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Second Appeal from Order No. 57 of 1963, decided on 2nd November 1965.

S. 30(1), proviso (a)‑Term "local authority" Has meaning as given in S. 3(28), General Clauses Act, 1897 Tax levied under North‑West Frontier Province Urban Immovable Property Tax Act, 1948 or West Pakistan Urban Immovable Property Tax Act, 1958 ‑ Not "municipal" or "local" fund‑Expression "latest assessment of the Municipality" in proviso (a) to S. 30 (1) of Displaced Persons (Compensation and Rehabilitation) Act, 1958 means, assessment of "urban area" within Municipality‑Tax levied, under North‑West Frontier Province Urban Immovable Property Tax Act, 1948 and West Pakistan Urban Immovable Property Tax Act, 1958 to be considered "assessment of the Municipality"‑Landlord entitled under proviso (a) to S. 30 (1) of Displaced Persons (Compensation and Rehabilitation) Act, 1958 to charge rent from tenant on basis of such latest assessment‑West Pakistan Urban Rent Restriction Ordinance (VI of 1959), S. 13 North‑West Frontier Province Municipal Act (XXXIII of 1950), S'3 (S) & 3 (12)‑Municipal Administration Ordinance (X of 1960), Ss. 2(24) & 2(26)‑General Clauses Act (X of 1897), S. 3 (28) North‑West Frontier Province. Urban Immovable Property Tax Act (XIII of 1948)‑West Pakistan Urban Immovable Property Tax (V of 1958).

In the area formerly known as the North‑West Frontier Province, urban immovable property was never assessed by Muni cipality for the purposes of rent and taxation. Hence in a large number of cases questions arose 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 and whether in the circumstances a transferee of evacuee property holding a Provisional Transfer Order could legally demand rent at the rate of latest assessment by the Excise and Taxation Department from the occupier of the property who became a statutory tenant under the transferee and 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, 1959. The above questions were formulated and referred to a larger Bench for decision. The Division Bench to whom reference in the case was made, after tracing brief history of the various Acts under which the urban immovable property was taxed in the area formerly known as the North‑West Frontier Province:

Held, that the Excise and Taxation Department notwithstand ing the fact that it is an assessing and collecting authority of the tax imposed under the North‑West Frontier Province Urban Immovable Property Tax Act, 1948 as also under the West Pakistan Urban Immovable Property Tax Act, 1958, is not a "local authority":

On the second question whether the tax levied under the North- West Frontier Province Immovable Property Tax Act, 1948 and the West Pakistan Urban Immovable Property Tax Act, 1958 can be considered to be the assessment "of the Municipality" within meaning of proviso (a) to section 30 (1) of the Displaced Persons (Compensation and Rehabilitation) Act, 1958 so as to enable a transferee to charge rent on the basis of such assessment, it was held that the terms "municipal committee" and "municipality", as defined in subsections (5) and (12) of section 3 of the North -West Frontier Province Municipal Act (XXXIII of 1950) and in subsections (24) and (26) of section 2 of the Municipal Adminis tration Ordinance (X of 1960), have different meanings and are not in the least synonymous or interchangeable. This being the position, the words "assessment of the municipality" within the meaning of proviso (a) to section 30 (1) of the Displaced Persons (Compensation and Rehabilitation) Act, 1958 clearly mean an assessment of "urban area" within the Municipality and do not in the least connote that the assessment should be carried out by the "municipal committee". The expression "of the municipality" in proviso (a) to section 30 (1) of the Displaced Persons (Compen sation and Rehabilitation) Act, 1958, therefore, means assessment in regard to any municipal area. Since the latest assessment of the tax on the immovable property pertains to the municipal areas, the landlords are entitled under proviso (a) to charge rent from the tenants on the basis of the latest assessments for the period involved in each case.

On the last question whether the failure to pay or deposit rent according to the latest assessment of the Excise and Taxation Department would render a tenant 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, 1959 it was held that the term "default" means wilful default and not one which is unavoidable.

Syed Teghan Shah v. Shah Muhammad Madani Abbas P L D 1964 Pesh. 101; Mst. Shah Jehan v. Mst. Mukti P L D 1963 Kar. 777 and Abdul Majid v. Saadullah and another P L D 1963 Quetta 16 ref.

Muhammad Afzal Khan Bangash for Appellant.

D. M. Khalil for Respondents.

Sher Bahadur Khan, A. A.‑G. : amicus curiae.

Dates of hearing: 16th, 17th, 18th, 23rd, 24th and 25th June 1965

‑The following three questions have been pre-pounded for reference to the Division Bench: (P L D 1966 Pesh. 73)

(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 "

2. Since a common question was involved in this appeal (S. A. O. No. 57 of 1963) and in eight other appeals (S. A: O. Nos. 37, 51, 56, 64, 79, 80 of 1963, 113 and 118 of 1964), all these appeals were heard together. In view of the important and complex nature of the questions, we called upon Mr. Sher Bahadur Khan, Additional Advocate‑General, to appear as amicus curiae. The decision of the question turns on the true interpretation of proviso (a) to section 30 of the Displaced Persons (Compensation and Rehabilitation) Act, 1958 (Act No. XXVIII of 1958) (herein after to be referred to as Act No. XXVIII of 1958). Proviso (a) to section 30 (1) was amended by section 2 introduced in the Second Amendment Act, 1963.

3. It will be convenient to read proviso (a) to section 30 (1) of Act No. XXVIII of 1958:

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

4. On behalf of the appellants, who are tenants, two‑fold argument was addressed, namely:

(1) That the Excise and Taxation Department was not a "local authority" within the meaning of section 30 of Act No. XXVIII of 1958.

(2) In the alternative, it was argued that the words "assess ment of the municipality" meant assessment made by the Municipal Committee under the Municipal Act, and since the appeals involved cases pertaining to the municipal areas of Peshawar and Haripur Municipal Committees, it would mean assessment under the North‑West Frontier Province Municipal Act, 1950. In other words, it was argued that the word "municipality" was synonymous to the words "Municipal Committee."

5. For the proper understanding of the arguments, addressed at the Bar, it would be useful at this stage to give a brief history of the various Acts under which the urban immovable property was taxed, so far it relates to the area formerly known as the North‑West Frontier Province. On the 2nd November 1948, the North‑West Frontier Province Urban Immovable Property Tax Act, 1948 (Act No. XVIII of 1948) (hereinafter to be referred as Act No. XVIII of 1948), was enforced under which the Provin cial Government was authorised by a notification in the Official Gazette to levy tax on the urban immovable property. Section 2(a) of Act No. XVIII of 1948, defines the term "Assessing authority" thus: "assessing authority' means assessing authority" constituted under this Act." In section 2 (b), the term "local authority" has been defined thus: "local authority" means a municipal committee, a cantonment board or a notified area committee."

6. The North‑West Frontier Province Municipal Act, 1950 (Act No. XXXIII of 1950) (hereinafter to be referred as Act No. XXXIII of 1950) came into force on the 1st of November 1950. The terms "committee" and "municipality" have been defined respectively in subsections (5) and (12) of section 3 of this Act as follows:

"(5) Committee' means, a municipal committee established by or under this Act.

(12) municipality' means any local area declared by or under this Act to be a municipality."

Municipal fund has been defined in section 48 of Act No. XXXIII of 1950, as follows:

"48. There shall be formed for each municipality a 'munici pal fund', and there shall be placed to the (sic) thereof:

(a) all sums received by, or on behalf of, the committee under this Act, or otherwise,

(b) the balance (if any) standing at the credit of the municipal fund of the municipality at the commencement of this Act, and

(c) all fines realized in cases in which prosecution for offences committed within the municipality are instituted under this Act or the bye‑laws made thereunder in which provision is made for the credit of such fines to the municipal fund."

Chapter V to section 7 of Act No. XXXIII of 1950, gives the list of the taxes, which may be imposed in whole or any part of the municipality. Subsections (1) (a) and (b) of section 67, which are material for decision, read as follows:‑

"(a) a tax payable by the owner, on buildings and lands not exceeding twelve and a half per centum on the annual value.

Provided that in the case of lands and building occupied by tenants in perpetuity, the tax shall be payable by such tenants.

(b) a tax on persons practising any profession or art or carry ing on any trade or calling in the municipality."

7. The West Pakistan Urban Immovable ‑ Property Tax Act, 1958 (Act No. V of 1958) hereinafter to be referred as Act No. V of 1958 was enforced on the 10th April 1958, which repealed Act No. XVIII of 1948, section 2 (i) of Act No. V of 1958, which defines the term "urban area" is in the following terms:‑

"Urban area" means an area within the boundaries of a Muni cipal Corporation, Municipal Committee, Cantonment Board, Small Town Committee, or other authority (not being District Board) legally entitled to, or entrusted by Government with the control or management of a municipal or a local fund."

8. I now address myself to‑ the first question, referred to the Division Bench, "as to whether the Excise and Taxation Depart ment is a local authority within the meaning of Proviso (a) to section 30 (1) of Act No. XXVIII of 1958." The decision of this question hinges on the definition of the term "local authority" This term is generally defined in the Acts‑interpretation clause according to the subject‑matter, and has thus been defined variously in different Acts. Since the term has been used in Act No. XXVIII of 1958, which is a Central Act, therefore, we are bound to accept the meaning of this term as given in the General Clauses Act, 1897 This term has been defined in section 3, subsection (28) as under:‑---

"(28) Local authority' shall mean a municipal committee, district board, body of port commissioners or other authority legally entitled to, or entrusted by the Government with, the control or management of municipal fund or local fund."

9. It will be manifest frown the definition, reproduced above, that the municipal committee, district board and body of port commissioners are per se local authorities and, therefore, it follows that the levy of any tax on the immovable property, whether the assessment is made by the servants of these authorities or through the Excise and Taxation Department, would the assessment by the "local authority". Since the Excise and Taxation Department is neither a municipal committee nor a district board or body of port commissioners it, therefore, follows that it does not come within the first limb of the definition of the term 'local authority'.

10. I now address myself to the question, whether the Excise and Taxation Department can be considered as "other authority legally entitled to, or entrusted by the Government with, the control or management of a municipal or local fund." In order to qualify itself to be called a "local authority" within the meaning of the last part of the definition of the term, it must be shown that it is either legally entitled to, or is entrusted with, the control of either "a municipal or local fund". We are, therefore, to see: (1) whether the Excise and Taxation Department is an authority, which under the law is entitled to the control or management of certain fund, and (2) whether the fund is a municipal or local fund. If both these conditions are not fulfilled, the authority would not come within the meaning of the term, as defined in section 3 (28) of the General Clauses Act, 1897.

11. For the proper decision of the first question it will be convenient at this stage to understand the definition of the term "municipal fund". The first definition of this term is. to be found in section 48 of Act No. XXXIII of 1950, reproduced earlier. The second definition is to be found in section 3 (25) of the Municipal Administration Ordinance (No. X of 1960) hereinafter to be referred to as Ordinance (No. X of 1960) which reads as follows:‑---

"3 (25). Municipal Fund' means the fund of a Municipal Committee."

12. It is important to observe here, that the standing counsel for the Municipal Committee of Peshawar and Haripur made a statement at the Bar, which was accepted by the counsel appearing on behalf of the appellant that so far no tax was levied on the urban immovable property under Act No. XXXIII of 1950 or Ordinance X of 1960, and that, in all, there had been four assess ments, each for the period of five years, i.e. 1949‑54, 1954‑59, 1959‑1964 and 1964‑69, carried out respectively in 1949‑1954, 1959 and 1964, out of which the first three assessments were under Act No. XVIII of 1948, while the fourth and the last assessment was under Act No. V of 1958.

13. On behalf of the landlords, the learned counsel tried to argue that the Excise and Taxation Department both under Act No. XVIII of 1948 and Act No. V of 1958, besides being declared as assessing authority, was also authorised to collect tax, and that under the rules framed thereunder, particularly under Rule 1‑A (a) (a) of the North‑West 'Frontier Province Urban Immovable Property Tax Rules, 1949, the Excise Department was specifically authorised to superintend and administer the tax leviable under the Act, and, therefore, the Department could be legitimately considered to be "entrusted with the administration and control of the tax." It will be convenient at this stage to reproduce Rule 1‑A (a) (a):

"1‑A. Superintendence and control of Administration under the Act:‑---

(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 administration and the collection of the tax leviable under the Act."

14. Reverting to the discussion on the first question formu lated for reference, the decision of that question wholly hinges on the decision of the further question, whether a tax levied under Act No. XVIII of 1948 and Act No. V of 1958 is a municipal or local fund.' This question admits of a short answer and in the negative, in that urban immovable property taxes levied under the various Acts in the former N.‑W. F. P., being provincial taxes, fall under the "Provincial Consolidated Fund" both under Article 96 of the late 1956‑Constitution and Article 86 of the present Constitution. The said Articles respectively read as follows:‑--

"96. (1) The Governor shall, in respect of every financial year, cause to be laid before the provincial Assembly a statement of the estimated receipts and expenditure of the Provincial Govern ment for that year, in this part referred to as, the Annual Financial Statements:

(2) The Annual Financial Statement shall show separately‑---

(a) The sums required to meet expenditure described by the constitution as expenditure charged upon the Provincial Consoli dated Fund, and

(b) the sums required to meet other expenditure propose to be made from the Provincial Consolidated Fund, and shall distinguish expenditure on revenue account from other expenditure."

"(86) All revenues received and all loans raised by a provincial Government and all moneys received by a provincial Government in repayment of any loan, shall form part of one consolidated fund, to be known as the Provincial Consolidated Fund of the Province concerned."

15. It follows from the above discussion that receipts of the tax under the Urban Immovable Property Tax Act are Provincial Funds. By another process of reasoning, we reach the same con clusion, and it is that the municipal and local funds are receipts, other than revenues; realized by taxation under the Provincial Act. It follows as a necessary corollary that the Excise and Taxation Department notwithstanding the fact, that it is an assessing and' collecting authority of the tax imposed under Act No. XVIII of 1948 as also under Act‑V of 1958, is not a "local authority".

16. This takes me to question No. 2, which, in my view, is the crux of the question. The question, as formulated in para‑phrase, is whether a transferee within the meaning of proviso (a) to section 30 (1) of Act No. XXVIII of 1958, is entitled to charge rent on the basis of the latest assessment "of the municipality". To put it differently, question No. 2 raises a question, whether the tax levied under Act No. XVIII of 1948 and Act No. V of 1958, can be considered to be the assessment "of the Municipality". I first propose, to consider the question from the point of view of Act No. XVIII of 1948.

Section 2 (b) defines "local authority" as follows:‑----

" Local authority' means a municipal committee, a canton ment board, or a notified area committee."

Section 2(e) defines the "rating area" as under:‑---

" rating area' means any area administered by a local authority which is included or hereafter be included in the‑ Schedule to this Act."

In the Schedule to the above Act, giving the list of the rating areas, Haripur and Peshawar are, respectively, shown at serial Nos. 2 and 4. Section 3 (1), which is material reads as follows:

"There shall be charge, levied and paid an annual Tax on buildings and laud situated in the rating area 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 notifications in the official Gazette, direct in respect of each such rating area."

17. In subsections (5) and (12) of section 3 of Act No. XXXIII of 1950, reproduced earlier, the terms "committee" and "muni cipality" have beer, respectively defined thus: " committee' means a municipal committee established by or under this Act" and "municipality" means any local area declared by or under this Act to be a municipality".

18. Subsections (24) and (26) of section 2 of Ordinance No. X of 1960, give the definitions of the terms "municipal committee" and "municipality", which are almost identical to the definition given in Act No. XXXIII of 1950, and are as follows:‑

" (24) Municipal Committee' means a municipal Committee, constituted under this Ordinance, by (whatever name called)'. The words in brackets were added by Ordinance XV of 1961.

'(26) Municipality' means an urban area, declared to be a municipality under this Ordinance.' "

It will be manifestly plain from the definition reproduced above that the terms "municipal committee" and "municipality" have different meanings and are not in the least synonymous or inter changeable. This being the position, the words "assessment of the municipality" within the meaning of proviso (a) to section 30 (1) of Act No. XXVIII of 1958, clearly means an assessment of "urban area" within the municipality and do not in the least connote that the assessment should be carried out by the "muni cipal committee". I am fortified in this view by the dictionary meaning of the word "of" At page 743 of the Chamber's Twentieth Century Dictionary (revised Edition), the word "of" has been defined thus:‑--

"from, from among, out from belonging to, among, proceed ings or derived from, made from having for material, having, or characterised by, in the manner that characterised, with respect to, owing to, with over, concerning, during, by on, in, specified as, constituted."

In the Webster's New International Dictionary, at page 1492, the definition of the word "of" has been given as under:‑

"In the most general sense, proceeding from, belonging to, relating to, connected with, concerning."

19. It follows from the above discussion that the expression "of the municipality" means assessment in regard to any municipal area. Since the latest assessment of the tax on the immovable property pertains to the municipal areas, the landlords are entitled under proviso (a) to section 30 (1) of Act No. XXVIII of 1958 to charge rent from the tenants on the basis of the latest assessment for the period involved in each case.

20. The third and the last question need not detain us long in that the term "default" within the meaning of section 13 (6) of the West Pakistan Urban Rent Restriction Ordinance (VI of 1959) has already been the subject‑matter of judicial pronouncement in the three decisions of this Court. The latest decision is a decision of this Bench in a case reported as Syed Toghan Shah v. Shah Muhammad Madani Abbas (P L D 1964 Pesh. 101) in which one of us after noting the previous two decisions, namely; Mst. Shah Jehan v. Mst. Mukti (P L D 1963 Kar. 777) Abdul Majid v. Saadullah and another (P L D 1963 Quetta 16) held that the terms "default" means "wilful default" are not one which is unavoidable. None of the counsel appearing on behalf of the parties to canvass the correctness of the rule enunciated in the authorities referred to above.

21. Having answered the questions under reference, the record of the case should be placed before a Judge sitting in Chambers at an early dated for decision of the appeals according to law.

.‑I agree.

K. B. A. Reference answered.

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