Summary: Facts:The appeals revolve around whether certain expenditures claimed by the respondents in their income tax returns are permissible deductions under Section 23(1)(xviii) of the Income Tax Ordinance, 1979. Disputes arose over the encashment of a bank guarantee by the Government of Punjab (GoP) in Civil Appeal No. 26/2009 and the imposition of charges by the State Bank of Pakistan (SBP) for delay in depositing counterpart funds in Civil Appeal No. 228/2010. The respondents claimed the amounts as business expenditures, while the tax authorities disallowed them, citing violation of law and infraction.---Legal Precedents and Analysis:Premier Bank Case (1999 PTD 3005): The Supreme Court held that while revenue expenses incurred wholly and exclusively for the purpose of business are allowable deductions, expenditures incurred as penalties or fines due to violations of law are not deductible.Applicability of Premier Bank Case: Section 23(1)(xviii) of the Income Tax Ordinance is similar to Section 10(2)(xvi) of the repealed Income Tax Act, 1922, as interpreted in the Premier Bank case. The law established in Premier Bank applies to Section 23(1)(xviii) of the Ordinance.Nature of Expenditure: Expenditures incurred due to breaches of contract or statutory obligations may or may not qualify as allowable deductions based on the circumstances.Expenditure as Damages or Compensation: Precedents from Pakistani and Indian jurisdictions establish that amounts paid as damages or compensation for breach of contract or statutory obligations qualify as allowable business expenditures.Civil Appeal No. 26/2009 (Encashment of Bank Guarantee): The encashment of the bank guarantee by the GoP was deemed to be damages or compensation for unsatisfactory performance rather than a penalty for violation of law. Therefore, it qualifies as an allowable deduction.Civil Appeal No. 228/2010 (Charges by SBP): Charges imposed by SBP for delay in depositing counterpart funds were considered fines for infringement of law, making them impermissible deductions.----Conclusion:The Court dismissed Civil Appeal No. 26/2009, upholding the allowance of the claimed expenditure. Civil Appeal No. 228/2010 was allowed, overturning the decision of the High Court, and disallowing the claimed expenditure.----Quote:The forfeiture of an amount under a contract cannot be equated with a fine or penalty incurred due to infraction or violation of any law. An amount paid as damages or compensation is an expenditure, a revenue loss, incurred in the course of carrying on the business and therefore is an admissible deduction under section 23(2)(xviii) of the Income Tax Ordinance, 1979.

Summary: Background: The case arose from the awarding of a contract by a national television corporation (PTVC) for the construction of Re-broadcasting Stations (RBS) in Neelum Valley, AJK, to a contractor (M/s Inter City). An inquiry revealed that the contractor submitted a fake registration certificate from the Pakistan Engineering Council (PEC), leading to allegations of forgery, criminal misconduct, and misuse of authority. This resulted in significant financial loss to the national exchequer. The petitioners, PTVC officials, filed for the quashment of the FIR against them, arguing that the responsibility for prequalification and scrutiny of contractors lay with the consulting firm (Unicon) hired by PTVC. -----Issues: 1- Were the petitioners, as PTVC officials, responsible for the alleged fraud and misconduct in the awarding of the contract? -----2- Did the investigation conducted by the Federal Investigation Agency (FIA) follow proper procedures and establish culpability against the petitioners? -----3- Should the FIR against the petitioners be quashed, or should they seek remedies under Section 265-K Cr.P.C. before the trial court? -----Holding/Reasoning/Outcome: The court held that: The primary responsibility for the prequalification and scrutiny of contractors rested with Unicon, the consulting firm, as per their contractual agreement with PTVC. There was no direct evidence implicating the petitioners in the submission of fake documents or the fraudulent awarding of the contract. The FIA's investigation was flawed, and the investigating officer was found to have acted negligently, leading to the suspension of the officer. The petitioners were directed to seek remedies under Section 265-K Cr.P.C. before the trial court. The High Court did not quash the FIR but provided clear guidance for the trial court to assess the petitioners' lack of culpability based on the evidence presented. -----Citations/Precedents: PLD 2010 SC 969 (Muhammad Abbasi vs. SHO Bhara Kahu and others): The case established that matters of guilt or innocence should be determined by the trial court under relevant sections of the Cr.P.C., rather than by the High Court in its constitutional jurisdiction. Section 265-K, Cr.P.C.: Provision for the trial court to acquit the accused at any stage if there is no probability of conviction. Section 249-A, Cr.P.C.: Provision for dismissal of a case by the trial court when there is no evidence to support the charge.

Summary: Civil Procedure Code (V of 1908)-------O. VII, R.2---Money suit---Contract for construction of road---Damages, recovery of---Scope---Plaintiffs were awarded contract for construction of road---Contention of plaintiffs wasthat due to law and order situation in the area, insurgents fired rockets and missiles on the labourand machinery which resulted in stoppage of work and government, in circumstances, wasresponsible to pay damages---Suit was dismissed by the Trial Court---Validity---Plaintiffs couldnot deviate from the terms and conditions of contract agreed upon between the parties---Law andorder situation, if any, could have been handled with the help of local administration---Plaintiffsinstead of resorting to legal course, opted an easy and shortcut way to sue the government withanother unjustified demand that they be accommodated by awarding another contract---Suchdemand was not only beyond the scope of contract awarded to the plaintiffs but beyond thepremises of law---Plaintiffs had failed to establish their claim through reliable and confidenceinspiring evidence and did not approach the Court with clean hands by suppressing material factswith regard to award of actual contract---Plaintiffs were not entitled for the relief claimed for---Impugned judgment passed by the Trial Court was based on proper appreciation of evidence---Appeal was dismissed in circumstances.

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Summary: ''a compromise decree is akin to a contract between the parties. If there is a breach of such a contract, it can provide a cause of action for an aggrieved party to seek legal remedy'' The executing court had erred in assuming jurisdiction to execute an order that was not deemed executable. Therefore, the judgment and decree of May 5, 2015, were set aside, with no costs imposed.

Summary: One of the key legal issues addressed in this case was the requirement for the attestation of documents under Article 17 of the Qanun-e-Shahadat Order, 1984, which is derived from the Holy Quran. This article stipulates that financial or future obligations, when reduced to writing, must be attested by two men, or one man and two women. The petitioners argued that the scribe of the document should be considered an attesting witness. However, the court ruled that for a scribe to be considered an attesting witness, they must have signed the document as such. In this case, the scribe did not do so, and therefore, the document did not meet the legal requirement for attestation.Ultimately, the Lahore High Court found that the judgment of the first appellate court was in accordance with the law and did not contain any legal irregularities. Consequently, the revision petition filed by the petitioners was dismissed.

Summary: (a) Specific Relief Act, 1877 ----S. 22---Suit for specific performance of contract---Execution and proof of agreement---Readiness and willingness of vendee---Discretion of Court---Plaintiff (appellant) sought declaration with permanent injunction, alleging that the agreement to sell dated 03.02.2014 was fraudulent, whereas defendants (respondents) filed a suit for specific performance---Trial Court dismissed plaintiff's suit and decreed respondents' suit for specific performance---Appellant contended that the agreement and related payment receipts (Exh.D2, Exh.D3, Exh.D4) were forged and not proved in accordance with Art. 17 read with Art. 79 of Qanun-e-Shahadat Order, 1984---Respondents contended that the agreement stood proved and that they had been willing and ready to pay the balance consideration amount---Trial Court directed forensic verification of appellant's signatures, but Punjab Forensic Science Agency could not conclusively determine genuineness due to insufficient specimen signatures---Court observed that appellant's conduct, including failure to facilitate signature verification, led to an adverse inference against him---Execution of agreement was established, and substantial performance was found through payment of earnest money and transfer of US$ 42,000/- to appellant's bank account---Held, specific performance is an equitable relief, and Court must determine which party is avoiding contractual obligations---Where agreement stands proved and substantial performance is shown, discretion may be exercised in favor of enforcement---Respondents directed to deposit Rs. 45,500,000/- as balance consideration within two months. (b) Qanun-e-Shahadat Order, 1984 ----Arts. 17 & 79---Proof of documents---Forensic verification---Failure to provide sufficient specimen signatures---Adverse inference against appellant---Where appellant failed to cooperate in verification of questioned signatures on payment receipts and did not contest credited bank transactions, presumption of authenticity of agreement arose in favor of respondents. (c) Civil Procedure Code, 1908 (V of 1908) ----O. XLI, R. 25---Additional issue framed at appellate stage---Reference to Trial Court for factual determination---Appellate Court exercised power under O.XLI, R.25, CPC, directing Trial Court to refer disputed receipts for forensic examination---Trial Court's report inconclusive due to lack of specimen signatures---Held, appellant's conduct in avoiding verification justified drawing of an adverse inference against him. (d) Property Law---Joint ownership---Partition---Decree for specific performance operating on co-owned property---Appellant's step-brother (Respondent No.6) contended that suit property was jointly owned and required partition before transfer---Held, decree shall operate only to the extent of appellant’s share, with proper partition proceedings to be undertaken by the Executing Court to determine the extent of divisible property before effecting transfer. (e) Transfer of Property Act, 1882 ----S. 53-A---Doctrine of part performance---Equitable title---Possession under an agreement to sell---Limitation---Where a transferee in possession under an agreement to sell faces threats to his possession from the transferor or a third party, he may file a suit to defend his equitable right to possession under S. 53-A, Transfer of Property Act, 1882---Held, right to retain possession is an existing right that does not lapse merely due to limitation---A transferee in possession may seek permanent injunction to protect his possession, and the Court may also direct execution of the sale deed to finalize the transaction and avoid future litigation---Reliance placed on Muhammad Nawaz Magsi v. Illahi Bux (2010 CLC 407), Ahmed Mujtaba Khan v. Iqbal Shah (1990 CLC 1381), and Inayat Ullah v. Shah Muhammad (PLD 1961 Lah. 372). Disposition: Appeals disposed of in modified terms---Respondents directed to deposit balance consideration within two months; decree to operate only on appellant's share.

Summary: ----Ss. 2(d), 2(e), 9, 7 & 22---Contract Act (IX of 1872) Ss. 20 & 65---Terms "finance" and"obligation" under Financial Institutions (Recovery of Finances) Ordinance, 2001---Scope---Facility/Agreement of Finance---Mistake as to a matter of fact, essential

Summary: Background A contractual agreement was executed between the appellant and the respondent on December 16, 2011, under which the appellant was to provide services to the respondent. The contract was terminated on March 19, 2012, leading to a settlement agreement where the respondent agreed to pay Rs. 43,500,000 to the appellant. Of this amount, Rs. 37,582,843 was paid, leaving a balance that the appellant claimed was unpaid. The respondent, in reply to the appellant's legal notice, argued that the balance amount had already been adjusted. Subsequently, the appellant filed a winding-up petition under Sections 305 and 306 of the Companies Ordinance, 1984, asserting the respondent’s inability to pay the alleged outstanding amount. -----Issues: 1- Was the respondent company commercially insolvent and liable to be wound up under Section 305 of the Companies Ordinance, 1984? ----2- Did the appellant’s claim meet the criteria of an undisputed and definite debt necessary to initiate winding-up proceedings? -----Holding/Reasoning/Outcome: The court dismissed the appeal, ruling that the respondent company was solvent and not liable for winding up. The appellant failed to demonstrate the respondent’s inability to pay its debt. The respondent provided cheques for the claimed amount and financial documents proving solvency. The debt claimed by the appellant was disputed, which disqualifies it from being treated as a valid basis for a winding-up petition under Section 306 of the Companies Ordinance, 1984. A winding-up petition is not an alternative remedy for recovering disputed debts; such disputes should be resolved through civil suits. The company’s financial position, as evidenced by its audited financial statements and balance sheets, indicated it had not lost its substratum and was capable of meeting its liabilities. Outcome: The appeal was dismissed without costs, as the appellant failed to substantiate its claim of the respondent’s insolvency. -----Citations/Precedents: Section 305, Companies Ordinance, 1984: Establishes that a company can be wound up for its inability to pay debts. Section 306, Companies Ordinance, 1984: The company must be indebted for a definite and undisputed amount. If the amount is disputed and evidence is required to resolve it, the company cannot be deemed indebted.

Summary: (a) Civil Procedure Code (V of 1908) –– O.VII, R.11 –– Rejection of plaint –– Scope –– Suit for rendition of accounts –– Maintainability in presence of contractual relationship Where parties are in a contractual relationship, a suit for rendition of accounts is not maintainable unless a fiduciary relationship exists or a statutory obligation provides otherwise. The mere fact that a party does not know the exact amount allegedly owed does not create a legal right to demand accounts. In the present case, the plaintiff sought rendition of accounts against a bank in the absence of any fiduciary relationship. The Court held that a contractual debtor-creditor relationship is not sufficient to sustain such relief. —Plaint rejected under O.VII, R.11, C.P.C. (b) Civil Procedure Code (V of 1908) –– O.XX, R.16 –– Rendition of accounts –– Scope limited to pre-existing legal right –– No independent cause of action created Order XX, Rule 16 provides procedural guidance for account-taking where a right to such rendition already exists; it does not itself confer a substantive right to claim accounts. Courts may order rendition of accounts only in specific relationships (e.g., trustee-beneficiary, principal-agent, co-sharers, Karta and coparcener), and not in cases of ordinary contractual dealings. —Held, no cause of action disclosed to warrant rendition of accounts. (c) Res Judicata –– Previously adjudicated claim –– Decree passed in cross-suit –– Effect Where the opposing party (Standard Chartered Bank) had already obtained a decree in a cross-suit (COS No.71 of 2012) which involved the same transactions, and the defence raised in the present suit had already been dealt with and rejected in the earlier litigation, the subsequent suit is barred by res judicata. The Court is competent to take judicial notice of the prior judgment and decree. —Subsequent suit barred; plaint rejected accordingly. (d) Interpretation of O.VII, R.11 –– Determination limited to contents of plaint –– Exception in case of preliminary issue While the general principle under O.VII, R.11, C.P.C. is that rejection of plaint must be based solely on the averments in the plaint, an exception arises where a preliminary issue is framed and determined by the Court. In the instant case, maintainability had been framed as a preliminary issue and the Court was, therefore, justified in considering prior proceedings and judgment in COS No.71 of 2012. —Contention repelled; rejection of plaint upheld. Cited Cases: • Haji Abdul Kareem v. Messrs Florida Builders (Pvt.) Ltd. PLD 2012 SC 247 • Messrs Friend Engineering Corporation v. Govt. of Punjab 1991 SCMR 2324 • Narandas Morardas Gajiwala v. SPAM Papammal AIR 1967 SC 333 • K.C. Skaria v. Govt. of Kerala AIR 2006 SC 811 • Messrs Babar Sewing Machine Co. v. Trilok Nath AIR 1978 SC 1436 Disposition: Application under O.VII, R.11, C.P.C. allowed; plaint rejected.