SARDAR SAID MUHAMMAD KHAN, C.J.---The above-entitled appeals have been directed against the judgment of the High Court dated 15-1-2000, whereby the applications filed by the appellant, herein, under section 136(2) of the Income Tax Ordinance, 1979, were dismissed on the ground that the Commissioner of Income Tax was not impleaded as a party in the same. As the above-entitled appeals arise out of the single judgment of the High Court we also propose to dispose of the same by this single judgment.
2. The brief facts of the case are that the appellant is functioning as a registered company under section 26 of the Companies Act (now Companies Act, 1984) and is working under the control of Ministry of Labour, Manpower and Overseas Pakistanis, Government of Pakistan. According to the appellant, it had filed the returns in Pakistan on 'total world income'basis and the assessments for the relevant years were also finalized in Pakistan but the returns were not accepted and income was arbitrarily assessed by the concerned authorities. The appellant, after exhausting the remedy of appeals, filed applications before the Income Tax Appellate Tribunal for making reference to the High Court but those were also rejected on 12-12-1995. Lastly the appellant filed applications under section 136(2) of the Income Tax Ordinance, 1979, to the High Court.
3. A preliminary objection was raised on behalf of the respondents in the High Court that as the Commissioner was not impleaded as party in the applications, the same were not maintainable.
The High Court, after hearing the parties, upheld the objection raised and dismissed the said applications as being improperly constituted. It is against the aforesaid order of dismissal of the applications that the above-titled appeals have been preferred.
4. We have heard the arguments and perused the record. A preliminary objection has been raised by Mr. Umar Mahmood Kasuri, Advocate, the learned counsel for the respondents, that the appellant is a registered company and the appeal could be filed only by the Board of Governors in view of the Memorandum and Articles of Association of Overseas Pakistanis Foundation (hereinafter shall be called as the Memorandum and Articles of Association) and not by its Managing Director alone. He has argued that it is for the appellant to show that the appeals have been duly filed but there is nothing on the record to show that the Managing Director was authorised by file Board of Governors to file appeals to this Court. He has cited following authorities in support of his contentions. In a case reported as Government of Pakistan v. Premier Sugar Mills PLD 1991 Lah. 381, it has been held that even a person incharge of the affairs of the company has to establish that the suit was competently and authorisedly instituted on behalf of the company. It was further observed that the suit by a Director of company would not be competent unless he was authorised to do so through a resolution of the company's Board of Directors. In a case reported as Bankers Equity Ltd. v. Sunflo Cit-Russ Ltd: PLD 1999 Lah. 450, it was held that the defendant-company was a corporate body and according to the memorandum and article of association, there was no concept of sub-delegation of powers to any officer of the defendant- company. Thus, it was observed that Purchase Manager of the defendant-company was not competent to move the application for leave to defend. It has been further contended that there must have been some authorization to the Managing Director by the Board of Governors of the Company. A reference has also been made to an unreported judgment of the High Court entitled Walton Tobacco Company and others v. Azad Government and others Writ Petition No,6 of 1992, decided on 16-7-1992,wherein it has been observed that as the minutes of meeting of the Board of Directors of Walton Tobacco Company did not conform to section 173 of the Companies Law because the names and number of members of the Board of Directors present in the meeting were not mentioned. Therefore, it was held that it could not be said that Azhar-ud-Din Naeem Siddique was validly appointed as attorney on behalf of the company.
5. In reply, it has been contended by Mr. Masood Ahmad Shaikh, Advocate, the learned counsel for the appellant, that under paragraph 15 of the Memorandum and Articles of Association, the Board of Governors is competent to delegate its powers to Managing Director which in the instant case was done in the meeting of the Board held on 9-7-1979, the meeting was attended by three of the members of the Board of Governors as is evident from the minutes recorded in the relevant register maintained by the company. Thus, according to the learned counsel for the appellant, the appeals were validly filed by the Managing Director.
6. We have given due consideration to the respective contentions of the parties and also perused the minutes recorded in the register of the company produced before us. All the powers enjoyed by the Board of Governors were delegated to the Managing Director as is evident from the decision taken' regarding Item No,9 of the agenda. The delegation is permissible under paragraph 15 of the Memorandum and Articles of Association. The relevant extract of the said minutes is reproduced as under:-- "Item 9. Delegation of powers to the Managing Director. Powers to make decisions in all Functional Areas of the Foundation viz. Strategic Decisions, Operational Decisions, Administrative and Financial Decisions. Resolved, that full powers are delegated to the Managing Director in all areas."
It is evident from what has been stated above that the Managing Director was fully empowered to act on behalf of the Board of Governors. The unreported judgment of the High Court, referred to above, is also not relevant because in that case the minutes did not show the names and number of members of Board of Governors who attended the relevant meeting but in the instant case the names and number of members of Board of Governors who attended the meeting in which powers were delegated to the Managing Director have been clearly recorded. Thus, we repel the contention of the learned counsel for the respondents that Managing Director was not competent to take steps to file the appeals in the instant case.
7. The next objection which was raised on behalf of the respondent was that Mr. Shafique Amjad, who is an Advocate and acted as attorney on behalf of the Managing Director and filed the appeals in this Court was not competent to do so. According to the learned counsel for the respondents, under section 21 of the Azad Jammu and Kashmir Legal Practitioners and Bar Councils Act, 1995, (hereinafter shall be called the Bar Councils Act) read with rules 1, 12 and 13 of Order IV of the Azad Jammu and Kashmir Supreme Court Rules, 1978, only an Advocate duly enrolled as an Advocate of the Supreme Court is competent to act and plead in the Supreme Court. He has contended that a person who is not an Advocate of the Supreme Court is not legally competent to file an appeal or plead in the Supreme Court as a 'Mukhtar' after receiving fee from the person on whose behalf he acts or pleads; if he is permitted to do so that would defeat the aforesaid provisions of the Bar Councils Act. Thus, it was argued that under section 10 read with section 23 of the Contract Act, the power of attorney executed in favour of Shafique Amjad being void renders the institution of the appeals as illegal. The learned counsel has pointedly made a reference to section 20 of the Bar Councils Act in support of his contention that only. An Advocate enrolled as such in the Supreme Court is competent to practise the profession of law and not an attorney (Mukhtar) of a party. Thus, the learned counsel for the respondents has contended that the power of attorney executed in favour of Mr. Shafique Amjad being void, the presentation of appeals by him in the Supreme Court would also be incompetent.
8. We have given due consideration to the matter. For convenience, section 20 of the Bar Councils Act .Is reproduced as under:-- "Right of advocates to practise.--(1) Save as otherwise provided in this Act, no person shall.Be entitled to practise the profession of law unless he is an Advocate.
(2) Subject to the provisions of this Act, the rules made thereunder and any other law for the time being in force--
(a) an Advocate of the Supreme Court, High Court or Shariat Court shall be entitled as of right to practise throughout Azad Jammu and Kashmir, and to appear, act and plead before any Court or Tribunal in Azad Jammu and Kashmir; and
(b) any other Advocate shall be entitled as of right to practise throughout the Azad Jammu and Kashmir.
(3) No Advocate shall appear or act for any person in any Court or Tribunal unless he has been appointed for the purpose by such person by a document in writing signed by such person or his recognized agent or some other person duly authorised by him to make such appointment, and such document has been filed in such Court or Tribunal: Provided that nothing in, this subsection shall apply to--
(a) a Public Prosecutor or .Any Advocate appointed by the State; or
(b) an advocate when appearing on behalf of another Advocate, if the advocate so appearing has filed a memo. Of appearance: Provided further that an advocate may be allowed to appear for an accused in custody on his undertaking to file the document required under this subsection."
9. The perusal of the provision reproduced above reveals that it only regulates the practice of law of Advocates in the Court; it does not specifically say that a person who is not an Advocate of the Supreme Court or the High Court cannot be appointed to act as an attorney (Mukhtar) of a party.
The appointment of an attorney or for that matter "Mukhtar" is governed by an Act known as the Power of Attorney Act, 1882, which also does not place any such restriction on the appointment of a "Muldnar". Thus, there being no restriction in the Bar Councils Act, the Azad Jammu and Kashmir Supreme Court Rules, 1978, or the Power of Attorney Act, 1882 that an Advocate cannot be appointed as an attorney by a litigant to act on his behalf, the power of attorney was not void as being violative of law. It is correct that there may be cases in which an Advocate who is not enrolled in the Supreme Court but he, as a matter of routine, gets fee and appears and pleads as a "Mukhtar' on behalf of a party; in such cases it can be said that he frustrates the provisions of the Bar Councils Act and the Supreme Court Rules but it cannot be said that if' an Advocate acts on behalf of a party on the basis of power of attorney only on solitary occasion and files an appeal, that .Would tantamount to defeat the provisions of Bar Councils Act or the Supreme Court Rules, especially so when there is no proof that he charged any fee for that.
10. Next, it has been argued on behalf of the appellant that the High Court has committed an error in holding that in view of Rule 33 of the Rules known as the Income Tax Appellate Tribunal Rules, 1981 (hereinafter -shall be called the Rules of 1981) the Commissioner, Income Tax, was a necessary party in the reference application made to the High Court for formulating the questions of law. The learned counsel has submitted that the aforesaid Rules were framed by the Income Tax Appellate Tribunal constituted by the Government of Pakistan and not by the Azad Jammu and Kashmir Council. He has submitted that as the rule-making power vested in the Income Tax Appellate Tribunal, the same could be framed only by the Tribunal constituted by the Azad Jammu and Kashmir Council and cannot be framed, or adapted by the Azad Jammu and Kashmir Council; the rules framed by the Income Tax- Appellate Tribunal constituted under the Income Tax Ordinance, 1979, in Pakistan, cannot be adapted by the Azad Jammu and KashmirCouncil in the State of Azad Jammu and Kashmir. Thus, the learned counsel has submitted that although the said Rules of 1981 were adapted in Azad Kashmir through an Act known as the Azad Jammu and Kashmir Council Finance (Amendment) Act, 1982 (Act No,4 of 1982), the same have no legal force because these rules were not framed by the Income Tax Appellate Tribunal under section 133(8) of the Income Tax Ordinance. He has also submitted that even otherwise, it is not correct to say on the analogy of the relevant provisions in the Income Tax Ordinance, 1979, that the Commissioner was a necessary party in the reference application. He has cited a case reported as Commissioner of Income-tax, Government of Azad Jammu and Kashmir, Muzaffarabad v. M/s. United Builders Corporation, Mirpur 1986 PTD 208, in support of his contention that in view of the provisions contained in the Azad Jammu and Kashmir Interim Constitution Act, the corresponding provision contained in section 136 of the Income Tax Ordinance, 1979, are not applicable so far as preferring an appeal to the Supreme Court is concerned. It has been further held that under section 136 of the Income Tax Ordinance, 1979, the jurisdiction of High Court is advisory in nature and is confined to giving its findings on question of law arising out of an order of the Appellate Tribunal and it is for the Appellate Tribunal to pass proper order in pursuance of finding of High Court. Thus,-the order of the High Court on the reference under section 136 whereby it set aside the order of Appellate Tribunal and restored that of the Income-tax Officer travelled was held to be beyond the scope of section 136 of the Income Tax Ordinance and was set at naught.
11. The learned counsel for the appellant has also submitted that the objection that the Commissioner, Income Tax, was a necessary party was not raised before the Income Tax Appellate Tribunal, the same could not be raised in the reference application which was made to the High Court.
12. In reply, it has been contended on behalf of the respondents that there is no quarrel with the fact that the Rules of 1981 have been duly adapted in Azad Jammu and Kashmir but the grievance of the appellant is that as the said Rules were framed by the Income Tax Appellate Tribunal constituted by the Government of Pakistan, the same could not be adapted by the Azad Jammu and Kashmir Council. The learned counsel has argued that the Azad Jammu and Kashmir Council possesses all legislative powers regarding income tax. Thus, if the rules framing power was delegated to the Income Tax Appellate Tribunal under section 133(8) of the Income Tax Ordinance, that can be also curtailed partly, wholly or taken away in toto. It has been vehemently argued that in case of delegated legislation, the authority which delegates the power is competent to take back the same. The learned counsel has maintained that as the Income Tax Ordinance, 1979, and rules framed thereunder were adapted in Azad Jammu and Kashmir by the Azad Jammu and Kashmir Council in exercise of its legislative powers, ithad the powers to amend the relevant statute and adapt the rules of procedure as- were in force in Pakistan. Thus, the provisions contained in subsection (8) of section 133 of the Income Tax Ordinance would be deemed to have been amended to the extent of the adaptation of the said rules. The learned counsel has cited following authorities in support of his contentions:-- In a case reported as Abdul Rahim v. Messrs United. Bank Ltd. Of Pakistan PLD "1997 Karachi 62, while interpreting the scope of first proviso to section 91 of the Banking Tribunals Ordinance, it was held that the provision was directory and not mandatory; thus, the word 'shall' would be read as 'may'. In a case reported as V. VasanthaPai v. C.K. Raniaswamy AIR 1978 Madras 342, it has been observed that when the Governor in exercise of his powers under Article 188 of the Constitution appoints some person or persons before whom the members may make and subscribe their oath, he does not thereby abdicate his own powers under the Article; the jurisdiction to administer oath in such cases is concurrent and option lies with the member in Council to choose between the two before whom he would like to make oath. In a case reported as EpariChinna Krishna Moorthy v. State of Orissa AIR 1964 SC 1581, while interpreting section 2 of the Orissa Sales Tax Validation Act (7 of 1961), and. Section 6 of the Orissa Sales Tax Act (1947), it has been held that the contention that once exemption was validly granted, the Legislature cannot withdraw it retrospectively because that would be invalidating the notification itself was not correct because section 2 in substance declares the intention of the delegate in issuing notification granting exemption that the same would be confined only to the person who actually produced the ornaments or employed artisans for the purpose. Thus, it was held that if the State Government was given the power either to grant or withdraw exemption, that cannot possibly affect the Legislature's 'competence to make any provision in that Lehalf either prospectively or retrospectively, therefore, the retrospective reparation of section 2 of the Orissa Sales Tax Validation Act was held valid. In a case reported as N.K. Papiah & Sons v. The Excise Commissioner AIR 1975 SC 1007 while dealing with the constitutionality of sections 22 and 71 of the Karnataka Excise Act (21 of 1966),. It was observed that section 71 which provides for the rule-making powers imposes necessary check upon the wider powers given to the Government to fix the rate. Thus, it was directed that the delegate will place the rule before the Legislature. It was observed that the Legislature may also retain its control over the delegate by exercising its powers of repeal of the legislation, withdraw the authority it had vested in him because it (Legislature) did not abdicate its functions, In a case reported as P. Ramiah v. Chief Secretary to the Government of Madras AIR 1950 Madras 100, it has been held that the Government order dated 21-3-1947 makes it clear that the District Magistrate and the Commissioner of Police, Madras, were also empowered to exercise powers under section 2(1) of the Madras Maintenance of Public Order Act in addition to the Provincial Government. It was observed that it was not an absolute transfer by the Provincial Government of its powers under section 2(1) of the Act, rather the same was only a partial delegation of its powers.
Thus, it would be perfectly open to the Provincial Government to say that it would not part with the powers vested in it under section 2(1) of the Act entirely and would reserve for themselves part of the same. In a case reported as Appeal Committee, Anakapalli Municipality v. Commissioner, Anakapalli Municipality AIR 1964 Andhra Pradesh 357, it has been held that where a Municipal Council delegates its powers under section 23 of the Madras District Municipalities Act to the Appellate Committee to hear appeals, it does not part itself with those powers and can hear appeals itself during the subsistence of the delegation. However, it was observed that good sense requires that there should not be conflict of decision or jurisdiction between the Government and delegate. In a case reported as Manton v. Brighton Corporation 1951 All England Law Reports 101 (Vol. 2), it has been held that as the responsibility for the discharge of the statutory duty delegated by the Local Council to the Committees remained with the Council, the Council had the power to determine the authority of any of the. Committees and it had also the power to revoke the authority of a Committee as whole. Thus, it was observed that it had the power to revoke the authority of a single member of the Committee before the end of his prescribed period of office. In a case reported as Gordon, Dadds& Co. v. Morris 1945 All England Law Reports 616 (Vol. 2), it has been held that the word 'delegate' in the Defence (General) Regulations, 1939, was used in its ordinary meaning and a delegation by a Competent authority of its powers under Regulation No,51 did not divest that authority of any of its powers under the Regulations. In a case reported as Ch. Abdul Latif v. Secretary, AJ&K Council 2000 PLC (C.S.) 210, it has been held that non-impleadment of necessary party under Service Tribunals Procedure Rules was a mandatory requirement and its violation would entail dismissal of the appeal. In a case reported as Archibald G. Hodge v. Queen (1883) 9 Appeal Cases 117, the argument that the Legislature having committed important regulations to agent or delegate effaces itself, was repelled observing that powers of Legislature were intact and it can, whenever it pleases, destroy the agency it has created and set up another or take the matter directly in its hands. It was further observed that it was for the Legislature to decide how long it needed the aid of the agencies and not for the Court to decide.
13. It has also been contended by the learned counsel for the respondents that assuming for the sake of arguments that no rules were either adapted or framed after the adaptation of Income Tax Ordinance, 1979, the rules which were framed under the Income-tax Act, 1922 would be deemed to have been in force in Azad Jammu and Kashmir. The learned counsel has referred to section 24 of the General Clauses Act and section 51 of the Azad Jammu and Kashmir Interim Constitution Act, 1974, in support of his contention that until and unless the fresh rules under new statute were framed, the rules framed under the Income-tax Act, 1922, which were prior in force in the State would continue to hold the field until repealed. The learned counsel has submitted that previous to framing of rules by the Income Tax Appellate Tribunal in the year 1981 which were adapted in Azad Jammu and Kashmir in the year 1982, the Income Tax Appellate Tribunal Rules, 1948, framed under the Income-tax Act, 1922, would continue to be applicable. In view of the provisions contained in rule 37 of the said rules, the Commissioner, to whom the Income Tax Officer was subordinate, was to be made a party in the reference application in the High Court. Thus, the learned counsel for the respondents has maintained that in any case, it was incumbent upon the appellant to array the Commissioner, Income Tax, as a party in the reference applications. The learned counsel has further argued that the Income Tax laws and rules framed thereunder are special law and the provisions of the Civil Procedure, Code are not attracted in the case while deciding the question as to whether the Commissioner was a necessary party or not in view of the provisions contained in Civil Procedure Code.
14. We have given due consideration to the arguments advanced at the Bar and we are of the opinion that the rules framed by the Income Tax Appellate Tribunal in Pakistan have been duly adapted in Azad Jammu and Kashmir vide section 2(a) of the Azad Jammu and Kashmir Council Finance (Amendment) Act, 1982, whereby all-rules and notifications etc. In force in Pakistan were adapted in Azad Jammu and Kashmir. So far as, the contention for the learned counsel for the appellant that as the rules adapted were framed by the Income Tax Appellate Tribunal which was constituted by the Government of Pakistan, those could not be adapted by the Azad Jammu and Kashmir Council is concerned, that is misconceived. There is no quarrel with the proposition that the Azad Jammu and Kashmir Council is fully competent either to exercise the rule-making powers itself or to delegate the same to any other authority through legislation. Under section 133(8) of the Income Tax Ordinance, 1979, the rules framing powers rested with the Income Tax Appellate Tribunal but after the promulgation of Act IV of 1982 by the Azad Jammu and Kashmir Council. The same stands amended to the extent of the adaptation of the relevant rules which were in force in Pakistan. Thus, the powers of rules making having been delegated to the Income Tax Appellate Tribunal by the Azad Jammu and Kashmir Council, the same can be curtailed or taken back through legislation as was done in the present case. Therefore, the argument on behalf of the appellant that as the rules of procedure were framed by the Income Tax Appellate Tribunal functioning in Pakistan, the same could not be adapted by the Azad Jammu and Kashmir Council despite the fact that it is the sole authority to legislate regarding the tax matters, is fallacious and is hereby repelled.
15. Before parting with the case, it may be observed that it is also correct that the rules framed in the year 1948 under the Income Tax Act, 1922, would be deemed to have been, in force in Azad Jammu and Kashmir by virtue of section 24 of the General Clauses Act and section 51 of the Azad Jammu and Kashmir Interim Constitution Act, 1974. However, in the instant case as fresh rules made under the Income Tax Ordinance, 1979, have been duly adapted in Azad Jammu and Kashmir, we need not dilate upon the matter any further.
16. Lastly, the learned counsel for the appellant has contended that the provision contained in rule 33 of the Income Tax Appellate Tribunal Rules, 1981, is directory and not mandatory, therefore, its non-compliance should not have resulted in the dismissal of the applications. He has argued that although the word 'shall' has been used in the said rule yet the same is to be read as 'may' because a rule of procedure should not be strictly construed. It may be observed that whether a provision of law, is to be treated as mandatory or directory depends upon the nature of the statute or the rules and the intention of the rules framer or the Legislature behind the same. In the present case, the Commissioner, Income Tax, being an important officer of the tax collecting machinery, is required to be impleaded as a party by the rule framers so as to provide him an opportunity to put forth his point of, view in the High Court before any questions of law are framed. Thus, we are unable to subscribe to the view of the learned counsel for the appellant that as the said rule is directory in nature, its non-compliance should not have resulted in the dismissal of the applications. In the light of what has been stated above, finding no force in the above-entitled appeals, the same are hereby dismissed.
The judgment shall be sent to the Assistant Registrar, Branch Registry, Mirpur, who shall announce the same after giving notices to the counsel for the parties.