SINDH INDUSTRIAL TRADING ESTATE LTD. Versus PROVINCIAL OMBUDSMAN
This is a petition for leave to appeal against the judgment of the High Court of Sindh dismissing the petitioner's constitutional petition which impugned a notice issued by the Provincial Ombudsman. The core question before the court was whether the petitioner, Sindh Industrial Trading Estate Ltd., falls within the definition of 'Agency' under clause 1 of section 2 of the Establishment of the Office of Ombudsman for the Province of Sindh Act, 1991. The Supreme Court held that the petitioner is an 'Agency' under the said Act, as previous judicial pronouncements established that the petitioner operates just like a department of the Provincial Government despite its corporate incorporation. Consequently, the petition was found to be without merit, and leave to appeal was refused. The key principle laid down is that corporate incorporation does not prevent an institution from being treated as a government department or agency for statutory and constitutional purposes when it performs essential governmental functions for and on behalf of the Provincial Government.
- Whether Sindh Industrial Trading Estate Ltd. falls within the definition of 'Agency' under the Establishment of the Office of Ombudsman for the Province of Sindh Act, 1991?
- Does corporate incorporation prevent an entity from acting as a department of the Provincial Government for statutory purposes?
- Section 2(1), Establishment of the Office of Ombudsman for the Province of Sindh Act, 1991
- Income-tax Act, 1922
AJMAL MIAN, J.‑‑‑ This is a petition for leave to appeal against the judgment dated 19‑2‑1992 passed by a Division Bench of the High Court of Sindh 'in Constitution Petition No.1770 of 1991 filed by the petitioner impugning a notice issued by respondent No.l upon the complaint made by respondent No.4 on the ground that the petitioner was not an Agency in terms of clause 1 of section 2 of the Establishment of the Office of Ombudsman for the Province of Sindh Act, 1991, hereinafter referred to as `Act', dismissing the same on the ground that this Court has already held in the case of Central Board of Revenue v. S.I.T.E. PLD 1985 SC 97 that the petitioner was like a department of the Government. The petitioner has therefore filed the present petition for leave to appeal.
2. In support of the above petition Mr. S. A. Samad Khan, learned A.S.C. for the petitioner has vehemently contended that the learned Judges of the Division Bench have misapplied the above judgment of this Court. In order to appreciate the above contention, it may be pertinent to reproduce clause 1 of section 2 of the Act, which reads as follows:‑‑
"`Agency' means a Department, Commission or office of the Provincial Government or a statutory corporation or other institution established or controlled by the Provincial Government but does not include the High Court."
3. A perusal of the above quoted definition indicates that for the purpose of the `Act' an Agency means a department, commission or office of the Provincial Government or statutory corporation or other institution established or controlled by the Provincial Government excluding the High Court.
4. The above definition seems to be very wide in its scope. The question which arises is, as to whether the petitioner falls within the ambit of the above definition. In this regard, reference may be made again to two judgments relied upon by the High Court, namely, Sindh Industrial Trading Estate, Ltd. v. Central Board of Revenue and three others reported in PLD 1975 Karachi page 128 and the judgment of this Court passed in appeal arising out of the above‑reported judgment of the High Court, namely, Central Board of Revenue v. S.I.T.E. It may be observed that the facts of the above High Court judgment were that the petitioner in the present petition filed Constitution Petition claiming that it was not subject to levy of income‑tax as it was operating as a Provincial Government Department. The above contention of the petitioner was accepted. Suffice to reproduce para. 10 of the judgment which reads as follows:‑‑
"Thus, the Sindh Industrial Trading Estate Ltd., being nothing more than a department of Provincial Government, though clothed with juristic personality, performs the essential functions entrusted to the Province with regard to the development of trade and industries. Of necessity, therefore, the income of this body corporate is the income of the Provincial Government, and, under the various Constitutional provisions referred to above, this income is not assessable to tax under the Income‑tax Act, 1922."
5. Against the above judgment of the High Court, the Central Board of Revenue filed an appeal with the leave of this Court which was disposed of by the judgment in the case of Central Board of Revenue and others v. S. I. T. E. (supra) in which the above view of the High Court was concurred with as follows:‑‑
"But as stated earlier, the facts found by the High Court and its conclusions on the questions raised by learned counsel are unexceptionable. The respondent‑Company was carrying on the function of Industrial Development and the trade and business connected therewith for and on behalf of the Government. The truth is that the lifting of veil, has revealed that for the relevant purposes in this case it was doing so just like a department of the Government, notwithstanding the incorporation, which as explained earlier, will not make any difference regarding the relevant Constitutional provision on exemption from Federal Taxation."
6. In view of the above judgment of this Court, it is not open to the petitioner to urge that it does not fall within the ambit of the definition of the term of `Agency' as defined by clause 1 of section 2 of the Act. The judgment of the High Court is unexceptionable, the present petition has no merits. Leave is refused.
AA./S‑731/S Leave refused.