2002 PLP 696 (CLD)

Bashir Memon, Official Assignee By this reference the official assignee seeks permission for payment of KESC dues amounting to Rs.11,92,567.61 Excise and Taxation Department dues amounting to Rs.16,39,1.13 and the dues of Karachi Water and Sewerage Board amounting to Rs.5,95,332 with respect to the plots bearing Nos.LF‑33 and LF‑34 situated at Site Landhi Industrial Area Karachi sold by the official assignee in pursuance to a decree. After receiving the highest offer, the official assignee vide his reference, dated 21‑5‑2001 submitted the highest offer for confirmation by the Court, paragraph 3 whereof reads as follows: "

3. The Official Assignee respectfully submits the highest offer of Mr. Anwar Kaludi for Rs.3.80 crore for the purchase of Silk Units situated at Plot Nos.LF‑33 and LF‑34 measuring about 4.780 and 4.175 acres, Landhi Industrial Area, Karachi with condition that offer is free from all taxes etc. and they will deposit full amount within 3 months from the date of acceptance of offer." Objections are filed to the reference, dated 7‑8‑2001 on behalf of the C.I.R.C. as well as the K.E.S.C. Heard learned counsel, Mr. Sohail H.K. Rana in support of the objections has argued that the K.E.S.C. has supplied the electricity consumed at the premises. In addition even during the period of disconnection the services of maintaining of line, installation of meter etc. were available at site for which the K.E.S.C. is entitled to amount of fixed charges in proportion to the services provided for which K.E.S.C. forwarded their bills. His contention is that K.E.S.C. is entitled to Rs.47, 00,385.53 out of which a sum of Rs.11,42,567.61 pertains to the dues of consumption of electricity up to the year 1985 while the balance sum of Rs.35,57,818.92 is on account of fixed charges for the period from 1995 onwards up to the July, 2001. Out of this amount the official assignee disallowed the claim of the K.E.S.C. to the extent of Rs.35, 57,818.92 being the amount of fixed charges up to July, 2001 on the ground that during this period no supply of electricity was available for the duration while the property was in possession of official assignee. Mr. Aijaz Ahmed, Advocate for the decree‑holder, has advanced his arguments opposing the demands and payments. However, he did not address any argument pertaining to the payment to be made to the Excise and Taxation Department on account of dues of excise and taxation amounting to Rs.16,39,

113. He vehemently opposed any payment being made to the K.E.S.C. and K.W.S.B His contention is that the property was subjected to mortgage and the law pertaining to payments that can be disbursed in such cases, does nor authorize for payment of any amount on account of the electricity charges to K.E.S.C. and the water and sewerage charges to K.W.S.B. prior to satisfaction of the claim of the mortgagor/D.H., as the claim of the mortgagor preference over these claims. In support of his contentions he has placed reliance on the case of Industrial Development Bank of Pakistan v. Messrs Maida Limited (1994 SCMR 2248). The official assignee in support of his reference has pointed out that the property has been sold in pursuance to the offer made by the purchaser. The offer specifically provided for the property to be sold free of all charges, and dues. His contention is that there is a contract between the official assignee and the purchaser and the terms of the same forming conditions of sale of property are to be abided. In support of his contentions, learned official assignee has stated that in several transactions carried out by him the Court allowed such payments. For the purpose of sale by the Court an agreement made is binding, but disbursement to the creditors is to be made in accordance with the respective priority of their A respective claims in accordance with the specific provisions of law already crystallized on this point are required to be followed. In view of the permission granted by this Court for the sale of the properties also mention taxes etc. The word "etc." attracts such payments as fall within definition of class of taxes on the principle of ejusdem generis. Any amount not falling within that category cannot be treated toy being at par with taxes. The next in priority is the claim of the mortgagor. The dues of B the K.E.S.C. and the K.W.S.B. do not fall under the category of taxes nor any item ancillary or incidental and are to be paid out of the amount available after satisfaction of the claims of the mortgagor which has the next priority after payment of dues of taxes. The question of the preferential right of a mortgagor came into consideration in the case of Messrs Industrial Development Bank of Pakistan (supra). It may be relevant to quote the similarity of facts in the instant case both on the point of facts and law from the following:‑‑ "The main question for consideration is whether Excise and Taxation Officer, K.D.A., K.W. & S.B. and K.E.S.C. can claim priority over the appellant. Admittedly, the sale proceeds were deposited by the auction‑purchaser and the property as advertised and ordered to be delivered was free from all encumbrances. The property was thus transferred to that auction‑purchaser free from encumbrances and burden which are claimed by these claimants. It is clear from the claims filed by these claimants that they want their dues and charges to be satisfied from the decretal amount and have made no claim to follow the property in the hand of the auction purchaser." (Underlining is mine) The question of disbursement of the amount of sale proceeds amongst the creditors in order of the priority attached to their respective claims has been settled in the same judgment as follows:‑‑‑ "According to this provision the first priority has been given to all expenses incurred on sale or any attempted sale. Then comes the claim of the prior mortgagee and cost incurred by him. Thereafter interest due on account of mortgage in pursuance of which decree was passed and sale was effected and cost of the suit in which such decree was passed, have to be satisfied. Second claim relates to Karachi Development Authority and Karachi Water and Sewerage Board. This claim relates to the water charges which was recovered by K.D.A. and was later in the year 1979 taken over by K.W. & S.B. The learned counsel for the K.W. & S.B. has referred to section 9(vi) of Karachi Water Management Board Ordinance, 1984 (Sindh Ordinance of 1981) which empowers the Board to collect water charges including arrears of such charges from consumers. Section 13 provides that all sum due to the Board from any person shall be recoverable as arrears of land revenue. There is no other provision by which the K.W. & S.B. or K.D.A. can claim priority over the claim of the appellant as in the case of Urban Immovable Property Tax. Merely because a particular charge is to be recovered as arrears of land revenue, it does not mean that it will have same priority over other claims which the land Revenue of the Government enjoys. As this provision provides a mode for recovery of water charges which is employed for recovery of land Revenue under the Land Revenue Act. 1967, K.D.A. and K.W. & S.B. cannot claim priority over the appellant and they will have to seek their relief from the residue left after satisfying the decree of the appellant and prior claims as recognized by Order XXXIV, rule 13, Civil Procedure Code. The last claim is of Electricity Supply Corporation. Mr. Noorul Hassan for K.E.S.C. has vehemently argued that the K.E.S.C. is entitled to recovery from consumer which under the definition in Karachi Electricity Supply Corporation Act includes the mortgagee. K.E.S.C. may have a claim against the mortgagee as consumer but so far priority in appropriation of the decretal amount is concerned it cannot claim the same against the mortgagee. The learned counsel has not been able to show any provision in the Karachi Electricity Supply Corporation Act which may entitle K.E.S.C. to claim priority notwithstanding the provision of Order XXXIV. rule 13, C.P.C. referred above." In view of the above observation, the reference of the official assignee, dated 7‑8‑2001 is allowed to the extent of payment of the dues of Excise and Taxation Department amounting to Rs.16,39,113 subject to verification of the same. The claim of the mortgagor under the decree is to be satisfied as provided under the provisions of Order XXXIV, rule

13. C.P.C. and thereafter the remaining claims may be settled out of the remaining balance amount of sale proceeds, if any. Payment made contrary to the procedure already laid down would amount to defeating the claim of the mortgagor by assigning of the first priority to the claim of the K.E.S.C. and K.W. & S.B. contrary to the specific provisions of law as already stated above. Accordingly payments to K.E.S.C. and K.W. & S.B. are payable out of the balance amount of sale proceeds if available after satisfaction of the claim of the mortgagor. The reference, dated 7‑8‑2001 stands disposed of accordingly. S.A.K./U‑20/KReference disposed of.