2025 PLP 996 (CLD)

SHAHID KARIM, J.

These petitions viz. W.P. No.7002 of 2020, W.P. No.7024 of 2020, W.P. No.7023 of 2020, W.P. No.8342 of 2020 and W.P. No.17460 of 2020 have a common thread running through them and are being decided through this common judgment. Background facts:

2. The petitioners are trans-provincial insurance companies engaged in the business of insurance throughout Pakistan. They are incorporated under the federal companies law and licensed under the Insurance Ordinance, 2000 which is a Federal law and regulated by a Federal regulator, that is, Securities and Exchange Commission of Pakistan. The cause of action in these petitions arose out of a notice ("The Impugned Notice") served upon the petitioners dated 2nd December 2019 by the Chief Inspector of Stamps, Board of Revenue Punjab. It states that: "You are directed to undertake the audit of the formations scheduled in the audit program. The audit reports be furnished within stipulated time ensuring that no case is left unattended giving details of recovery position of all the previously conducted audits of the concerned offices/courts. In case of non production of record by the offices/ societies the matter may be brought into notice of concerned ADC (R) personally for strict action. You are further directed to provide detail of action taken regarding verification of deposit of Stamp Duty, CVT etc pertaining to previous audit notri ) reports of Housing Societies ete in your audit reports."

3. The impugned notice is addressed to the Auditor Tax Wing assigned to the petitioner companies and an audit programme for the month of December 2019 has also been attached with the impugned notice. It can be discerned from the cumulative reading of the impugned notice as also the audit programme that the notice entails the audit/ inspection of insurance stamps in respect of the petitioner companies and for the purpose inspection of record has been sought. The precise purpose of the audit programme is to verify the deposit of stamp duty on the instruments of insurance executed by the petitioner companies. It is common ground that stamp duty is payable on the policies of insurance in terms of Article 47 (Article 47) of Schedule-I to the Stamp Act, 1899 ("The 1899 Act"). Article 47 at all times dealt with levy of stamp duty on policies of insurance of different kinds enumerated therein. It is also undisputed that the petitioners have all along been paying stamp duty on the rates determined in section 47 of Schedule I prior to the amendment of these rates through the Punjab Finance Act, 2018 ("the 2018 Act") which is collected by the Provincial Government and becomes part of the provincial consolidated fund. As adumbrated, through the 2018 Act the rates of stamp duty chargeable on different policies of insurance were significantly enhanced by the Province of Punjab. This compelled the petitioners to approach this Court on various grounds which will be adverted to in the proceeding paragraphs. Constitutional challenge:

4. On a constitutional plane, the petitioners' case can be captured in the following contentions: "Whether the petitioner, a trans-provincial company, incorporated regulated and administered under the federal statutory regimes, engaged in the business of insurance and the policies issued in relation thereto, falls within the exclusive legislative domain of the Federation being inter alia covered vide item No. 29 read with item No. 58 and item No. 59 contained in Part I and item No. 17 contained in Part II of the Fourth Schedule of the Constitution of the Islamic Republic of Pakistan, 1973 (the "Constitution of 1973") read with Articles 77, 141 and 142 thereof, thus, any legislation viz 'insurance' by the respondent Province, in particular with reference to imposition or collection of levy and/or an inquiry/audit under the provisions of the Stamp Act, 1899 (the "Stamp Act"), as have been enforced by the respondent Province, are inapplicable, do not cover and/or effect the petitioner and such like institutions, as per the scheme of the Constitution of 1973?

2. Whether the subject matter of 'insurance' and the policies issued in relation thereto, which fall within the domain of the respondent Province are as inter alia covered vide item No. 29 with reference to such legislative matters which are not covered in any items of the Fourth Schedule of the Constitution of 1973 read with Articles 77, 141 and 142 thereof; thus, the imposition of levy and/or an inquiry/audit under the provisions of the provincial Stamp Act are inapplicable viz. such subject matters which fall within the domain of the respondent Federation as per the terms of the Constitution of 1973?

3. Whether levy under the Stamp Act, an existing Act under the Constitution of 1973, is a levy of excise; its application by the respondent Province with reference to business of trans-provincial insurance companies, the business of insurance and the documentation covered therein being a subject matter reserved in the Federal Legislative List contained in the Fourth Schedule to the Constitution of 1973, is in violation to the provisions of the Constitution of 1973 as well as the Stamp Act?

4. Whether the Notice dated 02.12.2019 (the "impugned Notice") issued by the respondent Chief Inspector of Stamps, to the petitioner, is without lawful authority and of no legal effect being in violation to the provisions of the Stamp Act, the Rules framed thereunder as well as the Constitution of 1973?

5. Additionally, it is submitted that: "a. The provisions of the Stamp Act, 1899 as enforced by the respondent Province from time to time only apply to the law of insurance, as undertaken by a Province; the same do not cover the business of the Petitioner being conducted under the Federal domain. Any legislation and/or administrative action, by the respondent Province viz. the Petitioner's business of insurance covered and regulated under the federal laws, is ultra vires the Constitution of the Islamic Republic of Pakistan, 1973 (the "Constitution"). b. The Impugned Notice dated 02.12.2019 issued by the Respondent Chief Inspector of Stamps and all steps, taken or to be taken by him under the provincial provisions of the Stamp Act, 1899 in relation to the Petitioner with reference to its business of insurance as covered under the Federation's domain, be declared to be without lawful authority and of no legal effect; the mentioned Notice/actions be struck down. c. Additionally, the Impugned Notice dated 02.12.2019 may kindly be declared as being ultra vires the Stamp Act, 1899 as well as being illegal, unconstitutional, without lawful authority, mala fide and void ab initio as the respondent Province does not have any jurisdiction viz. the Petitioner and/or its business of insurance. d. In the alternative, without prejudice to the afore, the rate of stamp duty imposed vide the Punjab Finance Act, 2018 may kindly be declared as unconstitutional being an encroachment of the Federal domain besides being confiscatory and expropriatory as well as being in violation to Articles 18, 23, 24, 25 inter alia of the Constitution of the Islamic Republic of Pakistan, 1973"

6. Elaborating upon the submissions, set out above, Mr. Imtiaz Rashid Siddiqui and Mr. Shahzad Ata Elahi, Advocates who led the arguments contended that since the petitioner-companies are engaged in trans-provincial insurance business, the duties of stamp on the policies of insurance cannot be changed to the detriment of the petitioners (operating in the Province of Punjab) which will have to be in conformity with insurance companies operating in the federal capital territory as well as the other provinces. These insurance companies cannot be discriminated so as to be compelled to pay stamp duty which is significantly higher than the rates of stamp duties payable on policies of insurance in other provinces and the Islamabad capital territory. Mr. Imtiaz Rashid Siddiqui placed emphasis on a reading of Article 142(c) of the Constitution of Islamic Republic of Pakistan, 1973 ("the Constitution") to contend that the 1899 Act was an existing law at the time of promulgation of the Constitution and continues to remain within the domain of the Parliament to be amended suitably. This, according to him, is despite the amendments brought in the Constitution by the Constitution (Eighteenth Amendment) Act, 2010 and notwithstanding the change in the structure of legislative lists whereby the concurrent legislative list was done away with and post-18th amendment we are left with only one Federal Legislative List in 4th Schedule to the Constitution. There is no contention that Entry 29 of the Federal Legislative List deals with the law of insurance except the insurance undertaken by a province and includes the regulation of the conduct of insurance business. According to Mr. Siddiqui, when this Entry is read in conjunction with Entry 59 of Part I of the Federal Legislative List it becomes clear not only that the Parliament is empowered to legislate in respect of regulation of the conduct of insurance business but also all matters incidental or ancillary to this matter can only be undertaken by the Parliament and none else. Entries 29 and 59 of Part I of the Federal Legislative List provide that: "

29. The law of insurance, except as respects insurance undertaken by a Province, and the regulation of the conduct of insurance business, except as respects business undertaken by a Province; Government insurance, except so far as undertaken by a Province by virtue of any matter within the legislative competence of the Provincial Assembly. "

59. Matters incidental or ancillary to any matter enumerated in this Part."

7. Relying upon a judgment of the Supreme Court of Pakistan reported as Sui Southern Gas Company Ltd. and others v. Federation of Pakistan and others (2018 SCMR 802), learned counsel submitted that the Provincial Assembly cannot impose any tax or duties of stamp in respect of business of insurance which too falls within the domain of the Parliament to the exclusion of the Provincial Assembly. The learned counsel for the petitioners invited this Court to hold that the duties of stamp are in the nature of excise duty and thus within the competence of the Parliament. Other challenges:

8. Apart from challenges to the constitutionality of imposition of duties of stamp by Punjab, two narrower challenges were also mounted by the petitioners which may be summarized as follows: I. The definition of the term 'public office' does not include the petitioner-companies and this argument is premised on historical facts and the amendments brought about in section 2(22A) as well as Section 73 of the 1899 Act through the Punjab Stamp (Amendment) Act, 2021 ("the 2021 Act"). II. The definition of the term 'public office/ public officer should be read down to include only those offices and officers which will have public duties and taken holistically by reading the entirety of the provisions of the 1899 Act would lead to the ineluctable conclusion that the officers of the petitioner-companies would not be deemed as public officers in respect of which the notice under Section 73 of the 1899 Act can be issued for inspection of books and records.

9. The narrower grounds argued by the petitioners are being taken up ahead of the constitutional challenges which may not be required to be adverted to in case the challenges on the limited and narrower grounds succeed. This is a well-worn rule that courts have enunciated to avoid delving in broader questions to resolve a conundrum. A constitutional construction of a problem may tie a legislature's hands in future and have grave consequences. Courts should avoid constricting the powers of coordinate branches of the government particularly in matters of taxation. Chief Justice Roberts of U.S Supreme Court said in Dobbs v Jackson Women's Health Organization 597 U.S -(2022): "If it is not necessary to decide more to dispose of a case, then it is necessary not to decide more." This is a judgmental principle of judicial restraint. The statutory scheme:

10. Section 73 under which purportedly the impugned notice has been issued provides that: "

73. Books, etc., to be open to inspection.

(1) Every public officer shall, whenever his business involves an instrument chargeable with duty under this Act, keep and maintain such registers, books, records, papers, documents or proceedings relating to payment of that duty in such form as prescribed by the Board of Revenue and furnish a monthly statement of payment to the Collector. (2) Every public officer having in his custody any registers, books, records, papers, documents or proceedings, the inspection whereof may tend to secure any duty, or to prove or lead to the discovery of any fraud or omission in relation to any duty, shall at all reasonable times permit any person authorised in writing by the Collector to inspect for such purpose the registers, books, papers, documents and proceedings, and to take such notes and extracts as he may deem necessary, without fee or charge."

11. Prior to the Stamp (Amendment) Act, 2021 Act (the 2021 Act), Section 73 merely comprised of subsection (2) and subsection (1) has now been added through the 2021 Act. Similarly, section 2(22A) was amended and for facility is being juxtaposed with the original section 2(22A) which was inserted vide Stamp (Punjab Amendment) Act, 1973 ("the 1973 Act"): Section 2 (22A) inserted vide Stamp (Punjab Amendment) Act, 1973 (emphasis added) Section 2 (22A) substituted vide Stamp (Amendment) Act, 2021 "(22-A) "Public Office" includes a Government Office, a People's Local Council, a Local Authority, a Statutory Corporation or a similar body set up by the Central or Government, commercial or industrial concern whether singly owned or run through partnership having more than twenty employees, a body registered under the Companies Act, 1913, and a Co-operative Society;" (22A) "public office" includes an office of the Government, a local government, a statutory corporation or a similar body set up by the Federal Government or the Government, a commercial or industrial concern whether singly owned or run through partnership having more than twenty employees, a development authority, a private housing scheme or a housing authority, a cooperative housing society, a real estate developer or a real estate broker, a banking company and any other entity whether registered or unregistered under any law for the time being in force;

12. Article 47 after amendment in 2018 enhanced the rates of stamp duty to provide that: "(h) In Article 47 for the existing entries in column 2 and column 3 the following shall be substituted- "POLICY OF INSURANCE- A-See INSURANCE (see section 7)-- (1) For each voyage- if drawn singly. if drawn in duplicate, for each part. (i) where the premium or consideration does not exceed the rate of 1/8 percent of the amount insured by the policy; for every full sum of Rs. 5,000 and also any fractional parts thereof insured by the policy- ; (ii) in any other case, in respect of every full sum of Rs. 2,000 and also any fractional part thereof insured by the policy- . Ten rupees Ten rupees Ten rupees Ten rupees (2) For time- in respect of every full sum of Rs.2,000 or part thereof insured by the policy- (i) where the insurance shall be made for any time not exceeding six months; (ii) where the insurance shall be made for any time exceeding six months and not exceeding twelve months- . Ten rupees Twenty rupees Ten rupees Ten rupees B-FIRE-INSURANCE AND OTHER CLASSES OF INSURANCE, NOT ELSEWHERE INCLUDED IN THIS ARTICLE, COVERING GOODS, MERCHANDISE, PERSONAL EFFECTS, CROPS, AND OTHER PROPERTY AGAINST LOSS OR DAMAGE- (1) in respect of an original policy- (i) when the sum insured does not exceed Rs.5,000; (ii) in any other case and (2) in respect of each receipt for any payment of a premium on any renewal of an original policy. Fifty rupees One hundred rupees One half of the duty payable in respect of the original policy in addition to the amount, if any, chargeable under No. 53 C-ACCIDENT AND SICKNESS-INSURANCE- (a) Against railway accident, valid for a single journey only. Exemption When issued to a passenger travelling by the intermediate or the third class in any railway. (b) In any other case for the maximum amount which may become payable in the case of any single accident or sickness where such amount does not exceed Rs.2,000 and also where such amount exceeds Rs.2,000 for every Rs.2,000 or part thereof. Fifty rupees Ten rupees; provided that, in case of a policy of insurance against death by accident when the annual premium payable does not exceed Rs. 10 per Rs. 100,000 the duty on such instrument shall be ten rupees for every Rs. 1,000 or part thereof of the maximum amount which may become payable under it. D-INSURANCE BY WAY OF INDEMNITY- Against liability to pay damages on account of accidents to workmen employed by or under the insurer or against liability to pay compensation under the Workmen's Compensation Act, 1923, for every Rs.100 or part thereof payable as premium. Three rupees E-LIFE INSURANCE OR OTHER INSURANCE NOT SPECIFICALLY PROVIDED FOR, except such a RE-INSURANCE as is described in Division of this article- If drawn singly If drawn in duplicate for each part (i) for every sum insured not exceed-ing Rs.250; Ten rupees Ten rupees (ii) for every sum insured exceeding Rs.250 but not exceeding Rs.500; Ten rupees Ten rupees (iii) for every sum insured exceeding Rs.500 but not exceeding Rs.1,000 and also for every Rs.1,000 or part thereof in excess of Rs.1,

000. Ten rupees Ten rupees Exemption Policies of life insurance granted by the Director-General of Post Offices in accordance with rules for Postal Life Insurance issued under the authority of the Federal Government. F-RE-INSURANCE BY AN INSU-RANCE COM-PANY WHICH HAS GRANTED A POLICY OF THE NATURE SPECIFIED IN DIVISION A OR DIVISION B OF THIS ARTICLE WITH ANOTHER COMPANY BY WAY OF INDEMNITY OR GUARANTEE AGAINST THE PAYMENT ON THE ORIGINAL INSURANCE OF A CERTAIN PART OF THE SUM INSURED THEREBY. One half of the duty payable in respect of the original insurance but not less than ten rupees or more than one hundred rupees General Exemption Letter of cover or engagement to issue a policy of insurance: Provided that, unless such letter or engagement bears the stamp prescribed by this Act for such policy nothing shall be claimable thereunder, nor shall it be available for any purpose, except to compel the delivery of the policy therein mentioned.

13. Historically, the term 'public office' was not defined until the 1973 Act when for the first time the definition was brought in the 1899 Act. Priorly, that term was used in law at different places and presumably derived its meaning as used in ordinary parlance as well as in the context of its location. The 1973 Act not only provided a definition of the term 'public office' but also gave it a colour which was materially different from the ordinary dictionary meaning normally assigned to the term. The 2021 Act further amended the definition in material particulars and for the purposes of present controversy, the learned counsel for the petitioners laid much emphasis on the deletion of the words "a body registered under the Companies Act, 1913".

14. Section 73 of the 1899 Act provides for inspection of registers, books, records and other documents relating to payment of stamp duty in such form as prescribed by the Board of Revenue and the public officer shall also furnish a monthly statement of payment to the Collector. It further obliges every public officer having in his custody such registers, books, records and other documents at all reasonable times to permit any person authorized in writing by the Collector to inspect those registers etc. and to take such notes and extracts as he may deem necessary. As stated above, the petitioners contend that they are not liable for inspection by a person authorized in writing by the Collector and thus the impugned notices are ultra vires and unlawful. For the purpose, the true interpretation of the term 'public office/ public officer as used in the 1899 Act will have to be undertaken as also the scope of work of the stamp auditor analyzed.

15. As noted above, the term 'public office' was not defined prior to the 1973 Act. It was however sprinkled throughout the law in different connotations. For instance, section 33 provides that: "

33. Examination and impounding of instruments.- (1) Every person having by law or consent of parties authority to receive evidence, and every person in charge of a public office, except an officer of police, before whom any instrument, chargeable in his opinion, with duty, is produced or comes in the performance of his functions, shall, if it appears to him that such instrument is not duly stamped, impound the same. (2) For that purpose every such person shall examine every instrument so chargeable and so produced or coming before him, in order to ascertain whether it is stamped with a stamp of the value and description required by the law in force in 5 [Pakistan] when such instrument was executed or first executed: Provided that- (a) nothing herein contained shall be deemed to require any Magistrate or Judge of a Criminal Court to examine or impound, if he does not think fit so to do, any instrument coming before him in the course of any proceeding other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898; (b) in the case of a Judge of a High Court, the duty of examining and impounding any instrument under this section may be delegated to such officer as the Court appoints in this behalf. (3) For the purposes of this section, in cases of doubt,- (a) the Provincial Government] may determine what offices shall be deemed to be public offices; and (b) the Provincial Government] may determine who shall be deemed to be persons in charge of public offices.

16. The above provision relates to the examination and impounding of instruments. Doubtless, by section 3 of the 1899 Act certain instruments shall be chargeable with duty of the amount indicated in Schedule-I. The term 'instrument' has been defined in section 2(14) as: "Instrument" includes every document by which any right or liability is, or purports to be, created, transferred, limited, extended, extinguished or recorded and includes any instrument executed in electronic form."

17. The parties are on common ground that the instruments mentioned in Schedule I are chargeable with duties of stamp by affixation of an adhesive or impressed stamp or E-stamp of not less than the requisite amount. By the terms of section 33, every person having by law or consent of parties authority to receive evidence and every person in charge of a public office before whom any instrument chargeable in his opinion with duty is produced shall if it appears to him that such instrument is not duly stamped, impound the same. It follows indubitably that in case the instrument is not produced in evidence or the instrument is not produced before a person in charge of a public office, then the question of impounding of that instrument does not arise. The parties may at any time execute an instrument and choose not to stamp that instrument which would remain in their custody and would only be liable to duty of stamp when the conditions prescribed in section 33 are triggered. Only then the examination and impounding of the instrument can take place. This is an aspect of the matter which becomes stark upon a reading of section 33.

18. Another interesting aspect is contained in subsection (3) of section 33 which for the purpose of section 33 empowers the government to determine what offices shall be deemed to be public offices. It seems that for purposes of section 33 a different category of public offices may be determined by the Government and those persons in charge of public offices shall have the authority to examine and impound instruments on which stamp duty is chargeable. The determination of the person in charge of public offices under subsection (3) of section 33 may be different from the public officers defined in section 2(22A) read with (22B) and which, according to the learned A.A.G, would include not only an officer of the government but also a commercial or industrial concern and a private housing scheme as well as a cooperative housing scheme, a real estate developer or a real estate broker. Thus, it cannot be discounted that a scenario may develop where a separate determination is made by the government for the purposes of section 33 as distinct from the public officers generally defined in the 1899 Act through section 2(22A) read with (22B). This clearly shows that prior to insertion of the definitions of public office and public officer by the 1973 Act, the scheme of law was clear and unequivocal. The term 'public office' was merely used for the purpose of examination and impounding of instruments and there was no intention to enlarge the definition so as to ensnare all sorts of persons whether performing public duties or running private enterprises. The term 'public office' remained closer to its original intent meaning. Discussion:

19. There is an intriguing aspect surrounding the use of the term 'public office' at various places in the Act. To reiterate, the 1899 Act largely remained unchanged until two paradigmatic events whereby amendments were introduced in the law. The first was through substitution by 1973 Act which brought in the definitions of public office and public officer. The definition underwent a further substitution by the 2021 Act and this change in the definition and its impact will be adverted to later on in this opinion. For the time being, suffice to say that for the first time the term 'public office' was defined in the 1899 Act. The term, to reiterate, was being used at different places in the 1899 Act prior to introduction of the definition itself and it clearly seems while juxtaposing these concepts in the Stamp Act that the definition itself does not have any bearing in the overall context of the law and the West Pakistan Stamp Inspection and Audit Rules, 1949 (the Audit Rules). The term took colour from its situation in different parts of the 1899 Act and thereby varied the definition of that term but not against the grain of its core principles.

20. We have noted that Section 33 of the 1899 Act relates to examination and impounding of instruments and confers a power on a person in charge of a public office to impound an instrument produced before him and which is chargeable in his opinion with duty. This too will be elaborated upon in the proceeding paragraphs. Thus, a public officer becomes an impounding officer as well under Section

33. Likewise in subsection (2) of section 73 of the 1899 Act the term 'public officer' has been mentioned peculiarly in the context of inspection of registers, books, papers, documents and proceedings by any person authorized in writing by the Collector. This has reference to the Audit Rules where the Collector may authorize any person to inspect registers and books in the custody of a public officer. For the purposes of Audit Rules, therefore, a public officer is one who is liable to inspection by the stamp auditor within the ambit of the Audit Rules and which ambit will also exercise a gravitational pull on the notices issued to the present petitioners which have been challenged in these petitions. Chapter IV and the constitutional argument:

21. Chapter IV of the 1899 Act relates to instruments not duly stamped, their examination and impounding and the manner in which the instruments impounded are to be dealt with.

22. Section 33 has been set out above. The first part of subsection (1) of section 33 refers to a person who by law or consent of parties, has authority to receive evidence. That does not concern us for the time being. The second part refers to every person in charge of a public office, that is, a public officer before whom any instrument chargeable with duty is produced or comes in the performance of his functions. Such an officer shall, if it appears to him that such instrument is not duly stamped, impound the same. Under section 33, therefore, the public officer becomes in effect the impounding officer which term has also been used in subsection (3) of section 40 of the Act and provides that: "40(3) Where an instrument has been sent to the Collector under Section 38, subsection (2), the Collector shall, when he has dealt with it as provided by this section, return it to the impounding officer."

23. The significant aspect of section 33 is that in law power has been conferred on a public officer envisaged under Section 33 to impound an instrument and he shall do so in the performance of his functions. The crucial words are "in the performance of his functions" used in section 33 which have to be collated with Article 138 of the Constitution. This brings us to the constitutional argument in this Court by the learned Addl. Attorney General Mirza Nasar Ahmad. Article 138 of the Constitution provides that: "

138. On the recommendation of the Provincial Government, the Provincial Assembly may by law confer functions upon officers or authorities subordinate to the Provincial Government."

24. Section 33 and the functions that it seeks to confer on a public officer is an illustration of the mandate given under Article 138 of the Constitution where on the recommendation of the Provincial Government, the Provincial Assembly may confer functions upon officers or authorities subordinate to the Provincial Government. The scope and sweep of Article 138 was expounded by the Supreme Court of Pakistan in the seminal case of Mustafa Impex v. Government of Pakistan (PLD 2016 Supreme Court 808). Although the question involved in Mustafa Impex was the interpretation of Article 98 that Article is in para materia with Article 138 and the exposition would squarely apply to Article 138 as well. It was held that: "

65. We now turn to a consideration of the status of "subordinate authorities" which is a matter dealt with in Article

98. This article provides that, on the recommendation of the Federal Government, Parliament may, by law, confer functions upon officers, or authorities, subordinate to the Federal Government. It is reproduced below:- "

98. Conferring of functions on subordinate authorities.

On the recommendation of the Federal Government, [Majlis-e-Shoora (Parliament)] may by law confer functions upon officers or authorities subordinate to the Federal Government."

66. This article, read contextually with the other relevant articles, envisages a multi-stage procedure. Each stage has to be strictly complied with. The sequence of developments is as follows:- (i) The original concept in Article 90 (which now stands restored to its initial configuration) was that the executive authority of the Federation was to be exercised in the name of the President by the Federal Government. (ii) The Federal Government was defined to be the Prime Minister and the Federal Ministers (i.e. the Cabinet). (iii) The Cabinet was to act through the Prime Minister who was to be the Chief Executive. (iv) The Prime Minister could act directly or through Federal Ministers. (v) This hierarchical exercise of powers was stated to be subject to the constitution i.e. the exercise of governmental power was subjected to the constitutional provisions in their totality. This obviously postulates a referential base of a parliamentary democracy with the Cabinet at the heart of the Executive. (vi) In 1985 a radical change was made in Article 90 by vesting the totality of executive authority in the President instead of the Federal Government i.e. the Cabinet. The flow of authority was then the following: (a) The President now became the constitutional repository of all executive authority. (b) He could exercise this authority, either directly or through officers subordinate to him (this would obviously include the exercise of power through ministers). (c) There was no delegation of power as such. When powers were exercised by officials it was, in the eye of law, the President acting through them. (d) The effective restraint on the President was that power was to be exercised in accordance with the Constitution. This, therefore, restored the power of the Cabinet, albeit by a rather circuitous route. However, the formulation as a whole, was really a reversion to the structure of the Government of India Act, 1935 which we have already discussed above. (vii) By the 18th Amendment the original language of Article 90 was restored, but other changes were also made. When it came to Article 99, which in its original formulation, conferred the power on the Federal Government to delegate its functions to subordinate officials, this power was not restored. It is, however, important to bear in mind that in the original constitution the power to delegate was purely discretionary. It could be exercised, or not exercised, at the will of the Government. In actual practice it was perhaps rarely exercised. It follows from the above that the mere taking away of a discretionary power to delegate does not make any substantial difference to the exercise of constitutional power as matters stand at present. It is important to note that designated functions can only be conferred on officers or authorities who are subordinate to the Federal Government. They cannot, for example, be conferred on private entities or companies. Official power can only be exercised through official channels. However, as is obvious, even the passing of a law to such effect would not elevate the status of officers of the Federal Government and enable them to be treated as the Federal Government itself. Furthermore, this provision very clearly does not contemplate the transfer of legislative powers of any nature whatsoever to subordinate officials. All it permits is the discharge of certain functions by designated officials. The transfer of legislative powers would be a clear cut violation of the structure of the constitution and the concept of separation of powers. We are, therefore, unable to agree with the contention of the learned Additional Attorney General in this behalf. Neither the constitutional provisions, nor the Rules of Business, confer power on a Secretary or head of a Division, to be treated as the Federal Government."

25. In the profound words of Mian Saqib Nisar, J., the designated functions can only be conferred on officers or authorities who are subordinate to the Provincial Government. They cannot be conferred on private entities or companies. Further, official power can only be exercised through official channels. Taken in the backdrop of these observations by the Supreme Court of Pakistan, Chapter IV of the 1899 Act confers power on person in charge of a public office who is performing functions of the Provincial Government and before whom any instrument chargeable with duty is produced. Only that officer is empowered to impound the instrument as the act of impounding is the performance of public functions which can only be done by an officer of the Provincial Government. This also becomes evident from a reading of subsection (3) of section 33 where the Provincial Government may determine what offices shall be deemed to be public offices and it is inconceivable that the government can determine the office of a company or a private entity to be a public office for the purposes of impounding of instruments.

26. The definition 'Public office' does not synchronise with the contextual use of the term in different parts of the 1899 Act. In fact it is in significant tension with the specific duties that these officers are assigned to perform which are quintessentially public functions of the nature conferred under Art.

138. To expand the term, by fiction, so as to include private entities such as a private house scheme, a real estate developer or a real estate broker runs afoul of the constitutional mandate and notwithstanding the expansiveness of the definition, public functions of a Provincial Government cannot be conferred on private entities included in the definition. Although chapter IV does not define the terms 'public office' or 'public officer', the use of the term juxtaposed with the nature of their duties in these provisions fits neatly with the concept enshrined in Article 138.

27. This leads us to the next question which arises as a baseline question. Does the definition of public office in 1899 Act, comport with Article 138 of the Constitution? The definition is indeed a drafting anomaly and insofar as it includes private entities and persons, runs a diametrically opposite course to the concept which permeates the 1899 Act generally. It seeks to confer public functions on private entities, which has precisely been discountenanced by the Supreme Court in Mustafa Impex. The term public office, at its core, means an office which has been conferred public functions of the Government to be carried out. Article 138 contains the principle of delegability of public functions upon public authority or officers. Obviously a Provincial Government can only delegate public functions and that too on public officers and none else. There are sound practical reasons for a degree of shared or transferred responsibility. This has come to be described as the Carltona principle in the United Kingdom. Lord Reed in R (King) v. Secretary of State for Justice [2015] UKSC 54 described the principle as: "that functions given to government ministers can be exercised on their behalf by responsible officials of the government department concerned") "the [Carltona] principle is that a decision made on behalf of a minister by one of his officials is constitutionally the decision of the minister himself")," It was further stated in R v Birmingham City Council, exp 0 [1983] 1 AC 578 by Lord Brightman: "It is an inevitable feature of local government today that there must be delegation of the multifarious functions of a local authority among numerous committees, sub-committees and individual officers. No local authority could function efficiently otherwise."

28. What follows indubitably from the above is that if public functions under Article 138 belong to the Provincial Government then they can only be delegated to public officers who are departmental officials. The 1899 Act concerns itself with the collection and impounding of duties of stamp which, in essence, are public functions meant to be performed by public officers. The private bodies and persons included in the definition of public office in the 1899 Act may carry out functions which can be described as public but as commercial organisations they cannot be said to possess powers solely in order that they may use them for the public good. They do not have the same duty that a public body, which is not a commercial undertaking, has. It is entitled to look to the interest of its shareholders. This will also mean that these private bodies and persons will be subject to judicial review since their source of power is a statute. Was this a consequence contemplated by the legislature while adding the definition through the 1973 Act?

29. Public officers perform "functions of a public nature". The leading decision on the meaning of "functions of a public nature" is the UK House of Lords (now Supreme Court) case of YL v Birmingham City Council [2007] UK HL

27. The case concerned an elderly woman living in a residential home operated by Southern Cross Healthcare Ltd. a business providing accommodation and nursing services. It was held that "certainly it would be wrong to focus only on what is done without considering the institutional and relational context in which it is done." The first step is to identify an authority as a core public authority and "there is therefore no need to distinguish between private and public acts or functions of a core public authority. The majority held that Southern Cross was not performing a public function. According to YL, a function is a public one when government has taken responsibility for it in the public interest.

30. None of the authorities viz. "a commercial or industrial concern whether singly owned or run through partnership, a private housing scheme or a housing authority, a cooperative housing society, a real estate developer, a real estate broker, a banking company and any other entity whether registered or unregistered under any law for the time being in force" (the bodies in dispute) mentioned in section 2(22A) perform functions of a public nature or in other words functions of the Provincial Government and cannot, by fiction, be included in the definition which would not only tend to undermine the coherence of the law but also the constitutional mandate. The definition itself seems a legal island divorced from the scheme of the 1899 Act. And so is the definition of public officer in section 2(22B) which dovetails into section 2(22A).

31. Section 35 of the 1899 Act provides that: "

35. Instruments not duly stamped inadmissible in evidence, etc.- No instrument chargeable with duty shall be admitted in evidence for any purpose by any person having by law or consent of parties authority to receive evidence, or shall be acted upon, registered or authenticated by any such person or by any public officer, unless such instrument is duly stamped. Provided that- (a) any such instrument not being an instrument chargeable with a duty not exceeding twenty-five paisa only, or a bill of exchange or promissory note, shall, subject to all just exceptions, be admitted in evidence on payment of the duty with which the same is chargeable, or, in the case of an instrument insufficiently stamped, of the amount required to make up such duty, together with a penalty of five-rupees, or, when ten times the amount of the proper duty or deficient portion thereof exceeds five rupees, of a sum equal to ten times such duty or portion. (b) where any person from whom a stamped receipt could have been demanded, has given an unstamped receipt and such receipt, if stamped, would be admissible in evidence against him, then such receipt shall be admitted in evidence against him on payment of a penalty of one rupee by the person tendering it. (c) where a contract or agreement of any kind is effected by correspondence consisting of two or more letters, and any one of the letters bears the proper stamp, the contract or agreement shall be deemed to be duly stamped. (d) nothing herein contained shall prevent the admission of any instrument in evidence in any proceeding in a Criminal Court, other than a proceeding under Chapter XII or Chapter XXXVI of the Code of Criminal Procedure, 1898. (e) nothing herein contained shall prevent the admission of any instrument in any Court when such instrument has been executed by or on behalf of the Government], or where it bears the certificate of the Collector as provided by section 32 or any other provision of this Act."

32. The above provision firstly provides that an instrument which is chargeable with duty shall not be admitted in evidence unless such instrument is duly stamped. Similarly, it shall not be acted upon, registered or authenticated by any public officer unless such instrument is duly stamped. In the same vein, the function to act upon an instrument, to register it or to authenticate that instrument is indeed a public function and can only be performed by a public officer performing functions conferred upon him by the Provincial Government. The words "by any public officer" in section 35 are tied in with the forgoing words "acted upon, registered or authenticated . by any public officer". These are all public functions conferred by the Provincial Government and there is no power in any private person to act upon, register or authenticate an instrument. Once again, such a power is inconceivable to vest in a private person nor can he be conferred such a power, for that would be unconstitutional and against the holding of the Supreme Court in Mustafa Impex. No doubt, therefore, the functions contemplated by section 33 and section 35 of the 1899 Act are in essence public functions of a constitutional nature and the wide scope of the definition of 'public office' introduced by the 1973 Act would be in contradiction to these functions. These two potentially conflicting strands of the same term are hard to reconcile in the statutory setting of the 1899 Act.

33. Section 38 of the Act goes on to state the manner in which instruments which have been impounded are to be dealt with which instrument has to be sent in original to the Collector by the impounding officer. After the Collector has stamped the instrument, he shall return it to the impounding officer as provided in subsection (3) of section

40. Section 48 relates to recovery of duties and penalties and importantly all such duties and penalties may be recovered by the Collector but those duties and penalties are required to be paid under Chapter IV. The inference clearly would be that the purpose of the 1899 Act is to impose a stamp duty but the entire scheme of the law would only be triggered once any of the acts mentioned in Chapter IV of the Act is done by the holder of the instrument. All consequences will then follow including the impounding of the instrument and the imposition of duty and penalty leviable in respect of such instrument. The instrument will be impounded if it is sought to be admitted in evidence or the holder of the instrument seeks to act upon the instrument or have it registered or authenticated by a public officer. The cumulative and holistic reading of the 1899 Act does not enjoin any other situation where a deficiency in stamp duty can be identified and recovered but for the procedure provided in Chapter IV. The procedure sought to be invoked by the Chief Inspector of Stamps Board of Revenue Punjab does not comport with the general scheme of the 1899 Act and is an attempt to clearly assume jurisdiction which does not vest in the officer. This will become evident upon a consideration of the Audit Rules which we shall now advert to. Audit Rules:

34. The Audit Rules precede the 1973 and 2021 amendments and will have to be viewed in that context. They have not undergone any change despite the amendments introduced through the 1973 Act and the 2021 Act. These rules are enacted under the powers conferred by section 75 of the 1899 Act for inspection of books, records etc. contemplated by section

73. As stated above, subsection (2) of section 73 obliges a public officer who has custody of any registers, books, records etc. to permit any person authorized in writing by the Collector to inspect such books and records. Section 73 of the 1899 Act will have to be read in conjunction with the Audit Rules as these have a direct relation with each other. Rule 3 provides for the appointment of Stamp Auditors for the purpose of audit of documents requiring stamp duty which are presented to a public officer and the accounts mentioned in Appendix II thereto. Thus, the Stamp Auditors can only audit the accounts mentioned in Appendix II which mentions the following accounts:

1. Civil Courts and connected offices.

2. Revenue Courts and connected offices.

3. Criminal Courts and connected offices.

4. Accounts of Stamp Vendors.

5. Motor Licensing and Taxation Accounts.

6. Arms Licensing Accounts.

7. Pauper Suits Accounts.

8. Stamp Refund Accounts.

9. Copying Agencies Accounts under the control of the Financial Commissioners, Commissioners, Deputy Commissioners and District and Sessions Judges.

10. Registration of money Lenders Accounts.

11. Official Receivers' Stamp Accounts.

12. Marketing Committees' Accounts.

13. Registration offices.

14. Record Rooms.

15. All other government offices not included above."

35. Rule 5 provides that the Auditor shall be under the supervision of the Commissioner of the Division and shall in terms of section 73 be authorized by the Collector of the district to inspect the record for audit. The link between the Audit Rules and the 1973 Act has, by now, become evident. Rule 7 provides the scope of audit and states that: "

7. The Auditor shall, on visiting a district, audit the records of all fresh institutions made, documents filed and files pending in the offices etc., mentioned in Appendix II hereto from the date on which the last audit terminated. He shall, in particular, see that the stamps used are genuine and have not been removed from any document or file and reused.

36. The power of Auditor to audit and the scope of that audit has been enumerated in rule 7 set out above who is restricted to audit the record of the instrument made, documents filed and files pending in the offices mentioned in Appendix II. He has no other business and the scope of his audit does not extend beyond that. The offices to which a reference has been made in Appendix II have also been reproduced above which do not include the bodies in dispute and not at all the offices of the petitioner companies. Indubitably it follows that the petitioners are not comprised in the list of courts and offices and other accounts which are subject to stamp audit by a stamp auditor under the Audit Rules. It is sufficient to hold that the impugned notices are ultra vires on the basis of this argument of the learned counsel for the petitioners viz. that the Audit Rules do not empower the stamp auditor to inspect the books and records of the petitioners for audit.

37. It also follows from the above and upon a reading of Appendix II that the offices mentioned have an intrinsic relation with the powers of public officers stated in section 33 to assess if those officers discharged their duties to impound the instruments, to maintain record and to send it to the Collector. Another question which engages this Court would be that if an audit is conducted in respect of the petitioner companies how would the deficiency in the stamp duty be recovered for that process has expressly been provided in Chapter IV of the Stamp Act and can only be set in motion once any of the acts stated in section 33 occur. Merely conducting a stamp audit would not, ipso facto, start the process of recovery of any purported deficiency in the payment of stamp duty by the petitioners.

38. Section 2(22A) defines public office and the holder of public office is a public officer. The impugned notices have been issued on the notion that certain officers employed with the petitioners are the public officers within the meaning of the term used in the 1899 Act and therefore the stamp auditor would be empowered to carry out a stamp audit. Hence the impugned notices on the petitioners.

39. Apart from the submissions made above the learned counsel for the petitioners contend that it is indeed a fallacy on the part of the Chief Inspector of Stamps, in that, by way of substitution through the 2021 Act, certain words have been deleted from the definition of public office. The amended as well as un-amended definitions of the term 'public office' have been brought forth above and the crucial aspect for the purposes of the present controversy is that the words "a body registered under the Companies Act, 1913" have been omitted from the definition.

40. Doubtless, these words are not part of the definition of the term 'public office' post-2021 Act. The significance of this should not be lost on the respondents who intend to proceed to audit the records of the petitioners. If the stamp auditor can only audit a public office then the question would be whether the stamp auditor can do so in respect of the petitioners which are bodies registered under the Companies Act, 1913 (or its successor statute). Prior to the amendment of 2021 Act this question would not have arisen as those companies were specifically included in the definition of public office. The omission of these words has significantly slanted the argument in favour of the petitioners. The new definition of public office enacted through the 2021 Act does not make a mention of bodies registered under the Companies Act, 1913 or its successor laws. There is no contention that the petitioners are companies incorporated under the laws relating to registration and incorporation of companies and the new definition does not make any reference to such companies. The specific omission of these words would connote the intention of the legislature in excluding the companies such as the petitioners from the ambit of stamp audit by the stamp auditor. The new definition of public office expands upon the earlier definition in a variety of ways and if at all the intention was to include the companies as well, there was no impediment in the way of the Provincial Assembly to have retained these words in the new definition as well. This was not done and the unmistakable inference would be that the auditors under the 1899 Act and the Audit Rules do not exercise jurisdiction on the petitioner companies which are now beyond their sphere of activity.

41. Suffice to refer to the Treaties, Reading Law, the Interpretation of Legal Texts by Antonin Scalia and Bryan A. Garner, and the following statement in this regard: "If the legislature amends or reenacts a provision other than by way of a consolidating statute or restyling project, a significant change in language is presumed to entail a change in meaning."

42. On this ground as well the impugned notices are without lawful authority and the Chief Inspector of Stamps is denuded of powers to serve such notices on the petitioners to compel them to undertake stamp audit by the stamp auditor nominated by the Collector.

43. In sum, these petitions are allowed: I. The definition of public office contained in section 2(22A) to the extent of bodies in dispute is declared unconstitutional and without lawful authority. They are struck out from the definition. The definition of public officer in section 2(22B) will also be modified accordingly. II. The Impugned Notices to the extent of petitioners, too, are held without lawful authority and no legal effect. MH/E-2/L Petition allowed.