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Petitioner: Messrs H.A. RAHIM & SONS (PVT.) LTD. VS Respondent: PROVINCE OF SINDH and another
Court Name: Sindh High Court Judge(s): Ata-ur-Rehman Title: Messrs H.A. RAHIM & SONS (PVT.) LTD. vs PROVINCE OF SINDH and another Case No.: Suit No,764,of 1999 Date of Judgment:2000-05-27 Reported As: 2003 CLC 649 Result: Suit decreed
JUDGMENT
JUDGMENT The plaintiff, an importer of gold and silver; filed this suit challenging therein vires of sections 9 and 10 of the Sindh Finance Act, 1994 hereinafter referred to as "the 1994 Act", whereby the Government of Sindh imposed a levy popularly known as infrastructure fee. The plaintiff has also called into question the Maintenance of Infrastructure Fee Rules, 1994 hereinafter referred to as "the 1994 Rules", in particular Rule 3 thereof and other rules, orders, notifications and demands issued in respect thereof, including demands raised through letters/notices dated 12-4-1599 (Annexure E) and dated 24-5-1999 (Annexure E-2) (2). The plaintiff prayed as under:-- (a)Declare sections 9 and 10 of the Sindh Finance Act, 1994 and section 5 of the Sindh Finance Act, 1996, in particular Rule 3 and any other Rules, Orders or Notifications therein and any demand raised including demands dated 12-4-1999 (Annexure E) 24-5-1999 (Annexure E-2) to be completely without jurisdiction, ultra vires un-Constitutional, void ab initio and of no legal affect; (b)declare that the plaintiff is under no obligation to pay infrastructure fee under sections 9 and 10 of the Sindh Finance Act, 1994 and section 5 of the Sindh Finance Act, 1996 or under any Rules made thereunder; (c)permanently restrain the defendants from recovering any infrastructure fee under sections 9 and 10 of the Sindh Finance Act, 1994 and section 5 of the Sindh Finance Act, 1996 or under any Rules made thereunder. 3. As sections 9 and 10 of the 1994 Act and section 5 of the 1996 Act are relevant, they are reproduced for convenience as follows:-- (a)Sections 9 and 10 of the 1994 Act reported in PLD 1996 Sindh Statutes 135 provide as follows:--
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"9. There shall be levied and collected fee for service rendered in respect of development and maintenance of infrastructure on the goods, entering or leaving the Province, from or for outside the country, through air or sea at the rate and in the manner as may be prescribed. 10. Government may make rules for carrying into effect the purposes of this Act and such rules may among other matters, prescribed the procedure for the assessment from the taxes and cesses levied under this Act." (b)Thereafter an amendment was made in section 9 of the 1994 Act through section 5 of the 1996 Act which is reported in PLD 1996 Sindh Statutes 435 as follows:-- "5. Amendment of Sindh Act No,XIII of 1994.--- In the Sindh Finance Act, 1995. For section 9, the following shall be substituted-- "9. Infrastructure fee on goods.--- There shall be levied and collected infrastructure fee on the movement of goods entering or leaving the Province from or for outside the country, through air or sea, at the rate and in the manner as may be prescribed. Explanation.--- For the purposes of this section, the word infrastructure 'includes roads, streets, bridges, culverts, lights on passages, plantation on passages, beaches, bypasses, first aid centres, road side rest-houses, safety and protection on rail roads and construction of connected roads to railway stations regulation and control of traffic for smooth flow and movement of goods, public order, Police force, patrol for safety of goods, stands for loading and unloading goods, markets and development improvement maintenance and protection of such matters. 9-A. Validation.--- Anything done, action taken, assessment made and collected, order passed, or purported to have been done, taken, made, assessed, collected or passed on or before the coming into force of this section or on or after the enforcement of the Sindh Development and Maintenance of Infrastructure Fee Rules, 1994 by the authority specified in the said rules shall be deemed to have been validly done, taken, made, assessed, collected or -passed and shall have and shall be deemed always to have effected accordingly." 4. The amendment (as stated in para. 2 above) was of such a nature that an explanation was added to section 9 of the 1994 Act and a new section i,e, section 9-A was also added. 5. Alongwith the main suit an application for injunction was also moved on which ad interim orders restraining action detrimental to the interest of the plaintiff had been passed. As the matter only required interpretation of law, by the consent the matter was fixed for final arguments without leading evidence. Accordingly, the following issues were settled:-- "(i) Whether the infrastructure fee imposed through section 9 of the Sindh Finance Act, 1994 as amended by the Sindh Finance Act, 1996 is un-Constitutional, ultra vires, unlawful void ab inito and of no legal effect? And whether any recoveries can be made thereunder? (ii)Whether the defendants have provided any services for which any infrastructure fee under section 9 of the Sindh Finance Act, 1994 as amended by the Sindh Finance Act, 1996 can be imposed? (iii)Whether rule 3 of the Sindh Development and Maintenance of Infrastructure Fee Rules, 1994 is lawful and whether any fee can be levied? (iv)Whether the suit as framed and filed is maintainable?" 6. I have heard the learned counsel for parties, perused the record and the case-law referred by the parties issuewise findings are as follows:-- 7. Issue No,4 is dealt with first as it touches upon the very maintainability of the present suit. The fundamental objection raised by Mr. Munir-ur-Rehman, the learned Additional Advocate-General representing all the defendants was that validity of laws could not be tested by a Civil Court in civil suit filed under section 9 of the C.P.C. Mr. Munir-ur-Rehman had argued that the correct remedy for challenging law would be a Constitutional petition under Article 199 of the Constitution. Dr. Muhammad Farogh Naseem, the learned counsel for the plaintiff in response cited a number of
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judgments and submitted that Civil Courts are the Courts of ultimate jurisdiction and there is no bar in the 1973 Constitution of the Civil Procedure Code against a Civil Court so as to test the validity of statutes on the touchstone of the Constitution or otherwise. In order to seek further assistance on this point Mr. Ziaul Haq Makhdoom, Advocate was appointed amicus curiae who agreed with the learned counsel for the plaintiff that the present suit as framed and filed, challenging the validity of provisions of statutes is maintainable. 8. have given serious thought to the issue in question. Section 9 of the C.P.C. Very clearly states that a Civil Court has jurisdiction to try all suits of civil nature unless expressly or impliedly barred. Admittedly there is no bar either in the C.P.C. Or in the Constitution with regard to filing or maintainability of a civil suit challenging the vires of law. Also at the same time challenging the vires of law would be a matter of civil nature which would come squarely within the parameters of section 9 of the C.P.C. In Hamid Hussain v. Government of Pakistan 1974 SCMR 356, a Full Bench of the Honourable Supreme Court found that the Civil Courts were the Courts of ultimate jurisdiction. Apart from this there are other direct authorities which confirm that a Civil Court can test the validity of laws in a civil suit. In Malik Khizar Hayat Tiwana v. Punjab Province PLD 1955 Lah. 88 at p.117 a learned Single Judge of the Lahore High Court deciding a civil original case found that certain amending legislations were violative of the Government of India Act, 1935 (the then operative Constitution). In consequence the same were declared as ultra vires. In Chief Administrator Auqaf v. Pir Rashidud Daula PLD 1961 Lah. 993 at p.999-A a Division Bench of the Lahore 'High Court was pleased to observe that the jurisdiction to determine as to whether a law is valid is vested in all the Courts. In Pakistan Investment Limited v. Pakistan PLD 1980 Kar. 275 the vires of the statute levying Central Excise duty on services was challenged in a suit filed before the original side of this Court. Although on facts the Court found the legislation to be intra vires, the Court's jurisdiction to entertain such a suit was assumed. Aggrieved against the judgment in the suit the plaintiff preferred a High Court appeal before a Division Bench of this Court. The High Court appeal was decided alongwith many other Constitutional petitions filed on the Constitutional side of this Court. The judgment is reported as Mondi's Refreshment Rooms and Bars v. Islamic Republic of Pakistan PLD 1983 Kar. 214. A further appeal was Unsuccessfully preferred to the Supreme Court in Hirjina & Co. v. Islamic Republic of Pakistan 1993 SCMR 1342. In both the latter judgments of the Division Bench of this Court and the Honourable Supreme Court the maintainability of the suit to question vires of law was never doubted or discussed. In Mirpurkhas Sugar Mills Limited v. Consolidated Sugar Mills PLD 1987 Kar. 225 a learned Single Judge of this Court held that law could be challenged in a civil suit on grounds that it is inconsistent with the fundamental rights enshrined under the Constitution. It was also observed in that case that though Constitutional petitions are filed under Article 199 of the Constitution, there was nothing in the said Article or any other provision of the Constitution which provided that such challenge could only be made through a Constitutional petition. In Arif Builders and Developers v. Government of Pakistan PLD 1997 Kar. 627 a learned Single Judge of this Court was pleased to observe that Civil Courts had the jurisdiction to enforce fundamental rights embodied in the Constitution. Even in India there is Little doubt that Civil Courts can test the validity of laws. In Mulji Haridas v. Ibrahim Rahimtullah AIR 1932 Bom. 166 a Division Bench of the Bombay High Court was pleased to hold that a Civil Court had no jurisdiction to restrain a Legislative Assembly from introducing a certain bill or passing the same into an Act of Parliament. However, there is an explicit suggestion that once a bill is made into an Act of Parliament the Court could then deal with it. This judgment has been followed in Bhaira Bendara Narayan Bhup v. State of Assam AIR 1953 Assam 162. Earlier, the Federal Court in United Provinces v. Mst. Atiqa Begum AIR 1941 FC 16 was pleased to observe as follows:--
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"Where in a suit the question whether a statute is or is not valid involves the question of the scope of the executive authority of the Province, the Advocate-General of the Province is a proper party, in the sense that without him the Court cannot effectually and completely adjudicate upon and settle all the questions involved in the suit." ' The above would categorically show that the Federal Court had assumed that a Civil Court possessed the jurisdiction to test the validity of laws in a civil suit and that there was no cavil with this. In another context the judgment of the Federal Court in United Provinces v. Atiqa Begum has been approved, applied and followed by our Supreme Court in PIDC v. Pakistan 1992 SCMR 891. Similarly in Syedna Taher v. State of Bombay AIR 1958 SC 253 the Supreme Court of India dismissed an appeal against judgments of the Single and Division Benches of the Bombay High Court which were, inter alia, called upon to consider the validity of provisions of a statute, .The same having been raised in a civil suit before the Single Judge. Though on facts, the law was found to be intra vices none of three Courts considered that the Civil Court lacked the jurisdiction to test the validity of laws in a civil suit. It is 'pertinent to point out that in the present case the civil suit has been filed before the original side of the High Court which is also a Constitutional Court. In Shankar Roy Chowdhry v. HEA Cotton AIR 1925 Cal. 373 it has been correctly observed that a High Court entertaining a suit on its original side is a superior Court of record; and nothing is beyond its jurisdiction unless expressly barred. Seeking support from this judgment it becomes more than obvious that this Court exercising original civil jurisdiction and while entertaining civil suits is also a superior Court of record created under the Constitution. Also there is no bar either in the Civil Procedure Code or in the Constitution which prohibits enforcement of the provisions of the Constitution in a civil suit. Even in the aforecited case of Mirpurkhas Sugar Mills Limited PLD 1987 Kar. 225 similar observations have been made. In terms of Article 203 of the Constitution the power of superintendence and control is also vested in the High Courts. The High Court while entertaining a civil suit cannot only enforce the provisions of the Civil Procedure Code and Specific Relief Act but it can also enforce provisions of the Constitution including Article 199, being the Court of Superintendence under Article 203. This being so, the High Court in a civil suit has obviously the power and jurisdiction to test the validity of laws. 9. There is another aspect of the matter. The present suit has been filed for declaration and permanent injunction. A suit for declaration would lie under section 42 of the Specific Relief Act whereunder persons seek declaration with regard to their legal character in the sense of status or with regard to any right to property. The case of Muhammad Farooq Khan v. Sulaiman A.G. Punjurani PLD 1979 Kar. 88 is referred. The term right to property can mean both tangible and intangible rights. In coming to this conclusion reliance is placed on the case of T.J. Trust, Bombay v. CIT (Appeal) PLD 1958 SC (Ind.) 140 and Ahmed Arif v. CWT (1969) 2 CC 471, wherein it has been held that the term property is a term of the widest import, and subject to any limitation or qualification which the context might require, it signifies every possible interest which a person can acquire, hold or enjoy. In case of Ahmed Ali v. The State PLD 1957 Lah. 207 it was held that "property" may not have a market value for the person concerned yet it may not be quantifiable in monetary terms. In the present case the plaintiff has claimed his right to be dealt in accordance with Constitution. This right is a valuable property right as a citizen of the country, though intangible in nature. Even otherwise the plaintiff has in substance claimed that it is not obliged to pay a certain amount of money as fee under an alleged invalid law. In other words, the right in money is substantially in issue. Traditionally the Courts have construed section 42 of the Specific Relief Act very strictly resulting in non-suiting litigants on mere technicality. The Courts thereafter have developed techniques to defeat the technicalities and provide substantial justice to litigants through the process of construction and interpretation. In Muhammad Ilyas Hussain v. Cantonment Board PLD 1976 SC 785 the Supreme Court had observed that it was not always necessary for the plaintiff to
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sue for declaration for his title as substantive relief and ask for injunction only as a consequential relief. In Hyderabad Municipal Corporation v. Fateh Jeans Ltd. 1991 MLD 284 a learned Single Judge of this Court while interpreting section 42 of the Specific Relief Act was pleased to hold that even if the person was not an owner of the property he could be entitled to a declaration in relation thereto. In ICP v. S. Ahmed Sarwana, Advocate 1987 MLD 2442 another learned Single Judge of this Court found that even where a person was disentitled to declaratory relief under section 42, he could be granted permanent injunction. A somewhat similar view was also taken by another learned Single Judge of this Court in Shahid Mahmood v. KESC 1997 CLC 1936 wherein it was observed that even if the plaintiff could not be granted a declaration as to legal character, relief by way of permanent injunction to prevent breach of an obligation could always be granted and this was independent of his right to seek damages. The traditional strict view of section 42 that the same is exhaustive now seems to have watered down. Earlier also in Robert Fischer v. Secretary of State of India (1899) ILR 22 Mad. 270 (Privy Council it was held that section 42 of the Specific Relief Act was not exhaustive of the circumstances in which a person could ask for a declaratory relief. In the case of Shri Krishina Chandra v. Mahabir Parsad AIR 1933 All. 488 the Allahabad High Court categorically held that section 42 of the Specific Relief Act was not exhaustive so as to exclude all other forms of declaratory suits. Similar view have been taken in the case of Vangipuram Venkatacharyulu v. Shri Rajah Vasireddi AIR 1935 Mad. 964, Desu Reddiar v. Srinivasa Reddi AIR 1936 Mad. 605 and Sisir Kumar Chandra v. Smt. Monrama Chandra AIR 1972 Cal. 283 at p.290. The Supreme Court of India has also recognized in Ramasraghava Reddy v. Sheshu Reddy AIR 1967 SC 436 that where the declaration sought by the plaintiff falls outside the purview of section 42 of the Specific Relief Act, the declaration could be governed by the general provisions of the Civil Procedure Code like section 9 or Order VII, rule 7, I subscribe to latter line of cases and hold that. Section 42 of the Specific Relief Act is not exhaustive of the circumstances in which declaration is to be given. A declaration may well be given in circumstances not covered by section 42 of the Specific Relief Act in which case the general provisions of law shall govern the E declaration sought. It serves no useful purpose to beat about the bush and spend enormous time and effort only to determine the much debated issue as to whether a plaintiff possesses the legal character so as to afford him a declaration under section 42. No doubt there is some conflict in judicial authority as to whether section 42 is exhaustive, however, the line of authorities which spell out that section 42 if not exhaustive is to be given preference. Even in Pakistan there is direct authority for the proposition that the section 42 is not exhaustive. The case of Salimullah Beg v. Motia Begum PLD 1959 Lah. 429 is referred. The Court in substance has to see whether the plaintiff in the facts and circumstances of the case should or should not be granted a declaration. At the end of the day the Court has to dispense substantive justice and assess what is fair or unfair in the attaining circumstances. The case of Imtiaz Ahmed v. Ghulam Ali PLD 1963 SC 382 is referred. 10.In view of the above the suit is found to be maintainable and Issue No,4 is answered in affirmative. 11.As the first three issues are interconnected they shall be disposed of together. 13.Under section 9 of the 1994 Act as amended by the 1996 a new levy by the name of infrastructure fee was introduced by the defendant No,1 . In terms of this a fee has been levied for services rendered so as to develop and maintain infrastructure. The levy is on the goods which may enter/leave the Province from or outside the country. In other words, the charge or the charging event is on those goods which enter or leave the Province and which come from outside the country by way of import or which are meant for outside the country by way of export. Putting it differently again, the incidence of charge or the charging event is on goods entering or leaving the Province meant for import or export.
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14.As the matter touches upon the interpretation of Articles 141, 142, 151 and Entry 27 of the Federal Legislative List contained in the Fourth Schedule of the 1973 Constitution the same are being reproduced for the convenience:-- "141.Subject to the Constitution:--- (a) [Majlis-e-Shoora (Parliament)] may make laws (including laws having extra-territorial operation) for the whole or any part of Pakistan, and a Provincial Assembly may make laws for the Province or any part thereof." "142.Subject to the Constitution:-- (a)[Majlis-e-Shoora (Parliament)] make laws with respect to any List; [Majlis-e-Shoora (Parliament)], shall have power to make laws Concurrent Legislative List; (c) A Provincial Assembly shall, and [Majlis-e-Shoora (Parliament)] shall not, have power to make laws with respect to any matter not enumerated in either Federal Legislative List or the Concurrent Legislative List; and (d) [Majlis-e-Shoora (Parliament)] shall have exclusive power to make laws with respect to matters of enumerated in either of the Lists for such area in the Federation as are not included in any Province." "151. (1) Subject to clause (2), trade, commerce and intercourse throughout Pakistan shall be free. (2) [Majlis-e-Shoora (Parliament)] may by law impose such restrictions on the freedom of trade, commerce or intercourse between one Province and another or within any part of Pakistan as may be required in the public interest. (3) A Provincial Assembly or a Provincial Government shall not have power to-- (a)make any law, or take any executive action, prohibiting or restricting the entry into, or the export from, the Province or goods of any class or description, or (b)impose a tax which, as between goods manufactured or produced in the Province and similar goods not so manufactured or produced, discriminates in favour of the former goods or which, in the case of goods manufactured or produced outside the Province discriminates between goods manufactured or produced in any area in Pakistan and similar goods manufactured or produced in any other area in Pakistan. (4) An Act ofa Provincial Assembly which imposes any reasonable restriction in the interest of public health, public order or morality, or for the purpose of protecting animals or plants from disease or preventing or alleviating any serious shortage in the Province of an essential commodity shall not, if it was made with the consent of the President, be invalid." ' Entry 27 of the Federal Legislative List of the Fourth Schedule reads as follows.- -- "27. Import and export across customs frontiers as defined by the Federal Government, inter- Provincial trade and commerce, trade and commerce with foreign countries; standard of quality of goods to be exported out of Pakistan. 15.A bare reading of Article 151(1) of the Constitution confirms that it is subject to sub-Article (2) and provides that trade commerce and intercourse throughout Pakistan is free; under sub-clause (2) of the Federal Parliament may legislate in derogation of sub-Article (1) but only if required to do so in public interest. Sub-Article (3) is divided into two parts; the first part i,e, Article 151(3)(a) unconditionally restricts the Provincial Government to execute orders hampering inter-Provincial trade in any manner, while the second part i,e, Article 151(3)(b) restrains the Provincial Legislature or Government to impose tax calculated to create discrimination between goods manufactured in different Provinces inter se. Under Article 151(4) a Provincial Assembly could legislate in derogation of Article 151(3) provided the matter concerns public health etc. (as mentioned therein) and the consent of the President is obtained. 16.In Mirpurkhas Sugar Mills Ltd. v. District Council, Tharparkar 1990 MLD 317 a Division Bench of this Court while invoking Article 151 of the Constitution was pleased to strike down export tax on sugar
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meant for delivery from Sindh to any other Province. The same view was taken by another Division Bench of this Court in Mirpurkhas Sugar Mills Ltd. v. District Council, Tharparkar 1991 MLD 715. In this case it was also observed that imposition of any form of tax would amount to restriction on the free flow of trade. In the latter case the Court even struck down the attempt to invalidate the judgment given earlier i,e, 1990 MLD 317. The fact that any restriction hampering inter-Provincial trade violates Article 151 of the Constitution now seems settled (further see Saphire Textile v. Government of Sindh PLD 1990 Kar. 402, Asia Flour Mills v. Director of Food PLD 1996 Lah. 133 and Star Flour Mills v. Province of Punjab PLD 1996 Lah, 687. 17. The impugned levy is allegedly a fee charged on good entering or leaving the Province. No doubt Article 151(3)(b) only mentions taxes and not fee, the plaintiff, however, has pitched its case on the touchstone of Article 151(3)(a). The plaintiff's case is that Article 151(3)(a) prohibits the imposition of any restriction by the Provincial legislation/ executive order in relation to inter- Provincial trade i,e, movement of goods from one Province on movement of goods from one Province to another; and any fiscal measure, being a tax or a fee amounts to a restriction on such inter-Provincial trade; the impugned levy being a fee directly imposed on movement of goods from one Province to another thus militates against Article…
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