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Constitutional Petition No.D‑446 of 1985, decided on 8th December, 1986.

‑‑‑Ss. 2 & 3‑‑Life Insurance Nationalisation Order (10 of 1972)‑ Abandoned property‑‑Insurance Company, furnishing information to Administrator by a declaration, together with a statement of accounts, about a certain amount which was being held by it towards provident fund of specified persons who had been working in company and had left territories of Pakistan‑‑Company further stating that aforesaid amount was in custody of State Life Insurance Corporation of Pakistan following nationalization of Life Insurance business‑‑Administrator on basis of said declaration ordering recovery from State Life Insurance Corporation but company after exchange of correspondence between it and State Life Insurance Corporation ultimately surrendering shares of National Shipping Corporation which it had purchased in lieu of amount of provident fund under Staff Provident Fund Rules‑‑Company in fact had handed over said shares to Insurance Corporation of Pakistan and not cash payment as declared to the Administrator‑‑Held, since no cash had been handed over by Company to Insurance Corporation of Pakistan, it could not transfer its responsibility to Corporation to pay cash‑‑Corporation being not party in proceedings and question related to determination of liability of Corporation under Act (XX of 1975), such question could not be determined in absence of the Corporation.

‑‑‑Ss. 2 & 3‑‑Object of Act to vest abandoned property in Federal Government and impose an obligation on persons who were in possession, supervision or management of such property to surrender name to the Administrator‑‑Object of Act was not, in any case, to saddle any person with liability discharge of which might lead to his suffering a pecuniary loss on that account. [p. 1967] B

‑‑‑Ss. 2 & 3‑‑"Abandoned property"‑‑Definition‑‑Definition of abandoned property is so comprehensive that it includes within its ambit not only tangible movable or immovable property but even right r interest in such property.‑‑[Words and phrases]. Abandoned

‑‑Ss. 2 & 3‑‑Life Insurance Nationalization Order (10 of 1972) Staff Provident Fund Rules, 1947, Rr.7, 20 & 32‑‑Abandoned property‑ Money accumulated through contribution towards provident fund by staff of company under Staff Provident Fund Rules, and staff eligible to receive their respective shares of provident fund in event of their retirement from service‑‑Company, as per requirement of relevant rules invested money, contributed towards provident fund, in shares of National Shipping Corporation and in no case company was liable to account for entire amount credited in provident fund account‑ Company, on promulgation of Act XX of 1975, making a declaration to Administrator of Abandoned Property about amount accumulated through contribution towards said fund by staff/specified persons and Administrator asking company to surrender actual amount declared‑‑Company unable to do so and even if shares of National Shipping Corporation were sold at that time they were likely to fetch price much‑ less than their face value‑‑Held, since a right had accrued to individual employee, declared as specified person, to receive his respective share at time of his retirement, that right vested as abandoned property in Federal Government‑‑Consequently liability of company to declare to Administrator such property or surrender same would arise only when right to receive his share of fund accrued to each of such employees and in no case liability could be imposed on company to account for entire amount in question because performance of such obligation was not possible for company at that time without incurring a substantial loss‑‑Orders passed against company by Board of Trustees of Abandoned Property set aside in circumstances.

Government of Punjab v. Dr. Ijaz Hasan Qureshi P L D 1985 S C 2 8 rel.

M.A. M. Namazie for Petitioners.

Habibur Rahman for Respondents.

Date of hearing: 21st October, 1986.

The facts of the case are that the first petitioner in this case is an insurance company and prior to 1st November, 1972 the petitioner was carrying on life as well as general insurance business in Pakistan. On 20‑3‑1972 the President of Pakistan was pleased to promulgate Life Insurance Nationalization Order (President's Order No. 10 of 1972), with a view to provide for the nationalization of life insurance business in Pakistan. By virtue of this order, the management of all insurance companies transacting life insurance, in so far as the management relating to such business was concerned, became vested in the Government of Pakistan with effect from 19‑3‑1972 and all persons including the first petitioner were divested of life insurance business and the same was made over to the trustees appointment by the Federal Government. Immediately ther after, the trustees took possession of the total records and investment appertaining not only to the life insurance department employees but also to the employees working in the general department of the petitioner. Before such takeover, the first petitioner had provided a provident fund for the benefit of his employees and the trustees thereof had invested the amount deposited in the fund in approved securities as required by the Provident Fund Trust Rules framed by the Company.

2. On 17‑2‑1975 Abandoned Properties (Taking Over and Management) Act, 1975 (hereinafter referred to as "the Act") was promulgated whereby every person "who is or has at any time after 16th day of December 1971, been in possession, supervision or management of any abandoned property" was required within the date, to be notified by the Federal Government in the Official Gazette, to intimate in writing to the Administrator Abandoned Property (hereinafter referred to as "the Administrator"), his willingness to surrenderd such property to him. Thereafter, on 11‑5‑1975 a notice was published in this regard. In the "DAWN" newspaper by the Secretary, Board of Trustees, Abandoned Properties, which was subsequently followed by a Press note issued by the Cabinet Division, Federal Government, dated 17‑5‑1975.

3. The first petitioner thereafter furnished information to the Administrator by a declaration filed on 30‑5‑1975 together with a statement of accounts showing that the amount of Rs.7,74,168.20 was being held by the petitioner towards the provident fund of the "Bangali Staff" working with the petitioner as on 31‑12‑1971. However, the aforesaid amount was said to be in custody of the State Life Insurance Corporation of Pakistan following nationalization of the Life Insurance business. On the basis of this declaration the Administrator ordered recovery of the aforesaid amount from the said Corporation.

Thereafter, correspondence followed between the first petitioner and the Corporation and ultimately the petitioner delivered 41,687 shares of the National Shipping Corporation at book value of Rs.18.5 per share, valued at Rs.7,85,799.95 together with a cheque of Rs.348.51 making a total of Rs.7,86,148.46 as payment on account of the provident fund of the aforesaid employees. Thereafter, through notice, dated 4‑2‑1980 sent by the Dy. Administrator, the petitioner was asked to deposit a sum of Rs.101.66 being the balance of the provident fund relating to the aforesaid employees of the petitioner and accordingly this sum was paid by the petitioner through a pay order, dated 7‑2‑1980. Subsequently, while processing refund in the case of one of the contributors to such provident fund, it was observed by the account branch of the second respondent that the petitioner, instead of surrendering the actual amount which it was required to surrender as per order of the Administrator, dated 25‑6‑1975, had surrendered shares of the N.S.C and consequently, he called upon the petitioner to surrender the actual amount through Bank Draft/Pay Order, and threatened recovery of the same along with interest above 1 of the bank rate under the prevalent rules and regulations in case of failure to comply with the aforesaid directions. The petitioner contested the claim, but nevertheless, the second respondent passed and order, dated 10‑2‑1981, directing the petitioner to deposit the amount claimed by the respondents together with interest within fifteen days from the date of the Order. The shares surrendered by the petitioner to the respondents were, further ordered to be returned to the petitioner alongwith dividends, income, interest, etc. which might have accrued against them. The petitioner then filed appeal before the first respondent which by its order, dated 25‑7‑1984, dismissed the petitioner's appeal, and hence this petition.

4. Before us Mr. M.A.M. Namazie, learned counsel for the petitioner, has raised a two‑fold contention. Fisrtly, according to the learned counsel, since the custody of the shares did not lie with the petitioner, but the State Life Insurance Corporation of Pakistan, therefore, principally, the liability under the Act rested with the Corporation and not the petitioner. It was next argued, that even if such liability existed against the petitioner, since the amount deposited towards the provident fund had already been invested in shares of the N . S.C., the petitioner, under the law, cannot be asked to account for such amount in cash, the same having become impossible due to the intervening circumstances, over which the petitioner had no control. Mr. Habibur Rahman, learned counsel for the respondent on the other hand, has fully supported the impugned orders.

5. Before the arguments can be appreciated, reference may be made to some relevant provisions of the Act. The object behind the Act, as suggested by its preamble, is to provide for taking over the management of certain properties, defined as "Abandoned Property" in the Act. The definition which is contained in clause (a) of section 2 of the Act is as follows;‑

"(a) "Abandoned Property' means any property, movable or immovable including share in industrial units and firms, investments, deposits, policies of insurance and all other interests and rights in or to arising out of any such property, belonging to a specified person and includes any such property sold or transferred to or placed under the supervision or control of, any other person on or after the sixteenth day of December, 1971 but does not include any ornaments or wearing apparel or any cooking vessels or other household effects in the immediate possession of a specified person, not exceeding a total of rupees one thousand:"

The expression "Specified Person" appearing in the definition of "Abandoned Property" has also been defined to mean as:

"a citizen of Pakistan domiciled in the territories which immediately before the sixteenth day of December, 1971 constituted the Province of East Pakistan who has left or leaves or has expressed his desire to be taken out of, or to be allowed to leave, the territories of Pakistan and includes a company registered in the said territories the registered office of which has not been shifted in pursuance of the Companies (Shifting of Registered Office) Ordinance, 1972 (V of 1972)."

Section 3 of the Act vests all Abandoned Property in the Federal Government on and from the 16th day of December, 1971. Section 4 of the Act provides for constitution of a Board of Trustees consisting of a Chairman and such number of other Trustees as the Federal Government may specify in the notification, for the control and management of Abandoned Property. Section 5 provides for appointment of Administrator and Dy. Administrator for the purpose of carrying the provisions of the Act into effect. Sub‑section (1) of section 6 of the Act provides that:‑

"Every person who is, or has at any time after the sixteenth day of December, 1971 been in possession, supervision or management of any Abandoned Property shall be deemed to hold or to have held as the case may be, such property on behalf of the Board."

Sub‑sections (2) and (6) of section 6 then provide for information to be given by such person to the Administrator in respect of such property and its surrender to the Administrator or any other person authorised by him in this behalf. Section 7 authorises the Administrator to take over possession of any Abandoned Property. The Act further authorises the Board of Trustees to hear appeals from orders or decisions of the Administrator.

6. Turning to the contentions raised by Mr. Namazie, the first contention of the counsel in our opinion can easily be brushed aside. Although it has not been disputed that at the time the declaration was made by the petitioner of assets of the employees, declared as specified persons, in the Act, the aforesaid shares of the N.S.C. were in the custody of the State Life Insurance Corporation of Pakistan, but since the controversy in the case does not relate to such shares but to the actual amount declared by the first petitioner through its letter addressed to the Administration, dated 30‑5‑1975, the argument in our opinion, appears to be completely misconceived. The admitted factual position is that although the petitioner had, declared the aforesaid amount as lying with the State Life Insurance Corporation of Pakistan, but what had actually been handed over by it to the Corporation was only the shares of N.S.C. Since admittedly, no cash had been handed over by the petitioner to the aforesaid Corporation, the former cannot transfer its responsibility to the Corporation. In any case, since the State Life Insurance Corporation is not a party in this petitioner, we cannot determine any such controversy in its absence. The question relates to determination of liability of the aforesaid Corporation under the Act which cannot be determined in absence of the Corporation. The argument is, therefore, repelled.

7. The second contention of Mr. Namazie, however, appears to be more formidable. According to the learned counsel, the amounts contributed by the aforesaid employees had been invested by the first petitioner in the shares of N . S . C . which was in accordance with the Staff Provident Fund Rules, framed in this regard, and consequently, it has become impossible for the petitioner to re‑convert the shares into cash without sustaining a substantial loss. The learned counsel has argued that the value of the shares has reduced considerably. Two maxim have been quoted by the counsel in this respect, the first being, lex non cogit and impossibilia (The law does not compel a man to do that which he cannot possibly perform) and the second being, impotentia excusat legem (where the law creates a duty or charge and the party is disabled to perform it, without any default in him, and has no remedy over, there the law will in general excuse him). Both these maxims have been referred to by the Supreme Court in the case reported as Government of the Punjab v. Dr. Ijaz Hasan Qureshi P L D 1985 SC 28 wherein reference has been made to page 162 of the Broom's Legal Maxims which reads as follows: ‑

"In the performance of that duty, it has three points to which its attention must be directed. In the first place, it must see that the nature of the necessity pleaded be such as the law itself would respect, for there may be a necessity which it would not. A necessity created by a man's own act, with a fair previous knowledge of the consequences that would follow, and under circumstances which he had then a power of controlling, is of that nature. Secondly, that the party who was so placed used all practicable endeavours to surmount the difficulties which already formed that necessity, and which, on fair trial, he found insurmountable. I do not mean all the endeavours which the wit of man, as it exists in the acutest understanding, might suggest, but such as may reasonably be expected from a fair degree of discretion and an ordinary knowledge of business. Thirdly, that this shall appear by distinct and unsuspected testimony, for the positive injunction of the law if proved to be violated, can give way to nothing but the clearest proof of the necessity that compelled the violation. "

8. As far as the factual position is concerned, it has not been denied that the provident fund scheme introduced by the first petitioner for its employees was being governed by the Staff Provident Fund Rules which had been framed by the first petitioner in the month of August, 1947. According to Rule 7 of these Rules, all permanent employees on the first Petitioner's staff became eligible to contribute towards the fund. Rules 3 defines "Member" or "Subscriber" as "any person in the service of the company who contributes to the fund as subscriber under these Rules". According to rule 11, the petitioner is also liable to make its own contributions towards the fund and such contributions are to be credited to the account of subscriber to the fund. Rule 18 indicates that except under certain specified conditions, no such subdecriber to the fund is entitled to recover the share of the contribution made by the petitioner unless he has served the petitioner for a continuous period of ten years, from the date of his confirmation in the petitioner's service. According to Rule 20, the subscriber is entitled to receive the provident fund after his retirement from service of the petitioner. He is however, entitled to receive the entire amount standing to his credit including the share of the contributions made by the petitioner, provided that he has completed ten years' service with the petitioner as is contemplated by the aforesaid rule 18. Lastly, reference may be made to rule 32 which appears to be most important for the purpose of the instance case. The rule provides as follows:‑

"The Trustees for the time being shall invest all moneys contributed to the Fund or accruing by way of interest or otherwise to the Fund in accordance with the provisions of sub‑section (2) of section 282(b) of the Companies Act, 1913, so however that the securities in which the contribution made by the employees after the date of the recognition of the Provident Fund and the interest on the accumulated balance of such contribution are invested are payable both in respect of capital and interest in Pakistan."

9. The provisions of the Act to which we have referred above, clearly indicate that one of the objects behind the Act is to vest the Abandoned Property in the Federal Government and to impose an obligation on persons who are in possession, supervision, or management of such property to surrender the same to the Administrator. But the object, in any case, is not to saddle any person with liability, the discharge of which may lead to his suffering a pecuniary loss on that account. It has been clearly established that the first petitioner had invested the money contributed towards the provident fund in the shares of N.S.C. in accordance with the Provident Fund Rules. According to these Rules, the aforesaid employees were eligible to receive their respective shares of the provident fund in the event of their retirement from service of the petitioner and the latter was in no case liable to suddenly account for the entire amount credited in the provident fund account. This is also an admitted position that if the shares of the N . S. C . are now sold in the open market they would fetch a price much below their face value. Under the circumstances, can it be said that the petitioner should still be compelled to incur an obvious loss which by any standards cannot be called negligible, when admittedly the petitioner on his part has not committed any default However, Mr. Habibur Rahman has argued that since the employees who have now been declared as specified persons had made contributions towards the provident fund in cash and the shares of N.S.C. had not been purchased by the first petitioner on their behalf, the petitioner, under the Act, was liable for the entire amount now being claimed from it by the respondents. The learned counsel has emphasized that the shares which have now been handed over to the respondents by the first petitioner do not even fall within the purview of the definition of Abandoned Property.

10. As far as the second argument of the counsel is concerned, there can hardly be any cavil against the same. Obviously, since the shares were purchased by the petitioner and not by the employees, the same do not belong to the employees, and consequently, they cannot fall within the purview of the definition of Abandoned Property. However, the question still is, whether the entire disputed amount lying in credit with the first petitioner falls within the ambit of the definition of Abandoned Property. This definition is so comprehensive that it includes within its ambit, not only tangible movable or immovable property, but even right or interest in such property. When this definition is read together with section 3 of the Act, then it becomes crystal clear that all that has vested as Abandoned Property in the' Federal Government, is the right of such individual employee declared as specified person to the recovery of his shares in the provident fund. Such right, as indicated earlier, accrues to him on reaching retirement from the petitioner's service. Consequently, it appears to us that the properly which can be claimed by the Administrator in the instant case, as Abandoned Property cannot consist of the entire amount lying in credit with the petitioner on account of the provident fund of specified persons, but it only consists of such right of the suit employees to receive their respective shares as and when the right to receive the same accrues. Consequently, the liability of the first petitioner to declare to the Administrator such property or surrender the same would arise only when the right to receive his share of the fund accrues to each of such employees. In our view, in no case a liability can be imposed on the petitioner to account for the entire amount in question, since performance of such obligation does not appear to be possible for the petitioner now without incurring a susbtantial loss. Therefore, the petitioner is neither liable under the Act to hand over the shares of the N.S.C. to the respondents which in our view have rightly been ordered to be returned to the first petitioner nor the latter is under any obligation to surrender the entire amount credited towards the provident fund account by the aforesaid employees. However, as we have already indicated, the liability of the petitioner exists to declare and surrender the amount of provident fund of each of the aforesaid employees as the same would have become due on his retirement from service.

For the aforesaid reasons, we accept this petition and quash the impugned orders passed by the respondents. There will, however, do no order as to costs, in view of the nature of the points raised.

M.Y.H./E‑3/K. Petition accepted.

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