2025 C L C 769
[Balochistan]
Before Muhammad Hashim Khan Kakar, CJ and Muhammad Aamir Nawaz Rana, J
Messrs PAKISTAN SHIP BREAKER'S ASSOCIATION and others ---Petitioners
Versus
GOVERNMENT OF BALOCHISTAN, through Secretary Ministry of Planning and
Development, Quetta and 2 others ---Respondents
Constitutional Petitions Nos. 268, 351 and 404 of 2024, decided on 15th October, 2024.
Balochistan Development Authority Act (X of 1974) ---
----S. 18(2)(d) & (e)--- Balochistan Ship Breaking Industry Rules, 1979, R. 15(2) ---Levy of
"Tonnage Charges" or "Royalty" ---Reduction ---Approval of the cabinet ---Settlement
between the Pakistan Ship Breakers Association and Balochistan Development Authority (BDA) as to reduction of Tonnage Fee without approval of Cabinet ---Legality ---
Misconstruing a court's historical summary as a mandate for specific action of reducing tonnage fee---Effect ---Petitioners challenged a letter from the BDA directing the Pakistan
Ship Breakers Association to pay a tonnage fee at the rate of Rs. 800 per ton on the ground that the competent authority had withdrawn its previous order regarding fixation of a reduced
tonnage fee passed on the basis of settlement between the BDA and Pakistan Ship Breakers Association--- Validity ---Under S. 18(2)(d) & (e) of the BDA Act, the BDA could impose
"tonnage charges" or "royalty" only with the previous sanction of the Government and since no previous sanction of the Government was obtained by the Competent Authority while reducing tonnage fee from Rs.800/ - per ton to Rs.350/ - per ton, therefore, fixation of tonnage
fee at Rs.350/ - per ton was not in accordance with law ---No direction regarding reducing of
tonnage fee from Rs.800/ - per ton to Rs.350/ - per ton was issued by High Court, thus, the
BDA had misconstrued the order passed by High Court ---Chairman BDA had admitted that
approval regarding decrease of tonnage fee from Rs.800/ - per ton to Rs.350/ - per ton had not
been accorded by the Competent Authority, thus, the contention of petitioners that certain right had been created in their favour by fixing the rate of tonnage fee @ Rs.350/ - per ton
had no substance as the Competent Authority, which in the cases in hand was Government of Balochistan, had never approved the said rate, rather the Provincial Cabinet had fixed the rate of tonnage fee @ Rs.800/ - per ton and in this regard the requisite Notification had
already been issued by the BDA ---High Court directed the Chairman BDA to strictly act in
accordance with law and charge the tonnage fee as per the BDA Act and the rules framed thereunder without being influenced from any observation made in the judgments of High Court ---Constitutional petitions were disposed of, accordingly.
Collector of Customs v. Sheikh Spinning Mills 1999 SCMR 1402; Government of N.-
W.F.P. v. Rahimullah 1992 SCMR 750; Ejaz Shafee v. Federation of Pakistan PLD 1997 Kar 604; Continental Biscuits Ltd. v. Federation of Pakistan through Secretary Defence, Ministry of Defence, Islamabad 2017 PTD 1803; Muhammad Mubeen- Us-Salam and others v.
Federation of Pakistan through Secretary, Ministry of Defence PLD 2006 SC 602; A.R. Khan v. P.N. Boga PLD 1987 SC 107; Overseas Pakistanis Foundation and others v. Sqn. Ldr. (Retd.) Syed Mukhtar Ali Shah 2007 SCMR 569; Abdul Hameed v. Mehmood 2001 SCMR 1316 and Ghulam Rasool v. Chief Administrator of Auqaf PLD 1971 SC 376 distinguished.
Mustafa Impex's Case PLD 2016 SC 808 rel.
Syed Tanweer Ashraf and Imam Sher Marri for Petitioners.
Zahoor Ahmed Baloch, Additional Advocate General for Respondent No.1.
Saad Salauddin for Respondents Nos. 2 and 3.
Date of hearing: 27th September, 2024.
JUDGMENT
MUHAMMAD AAMIR NAWAZ RANA, J. ---Through this common judgment, we
intend to dispose of the above -captioned Constitution Petitions as identical propositions of
law and similar facts are involved in these petitions.
PROLOGUE:
2. The Balochistan Development Authority Act, 1974 ('BDA Act') was promulgated on
22.07.1974 for the promotion of the economic and industrial development of Balochistan and
for matters ancillary thereto. Under section 18(1) of the BDA Act, the authority was authorized to take such measures and exercise such powers for carrying out the purposes of the BDA Act. Through Balochistan Ordinance XI of 1980, which had taken effect from 04.06.1974, words "tonnage charges", "royalty" or "any other fee" were inserted in section 18 (2)(d) and (e) of the BDA Act.
3. In pursuance of section 30 of the BDA Act, the Balochistan Ship Breaking Industry
Rules, 1979 ('Rules, 1979') were framed in the year 1979. Under section 15 (2) of the Rules, 1979, the Balochistan Development Authority ('BDA') has been authorized to collect tonnage fee from the ship breakers at the time of import of their ships/vessels.
4. The tonnage fee was initially being charged at Rs. 15/ - per ton under Rule 15 (2) of
the Rules, 1979 which got enhanced from time to time; subsequently in the year 2018, the tonnage fee was enhanced from Rs.50/ - per ton to Rs.800/ - per ton vide Notification No.
RO(BDA)/P&D/(505)/2017 -18/4795 dated 23.02.2018, which Notification was assailed by
the Pakistan Ship Breakers Association and other aggrieved petitioners before this Court by
filing Constitution Petition No.411 of 2018. Record transpires that on account of some settlement between the Pakistan Ship Breakers Association and BDA, the following rates were agreed between them:
a) Rs.200/LDT till 30.06.2019.
b) Rs.350/LDT with effect from 01.07.2019.
c) Annual Increase of 2.5% w. e.f. 01.07.2020.
5. Constitution Petition No.411 of 2018 was disposed of by this Court vide order dated
14.12.2018 in the following terms:
"The learned counsel for the BDA places on record copy of the settlement and stated that the BDA decided to withdraw the impugned notification. He stated that the parties have reached a settlement, pursuant to which tonnage fees has been agreed between the parties, which is mentioned in the settlement deed. The learned counsel stated that the BDA is going to issue afresh notification as per the agreement.
The learned counsel for the petitioner stated that he has no contact with his client.
We have heard the learned counsel for the respondent/BDA. Through this petition, the petitioner has challenged the notification No.RO(BDA)/P&D/(505)/2017- 18/4795
dated 23rd February, 2018, which according to the learned counsel has been withdrawn by the BDA, therefore, the grievance of the petitioner has been redressed. As far as the settlement between the parties is concerned, this is for them to follow, as it is not the subject matter of this petition. Under such circumstances, the petition having borne fruit, is disposed of accordingly".
6. Record further transpires that Constitution Petition No. 195 of 2020 etc, in which the
imposition of tonnage fee was challenged, had also been filed by the certain Ship Breakers; the said Constitution Petitions were dismissed by this Court vide common judgment dated 04.05.2023. For the purpose of subject matter of these Constitution Petitions, the relevant portion of the ibid judgment is reproduced:
"13. In pursuance of above decision of the Cabinet, the 2nd Notification was issued on 24.07.2018 by the Additional Chief Secretary (Dev.), Planning and Development Department (BDA Section), GoB. Despite aforementioned approval by the Provincial
Cabinet and subsequent Notification dated 24.07.2018, the Order dated 29.03.2019
was issued by the Chairman BDA, whereby tonnage fee has been fixed at Rs.350/ -
LDT w. e.f. 01.07.2019 with annual increase of 2.5% w.e.f. 01.07.2020; which
apparently is an outcome of amicable settlement between BDA and Pakistan Ship Breakers Association and the said order is still holding the field. So in this context, the argument of learned counsel for the petitioners that enhancement in the rates of tonnage fee without approval of the Provincial Cabinet seems misplaced and out of
context, rather as a matter of act the Provincial Cabinet has given the approval for
tonnage fee of Rs.800/ - per ton and only as a result of mutual settlement lesser fee is
being charged by BDA."
(Emphasis supplied)
7. Record divulges that on the same subject matter of aforesaid Constitution Petitions,
another Constitution Petition bearing No. 121 of 2023 was also filed by the Pakistan Ship
Breakers Association and other aggrieved petitioners before this Court wherein the jurisdiction of Chairman BDA or for that purpose Government of Balochistan was challenged for levying the tonnage fee. The said Constitution Petition was dismissed by this Court vide judgment dated 20.12.2023. The petitioners of said Constitution Petition filed Review Application No.02 of 2024 for review of judgment dated 20.12.2023 but same was dismissed in limine vide order dated 16.05.2024 with the following observations:
"7. It was clear in the above judgment that the Provincial Cabinet has given approval for tonnage fee at Rs.800 per ton and in this regard the Notification dated 24.07.2018 was also issued by BDA but despite that, due to some mutual settlement, BDA is charging tonnage fee at Rs.350/ - per ton. The validity of said mutual agreement
between BDA and Pakistan Ship breakers Association was not under challenge, therefore, no observations were made in this regard in the impugned judgment.
Since the questions raised by the applicants in this review application have radically been addressed in the impugned judgment, therefore, the Review Application, being meritless, is dismissed in limine. "
PRESENT CONTROVERSY:
8. The petitioners of these Constitution Petitions have impugned letter dated 27.02.2024
written by the Director (Finance) BDA in which direction has been issued to the Chairman, Pakistan Ship Breakers Association to pay tonnage fee @ Rs.800/ - per ton on the ground that
the Competent Authority had withdrawn its previous order dated 29.03.2019 regarding fixation of tonnage fee. For ready reference, the impugned letter dated 27.02.2024 is reproduced hereunder:
"Quetta, the 27th February, 2024
To,
The Chairman,
Pakistan Ship -breakers Association,
Subject: - C.P. NO. 195/2020, C.P. NO. 1079/2020, C.P. NO.
1309/2020 REVISION OF TONNAGE FEE.
In continuation of the decision of Hon'ble High Court of Balochistan on the
subject Constitutional Petitions, the competent authority is pleased to withdraw his previous order dated 29.03.2019 with regard to fixation of tonnage fee.
2. Subsequent to the withdrawal of the previous order all the ship- breakers are
liable to pay tonnage fee @ of Rs.800/ - per ton from the date of judgement of the
Hon'ble Apex Court i.e. 04.05.2023.
3. This is for information and further necessary action on the matter.
(Muhammad Tahir Durrani), Director (Finance)/G.S.B BDA.
ARGUMENTS OF LEARNED COUNSEL FOR THE PARTIES:
9. Learned counsel for the petitioners has mainly contended that the Director (Finance),
BDA, without any justification, has misinterpreted common judgment dated 04.05.2023 passed in Constitution Petition No. 195 of 2020 etc., as in the said judgment, no direction
was issued by this Court to the Competent Authority either to withdraw its previous order
dated 29.03.2019 or to charge tonnage fee @ Rs.800/ - per ton. Learned counsel further
contended that under the provisions of section 20 of the General Clauses Act, 1956 and section 21 of the General Clauses Act, 1897, an authority having power to issue notification has also authority to add, amend, vary or rescind but before the decisive steps have been
taken. Learned counsel further contended that under section 30 of the BDA Act, the
Government has amended Rule 15(2) of the Rules, 1979 but said section does not empower
the Government to make rules on tonnage fee and since the rules are in conflict with the main statute, therefore, the tonnage fee could not have been enhanced. Learned counsel further contended that the BDA Act and the Rules, 1979 are special law and there is no provision under the law which authorizes the Government to issue any notification in respect of tonnage fee. While concluding his arguments, learned counsel contended that since BDA has itself entered into agreement with the Pakistan Ship Breakers Association, therefore, the said agreement cannot be unilaterally rescinded by the BDA. In support of his contentions, learned counsel relied upon the following case laws:
i. Collector of Customs Versus Sheikh Spinning Mills
1.
ii. Government of N.- W.F.P. Versus Rahimullah2.
iii. Ejaz Shafee Versus Federation of Paksitan3.
iv. Continental Biscuits Ltd. Versus Federation of Pakistan through Secretary Defence, Ministry of Defence, Islamabad
4.
v. Muhammad Mubeen- Us-Salam and others Versus Federation of Pakistan through
Secretary, Ministry of Defence5.
vi. A.R. Khan Versus P.N. Boga6.
vii. Overseas Pakistanis Foundation and others Versus Sqn. Ldr. (Retd.) Syed Mukhtar Ali Shah
7.
viii. Abdul Hameed Versus Mehmood8.
ix. Ghulam Rasool Versus Chief Administrator of Auqaf9.
10. Learned counsel for BDA and learned Additional Advocate General ('AAG'), while
supporting the impugned letter, contended that the alleged agreement between the Pakistan Ship Breakers Association and BDA, during pendency of Constitution Petition No.411 of 2018, was not validated by the Competent Authority i.e. Government of Balochistan. In this regard, learned counsel for BDA referred letter dated 27.06.2022.
11. Arguments heard and with the able assistance of learned counsel for the parties,
relevant record and Notifications were perused.
DETERMINATION:
12. In Constitution Petition No.411 of 2018, Pakistan Ship Breakers Association had
assailed the initial Notification dated 23.02.2018 (in which tonnage fee was fixed at Rs.800/ -
per ton) mainly on the ground that same was issued without prior approval of the Provincial Cabinet, and in the light of Mustafa Impex Case
10 same is not legal. Perusal of Notification
dated 23.02.2018 shows that same was issued by the Additional Chief Secretary, Planning and Development Department (BDA Section), Government of Balochistan ('GoB') with the prior approval of the Chief Minister but since the approval of Provincial Cabinet was missing, therefore, the matter was placed before the Provincial Cabinet in its meeting held on 29.05.2018 and the Provincial Cabinet had given approval for enhancement of rates. For ready reference, the decision of the Provincial Cabinet is reproduced hereunder:
"Decision
The Provincial Cabinet unanimously approved the proposed enhancement of tonnage fee from Rs.50/ - to Rs.800/ - per ton and amendment in the Balochistan Ship Breaking
Rules, 1979, as specified below: -
In the aforesaid Rules, in rule 15 in sub- rule (2) for the words and figures "Rs.50/ - per
tonnage fee", appearing after the words "at the rate of", the words and figure will be
"Rs. 800/ - per ton (with annual increase of 1 %) for 5 years" shall be substituted with
immediate effect".
13. Record transpires that after decision of the Provincial Cabinet, second Notification
was issued on 24.07.2018 by the Additional Chief Secretary, Planning and Development
Department (BDA Section) GoB but despite approval of Provincial Cabinet and subsequent Notification dated 24.07.2018, during pendency of Constitution Petition No.411 of 2018, some settlement took place between the Pakistan Ship Breakers Association and BDA and
instead of @ Rs.800/ - per ton (with annual increase of 1% for 5 years), the tonnage fee @
350/- per ton w.e.f. 01.07.2019 was fixed with annual increase of 2.5% w.e.f. 01.07.2020.
14. In view of section 18(2)(d) and (e) of the BDA Act, the BDA can impose "tonnage
charges" or "royalty" only with the previous sanction of the Government. Since no previous
sanction of the Government was obtained by the Competent Authority while reducing tonnage fee from Rs.800/ - per ton to Rs.350/ - per ton, therefore, fixation of tonnage fee at
Rs.350/ - per ton was not in accordance with law. This fact is further fortified from letter
dated 27.06.2022 written by the Chairman BDA to the General Manager (Ship breaking) BDA, wherein it is categorically mentioned that the case was submitted to the P&D Department GoB on 02.09.2021 which has not been endorsed, therefore, it has been decided that tonnage fee would be charged w.e.f. 01.07.2022 at Rs.800/ - per ton in pursuance to the
Government of Balochistan Notification dated 23.02.2018. For ready reference, letter dated 27.06.2022 is reproduced hereunder:
"Quetta, the 27th June, 2022
To,
The General Manager (Ship Breaking), Balochistan Development Authority, AT HUB.
Subject: - IMPLEMENTATION OF THE NOTIFICATION REGARDING
ENHANCEMENT OF TONNAGE FEES AMOUNTING TO RS. 800/ - PER
TON W.E.F 1ST JULY 2022.
Reference is invited to a notification No. RO(BDA)/P&D/(505)/2017- 18/4795
dated 23rd February 2018, regarding above subject, and subsequent order issued by the Balochistan Development Authority vide No. BDA/HQs/Ch:/2019/127- 36 dated
29th March 2019, which was issued in light of amicable settlement under the direction of Hon'ble High Court and relief was extend to ship breakers due to Covid 19 and slow activates in ship breaking industry. The Case was submitted to the P&D Department Government of Balochistan on 02/09/2021 which has not been endorsed so far therefore it has been decided that tonnage fees would be charged w. e.f 01st July 2022 amounting to Rs. 800/ - per ton in pursuance to the Government of
Balochistan Notification dated 23rd February 2018.
2. In view of the above, you are hereby directed to ensure the implementation of Government of Balochistan's Notification dated 23rd February 2018 in letter in spirit under information to head office.
CHAIRMAN"
(Emphasis supplied)
15. It is noted that it has been mentioned in the above letter, that amicable settlement had
been taken place under the direction of this Court and relief was extended to the Ship Breakers due to COVID -19 and slow activities in Ship Breaking Industry. Perusal of record
divulges that no such direction regarding reducing of tonnage fee from Rs.800/ - per ton to
Rs.350/ - per ton was issued by this Court in its order dated 14.12.2018 passed in Constitution
Petition No.411 of 2018, rather it was observed by this Court in the said order as follows:
"--------As far as the settlement between the parties is concerned, this is for them to
follow, as it is not the subject matter of this petition. Under such circumstances, the petition having borne fruit, is disposed of accordingly"
16. Apparently the BDA has misconstrued the above order passed by this Court. The
Chairman BDA, vide letter dated 27.06.2022, has admitted that approval regarding decrease of tonnage fee from Rs.800/ - per ton to Rs.350/ - per ton had not been accorded by the
Competent Authority. Therefore, the contention of learned counsel for the petitioners that certain right has been created in favour of the petitioners by the BDA by fixing the rate of tonnage fee Rs.350/ - per ton has no substance as the Competent Authori ty, which in the cases
in hand is Government of Balochistan, has never approved the said rate, rather the Provincial
Cabinet had fixed the rate of tonnage fee @ Rs.800/ - per ton and in this regard the requisite
Notification had already been issued by the BDA.
17. In the previous judgments11 and Order12 passed by this Court, only the above
chequered history was explained and no direction either to enhance the tonnage fee or to
reduce the tonnage fee was issued, therefore, the reference of common judgment dated
04.05.2023 passed by this Court in Constitution Petition No.195 of 2020 etc. in the impugned
letter dated 27.02.2024 written by the Director (Finance) BDA is out of context. The case
laws relied upon by learned counsel for the petitioners are distinguishable from the facts and attending circumstances of these Constitution Petitions.
For the foregoing reasons, the Chairman BDA is directed to strictly act in accordance
with law and charge the tonnage fee as per the BDA Act and the rules framed thereunder without being influenced from any observation made in the judgments referred above. With this direction, the above -captioned Constitution Petitions stand disposed of. The interim
orders dated 15.03.2024, 03.04.2024 and 17.04.2024 respectively passed in Constitution Petitions Nos.268, 351 and 404 of 2024 stand recalled.
Copy of this common judgment be sent to the respondents for information and
compliance.
SA/168/Bal Order accordingly.This judgment is reproduced from a publicly available source for informational purposes and does not constitute legal advice. If you believe this listing contains an error,
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