RASOOL BUX KHAN SUNDRANI & CO Versus PEOPLE'S MUNCIPALITY, SUKKUR

1. JAMALUDDIN H. AHMAD, J. ‑Respondent No. 1 i.e. People's Municipality, Sukkur disposed of the lease of its right to collect octroi, export tax and toll tax for the period 1‑7‑74 to 30‑6‑75 by public auction, and the petitioners, a registered firm, being successful bidders were granted the said lease. They deposited a total amount of Rs. 5,57,810 before the said lease was confirmed by the respondent No. 1. Finally, an agreement was executed by the petitioner on 29‑6‑74, and clause 6 of this agreement is as follows:

2. "6. That the daily average income of the contractual amount worked out to be Rs. 13,893.15 (Thirteen thousand eight hundred ninety three and paisas fifteen only) to be credited by the licensee in the Municipal Account No. M‑2 in National Bank of Pakistan Branch of the People's Municipality, Sukkur, under intimation to the Taxation Officer, People's Municipality, Sukkur irrespective of the fact that he is getting or not getting that much income from the Octroi Posts. For holidays, the licensee shall have to pay up the average income in advance. In case of default the Administrator, People's Municipality Sukkur shall be at liberty to order his munshi to deposit the daily income in the Municipal account. This auction will not be questioned in Court of law."

3. The petitioners signed the agreement in spite of this clause 6, which according to them was patently contrary to Rule 225 of the Municipal Committee `Octroi' Rules, 1964, as amended in 1968 and is as follows:‑

4. "(1) Notwithstanding anything contained in these rules, Municipal Committee may, with the prior approval of Government, lease out by public auction for a period not exceeding one year the collection of octroi on such terms and conditions, not inconsistent with the provisions of this Chapter, as may be specified by Government," and

(7) In addition tothe security deposit referred to in sub‑rule (6), the person whose bid has been accepted and confirmed by the Controlling Authority (hereinafter referred to as the lessee) shall, within seven days of such confirmation deposit with the Municipal Committee, one‑tenth of the amount of his bid, and the balance of the amount of his bid shall be paid by him to the Municipal Committee in equal monthly instalments at the close of every month, for which the instalment is due."

5. According to the petitioners, as they had already made a payment of Rs. 5,57,810.00 as stated above, they felt handicapped and could not at that time protest to this clause, but 'soon after executing the agreement they had repeatedly told the respondents that daily payment of the taxes was not legal and therefore this clause was not binding on them. In any case, the daily payment was not stopped by the petitioners and they continued to deposit the same, though not willingly. Ultimately they approached the Minister of Housing Town Planning and Local Government Department, Government, of Sind, who on 9‑11‑1974 sent hill recommendation to the respondent Municipality saying that the request of the petitioners was genuine and that there was no harm if the recoveries were made from them at the end of the month. Respondent No. 1 in spite of this recommendatory note continued to make its demand for the daily collections in terms of clause 6 of the agreement. The lease being only for one year i.e. from 1‑7‑74 to 30‑6‑75, the petitioners challenged the legality of this demand by this petition which they filed on 13‑2‑75.

2. In the first place this petition has been filed through one Bhagwandas son of Killomal partner in the petitioners firm, and the respondents have produced an application which amongst others was signed by the same Bhagwandas, whereby they all had moved the Municipal authorities to adopt the method of daily deposit. This application was made before the auction and the signatories of the application had threatened not to bid at the auction unless this request was accepted. The learned Advocate‑General, who appeared for the respondents therefore contended that the petitioners were estopped from raising this plea now. Although the petitioners are able to point out that at the time of making the abovesaid application, Bhagwandas was not representing the petitioners firm, but had signed that application as a partner of another firm Mir Hakim Ali Khan Bhagwandas of Kandhkot, still it is difficult to believe in the circumstances that the petitioners were not aware of the situation at the time of taking part in the auction which they did through the same person Bhagwandas. Therefore even if the plea of estoppel may not strictly be available to the respondents, still this circums tance reflects quite materially on the bona fides of the petitioners.

6. According to the Advocate‑General, the auction and the lease deed were for collection of three different taxes i.e. octroi, export tax and toll tax, and the method of payment specified in the lease deed, was for the aggregate amount of all the three taxes. The petitioners had chosen to dispute only one, i.e. octroi, because they knew that they could not object to the daily collection of the‑ other two taxes and also because it is not possible to determine the three amounts separately for the purpose of this agreement. He referred to case‑law to show that even on the assumption that the term relating to recovery of octroi was not consistent with rules, it could not on that ground be avoided as it forms only a part of the subject matter of the contract. The further submission was that even this circumstance points out clearly that the petition was not bona fide but was on account of some motive not described in the petition. In this context, the learned Advocate‑General pointed out the various clauses of the agreement ‑and contended that in view of the settled terms of contract between the parties, the only remedy open to the petitioners was that of filing a suit. More pointedly he referred to clause 15 of the agreement that:

7. "In the event of any dispute between the licensee and the People's Municipality, Sukkur, the matter shall be referred by the aggrieved parties to the Controlling Authority whose decision shall be final."

8. According to him, this clause was in fact an arbitration clause in the agreement which was being frustrated by this petition.

9. The learned Advocate‑General therefore laid great stress on the point that proper course for the petitioners was to file a civil suit and not a constitu tional petition, which was being used as a device to deny the respondents the right of having the matter settled through arbitration.

3. I would however first like to examine the case of the petitioners on this first submission. It is obvious that they rely on the words in rule 225 (1) which require that the terms and conditions should not be inconsistent with the provisions of Chapter XXX. They therefore contend that payment of the balance of the money in equal monthly instalments at the close of every month could not be substituted by its recovery by daily instalments.

10. And in' this respect; I think the learned Advocate‑General is right when he says that the provision about the mode of payment is not a negative provision and therefore is not also mandatory, so as to make it impossible A for the Municipality to agree to any other method of payment. He relied on Mst. Nawab Bibi v. Rafiq Bano (PLD 1971 SC 481) and the following passage from Maxwell on the Interpretation of Statutes (11th Edition), at p. 369, which was also quoted by their Lordships with approval: ‑

11. "On the other hand, where the prescriptions of a statute relate to the performance of a public duty, and where the invalidation of acts done in neglect of them would work serious general inconvenience or injustice to persons who have no control over those entrusted with the duty, yet not promote the essential aims of the Legislature, such prescriptions seem to be generally understood as mere instructions for the guidance and governance of those on whom the duty is imposed, or in other words, as directory only. The neglect of them may be penal, indeed, but it does not affect the validity of the act done in disregard, of them. It has often been, held, for instance, when an Act ordered a thing to be done by a public body or public officers and pointed out the specific time when it was to be done, that the Act was directory only and might be complied with after the prescribed, time."

12. The petitioners after all received the amount of octroi tax from the members of the public, forthwith, on, the goods being brought within the Municipal limits. Payment of lease amount which relates to this octroi, also, was a contractual liability which even the petitioners do not deny. If the instal ment is paid daily as agreed to by the petitioners, it is not going to come in conflict with public policy. Even if the provision made in the rule 225(7) about monthly instalment is not adhered to, strictly speaking, it is not going. to adversely affect the spirit and the purpose of the rule, which is merely the recovery of the amount which is already collected from the public. And it is probably therefore that the bidders at the auction, had by, prior applica tion pursuaded ‑the Municipality to agree to receive the payment daily, and similarly the Minister, Housing' and Planning, also made a recommendation that there was no harm if the necessary recovery is made in monthly instal ments. This rule obviously on its plain construction is directory and not mandatory and a deviation in following it, cannot make the whole auction void.

13. This submission, therefore, fails as the Municipality by granting a lease to the petitioners on terms whereby the lessee has agreed to pay his instal ments daily has not acted inconsistently with the provisions of Chapter XXX of the Octroi Rules as the rule 225(7) being itself only directory in nature, can permit of a different mode of recovery of octroi by agreement of the parties.

4. Mr. Khalid Ishaque, the learned counsel for the petitioners then contended that according to the terms of the lease the recovery of the taxes was to be made as per rates specified in the schedule of the Sukkur Munici,pality. Item No. I in Clause 1 of the Schedule which deals with Articles of food gives the rate of wheat, grain, maize and "other foodgrains, not specified elsewhere," as 12 paisas per maund. On the other hand, item No. 232, under clause (xviii) which deals with Articles for miscellaneous use, the rate for "seeds of all kinds not specified elsewhere" is given at Rs. 1.20 per maund. According to the petitioners, sarsoon, rapeseed and cotton seed fall under item No. 232, as they are seeds and are not specified elsewhere 'in the Schedule; but the respondent No. 1 has illegally directed the collecting staff to charge those seeds at 12 paisas per maund instead of Rs 1.20 per maund. The Municipality is thus treating the seeds as grain, which action is not only illegal but is also putting the petitioners to a huge financial loss. As per their estimate, cotton seed alone brought within the limits of Sukkur Municipality during one season, was about 3‑4 lacs maunds, and the petitioners were getting Rs. 1.8 less on each mound.

14. The petitioners further stated that the respondent No. 1, tried to justify this action, saying that a clarification had already been issued by them wherein cotton seed, rapeseed and sarsoon were shown as falling under item No. 1 of the Octroi schedule. It may be noted that the respondent No. 1 did not deny this position and claimed to have made this clarification by a resolution passed in an Emergent Meeting dated 14‑4‑67, i.e. much prior to the date of the auction or the contract entered into by the petitioners. The petitioners' contention therefore was that the respondent No. 1, Sukkur Municipality, was not authorized by law to change or alter the rate of the Octroi, and in fact was not even competent to fix any Octroi rates at all and for this Mr. Kbalid Ishaque referred to Government of West Pakistan Notification odf 28‑2‑1966 which was published on 3‑3‑1967, whereby in fact the Schedule of rates was passed. This notification shows that the rates were fixed in pursuance of provisions contained in sections 33 and 34 of 'the Municipal Ordinance, 1960; rule 7 of the West Pakistan Municipal (Imposi tion of Taxes) Rules, 1960 and rule 28 of the West Pakistan Municipal Committee Octroi Rules, 1964. Now rule 28 reads as under:‑

15. "In levying Octroi, a Municipal Committee shall be guided by the Model Octroi Schedule in Appendix `A'. A Municipal Committee may adopt the Model Octroi Schedule without any modifications, or with such modifications as it may deem necessary.",

16. Mr. Khalid Ishaque contended that after finalizing the schedule as above, the Municipality Sukkur had no powers to alter the same, without following the procedure laid down in the Municipal Committee (Imposition of Taxes) Rules, 1960.

17. Besides being unlawful, this action was also in violation of clause 4 of the lease, which is as under:‑

18. "That the licensee will be authorised to collect Octroi, on all taxable articles brought for consumption, use or sale within the municipal limits of People's Municipality, Sukkur according to the rate prescribed in the sanctioned octroi Schedule of People's Municipality, Sukkur and also at the rates revised or modified by the competent authority or Government from time to time including toll tax and export tax."

19. Prima facie, the submission of the learned counsel has considerable weight, but the learned Advocate‑General contended that by issuing the clarification, the respondent‑Municipality had neither revised nor modified any rates already specified in the Schedule. Respondent No. 1 had merely clarified what the octroi clerks are entitled to do under rule 45 of the Octroi Rules, 1964 and which is as' under:‑

20. "If any article is not specifically mentioned in the Octroi Schedule and is not otherwise exempted, it shall be charged under the item which in the opinion of the Octroi Clerk is allied or comparable to the article in question."

21. The submission was that rapeseed, sarsoon and cotton seed were brought within the Municipal limits for extracting oil and not as seeds for sowing purposes, and could therefore be associated with foodgrain. The respondent was also justified in issuing the clarification which was to serve as guideline for the functionaries who were directly concerned with the recovery of octroi. In any case, this clarification by resolution of the Municipal Committee was issued long before the petitioners took up the lease and was in fact a part of the lease agreement. Octroi was charged at this rate from the year 1967 and even the petitioners were acting thereon and recovered octroi according to the said rates. This being a part of the contract, which is acted upon, the petitioners were not, in his submission, entitled to challenge the validity of the same by invoking the extraordinary jurisdiction of this Court. The petitioners' case on the other hand, was also not that the respondent Municipality Sukkur had brought about this change subsequent to the lease. In fact they had given a notice to the respondent dated 30‑1‑75, which is filed with the petition and in that they complained that these articles were being charged under wrong classification, already issued in its clarification appended with the schedule. By this notice the petitioners had asked the respondent Municipality to settle this matter within three days or they would be "constrained to file the civil suit for reimbursement of Rs. 2 lacs on account of loss sustained by them." ..

22. The real difficulty therefore in the way of petitioners, is on account of their not objecting to, and acting upon the clarification which on their own showing was attached to the Schedule and which was thus a part of lease agreement. We specifically questioned Mr. Khalid Ishaque, the learned counsel for the petitioners, as to why the rate mentioned in the clarification had continuously been charged by the petitioners for a major period of the lease, and how was , it. that they did not approach the civil Court for any relief or even go in for‑arbitration although it was provided for in the lease deed, but he had no clear answer and the only explanation that he was able to give us, was that the petitioner had been continuously writing to the Municipal authorities and had been protesting. This, however, did not amount to taking steps to assert their rights under the , agreement, and Mr. Khalid Ishaque, as stated above, had no explanation.

5. Now the relief sought by the petitioners expressly, is for a direction on the basis of the terms of the lease agreement and the schedule, but it is well settled that Courts while exercising extraordinary jurisdiction do not issue orders or directions ‑ for the enforcement of contractual obligations, nor can this jurisdiction be allowed to be used for the purpose of determining and enforcing such rights.

23. A party who has entered into an agreement with another, cannot apply to the High Court for issuing a direction to enforce the terms of the agreement instead of approaching the civil Court of competent jurisdiction for necessary relief, and the High Court would be reluctant to exercise its powers when such other remedy is obviously available.

24. The petitioners have avoided to file a suit although they gave such notice to the respondents which included even a claim for reimbursement. What is more they have avoided to take advantage of the arbitration clause which is very much in the agreement and by resorting to which this ‑dispute could have possibly been resolved more conveniently. In ‑ the case of Shamshad Ali Khan v. Commissioner, Lahore (1969 S C M R 122) their Lordships of the Supreme ('Court observed:‑‑

25. "As the highest it was a case of a breach of agreement for which the remedy did not lie in the writ jurisdiction of the High Court."

26. So also in a more recent case, Al‑Mahmood Industries (Pakistan) Ltd. v. The Trading Corporation of Pakistan Ltd. (1974 S C M R 51), their Lordships have observed:‑

27. "The learned counsel had to concede that the terms and conditions of the agreement entered into by the parties do provide for reference of disputes to arbitration. For this reason, as well as for the reason that certain disputed questions of fact would need to be resolved, it is cleat that the matter was not suitable for adjudication in the exercise of the p writ jurisdiction of the High Court. It was open to the petitioner to go in for arbitration according to the agreement, or to institute a civil suit for the enforcement of the contract between the parties. Thus as rightly pointed out by the High Court, an adequate alternative remedy was available to the petitioner, but had not been availed of."

28. These observations are fully applicable to the facts of the present case and conclude any controversy. Furthermore, in the present case the petitioners have themselves delayed taking action till after two‑thirds of the lease period .bad already expired, and for which no satisfactory explanation was given.

6. In view of the above discussion and as no other ground has been ‑raised or argued, this petition is dismissed.

29. DORAB PATEL, J.‑I agree.

30. S. A. H. Petition dismissed.