P L D 1967 Supreme Court 428 (PLP)

CORNELIUS, C. J.‑This case arises out of the disposal in Settlement of a valuable evacuee property in Lahore known as the Capital Cinema. It was put to unrestricted public auction on the 20th February 1960 and was knocked down to one Sheikh Mukhtar Ahmad for Rs. 61 lacs plus a sum of Rs. 10 lacs for certain residential premises attached to the cinema. It proved later that this was an exaggerated price that had been reached under the stress of the auction, for even the first instalment of Rs. 10 lacs required from the successful bidder was never paid. Confirmation of the auction was, however, held up on account of a writ petition filed by one Mirza Muhammad Sharif who claimed that the property should 1‑i;ive been transferred to him under the provisions alternative to unrestricted public auction contained in paragraph 15 of the Schedule to the Displaced Persons (Compensation and Rehabilitation) Act. Mirza Muhammad Sharif's petition was dismissed 15th March 1960 and a Letters Patent Appeal was dismissed on the 20th October 1960. In the meantime, following the default on the part of Mukhtar Ahmad, the Settlement Authorities called for tenders by a public notice of the 1st May 1960. The cinema had been leased out to the present appellants, Irfanullah and Sarwat Hussain Siddiqi at a monthly rental, and when the sealed tenders were opened on the 28th May 1960, it was found that the highest tenders was one of Rs. 32 lacs by these two persons. This tender was accepted subject to the condition that 25 per cent. of the tender price should be paid within a month. On the 3rd June 1960, these two persons executed a partnership deed in respect, of the cinema, which mentions that they had jointly tendered for the cinema and that their tender had been Accepted, and went on to provide inter alia that they would be equal shareholders and owners in the cinema and the provisional transfer order would be made out in both names. ' The partnership was approved by an order of the Settlement authorities dated the 8th June 1960. It was, however, not found possible to finalise this transaction by reason of the fact that Mirza Muhammad Sharif's writ petition was then pending before the High Court and that Mukhtar Ahmad had also moved a writ petition to save the auction sale in his favour, which the Settlement authorities had purported to cancel before they invited tenders on the 1st May 1960. As has been seen, Mirza Muhammad Sharif's writ petition finally ended in failure in the High Court on the 20th October 1960, Mukhtar Ahmad's writ petition ended similarly on the 19th December 1960. He had made an offer of a payment in the High Court, which he was unable to perform. Mukhtar Ahmad made a further offer to the Settlement authorities to pay by instalments, but this was rejected by the Chief Settlement Commissioner by his order of the 29th April 1961, on the ground that he had failed several times already to keep his promises. The Chief Settlement Commissioner by the same order confirmed the acceptance of the tender by the present appellants and on the 10th June 1961, they were directed to deposit within 30 days, 25 per cent. of the tender amount either in cash or through compensation books. The requirement was for Rs.8 lacs in equal shares from the two transferees. Irfanullah tendered compensation books of value somewhat in excess of Rs.5 lacs, which were covered by agreements of association to the extent of a little over Rs. 4 lacs and thereby made good the initial payment that was required of him. He asked in his letter of the 5th July that if his partner Sarwat Hussain Siddiqi should fail to pay his share, intimation should be sent to him so that he might deposit the balance. On the 7th and 8th July 1961, Sarwat Hussain put in compensation books to the value of Rs.3,48,545 accompanied by agreements association. He also put in some compensation books in the names of Mst. Humera Khatoon and Syed Abdur Rauf, but without agreements of association, which were accordingly not credited to him. The total amount which the Settlement Department received towards the initial 25 per cent. was Rs. 7,53,027 being about Rs. 47,000 less than the amount which was required. As regards the payment of the balance, the position appears to be as follows. In the first instance, only Irfanullah was informed that 25 per cent., namely, Rs. 8 lacs should be deposited within 30 days, and the balance was to be paid in 36 equal monthly instalments, that is to say two‑thirds of a lac of rupees per month. The reason why Irfanullah alone was addressed on this point is that, towards the initial deposit required at the time of tendering, only Irfanullah had deposited compensation books amounting to Rs. 15,

420. There need be no doubt, however, that Sarwat Hussain became aware of this requirement. It should be mentioned that, at this stage, Irfanullah and Sarwat Hussain were being treated equally, that is, as if both were claimants. As will be seen, shortly after, the Settlement Authorities purported to treat the latter differently, i.e., as a non‑claimant. Irfanullah and Sarwat Hussain were already in possession of the cinema and were operating it. They made no payment whatsoever for four months. On the 15th November 1961, notices were sent to each of them individually. That to Irfanullah was in continuation of the letter of the 10th June 1961, by which both of them were required to deposit 25 per cent. of the tender money within a month. This letter acknowledged deposit of half of 25 per cent. by Irfanullah and stated that no further payment had been received although he was required to pay the balance due from him of Rs. 12 lacs in 36 monthly instalments. He was directed to arrange payment of one and one‑third lacs of rupees on account of the instalments which had fallen due, failing which, it was added "you will render yourself liable for ejectment and your share in the above‑mentioned cinema will be cancelled". The letter to Sarwat Hussain of the same date is in different terms. It was pointed out that he was not a claimant since his father was still alive, and the mere surrender by the father of his claim in favour of Sarwat Hussain and another son could not make Sarwat Hussain a claimant. As a non‑claimant he could not claim the advantage of payment by instalments. He was accordingly directed to deposit the balance of Rs. 12 lacs due from him within 30 days from the 15th November 1961., failing which he would be liable to be ejected and his share in the cinema would be cancelled. Irfanullah replied to the letter of the 15th November 1961 on the 13th December 1961, enclosing compensation books of the value of Rs.38,OC0, saying that he had already deposited compensation books carrying a balance of about one lac of rupees which should be adjusted against the due instalments of one and one‑third lacs of rupees. He added that some Rs. 40,000 as lease money had been deposited by him with the authorities, which was not due since the cinema had been transferred to him and that this amount should be returned, and at the same time asked to be given details of the property that he and Sarwat Hussain had bought. Sarwat Hussain's letter in reply is of the same date. It contained no offer of any further payment. It set up a case to be regarded as a claimant on the basis of an order of the 1st July 1961, by a Deputy Settlement Commissioner and questioned the demand for recovery as from a non‑claimant. The letter asked for details of the property transferred in the same terms as had been used by Irfanullah and similarly claimed return of about Rs. 40,000 lease money. On the 12th February 1962, letters were issued to each of these persons informing them that they had failed to make payments in accordance with the terms of the sale and that the cinema would be sealed on the following day. The letter to Irfanullah acknowledged receipt from him of Rs.4,04,q82 towards the initial 25 per cent. It mentioned the demand for one and one‑third lacs of rupees made on the 15th November 1961,.,and said that no payment had been made towards this amount except Rs. 20,000 by means of two compensation books. There was thus a default. The letter to Sarwat Hussain Siddiqi contained the same threat that the cinema would be sealed the following day. It acknowledged receipt from him of compensation books with agreements of association to the extent of Rs. 3,48,545 only, thus falling short of the required 4 lacs and mentioned that two other books put in by him were not supported by association deeds. These amounted to Rs. 34,

534. It went on to say that being a non‑claimant he was required to pay the balance of Rs. 12 lacs due from him in a lump sum within 30 days and that a demand to this effect had been sent on the 15th November 1961, to which he had made no response. The cinema was actually sealed on the 13th February. 1962. Following this, the Settlement authorities allowed further time to see whether the transferees would come up with some substantial payment, but they only used it to file petitions asking for extensions of time to make 'payments. Sarwat Hussain expressed willingness to pay the full sum of 16. lacs due from him on the assurance that a half‑share would be transferred to him permanently and no default by Irfanullah would be allowed to effect his interests. Since the order of transfer had been made in favour of the two persons jointly, such a proposition was not within the terms of the transfer, and could not be accepted without making a wholly new transfer. The Settlement Commissioner (Industries) recommended to the Chief Settlement Commissioner. that the transaction of transfer of the Capital Cinema to the appellants should be cancelled in exercise of the power under paragraph 24 of the Sched Displaced Persons (Compensation and Rehabilitation) Act. Such an order was made by the Chief Settlement Commissioner on the 7th March 1962 and it was directed that the cinema should be put up to unrestricted public auction. This was eventually done, and the cinema was knocked down in favour of the respondent Mst. Kishwar Sultana for Rs. 36 )acs. (hereupon, the ex‑transferees irfanullah and Sarwat Hussain in loved a writ petition in the High Court on the Goth Nlarch its to obtain quashment of the orders of the Chief Settlement Commissioner. A learned Single Judge in the High Court dismissed their petition finding them to have been in default in regard to the terms of payment of the transfer price on which the property had been transferred to them. The new transferee had also raised before the Court the legal point that the mode of transfer adopted, that is by tender, which had resulted in the transfer to the writ‑petitioners was illegal. Reliance was placed on the provisions of paragraph 15 of the Schedule aforesaid of which the first sub‑paragraph reads as follows:‑ "Every industrial concern or cinema house shall, subject to the provisions of the following sub‑paragraphs be sold in an unrestricted public auction." The second, third and fourth sub‑paragraphs relate to transfers otherwise than by public auction, but none of them was or could be invoked by the appellants in their favour. The Settlement Authorities in reply to this objection placed reliance upon paragraph 15‑A, enabling the Central Government to make orders for the disposal of any class of industrial concern or cinema houses in a manner other than public auction, and referred to instructions issued in this behalf on the 19th October 1959, by the Central Government. These instructions were briefly to the following effect. They purported to save the operation of irregular orders made by a competent Settlement authority before the 5th January 1959, for disposal of an industrial concern or cinema house, with a qualification as to the benefit of deferred payment, which was available to the claimant prior to the 5th January 1959. They purported to save also transfers in an irregular mode made by a competent Settlement authority between the 5th January 1959 and the 28th September 1959. They provided that an uneconomic concern should be transferred at the prevailing market value minus the investment made, to any person who was holding it under an allotment order. A concession was made in respect of certain claimants and transferees, and finally in the last paragraph it was provided as follows:‑ "If an industrial concern or a cinema house is offered for sale in public auction, and the Chief Settlement Commissioner is not satisfied with the bids offered then he may for reasons to be recorded in writing dispose of such industrial concern or cinema house by negotiations or by inviting tenders or any such other manner as he may deem necessary." It was on this last paragraph that the Government case was based. The learned Judge in the High Court was of the view that the conditions for the application of the paragraph in the instructions of the 19th October 1959, reproduced above had not be on shown to exist, It was not the case that there had been a public auction and the Chief Settlement Commissioner was not satisfied with the bids offered. In fact, Mukhtar Ahmad's bid was a very high one and had apparently been accepted provisionally. The conclusion was accordingly reached that the transfer of the cinema by calling for tenders in favour of the present appellants was not in accordance with the statutory provisions. On these findings as well as the finding that both Irfanullah and Sarwat Hussain were in default, the learned Sill‑le Judge. upheld the order cancelling the transaction in their favour. The Chief Settlement Commissioner had also made an order forfeiting Rs. 4 lacs out of the compensation books tendered by the appellants. The grounds for the forfeiture was that during the period of their occupation, the ex‑transferees had made a profit of somewhat over Rs: 4 lacs from the cinema and the attached residential premises. The learned Judge in the High Court thought that the order of forfeiture was not justified and moreover that it was not supported by any authority. He accordingly set it aside. Leave to appeal against the order of the learned Single Judge was given by this Court to consider alA number of important questions that arose in the case. We have heard Mr. Mahmud Ali in support of the appeal and replies have been made on behalf of the Chief Settlement Commissioner by the Attorney General of Pakistan and on behalf of Mst. Kishwar Sultana by Mr. A. K. Brohi. On the facts that appear from the record it is clear beyond doubt that each of the ex‑transferees was in default in his payments. Irfanullah had made payment of the initial 25 per cent. deposit, but his allegations that the balance of about Rs. 1 lac out of the compensation books he had furnished was e available for credit towards the sum of one and one‑third lacs of rupees, which had become due from him by way of monthly payments by the l5th November 1962, is shown to be unsound, since no agreements of association had been filed in respect of such excess. Mr. Mahmud Ali argued that if allowed time, Irfanullah could have procured such agreements. Considerable time was in fact allowed, but no attempt in this direction was made by Irfanullab. The argument that he was entitled to a more favourable and relaxed mode of payment by instalments is not available in favour of Irfanullah for the reason that he accepted the terms of payment as demanded, and indeed put up a case to the effect that he had actually complied with those terms. It was urged on his behalf before the High Court and the argument was repeated before us by Mr. Mahmud Ali that he was entitled as a claimant to make payments every three months. The learned Single Judge found that even so he bad defaulted, because after the 10th July 1961, he made no payment except by two compensation books to the value of Rs. 38,

050. By the time that the cinema was sold, that is the 13th February 1962, three months' further payments amounting to one lac of rupees had become due and nothing had been paid towards that. The case as respects Sarwat Hussain is described by the learned Single Judge as being "even worse". It is clear that in the first instance he did not make the full payment of that was required of him. His case that he was a claimant was based upon an order made by a Deputy Settlement Commissioners upon an application by his father Muhammad Mussain Siddiqi, an aged person, that his compensation book should be transferred to his legal heirs Sarwat Hussain and Mussarat Hussain. The Deputy Settlement Commissioner accepted this petition and directed that the names of these two persons should entered in' the compensation book and all rights thereunder should stand transferred to these persons. The learned Single Judge had pointed out that in order that a person should be treated as a claimant, it is necessary that he should satisfy the definition in section 2, subsection (2) of the Displaced Persons (Compensation and Rehabilitation) Act, 1958, i.e., he should be a displaced person whose claim has been registered under the Registration of Claims (Displaced Persons) Act, 1956. The expression also includes successors in interest of a claimant who dies on or before the 31st day of August 1959. Neither of these conditions was satisfied by Sarwat Hussain and therefore the Settlement authorities were right to reject his case for being a claimant and to demand that he should make good the full amount of Rs. 16 lacs due from him by a certain date. When that demand was made from him, Sarwat Hussain's only reply was that he should be treated as a claimant, for which there was clearly no basis. He was then in arrears to the extent of about Rs. 51,500 in respect of the initial payment and having been given a month from the 15th November 1961, to pay up the balance of Rs. 12 lacs by the time that he sent his reply on the 13th December 1961, he was in arrears to the extent of twelve and a half lacs of rupees, which he made no attempt either to acknowledge or to pay. It was only after the cinema was sealed that he made an offer to pay the amount due from him and then on condition that the existing transaction should be superseded and he should be transferred a half share in the cinema independently of Irfanullah. That could not be regarded as constituting compliance with the conditions of the transfer to him in any form. As the judgment of the learned Single Judge shows, in his representation of the 19th February 1962, Sarwat Hussain admitted that he was in default and asked for time to put in agreements of association provided the cinema was desealed. Thus, both the ex‑transferees were clearly in default, while at the same time they were enjoying the profits from the cinema.) By their conduct they exhibited no anxiety whatsoever to make good the payments which were due from them, and which they D expressly admitted to be due. By such admission, the claimant Irfanullah is clearly estopped from setting up a plea that he should have been allowed to pay in a more relaxed form. As for Sarwat Hussain he was bound to pay immediately since it was clear that he was a non‑claimant. An argument was raised that there was an appeal pending against the order of cancellation of the transaction before the Chief Settlement Commissioner, at the time when the cancellation was ordered. The papers on record show that the actions of the authorities subordinate to the Chief Settlement Commissioner were placed before the latter in a comprehensive note by the Settlement Commissioner (Industries) on the 7th March 1962, and on the same day, the Chief Settlement Commissioner made the final order cancelling the transaction and directing fresh auction. The appeals which the present appellants filed before the Chief Settlement Commissioner were presented on the 10th and 12th March 1962, that is after the order of the Chief Settlement Commissioner cancelling the transaction. They were brought against refusal of Settlement Commissioner (Industries) to entertain representations seeking for more time that had been presented on the 19th February 1962, by each of the present appellants. Eventually, the Chief Settlement Commissioner dismissed these appeals in limine on the ground inter alia that no appeal lay to him from an order of the Settlement Commissioner under section 19 of the Displaced Persons (Compensation and Rehabilitation) Act, and this was a perfectly valid ground. Moreover, this matter had already been considered by the Chief Settlement Commissioner when he made his final order on the 7th March 1962, cancelling the transaction and the appeals were therefore ab initio infructuous. The challenge to the legality of the action taken by the Settlement authorities after the failure of the auction in favour of Mukhtar Ahmad remains to be considered. It should be mentioned that this point was raised by the new purchaser who only came into the picture after the transaction in favour of the present appellants had been cancelled and it is questionable whether she has locus standi in that behalf. However, the point has been dealt with in the judgment of the learned Single Judge, and it is desirable that this Court should state its views as it may possibly arise in other cases. The principal provisions of the law in Settlement relating to the disposal of industrial concerns and, cinema houses are contained in paragraph 15 of the Schedule to the Act aforesaid. The contents of this paragraph have already been set out in some detail. By paragraph 15‑A in the same Schedule, the Central Government was empowered to make "any order for the disposal of any class of industrial concerns or cinema houses in such manner as may be specified therein". The Central Government's instruction of the 19th October 1959, issued under this paragraph have already been set out in detail in the earlier part of this judgment. It remains to consider whether it is possible to put a liberal construction on paragraph (5) of these instructions. On a full‑ reading of the instructions, the view cannot be avoided that they are to be construed and applied strictly within their terms in the manner of a proviso to the original paragraph

15. It is not therefore possible to regard the circumstances attending the failure of the auction in favour of Mukhtar Ahmad as being within the meaning of the condition precedent to the application of paragraph (5) aforesaid, viz., "if a cinema house is offered for sale in public auction and the Chief Settlement Commissioner is not satisfied with the bid offered". The argument that sale by tender is another form of sale by auction cannot be accepted, since the two modes are categorically different. The requirement of paragraph 7(1) is, moreover, of an unrestricted public auction. The Chief Settlement Commissioner so far from being dissatisfied with the bids offered at the first auction, actually accepted the bid made bye Mukhtar Ahmad. Therefore, the view taken on this point by the learned Single Judge in the High Court appears the correct. The transfer of the cinema in favour of the present appellants was not in accordance with the statutory, provisions. We hold that the decision of the learned Single Judge that the transaction in favour of the present appellants was rightly cancelled, is in accordance with the facts and we hereby dismiss this appeal with costs. A. H. Appeal dismissed.