TARIQ MOHSIN SIDDIQUI Versus PROVINCE OF SIND

I. MAHMUD, J. -By this Constitutional Petition, the validity of recovery proceedings taken against the petitioner by the City Deputy Collector, Karachi for recovery of forest dues as arrears of Land Revenue, are sought to be challenged.

2. Briefly, the material facts are that the petitioner, Tariq Mohsin Siddiqi, who alongwith the respondent No. 4 was a partner of the firm, Messrs Universal Associated Agencies, Karachi, entered into two agreements on behalf of the firm with the Chief Conservator of Forest, Government of Sind, the respondent No. 2 dated 25/26-10-1971 for the purchase of standing trees in "Unerpur Forest", District Dadu and in "Rais Murid Forest". District Hyderabad for Rs. 1,52,000 and Rs. 6,11,000 respectively. Under these agreements, the purchase price was to be paid in four instalments, and it was provided that if the purchaser failed to pay an instalment on the due date, the trees and timber were liable to be seized and re-sold at the risk of the purchaser and any loss accruing to the Sind Government was to be recovered from the purchaser as arrears of Land Revenue, under sections 82 and 83 of the Forest Act, 1927. It was further provided in clause (4) that the purchaser shall not be entitled to transfer his rights and liabilities under the agreements. On 1-1-1972 the firm was reconstituted, as the respondent No. 5, S. Khurshid Ali, a relation of respondent No. 4 was taken as a partner. Six months later on 31-5-1972, the petitioner and the respondent No. 4 retired from the partnership under a Deed of Dissolution dated 31-5-1972, leaving the respondent No. 5 as sole proprietor of the firm. Under the dissolution deed, the respondent No. 5 agreed to continue the two forest contracts and to discharge all the liabilities under them. Intimation of the dissolution of the firm was given to the Chief Conservator of Forest, Hyderabad on the same day by the respondent No. 5, who also gave an undertaking on 5-10-1972 to the department that as sole proprietor of the firm, he shall be responsible in respect of the contracts and liabilities arising thereunder.

3. The firm failed to pay the second instalments which fell due under the agreements. Therefore, the Divisional Forest Officer gave notice dated 22-3-1973 to the respondent No. 5, as well as to the firm that the material at the sites would be seized and put to auction. It appears that the agreements were cancelled and, according to the petitioner, the Forest Department sold the stacks of timber lying at the sites without notice to him or advertisement in the press, for paltry sums of Rs. 70,000 and Rs. 57,000 to one Rashid Hussain, a fictitious person who was put up by the respondent No.5 in collusion with the forest staff. That after the alleged public auction without holding any inquiry or issuing demand notice, the Department created demands totaling Rs. 3,16,950 and Rs. 57,000 respectively as dues against the firm and although he had long since ceased to be a partner of the firm, recovery notices were served upon him on 9-8-1973 by the City Deputy Collector, the respondent No. 3. The petitioner made protests to the respondents Nos. 2 and 3 contending that as he had retired from the partnership on 31-5-72 the recovery proceedings taken against him as a former partner, were illegal and that the respondent No. 5 alone was liable for the payment of the alleged dues. But, as his protests were ignored, he was compelled to file a suit against the first three respondents, for a declara tion and injunction in the Court of the Senior Civil Judge, Hyderabad. While the suit was pending, fresh recovery notices were served on the petitioner by the City Deputy Collector, Karachi on 22-11-1974 Annexures "N", "O" and "P" under sections 81, 82 and 85 of the West Pakistan Land Revenue Act, 1967 (hereinafter referred to as "the impugned notices") for recovery of Rs. 3,23,290 and Rs. 57,141 as arrears of land revenue under the respective agreements and the property of the petitioner, a Plot No. 339 Garden West, Karachi was also attached. In view of the fresh notices, the petitioner obtained an order for withdrawal of the suit with permission to file a fresh suit, but instead, the petitioner has filed the present Constitutional Petition against the three respondents, for a declaration that the impugned notices are without lawful authority and of no legal effect. He has also impleaded his former two partners, the respondents Nos. 4 and 5. Respondent No. 5, is not represented while respondent No. 4 has supported the case of the petitioner.

4. The main contention of Mr. S. Sharifuddin Pirzada, who appeared for the petitioner on the first day and of Mr. S. A. Nusrat who succeeded him, is that the impugned notices seeking to recover the amounts of Rs.3,23,290 and Rs.57,141 as arrears of land revenue, are illegal and without jurisdiction on the ground that neither the amounts claimed have been adjudicated, determined or established as "dues" by any competent authority, nor any show-cause notice or opportunity of being heard was given to the petitioner. It is not disputed that any amount due to the Government from the Forest contractor under the agreements is liable to be recovered as if it were an arrear of land revenue under sections 82 and 83 of the Forest Act, 1927 as is stated in clause (22) of the agreements. But the contention is that before the Forest contractor is declared "a defaulter", as defined in section 4('7) of the West Pakistan Land Revenue Act, 1967, as being a person liable for an arrear of land revenue, there has to be an adjudication or determination of the precise amount of the dues by the com petent authority entrusted with the function of determining the liability, which in this case is the Divisional Forest Officer under the agreements and is ultimately, the Chief Conservator of Forests, the respondent No. 2. The petitioner's case is that no notice of demand was ever issued to the firm, Messrs Universal Associated Agencies, Karachi nor to any of its partners and no opportunity was afforded to them to make any representations or place their submission against the alleged claims. Despite the fact that the petitioner has pleaded in ground 15(x) of the petition that no show-cause notice 'was issued by respondents Nos. 1 to 3, the counter-affidavit filed by Masood Ahmed Mirza, the Divisional Forest Officer, Hyderabad dated 22-3-1975 is silent on this point. We, therefore, asked Mr. Imam Ali Kazi, learned counsel for these respondents, whether in fact, any notice of demand was issued before the City Deputy Collector, Karachi was instructed to initiate the recovery proceedings. Learned counsel was unable to satisfy as that any such demand notice was issued to the firm or to any of its partners, including the petitioner. The case of the petitioner is that the .auction sale was got done by the staff of the Forest Department in collusion with respondent No. 5 who put up a fictitious person, Rashid Hussain and ,the amounts realised in the auctions were petty sums and far below the prevailing prices. While such a controversial question of fact cannot be adjudicated in this Constitutional Petition, the fact remains that in the; absence of a notice of demand, neither the petitioner nor the firm has had any opportunity to make representations against the correctness of the B amounts claimed by the Forest Department as dues.

5. It appears that the amounts in question were computed by the Forest Staff on their own and the figures were communicated to the City Deputy Collector for recovery by the coercive process, who faithfully followed the instructions. Neither the Forest Act, 1927, nor the Revenue Act, 1890 prescribes any procedure as to how the alleged defaulting party has to be heard in connection with the allegations made against him and before determining the precise amount of the default and fixing his liability. But there is no doubt that the function of determining the amount due to the Government, which has been entrusted to the Forest Officer under the Forest Act, 1927, is a quasi judicial function and the law implies that he must con duct the proceeding in accordance with the principles of natural justice. In support of this proposition Mr. S. A. Nusrat relied on the judgment of their Lordships of the Supreme Court reported in Abdul Latif v. Government of West Pakistan (P L D 1962 S C 385). In that case the question which arose for their Lordships' consideration was whether the Deputy Commissioner, Peshawar was entitled ,to recover from the appellant, Abdul Latif a certain sum alleged to be due from him as arrears of land revenue without giving him an opportunity to question the correctness of the said alleged liability. It was held that before -the machinery of recovery proceedings could be initiated for realisation of the arrears prescribed under the Punjab Land Revenue Act of 1887 (which corresponds with those of the West Pakistan Land Revenue Act, 1967 applicable in the instant case) there must be a determination or ascertainment of the precise amount "due" before the appellant could be regarded as a "defaulter" under the provisions of the Punjab Land Revenue Act, 1887. In that case, without serving a show-cause notice on the appellant Abdul Latif, a deficiency of, Rs. 7484 odd in stamps of the treasury was sought to be recovered by the Tehsildar at the instance of the Deputy Commissioner on a certificate of the Treasury Officer, as arrears of land revenue by the coercive provisions of section 89 of the Punjab Land Revenue Act, 1887. Their Lordships held that notwithstanding the absence of any provision in the Public Accountants' Default Act or the Revenue Recovery Act prescribing any procedure as to how the accounting party was to be heard, there was an obligation imposed by law upon the authority entrusted with the function of determining the liability, at least to comply with the requirements of sub stantial justice. They, therefore, struck down the recovery proceedings taken by the Deputy Commissioner. Mr. S. A. Nusrat also referred to Government of West Pakistan and others v. Abdul Majid and others (P L D 1963 Kar. 653) where the principle -enunciated by their Lordships of the Supreme Court in Abdul Latif's case was applied. Their Lordships of the Supreme Court re-affirmed this principle recently in Haji Mahboob Alam v. The Province of Punjab (1973 S C M R 415). We are there. fore of the view that the impugned notices issued by the recovery ,officer, City Deputy Collector, respondent No. 3 are illegal and without Jurisdiction.

6. In this view of the matter, it would not have been necessary to consider the other grounds put forward by the petitioner against the legality of the impugned notices. But as the question of the personal liability of the petitioner for the payment of the dues is likely to arise in any future proceedings which the respondent No. 2 may repeat against the petitioner for re covery of the dues, we must express our opinion on the question. The submission of Mr. S. A. Nusrat is that the petitioner having ceased to be a partner of the firm on 31-5-1972 upon dissolution of the firm, which fact was intimated to the Department by the respondent No. 5 and which is not denied by them, he cannot be personally liable to pay the dues of the firm which have accrued after his retirement. In this connection, he referred to section 45(1) of the Partnership Act, 1932, which exonerates a partner of the dissolved firm from liability to third parties for any act done by any of the partners after the dissolution of the firm, which would have been an act of the firm if done before the dissolution, until public notice is given of the dissolu tion. An analogous provision is contained in section 32(3) of the said Act,. which relates to the liability of a retiring partner. Although no public notice of the dissolution of the firm has been given in this case, counsel's submission" is that actual and individual notice is on a better footing and affords higher protection to the petitioner. I am inclined to agree. In this connection, counsel referred to Thummala Rama Rao and others v. Thodagam Venkateswara Rao and others (A I R 1963 Andh. Pra. 153) and Central United Bank Ltd., Rajapalayam and another v. B. A. Venkatarama Naidu (A I R 1963 Mad. 302). But Mr. Imam Ali Kazi referred to clause (4), of the agreements, under which the petitioner had agreed not to transfer his rights and liabilities under the agreements or part with his rights thereunder to any person in any manner whatsoever until he shall have paid the price agreed upon in full. I agree with the submission of Mr, Imam Ali Kazi that in the circumstances, the petitioner continues to remain liable, for which he has stipulated for an indemnity from respondent No. 5 in paragraph 3 of the Deed of Dissolution.

7. For the foregoing reasons, we allow this petition. However the respondent No. 2 is at liberty, if he so wishes, to initiate proceedings to determine and establish the alleged dues after issuing a proper show-cause notice and hearing the petitioner. In the Circumstances, there will be no order as to costs.

S. Q. Petition allowed.