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Second Appeal from Order No. 57 of 1963, decided on 20th April 1964.

, S. 30(1), proviso (a) "Local authority" Excise and Taxation Department not "Local authority" ‑ Tax assessed on immovable property by Department after determination of annual rental value-Not covered by term "local fund"‑West Pakistan Urban Immovable Property Tax Act (V of 1958), Ss. 2 & 3‑West Pakistan Urban Rent Restriction Ordinance (VI of 1959), S. 13‑North‑West Frontier Province General Clauses Act (II of 1932)‑General Clauses Act (X of 1897), S. 3(28)‑[See also P L D 1966 Pesh. 89].

Official Assignee, Madras v. Trustees of Port Trust, Madras A I R 1936 Mad. 789 ref.

S. 30(1), proviso (a)‑Whether Excise and Taxa tion Department "local authority" within meaning of proviso (a) ‑Whether transferee of property could legally demand rent at rate of latest assessment by Excise and Taxation Department and whether failure by occupant to pay or deposit rent at such enhanced rate renders him liable to ejectment, or to his defence being struck off under S. 13(6), West Pakistan Urban Rent Restriction Ordinance, 1959 ‑ Questions referred for decision to larger Bench ‑ West Pakistan Urban Rent Restriction Ordinance (VI of 1959), S. 13‑[See also P L D 1966 Pesh. 89.

Muhammad Afzal Khan for Appellant.

Dost Muhammad Kamil for Respondent.

Dates of hearing: 6th, 9th, 31st March and 1st April 1964.

In these nine appeals apart from other questions which arise for consideration, the common question involved is: whether the transferee of evacuee property could legally demand rent from the occupier of that property according to the latest assessment of the Excise and Taxation Department.

2. The relationship between a transferee of any evacuee property and the occupier of that property is governed by the provisions of section 30(1) of the Displaced Persons (Compensa tion and Rehabilitation) Act, 1958 which runs:

"30 (1) Where any person is in possession any evacuee house or shop or has been declared on or before the twentieth day of December 1958, by a Custodian to have tenancy rights from a date prior to the fourteenth day of August 1947, in any indus trial concern, cinema house or printing press which is transferred to any other person under the provisions of this Act, then notwithstanding anything contained in any other Law such person shall without prejudice to any other fight which he may have in that house, shop, industrial concern, cinema house or printing press, be deemed to be a tenant of the transferee on the same terms and conditions as to payment of rent or otherwise on which he held it immediately before transfer."

3. The charging of rent by the transferee is regulated by proviso (a) to section 30 (1) of the said Act. It reads as under:‑---

"(a) it shall be lawful for the transferee to charge a rent on the basis of the latest assessment of the Municipality or local authority, as the case may be."

4. The decision of the question raised depends on the true interpretation of the expression local authority' occurring in the aforesaid proviso (a).

5. The question has arisen, because in the old North‑West Frontier Province urban immovable property was never assessed by a Municipality for the purposes of rent and taxation.

6. The North‑West Frontier Province Urban Immovable Property Tax Act, 1948 received the assent of the Governor of the Province on the 2nd November 1948 and the provisions of the said Act were made applicable to the old North‑West Frontier Province by Notification No. 4998‑Taxn. dated the 1st June 1949.

7. Local authority' as defined in the aforesaid Act means a municipal committee, a cantonment board, or a notified area committee.

8. The levying of tax has been provided in section 3 which reads:‑

"3 (1) There shall be charged, levied and paid an annual tax on buildings and lands situated in the, rating areas shown in the Schedule to this Act at such rate, not exceeding twenty per centum of the annual value of such buildings and lands, as the Provincial Government may by notification in the official Gazette, direct in respect of each such rating area.

(2) The Provincial Government may by notification in the official Gazette, from time to time add to, omit or very any of the entries contained in the Schedule to this Act.

(3) The Urban Immovable Property Tax shall be leviable primarily on the actual occupier of the buildings or lands upon which the said tax is assessed, if he is the owner of the buildings or lands or holds them on a building or other lease granted by or on behalf of Government or on a building or other lease from any person or local authority.

(4) In other cases the Urban Immovable Property Tax shall be primarily levied as follows:‑

(a) if the property is let, upon the lessor;

(b) if the property is sublet, upon the superior lessor;

(c) if the property is unlet, upon the person in whom the right to let vests."

9. The annual value had to be ascertained by estimating the gross annual rent of such property together with its appurtenances and any furniture that may be let for use or enjoyment with such building might reasonably be expected to let from year to year, less certain allowances provided in clauses (a), (b) and (c) of section 5 of the Act. .

10. The provision for collection of tax had been made by section 13 which says that the tax shall be paid to such person or authority as the Provincial Government may direct, and in such manner as may be provided.

11. The North‑West Frontier Province Urban Immovable Property Tax Rules, 1949 came into force on 10th October 1949. Rule 1‑A is relevant and is reproduced below:‑

"(1) (a) Subject to the control of Government and the general supervision of the Excise and Taxation Commissioner, North- West Frontier Province and unless Government shall by notifi cation otherwise direct the Provincial Excise and Taxation Officer, North‑West Frontier Province shall superintend the administra tion and the collection of the tax leviable under the Act.

(b)---------------------------------------------------

(2) The assessing authority for a rating area is charged with the duty of carrying out the provision of the Act, subject to the ‑control and direction of the Provincial Excise and Taxation Officer, North‑West Frontier Province, and the orders of Government."

12. The North‑West Frontier Province Urban Immovable Property Tax Act was replaced by the West Pakistan Urban Immovable Property Tax Act, 1958, which contains identical provisions.

13. Urban area' has been defined in section 2 as an area within the boundaries of a Municipal Corporation, Municipal Committee, Cantonment Board, Small Town Committee, or other authority (not being a District Board) legally entitled to, or entrusted by Government with the control or management of a municipal or a local fund.

14. The levying of tax essentially became the duty of the Excise and Taxation Department under the Act of 1958.

15. The West Pakistan Urban Immovable Property Tax Rules, 1958, were promulgated by Notification No. Tax. III/2/1‑58 dated the 29th December 1958.

16. According to rule 3 (1), a District Excise and Taxation Officer was declared as the assessing authority' in respect of rating areas within the jurisdiction and he has been given the following powers under rule 3 (2):‑

"(a) to affix or cause to be affixed to any property in the rating area any mark for purposes of identification and to enter into or upon any premises for this purpose between sunrise and sun set is, and to the extent, absolutely necessary;

(b) to enter into or upon any property within the rating area, between sunrise and sunset, after giving twenty‑four hours' notice to the occupier, or if there be no occupier, to the owner of such property in order to‑

(i) decide whether the return made in respect thereof is correct;

(ii) assess its annual value;

(iii) ascertain if it is assessable to tax;

(c) to examine any document, of whatever nature or kind and by whomsoever executed, relevant to the enquiry contemplated by clause (b) of this sub‑rule;

(d) to exercise the powers of a Civil Court under the Code of Civil Procedure, in the matter of the summoning and examina tion of persons likely to be in possession of facts or of documents relevant to an enquiry under clauses (b) and (c) of this sub‑rule and in the matter of recording or receiving statements of the persons claiming exemption from tax."

17. The crux of the matter, therefore, is whether the Excise and Taxation Department can legitimately be described as a local authority' as contemplated by proviso (a) to section 30 (1) of the Displaced Persons (Compensation and Rehabilitation) Act, 1958.

18. The expression local authority' has not been defined in the Displaced Persons (Compensation and Rehabilitation) Act, 1958, and for its definition we have to fall back upon the General Clauses Act (No, X of 1897).

19. Local authority as defined in the said Act means a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Govern ment with, the control or management of a municipal or local fund.

20. In the North‑West Frontier Province General Clauses Act (II of 1932), the expression local .authority' has been defined as under:----

" Local authority' shall mean a municipal board, district board, or other authority legally entitled to, or entrusted by the Local Government with, the control, or management of a municipal or local fund."

21. The Excise and Taxation Department does not fall within the first part of the definition. It has now to be seen whether it is covered by the second part of the definition, viz. other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund'.

22. The tax which is levied on assessment made by the Excise and Taxation Department on the annual rental value of urban immovable property is distinctly not a municipal fund. The further question of whether the tax: so realised falls under the definition of local fund' needs consideration.

23. Local fund' has been defined in the Compilation of the Treasury Rules (Volume I) and is reproduced below for the sake of convenience:

(i) revenue a mnistered by bodies which by law or rule having the fore of law come under the control of the Govern ment, whether in regard to the proceedings generally, or to specific matters such as the sanctioning of their budgets, sanction to the creation or filling up of particular appointments, the encashment of leave, pension of similar rules;

(ii) the revenues of any body which may be specially notified by the Government as such."

24. After carefully considering the matter, I am clear in my mind that the tax realised under the West Pakistan Urban Immov able Property Tax Act, 19 8 does not fall under the definition of local fund.

25. The learned District Judge, Peshawar, as an Appellate Authority under the West Pakistan Urban Rent Restriction Ordinance VI of 1959 summed up his conclusions on the point (in S. A. O. No. 57 of 1963) as below:‑‑

"The foregoing provision of law makes it clear that when the West Pakistan Urban Immovable Property Tax is enforced in any particular area, it is the assessing authority provided therein which is to assess the property for the purposes of rent and taxation. The other bodies do not discharge this function. The idea behind the provision of charging rent according to the latest assessment of the local body was to permit the landlord to utilise his property subject to certain statutory restrictions at the prevailing market rate. This purpose cannot be nullified and set at naught merely because the authority mentioned for determining the prevailing value of the property is substituted by one un‑named. The ordinary rule of interpretation required that a beneficial construction is to be put and for this an extended meaning may be given to the provision of a statute. Maxwell on the Interpretation of Statutes on page 66 remarks as follows:

It is said to be the duty of the Judges to make such construc tion of a statute as shall suppress the mischief and advance the remedy. Even where the usual meaning of the language falls short of the whole subject of the Legislature, a more extended meaning may be attributed to the words, if they are fairly susceptible of it. The construction must not of course, be strained to include cases plainly omitted from the natural mean ing of the words.'

On page 38 of the same book the following observations occur:‑-----

Before adopting any proposed construction of a passage susceptible of more than one meaning, it is important to consi der the effects or consequences, which would result from it, for they often point out the real meaning of the words. There are certain objects which the Legislature is presumed not to intend, and a construction which would lead to any of them is therefore, to be avoided. It is not infrequently necessary, therefore, to limit the effect of the words contained in an enactment (especially general words), and sometimes to depart, not only from their primary and literal meaning, but also from the rules of gram matical construction in cases where it seems highly improbable that the words in their wide primary or grammatical meaning actually express the real intention of the Legislature. It is re garded as more reasonable to hold that the Legislature expressed its intention in a slovenly manner, then that a meaning should be given to them which could not have been intended.'

In view of the foregoing discussion I hold that it was within the competence of the landlord to demand rent at the rate of the latest assessment of the Excise and Taxation Department."

26. I do not agree with the construction placed by the learned. Appellate Court as, in my opinion, the Excise and Taxation Department is not a local authority', and to say that the tax assessed on urban immovable property by the Excise and Taxation Department after determination of its annual rental value a is covered by the definition of local fund' is nothing short of doing violence to the language employed to define the expression.

27. A somewhat similar question arose in respect of Port Trust in the case reported as Official Assignee, Madras v. Trustees of Port Trust, Madras (A I R 1936 Mad. 789) and it was held in that case that the Port Trust is a local authority'. The ratio decidendi in that case was summed up as follows:‑----

"It is contended that the Port Trust is not entrusted by the Government with the control or management of Municipal or Local Fund and is not therefore a local authority' within the meaning of that subsection and that no fund has been consti tuted under the Port Trust Act of 1905 such as that in section 139, Madras City Municipal Act. Mockett, J. negatived this con tention because provision is made in the Port Trust Act for the imposition and recovery of rates and that it is from these rates that the Port Trust income is derived and had no doubt that its collection by the Port Commissioners constitutes a local fund within the meaning of section 3 (28), General Clauses Act. In our view it is not necessary to employ the test of whether the Port Trust is entrusted with the control or management of a local fund because Mr. K. S. Krishnaswami Iyengar has put an interpretation upon that subsection with which we agree. It is that the words legally entitled to or entrusted by the Govern ment with the control or management of a Municipal or Local fund' qualify the words immediately preceding them, namely, 'or other authority' and do not relate to a Municipal Committee, District Board or body of Port Commissioners. We think that that is clearly correct. It is obvious that a Municipal Committee is a local authority' and equally so a District Board, and in our view so also is a body of Port Commissioners; and it is conceded that the Port Trust comes within this descrip tion; and it does not seem to us to be intended or reasonable that they should be a local authority' only when they control or are entrusted by the Government with the control and management of a Municipal or Local fund, but it is otherwise in the case of other authorities not definitely specified who can only bring themselves within that definition if the latter part of the subsection can be applied to them; and moreover the word or' and not and' other authority is used. The Port Trust there fore, is a local authority."

28. In view of the general importance of the questions, I feel that their decision one way or the other will have for reaching effects on the rights of persons who have acquired immovable evacuee property under the Displaced Persons (Compensation and Rehabilitation) Act, 1958.

29. I am of the view that the main question and the question incidental thereto raised in these appeals should be decided by a Full Bench. The following question are formulated for reference to a larger Bench:‑

(1) Whether the Excise and Taxation Department is a local authority' within the meaning of proviso (a) to section 30 (1) of the Displaced Persons (Compensation and Rehabilitation) Act, 1958.

(2) Whether in the circumstances a transferee of evacuee property holding a Provisional Transfer Order could legally demand rent at the rate of the latest assessment by the Excise and Taxation Department from the occupier of the property who became a statutory tenant under the transferee or at the rate which the tenant was paying to the Custodian before the transfer of property.

(3) Whether the failure to pay or deposit rent according to the latest assessment of the Excise and Taxation Department by the tenant would render him liable to ejectment or his defence to be struck off by the Rent-Controller under section 13 (6) of the West Pakistan Urban Rent Restriction Ordinance VI of 1959.

3o. The files of these cases should be laid before the Senior Judge nominating a larger Bench for deciding the formulated by me above.

K.B.A Case referred to larger Bench.

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