1998 PLP 1628 (CLC)

The Punjab Local Councils (Contract) Rules, 1981: "

2. Definitions.‑‑‑(1) In these rules, unless the subject or context otherwise requires, the following expressions shall have the meanings hereby respectively assigned to them, that is to say‑‑ (a) 'agreement' means any kind of undertaking expressed or implied, made between a local council and any other person for consideration, for the purchase or supply of goods or materials, or for the acquisition, purchase or transfer by grant, gift, sale, mortgage, lease, exchange or otherwise of any movable or immovable property or for the execution of any work or for the performance of any service; (b) 'contract' means an agreement enforceable by law; (c) 'contractor' means a person entering into a contract with a local council, and shall include a person submitting a tender under Rule 7; (d)

(e)

"

5. Manner of making contracts.‑‑‑(1) A formal deed of agreement shall be executed between the local council and the contractor for every contract‑‑‑ (a) the performance whereof is subject to such conditions as may be specified; (b) which is to be made after inviting tenders; or (c) for the acquisition, purchase, lease, sale or transfer of any immovable property. (2) All agreements by or on behalf of a local council shall be signed by the Chairman and attested by two witnesses and shall bear the seal of the local council and shall be executed in such form as would bind him if it were made on his own behalf and may in the like manner and form be varied and discharged. (3) All agreement shall be written on a stamped paper of the appropriate value and shall, where necessary be registered under the law for the time being in force. (4)

(5)

6. Personal responsibility of the person approving or making contracts.‑‑?The Chairman making or approving a contract shall be personally responsible for ensuring that‑‑‑ (i) the contract is made without coercion, under influence, fraud or misrepresentation; (ii) the parties are competent to make the contract; (iii)

(iv)

(v)

(vi)

The Punjab Local Councils (Lease) Rules, 1990 "

2. Lease of collection rights.‑‑‑A Local Council tray 'lease out by public auction for a period not exceeding one year; the collection rights of tax, fee, rate, toll, cess or other charges levied by a Local Council. " The Punjab Zila Council Goods (Exit) Tax Rules, 1990: "(10) The successful bidder shall execute a formal deed in favour of the Zila Council the cost of which shall be borne by him containing the terms and conditions of the lease before exercising rights thereunder. "

9. The intentional suppression of the fact that there existed contracts between the parties disentitles the petitioners to any relief under the Constitutional jurisdiction by this Court. Reliance is placed on the case of Abdur Rashid v. Pakistan and others (1969 SCMR 141), wherein it was held by the apex Court as under:‑‑‑ "But in view of the fact that he did not come before the High Court with clean hands we did not allow him to do so. We are satisfied that the petitioner did not state all the relevant facts before High Court; that he deliberately suppressed the facts that he had been arrested by the Iranian Authorities for abetting his brother in a smuggling case and that for that reason he was considered an undesirable person. In these circumstances, the High Court rightly held that he was not entitled to get any relief in the writ jurisdiction. "

10. The agreements contain a clause (Condition No.45/46) regarding adjustment of the recovered taxes for the period the supervision remained with the respondents in the account of the petitioners regarding lease money. It is clearly mentioned that the lease period was one year starting from 1‑7‑1997 till 30‑6‑1998. The petitioners knew it well while executing the contracts/ agreements, dated 4‑11‑1997/6‑11‑1997. This condition was not new for the petitioners. This was already mentioned in the advertisements for auction of leases appeared in various newspapers, which amounted to an offer for lease of these taxes. The petitioners accepted this offer, took part in the auction and finally being successful bidders executed by abovesaid agreements. So, the petitioners as well as the respondents are bound by the terms and conditions of the agreements. In the case of Bashir Ahmad v. Muhammad Yousaf through Legal Heir (1993 SCMR 183), the Supreme Court laid down as follows:‑‑‑ "As agreement or contract made between the competent parties with their consent for lawful consideration and lawful object is binding on the parties. The Legislature, thus, intends that there should be concluded valid contract." The petitioners never disputed the execution of the agreements or the contents. The agreements being enforceable by law are contracts between the parties under section 2(h) of the Contract Act. The petitioners cannot be allowed to say something against the accepted terms and conditions of leases. It is now well‑established principle of law that the Constitutional jurisdiction of the High Court cannot be ordinarily invoked to enforce contractual obligations. In such a case, other equally adequate and efficacious remedies are available in view of the provisions of sections 139, 156, 166 and 173 of the Punjab Local Government Ordinance, 1979 and through recourse to the Civil Court. The Supreme Court in the case of Raja Muhammad Ramzan and 21 others v. Union Council, Bajnial and another (1994 SCMR 1484) held the same view. In Muzaffar‑ud‑Din's case (referred in para. No.6 supra) the Supreme Court observed:‑‑‑ "On hearing the learned counsel for the petitioner we find ourselves in complete accord with the view adopted by the learned Judges in the High Court that the only appropriate remedy open to the petitioner was to file a civil suit for the specific performance of the contract if so advised. " The same view was expressed in the case of Hassan Associates v. Pakistan Telecommunication Corporation through Divisional Engineer (Development) Cable Planning, Faisalabad and 5 others (1996 MLD 244).

11. In the case of Muhammad Fiaz Abbasi and another and Ch. Anwar Muhammad Khan and 6 others, referred in para. No.7 supra, the Constitutional petitions were entertained as the legality of the orders of the Government functionaries were challenged, while in the cases of Messrs Muhammad Safdar & Company and Abdul Hameed the very factum of auction was in dispute and in the case of Malik Muhammad Sarwar and others the increase in the rates of taxes on various items was challenged. In the case of Rustam Ali and another no such agreement, as in the instant cases, was executed between the parties. Hence, the abovecited rulings on behalf of the petitioners are not at all applicable to the facts of the petitioners' cases.

12. The learned counsel for the respondents next referred to Condition No.25 in the agreement of Malik Sakhi Muhammad and similar Condition No.27 in Allah Ditta?s agreement and submitted that the matter was to be referred to the Arbitrator, whose decision would be final and binding on both the parties. In this regard he referred the case of Messrs Combined Enterprises v. Water and Power Development Authority, Lahore (PLD 1988 SC 39) wherein the order of the learned Civil Judge appointing the Arbitration was restored and that of annulling the appointment of the Arbitrator was set aside because of the existence of the stipulation regarding reference of dispute or difference to an Arbitrator. Even in the case of Hassan Associates (referred in para. No .12) it was observed as follows:‑‑‑ "In the instant case, the learned counsel conceded that the agreement provides an arbitration clause; according to which ' if any dispute, reference or question shall at any time arise between the contractor and consultant, the same shall be referred to employer herein the sole authority to decide and his decision will be final to be acceptable to both contractors and consultant". In the presence of terms and conditions for reference of dispute by the agreement itself, the disputed matters are to be resolved by the arbitrtaor; it is clear that the matter is not suitable for adjudication in the exercise of the writ jurisdiction of the High Court. It is open to the petitioner to go in for arbitration according to the agreement between the parties being an adequate alternative remedy which has not been availed by the petitioner. In this regard reliance can be placed on Al‑Mahmood Industries (Pak.) Limited v. The Trading Corporation of Pakistan Limited and another 1974 SCMR 51."

12. On petitioners' behalf reliance was placed on the case of Director Housing, A.G.'s Branch, Rawalpindi v. M/s. Makhdum Consultants (PLD 1997 SC 663) and it was contended that it was the discretion of the Court to stay or refuse to stay the legal proceedings under section 34 of the Arbitration Act, 1940. There is no doubt that it is discretionary of the Court to stay the proceedings under section 34 of the Arbitration Act, but where a clause exists about the reference to the arbitration of a dispute arising out of the terms of the contract between the parties, it is always appropriate that the dispute be referred to the Arbitrator in terms of a lawful agreement. Even in the Director Housing's case the Supreme Court observed as follows:‑‑‑ "The Court in such cases has a discretion either to stay or refuse to stay the legal proceedings. However, in exercise of this discretion the Court is always guided by the paramount consideration that a party is bound by the terms of a lawful agreement which it enter into with another party and it cannot be relieved lightly from the obligations arising under the agreement except in very exceptional circumstances which make the enforcement of the terms of agreement unlawful or highly inequitable. Therefore, where a party enters into an agreement with another party to refer any, future dispute arising between them under the agreement to the arbitration for its resolution, the Court will not generally allow continuation of any legal proceedings initiated by a party to such an agreement, ignoring the arbitration agreement, and direct the party to have recourse to the agreed forum for decision of the dispute. " As none of the parties has rescinded or disputed the abovementioned contracts, the Constitutional petitions are not maintainable without referring the dispute to the Arbitrator.

14. It was finally submitted on behalf of the respondents that the amount collected by the staff of the respondents was adjusted against the lease money due from the petitioners and after accepting the said settlement in accordance with the agreements the petitioners paid the remaining instalment. He submitted that, thus, the petitioners were estopped from their conduct to re-agitate this matter. This learned counsel for the petitioners did not deny the factual position but still maintained that the petitioners were not bound to pay the lease money for the period during which the taxes were not collected by them.

15. I am of the view that the contention of the learned counsel for the respondents has much force. The petitioners by getting the money received by the staff of the respondents adjusted towards the lease money in fact acted upon the agreements/contracts duly executed between the parties. They are now estopped from agitating this matter at this late stage. The conclusion is that the writ petitions are not maintainable as adequate and efficacious remedies are available to the petitioners. Both the writ petitions are accordingly dismissed with costs. A.A./S‑206/L?????????????????????????????????????????????????????????????? ??????????? Petitions dismissed