between the competent parties with their consent for lawful consideration and lawful object is binding on the parties. The Legislature, thus, intends that there should be concluded valid contract."
The petitioners never disputed the execution of the agreements or the contents. The agreements being enforceable by law are contracts between the parties under section 2(h) of the Contract Act.
The petitioners cannot be allowed to say something against the accepted terms and conditions of leases. It is now well-established principle of law that the Constitutional jurisdiction of the High Court cannot be ordinarily invoked to enforce contractual obligations. In such a case, other equally adequate and efficacious remedies are available in view of the provisions of sections 139, 156, 166 and 173 of the Punjab Local Government Ordinance, 1979 and through recourse to the Civil Court.
The Supreme Court in the case of Raja Muhammad Ramzan and 21 others v. Union Council, Bajnial and another (1994 SCMR 1484) held the same view. In Muzaffar-ud-Din's case (referred in para. No,6 supra) the Supreme Court observed:--- "On hearing the learned counsel for the petitioner we find ourselves in complete accord with the view adopted by the learned Judges in the High Court that the only appropriate remedy open to the petitioner was to file a civil suit for the specific performance of the contract if so advised."
' The same view was expressed in the case of Hassan Associates v. Pakistan Telecommunication Corporation through Divisional Engineer (Development) Cable Planning, Faisalabad and 5 others (1996 MLD 244).
11. In the case of Muhammad Fiaz Abbasi and another and Ch. Anwar Muhammad Khan and 6 others, referred in para. No,7 supra, the Constitutional petitions were entertained as the legality of the orders of the Government functionaries were challenged, while in the cases of Messrs Muhammad Safdar & Company and Abdul Hameed the very factum of auction was in dispute and in the case of Malik Muhammad Sarwar and others the increase in the rates of taxes on various items was challenged. In the case of Rustam Ali and another no such agreement, as in the instant cases, was executed between the parties. Hence, the abovecited rulings on behalf of the petitioners are not at all applicable to the facts of the petitioners' cases.
12. The learned counsel for the respondents next referred to Condition No,25 in the agreement of Malik Sakhi Muhammad and similar Condition No,27 in Allah Ditta's agreement and submitted that the matter was to be referred to the Arbitrator, whose decision would be final and binding on both the parties. In this regard he referred the case of Messrs Combined Enterprises v. Water and Power Development Authority, Lahore (PLD 1988 SC 39) wherein the order of the learned Civil Judge appointing the Arbitration was restored and that of annulling the appointment of the Arbitrator was set aside because of the existence of the stipulation regarding reference of dispute or difference to an Arbitrator. Even in the case of Hassan Associates (referred in para. No,12) it was observed as follows:--- "In the instant case, the learned counsel conceded that the agreement provides an arbitration clause; according to which 'if any dispute, reference or question shall at any time arise between the contractor and consultant, the same shall be referred to employer herein the sole authority to decide and his decision will be final to be acceptable to both contractors and consultant". In the presence of terms and conditions for reference of dispute by the agreement itself, the disputed matters are to be resolved by the arbitrator; it is clear that the matter is not suitable for adjudication in the exercise of the writ jurisdiction of the High Court. It is open to the petitioner to go in for arbitration according to the agreement between the parties being an adequate alternative remedy which has not been availed by the petitioner. In this regard reliance can be placed on Al- Mahmood Industries (Pak.) Limited v. The Trading Corporation of Pakistan Limited and another 1974 SCMR 51."
12. On petitioners' behalf reliance was placed on the case of Director Housing, A.G.'s Branch, Rawalpindi v. M/s. Makhdum Consultants (PLD 1997 SC 663) and it was contended that it was the discretion of the Court to stay or refuse to stay the legal proceedings under section 34 of the Arbitration Act, 1940.
' There is no doubt that it is discretionary of the Court to stay the proceedings under section 34 of the Arbitration Act, but where a clause exists about the reference to the arbitration of a dispute arising out of the terms of the contract between the parties, it is always appropriate that the dispute be referred to the Arbitrator in terms of a lawful agreement. Even in the Director Housing's case the Supreme Court observed as follows:--- "The Court in such cases has a discretion either to stay or refuse to stay the legal proceedings.
However, in exercise of this discretion the Court is always guided by the paramount consideration that a party is bound by the terms of a lawful agreement which it enter into with another party and it cannot be relieved lightly from the obligations arising under the agreement except in very exceptional circumstances which make the enforcement of the terms of agreement unlawful or highly inequitable. Therefore, where a party enters into an agreement with another party to refer any future dispute arising between them under the agreement to the arbitration for its resolution, the Court will not generally allow continuation of any legal proceedings initiated by a party to such an agreement, ignoring the arbitration agreement, and direct the party to have recourse to the agreed forum for decision of the dispute."
As none of the parties has rescinded or disputed the abovementioned contracts, the Constitutional petitions are not maintainable without referring the dispute to the Arbitrator.
14. It was finally submitted on behalf of the respondents that the amount collected by the staff of the respondents was adjusted against the lease money due from the petitioners and after accepting the said settlement in accordance with the agreements the petitioners paid the remaining instalment. He submitted that, thus, the petitioners were estopped from their conduct to agitate this matter. This learned counsel for the petitioners did not deny the factual position but still maintained that the petitioners were not bound to pay the lease money for the period during which the taxes were not collected by them.
15. I am of the view that the contention of the learned counsel for the respondents has much force.
The petitioners by getting the money received by the staff of the respondents adjusted towards the lease money in fact acted upon the agreements/contracts duly executed between the parties.
They are now estopped from agitating this matter at this late stage. The conclusion is that the writ petitions are not maintainable as adequate and efficacious remedies are available to the petitioners. Both the writ petitions are accordingly dismissed with costs.