P L D 1966 (W (PLP)

INAMULLAH KHAN, J.‑

This is a petition under Article 98 of the Constitution challenging the orders passed by the learned Custodian on 24th and 25th November 1960, whereby the learned Custodian revised the order, confirming the transaction in respect of urban property under section 20 of Act XII of 1957, of the learned Additional Custodian in exercise of his suo motu power of revision and dismissed the revision filed by the petitioners against the order of the Additional Custodian refusing to confirm the transaction in respect of agricultural property. The petitioners also prayed for declaration that the cancellation of income‑tax certificates by respondents Nos. 10 and 11 was illegal. The further prayer was that the property covered by exchange deed dated 31st July 1948 may be declared to be non evacuee property.

2. The facts giving rise to the present petition briefly put are these. One Haji Siraj Ahmed deceased, the predecessor‑in- interest of the petitioners, entered into an agreement of exchange on 19th February 1948 with Messrs Murlimal Sant Ram & Co., respondent No: 4 in respect of his property with that of the latter. On 19th February 1948, Haji Siraj Ahmed executed a deed of transfer in respect of his properties at Ghaziabad, District Meerut, valued at Rs. 5,00,000 (rupees five lakh) in favour of Messrs Murlimal Santram & Co. It was registered on 20th March 1948. Thereafter, respondent No. 4, on 9th April 1948, applied to the Assistant Inspecting Commissioner of Income‑tax, Karachi for issue of certificate under section 3 of Ordinance IV of 1947. In the meantime hoping that the requisite certificate under section 3 would be granted, the respondent No. 4 executed a sale‑deed on a stamp paper valued at Rs 14,988 (Rs. fourteen thousand nine hundred and eighty‑eight) on 31st July 1948. It was presented before the Magistrate on 30th September 1949, but could not be registered in the absence of the income‑tax certificate and also a certificate under section 17 of Ordinance XV of 1949.

3. The Deputy Custodian informed, by his letter dated the 5th December 1954, the Income‑tax Officer that a charge of Rs. 32,21,219 (Rs. thirty‑two lakh twenty‑one thousand two hundred and nineteen) had been created on the property of res pondent No. 4, it may be mentioned that the charged property is not the subject‑matter of the present petition. After the receipt of the letter from the Deputy Custodian five Income‑tax certificates relating to five properties were granted on 14th December 1955 by the Inspecting Assistant Commissioner. Thereafter, the Additional Custodian on 23rd January 1957, sanctioned the transaction dated 31st July 1948, and issued a certificate under section 19 of Ordinance XX of 1956, permitting the registration of the transaction in question. The Sub‑Registrar registered the deed on, 1st April 1957. It may be mentioned that the Custodian in exercise of his revisional jurisdiction had set aside the permission granted by the Additional Custodian for registration of the deed, but on an application for review by the petitioners withdrew that order with the result that the transaction was registered by the Sub‑Registrar as already mentioned on 1st April 1957.

4. The petitioners made an application on 6th April 1960, for confirmation of the transaction under section 20 of Act XII of 1957 (hereinafter called the Act). It would, however, appear that the Income‑tax Officer withdrew the No‑Objection Certificate issued on 14th December 1955, on 20th May 1960. The learned Additional Custodian disregarded the cancellation of the No Objection Certificate and confirmed the transaction. He did so mainly on the interpretation of section 20 of the Act. He was of the view that all that section 20 required was that the transfer should have been covered by an income‑tax certificate. The learned Additional Custodian, however, was of the view that as there was no income‑tax certificate in respect of the agricultural property, the transaction could not be confirmed in respect of the same under section 20 of the Act.

5. The petitioners filed a revision before the Custodian against the order of the Additional Custodian rejecting their application for confirmation of the agricultural property. When the matter came before the learned Custodian, he in exercise of his power under section 43 (4) of the Act, issued notice to the petitioners in respect of the confirmation of the urban property. The Custodian dismissed the revision of the petitioners in respect of the agricultural property on the 25th November 1960, and set aside the order of the learned Additional Custodian confirming the transaction in respect of urban property by his order dated 24th November 1960.

6. Two fold preliminary objections have been taken by the learned Advocates appearing for the respondents. We propose to dispose of these objections in the first place. It was contended that the present petition was not maintainable as a similar petition was withdrawn by the petitioners on 18th April 1963. In this connection reliance was placed on Order XXIII, rule 1, C. P. C. that as the petitioners had not taken permission of the Court to file a fresh petition they could not file another petition in respect of the same subject‑matter. It is true that the petitioners had filed Writ Petition No. 416/1962 on 11th June 1962 and withdrawn it on 18th April 1963. The relevant order of the Division Bench of this Court reads as under:

"Mr. Zahir Alam states that he be permitted to withdraw the petition. No permission is necessary for an unconditional withdrawal. Petition dismissed." Mr. Muhammad Bux A. Memon, the learned Advocate, who appears for the petitioners, contended that the principle underlying Order XXIII, rule 1, C. P. C. is not applicable to the circumstances of the present case. He admitted that though the Petition No. 416/1962 was withdrawn on 18th April 1963, without any explicit permission of the Court to file another petition, but Petition No. 638/1962, which was filed on 10th September 1962 was already pending in the Court. We are of the view considering the principle underlying Order XXIII, rule 1, C. P. C. that where a suit is already pending before the previously instituted suit is withdrawn the provision of Order XXIII, rule 1, C. P. C. would not be applicable. In this connection Mr. Muhammad Bux A. Memon, the learned Advocate for the petitioners relied on a Division Bench case of the Lahore High Court, Mangi Lal v. Radha Mohana (A I R 1930 Lah, 599). It was held in that case that Order XXIII, rule 1, C. P. C. refers to permission to withdraw a suit with liberty to institute a fresh suit after the first one has been withdrawn. Order XXIII, rule 1, C. P. C.I cannot be read so as to bar a suit which has already been instituted before the other suit has been abandoned or dismissed. We respectfully agree with the principle laid down in that case and are of the view that Writ Petition No. 638/1962, was maintainable,

7. In the second place, it was contended that the order passed in Writ Petition No. 540/1962, operates as res judicata and there fore. the petitioners are not entitled to the relief they have claimed in the present petition. There is not much force in this contention. The petitioners filed Writ Petition No. 540V1962, on 31st July 1962. This was disposed of by a Division Bench of this Court on 28th August 1962. The petition was summarily dismissed on the ground that the petitioners had failed to cite any law that the Income‑tax authorities could not cancel income‑tax clearance certificate once granted. In order to apply the principle of res judicato as embodied in section 11 of the C. P. C. two of the necessary essentials are that the matter should be between the same parties and that there must be final adjudication on the merits of the case, In this case we find, as already observed I, that the petition was dismissed summarily. In the second place, Writ Petition No. 540 of 1962 was not between the same parties. The parties to Writ Petition No. 540/1962 were the Income‑tax Commissioner. Income‑tax Officer and Messrs Murlimal Sant Ram & Co, The parties to the present petition are all respondents. It cannot, therefore, be said that the decision in Writ Petition No. 540/ 1962, was between the same parties. As to whether prior decision of a writ petition operates a bar to a petition filed later on case for consideration before the Supreme Court of India. In Daryao v. State of U. P. (A I R 1961 S C 1457). It was observed in that case that if a writ petition was dismissed in limine and an order is pronounced in that behalf, whether or not the dismissal would constitute a bar would depend upon the nature of the order. If the order considers the questions raised in the petition it would be an order on merits. On the other hand, if the order does not consider all the aspects of the case and disposes of the matter on some technical ground it cannot be said to be an order on merits, so as to attract the principle of res judicata. In Writ Petition No. 540/1962 it was contended on behalf of the peti tioners that the Income‑tax authorities had cancelled the income tax clearance certificate without giving any show‑cause notice to the petitioners. On the face of it, the order of the income‑tax authorities withdrawing their income‑tax clearance certificate was in violation of the principles of natural justice. This point was not considered by the Bench. In that view of the matter, we think that the order passed in limine cannot be said to be an order so as to operate as res judicata.

8. For the consideration of the merits of the petition we would divide the contentions raised by the learned Advocates for the parties into two parts, the one relating to urban property and the other to agricultural property. We propose to take up the contentions relating to urban property in the first instance

9. The learned Custodian set aside the order of the learned Additional Custodian dated the 29th August 1960, confirming the transaction relating to the urban immovable property on two fold grounds. He was of the view that section 21 of the General Clauses Act, empowers the Income‑tax authorities to cancel the income‑tax clearance certificates granted on 14th December 1955. In the second place, he interpreted the word "or" occurring in sub‑clause (3)(a)(ii) of section 20 of Act XII of 1957 to mean "and" thereby holding that it was not sufficient that the transaction was once covered by the requisite certificate, but that the certificate, should be valid at the time of confirmation as well. We propose to dispose of these two points separately.

10. The principle underlying section 21 of the General Clauses Act, 1897, could no doubt apply to an order passed by an Income‑tax authority. The question is whether the order canceling the income‑tax certificate was passed by a competent authority. The further question would be, conceding that the cancellation order was passed by a competent authority, whether it could affect a completed transaction. We asked Mr. Noorul Arfin, the learned counsel appearing on behalf of respondents Nos. 10 and 11, to produce before us the relevant file dealing with the cancellation of the income‑tax certificates granted by the Inspecting Assistant Commissioner of 14th December 1955. Mr. Noorul Arfin, after the adjournment we had granted to have the file searched, stated that the relevant file dealing with this aspect of the case is not available with the Income‑tax authorities. Admittedly, the order of cancellation was passed by an Income tax Officer. The Income‑tax Clearance Certificate was granted by the Inspecting Assistant Commissioner. On the face of it an Income‑tax Officer, who is subordinate to the Inspecting Assistant Commissioner could not modify or cancel an order passed by him. It was, however, contended by Mr. Noorul Arfin, the learned Advocate for the Income‑tax Department that the Inspecting Assistant Commissioner later on approved the order of the Income‑tax Officer, and, therefore, the illegality was cured. No such order by the Inspecting Assistant Commissioner has been produced or filed by the Income‑tax authorities. In the absence of the cancellation order being by a competent authority, namely, by the Inspecting Assistant Commissioner, we would hold that the cancellation order was not legal. We may, however, observe that the Income‑tax Officer, by an amendment of the Transport of Property Ordi nance IV of 1947, has been given the same power as the Inspecting Assistant Commissioner. This power was con ferred on the Income‑tax Officer by Finance Ordinance, 1959, but was not given retrospective effect. The Income‑tax Officer, therefore, could not cancel an order that was passed by an Inspecting Assistant Commissioner in 1955. He may have power in respect of orders passed after the amendment of the Ordinance.

11. At any rate, even if the order of the Income‑tax Officer canceling the Income‑tax certificate was a valid one it could not affect a completed transaction. The income‑tax certificate was cancelled on 20th May 1960. The sale‑deed relating to the urban property and the agricultural property admittedly was registered on 1st April 1957, after the Additional Custodian sanctioned the registration of the document under section 19 of Ordinance XX of 1956, by an order dated the 23rd January 1957. This order was ultimately approved by the learned Custodian by his order dated the 21st December 1959. As the cancellation of the income‑tax clearance certificate took place in May 1960, section 21 of the General Clauses Act will not empower the Income‑tape authorities so as to affect a transaction which has already been completed as a result of the certificate granted. In this connection reference may be made to a decision of the Federal Court in Shahbaz v. The Crown (PLD 1956 FC 46).

12. Mr. Noorul Arfin, Advocate for respondents Nos. 10 and 11, and other Advocates for other respondents, very strenu ously contended that the income‑tax certificates granted by the Inspecting Assistant Commissioner on 14‑12‑1955 were not under section 3 of Ordinance IV of 1947. It is true, as would appear from the heading of the certificate granted by the Inspecting Assistant Commissioner, that it purports to have been issued under section 16(3)(a)(ii) of the Pakistan Adminis tration of Evacuee Property Ordinance XV of 1949. In this connection two fold questions will require consideration. In the first place as to whether the certificate was granted in pursuance of any application made by the petitioners to the relevant Authority under section 16 (3) (a) (ii) of the Ordinance or under section 3 of Ordinance IV of 1947. In the 2nd place whether section 16(3)(a)(ii) of Ordinance XV of 1949 confers; any power on the Inspecting Assistant Commissioner of Income‑tax to grant the requisite certificate. Admittedly the certificates in question were granted by the Inspecting Assistant Commissioner of Income‑tax on 14th December 1955, in pursuance of an application made by respondent No. 4 under section 3 of the Transfer of Property Ordinance, 1947. Section 3 reads as follows:‑ "

3. Registration of documents.‑No registering officer, revenue officer, custodian or other Officer appointed to deal with property shall register any document, relating to property of other than agricultural land, which is required to be registered under the provisions of clause (a), (b), (c) or (e) of subsection (1) of section 17 of the Indian Registration Act, 1908 (XVI of 1908), unless it is certified by an Inspecting Assistant Commissioner of Income‑tax, in respect of every person whose right, title or interest in the property is or will be transferred, assigned, limited or extinguished under the terms of the document, either that such person is not liable to taxation under the Income‑tax Act, 1922 (XI of 1922) the Excess Profits Tax Act, 1940 (XV of 1940) or the Business Profits Tax Act, 1947 (XXI of 1947) or that he has either paid or made satisfactory provision for the payment of all existing or anticipated liabilities under any of the said Acts." If the Income‑tax authorities wrongly mentioned some other provision of law while granting the requisite certificate when an application under section 3 of Ordinance IV of 1947 was made, the petitioners cannot be penalised for the same. We have not been shown any provision of law except section 3 of Ordi nance IV of 1947, under which the Inspecting Assistant Commis sioner of Income‑tax is empowered to grant certificates. Section 16(3)(a)(ii) of the Pakistan Administration of Evacuee Property Ordinance (XV of 1949) reads as under:‑ "The Custodian shall hold a summary inquiry into the application in the prescribed manner, and‑

(a) shall reject the application if the creation or transfer‑ (i) (ii) was not or is not covered by a certificate from the pres cribed Income‑tax authority to the effect that no objection existed or exists to such creation or transfer." The above provision of law on the face of it does not confer any authority on the prescribed Income‑tax authority to grant certi ficate. It only makes it incumbent upon the Custodian not to confirm the transaction if the transaction was not or is not. covered by a certificate from the prescribed Income‑tax authority. We are strengthened in our view by making a reference to rule 12 (3) of Administration of Evacuee Property Rules, 1950 (hereinafter called the Rules). It runs as under -- "12(3). The application shall be accompanied by a certi ficate in terms of section 3 of the Transfer of Property (Pakis tan) Ordinance, 1947, from the Inspecting Assistant Commis sioner of Income‑tax of the area in which the property is situate or such other officer as may be duly appointed in this behalf, or in the absence of such certificate an affidavit declaring why such a certificate is not attached and by a duly attested copy of the instrument effecting the transaction sought to be confirmed and of such other document as may be relied upon and shall bear a Court‑fee stamps of rupees twenty or rupees ten according as the value of the consideration does or does not exceed rupees ten thousand." It is clear from the above as the certificate has to be in terms of section 3 that the application has to be made under the same section. Perhaps the Inspecting Assistant Commissioner of Income‑tax made a reference to section 16 (3) (a) (ii) of the Pakistan (Administration of Evacuee Property) Ordinance XV of 1949, only to indicate that the said certificate could also be used for the purposes of confirmation but it does not mean that the same was granted under any other law except Ordinance IV of 1947, which confers power on the said authority to grant the requisite certificate. The learned Custodian by his order dated 24th November 1960, has also held that the certificates to question were under section 3 of Ordinance IV of 1947.

13. In order to consider the second ground taken by the learned Custodian in setting aside the order of the learned Addi tional Custodian confirming the transaction, it would be useful to reproduce the relevant provision of law. It is embodied under section 20, Act XII ‑ of ‑1957. Section 20 lays down restriction on transfer of properties by evacuee. Such transfers by evacuees could not confer any right or title on the transferees unless those transactions were confirmed by the Custodian. Section 20 provides certain conditions which have to be fulfilled by the person applying for confirmation of the transaction. The relevant provision contained in sub clauses (2) and (3) of section 20 of Act XII of 1957, reads as under:‑ (2) An application for confirmation of such creation of a right of an encumbrance or transfer as aforesaid may be made to the Custodian within the prescribed period by any party thereto, or by any person claiming under or lawfully authorized by such party. (3) The Custodian shall hold a summary inquiry into the application in the prescribed manner, and‑ (a) shall reject the application if the creation of transfer‑ (i) was or is prohibited under any law for the time being in force, or (ii) was not or is not covered by a certificate from the prescribed Income‑tax authority to the effect that no objection exists to such creation or transfer. (b) may reject the application if he is of opinion that the creation or transfer‑ (i) was not or has not been entered into in good faith or for adequate consideration, or (ii) ought for any other reason not to be confirmed." The question for our consideration is as to whether the transfer in question was covered by a certificate from the pres cribed Income‑tax authority or not. Under section 3 of Ordinance IV of 1947, no sale‑deed relating to immovable property could be registered by the Registering authority unless a certificate was produced from the Inspecting Assistant Commissioner of income‑tax. The very fact that the sale‑deed has been registered would lead one to presume that the requisite certificate was produced. The Registering authority could be deemed to have acted in accordance with the law. The fact that he registered the document would lead one to the conclusion that the necessary certificate under section 3 was produced before him. At any rate, the finding of the learned Custodian is that the certificates granted by the Inspecting Assistant Commissioner on 14‑12‑1955 purported to be under section 3 of Ordinance IV of 1947. The transfer, therefore, cannot be said to have not been covered by the requisite certificate from the prescribed Income‑tax authority within the meaning of section 3 of Ordinance IV of 1947. The learned Custodian, however, observed that it was not sufficient compliance of the law that the transfer was once covered by the requisite certificates. He was of the opinion that the word "or" occurring between "was covered" and "is covered" means "and" He therefore, held that the certificate should continue to be valid. To read the word "or" to mean "and" under pro visions of section 20(3)(a)(ii) would be doing violation to the language. The object of the Legislature could not be to read "or" as "and" and if that would have been the object it was not necessary to use the word "or" instead of in "and" In this connection it is significant to note that section 12 of Ordinance XVIII of 1948 is in substance the same as section 20 of Act XII of 1957. We propose to make a reference to sub clause (2) (b) of section 12 of Ordinance XVIII of 1948. It reads as under:‑ "The Custodian shall not confirm a transfer unless‑ (a) (b) There is produced before him a certificate signed by the prescribed Income‑tax authority certifying that no objection to such transfer on the ground that it might cause loss to the revenues of Pakistan exists." The important words to note are "there is produced" the Legis lature under the above provision made it incumbent upon the transferee to produce a certificate signed by the prescribed income‑tax authority. In other words, it was necessary that a valid certificate was filed along with the application. The Legislature perhaps realised that where a transferee had already produced an income‑tax certificate before the Registering Authority it would be unnecessary for him to again produce a certificate from the same authority for the purposes of confirmation of the transfer. The Legislature, therefore, amended the law, so as to substitute the word "covered" for "produced". The Legislature is deemed to have amended the law with some object. The object to our mind was not to duplicate the task of transferee by requiring him to again produce an income‑tax certificate for the purpose of confirmation of the transfer.

14. Mr. Valiani for respondents 2 and 3 relied on a notifi cation by the Central Government dated the 17th of May 1950, in support of the contention that the requisite income‑tax certificate for the purposes of section 20 of the Act should exist on the date of the confirmation of the transaction. The relevant notification reads as under:‑ "No. F‑13 (32)/49‑P., dated 17th May 1950.

In exercise of the powers conferred by section 45 of the Pakistan (Adminis tration of Evacuee Property) Ordinance, 1949, the Central Gov ernment is pleased to exempt from the operation of sub‑clause (iii) of clause (a) of subsection (3) of section 16 of the Ordinance any property in respect of which a certificate was obtained under section 3 of the Transfer of Property (Pakistan) Ordinance, 1947, between the 10th day of December 1947, and the 20th day of October 1948." The learned Advocate contended that the operation of sub‑clause (ii) by clause (a) of subsection (3) of section 16 (which is equivalent of section 20 (3)(a)(ii) of Act 12 of 1957) was exempted only in respect of property for which a certificate under section 3 of Ordinance IV of 1947 was obtained between 10th December 1947 and the 20th October 1948. On this basis conclusion is sought to be drawn that the income‑tax certificate must exist at the time of confirmation of the transfer. It was urged that if the intention of the Central Government was to exempt the operation of the relevant provision of section 20 in case of property in respect of which the income‑tax certificate had once been detained the Central Government would have so notified. There is not much force in this contention. The Court is concerned with the intention of the Legislature that is deducible from the language of section 20(3)(a)(ii) of the Act. We have already observed that there is a distinction between "was not" or "is not covered" by a certificate from the prescribed income‑tax authorities and that it would be sufficient compliance of law if the transfer was covered with the requisite certificate. The Legislature has purposely used the words "is not covered" to safeguard the interest of the Government where the transfer related to agricultural property. In the case of agricultural property it was not necessary for the purpose of registration to produce a certificate under section 3 of Ordinance IV of 1947. It was, therefore, necessary to make provision for the production of a certificate at the time of confirmation of the transaction. Some people had left Pakistan for India without making provision for their income‑tax dues, and the only property from which the dues could be realised was agricultural property. A provision had to be made for realisation of the revenue.

15. In these circumstances, we are clearly of the view that, where a transaction is once covered by an income‑tax certificate it is not necessary to again produce the certificate before the Custodian. This conclusion is further strengthened by the rules framed by the Central Government (Administration of Evacuee Property Rules, 1950). We have already reproduced rule 12(3). It would appear from the said rule that the applicant can file an affidavit indicating as to why he was not attaching an income tax certificate. This obviously was meant to meet the situation where a transferee had already filed an income‑tax certificate before the Registering authority; in other words, where the transfer was covered by the requisite certificate.

16. The only question that requires consideration now is as to whether in the absence of income‑tax certificate relating to agricultural property the transaction could be confirmed by the Custodian. We are clearly of the view that the learned Custodian was right in his conclusion that the transaction could not be con firmed under section 20 of the Act in the absence of income‑tax certificate. In this connection, Mr. Muhammad Bux, A. Memon, very strenuously contended that under section 3 of Ordinance IV of 1947, no income‑tax certificate was necessary for registration of a sale‑deed relating to agricultural property. This will no doubt protect a transferee of the agricultural property from producing a certificate before the Registering authority for the registration of the sale‑deed. But the question is whether this could obviate the requirements of section 20 of Act XII of 1957. The language of section 20, the relevant portion thereof has already been reproduced, is imperative. It casts a duty upon the Custodian not to confirm a transfer if the saint was not covered by an income‑tax certificate. It was the duty of the petitioners to have made an application for the requisite income‑tax certificate for the purposes of confirmation of the transaction relating to agricultural property. In case the income tax authorities refused to grant the certificate the petitioners could move this Court for necessary order. They have not done so. In these circumstances, we are of the view that the transaction in relation to agricultural property could not be confirmed in the absence of an income‑tax certificate.

17. The learned Advocate appearing for the petitioners has not addressed us as to how we could declare the property covered by the exchange deed dated the 31st July 1948, to be non‑evacuee property. The question of granting any such relief, therefore, does not arise.

18. For the reasons given above, we set aside the order of the learned Custodian, dated 24th November 1960, and restore that of the learned Additional Custodian dated 29th August 1960, confirming the transaction relating to the urban immovable property. In the special circumstances of the present case, we make no order as to costs. S.Q. Petition allowed.