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Jurisdiction lost with passage of time – I

The following is provided in sub-section (2) of section 33 in Pakistani Federal Excise Act, 2005: “Provided that such order shall be passed not later than one hundred and twenty days from the date of filing of appeal or within such extended period, not exceeding sixty days, as the Commissioner (Appeals) may, for reasons to be recorded in writing, extend.” In line with this, words appearing in Sales Tax Act, 1990 under sub-section (2) of section 45-B are:

“Provided that such order shall be passed not later than one hundred and twenty days from the date of filing of appeal or within such extended period as the Commissioner (Appeals) may, for reasons to be recorded in writing fix. Provided further that such extended period shall, in no case, exceed sixty days.” On the subject, section 129(4) of Income Tax Ordinance, 2001 reads:

“Provided that such order shall be passed not later than one hundred and twenty days from the date of filing of appeal or within an extended period of sixty days, for reasons to be recorded in writing by the Commissioner (Appeals).”

Section 193-A(3) of the Customs Act, 1969 is: “The collector (Appeals) may, after making such further inquiry as may be necessary pass an order, within ninety days from the date of filling of appeal or within such extended period as the Collector (Appeals) may for reasons to be recorded in writing, extend, confirm, modify or annul the decision or order appealed against:

Provided that such extended period shall not exceed ninety days unless the Board further extends at any time during the pendency of appeal.” Actions called for as follow-up or compliance of a court order can be categorised into “mandatory” or “directory”. Black’s Law Dictionary elaborates and exemplifies the two in the following terms:

“A “mandatory” provision in a statute is one the omission to follow which renders the proceeding to which it relates void, while a “directory” provision is one the observance of which is not necessary to validity of the proceeding. It is also said that when the provision of a statutes is the essence of the thing required to be done, it is mandatory, Kavanaugh vs. Fash, C.C.AOk1., 74 F.2d 435, 437; otherwise, when it relates to form and manner, and where an act is incident, or after jurisdiction acquired, it is directory merely.”

The word ‘merger’ is defined by Webster Comprehensive Dictionary as: “the extinguishment of a lesser estate, right or liability in a greater one”.

Interpreting these provisions of tax laws under reference as directory nullifies the provisions. They are of no effect, with effort to make them directory. Although this does not disturb their readability. However, this way, the provisions are turned surplus, of no effect. Usurpation of the public rights and inflicting injustice to the public or advantage to the delinquents sways that way.

An order holds the fort till the same is not zeroed or modified by a verdict handed down by a superior forum. Order passed by the higher (appellate) authority in an appeal is taken to have put at rest issues raised in the appeal or contentions unveiled up to appellate stage of the order contested. Presupposed is existence of two independent contentions – not necessarily in total opposition to each other. The one of which may extinct the other by absorption. Through operation of law a merger is accomplished. It is joining the procedural aspects of law and equity, the act of combining the two claims or contentions.

An absolute law provision must be obeyed exactly. Such law is mandatory. A directory law may be obeyed or fulfilled substantially. One has to look into the subject matter. He should register impact of the provision disregarded. Relation of the relevant provision to the general object intended to be secured should be focused. Benefit to the public by contravention in case of going by the provision, one must not overlook.

An order ceases to exist (in law) on issue of an order by a superior forum in adjudication of the lower authority’s pronouncement appealed against before that superior forum. Appealed against, the lower authority’s order is taken to have merged into order of the higher authority. This is what the ‘doctrine of merger’ is.

“Legal Terms & Phrases” by M. Ilyas Khan, Advocate Supreme Court of Pakistan, provides higher pedestal to the merging order. It reads:

“The primary meaning of the words ‘merge’ & ‘merger’ seems to be to sink or disappear in something else, to be lost to view or absorbed into something else, to become absorbed or extinguished, though at the same time; the word ‘merge’ also carries meaning of joining together, an addition, a combination of the qualities of one with another not a death but rather a marriage” – A & B Food Industries. Vs. CIT. 1992 SCMR 663 + PTD 1992 932.& Also PTD 1992 545.

“To merge” denotes to sink or disappear in something else, becoming swallowed, combined, absorbed, extinguished or lost to view. It is absorption of a thing of lesser importance by one of a greater importance, by which the lesser gives way to the more important. It is loss of individuality and identity of the lesser, extinguishing a right, estate or contract etc by absorption into another, to be sunk in greater title. Lesser ceases to exist but the greater is not increased. The doctrine of merger is not enshrined in constitutional law. It is not of universal or unlimited application.

What merges is the operative part. It is findings of the appellate authority which rein. In case appellate forum confines to findings of the sub-ordinate forum, such findings are taken as of the appellate forum. If there are grounds different than the sub-ordinate forum what emerges is operative part of the judgement in hand delivered by the appellate authority. It is not view of the sub-ordinate forum.

In orders of authorities, including courts, there may be no clear demarcation between facts and the decision. However, background and reasons are in the beginning. A decision is given in operative portion of the order. In case of a decree or order by the appellate or revisional authority, including a court, what emerges is decree or order of the higher authority, not necessarily rationale for the decision. The doctrine of merger is pressed into service to sustain and advance arguments of merger by the parties. Consequently, there has been a flood of case law, particularly in tax proceedings, dealing with the scope, purpose, effect and application or otherwise of the ‘doctrine of merger’.

On the filing of an appeal against it, finality of an order is put into jeopardy. The order appealed against does not merge elsewhere. It remains in limbo till an order deciding appeal by the aggrieved party surfaces. On a superior forum issuing judgement, order of the lower forum finally ceases to be actionable or efficacious. Findings and proceedings of the lower forum are taken to have lost identity, submerged into order of the superior forum. “In certain cases, the reasons for decision can also be said to have merged in the order of the superior court if the superior court has, while formulating its own judgement or order, either adopted or reiterated the reasoning, or recorded an express approval of the reasoning, incorporated in the judgement or order of the subordinate forum.” – “Supreme Court Words and Phrases” by Surendra Malik & Sumeer Malik (2012 Edition) – Page No 1108.

What comes out of the merger is operative part, expressed in repugnance or affirmation of operative part of the judgement or decision thrashed upon:

“When a decree or order passed by an inferior court, tribunal or authority was subjected to a remedy available under the law before a superior forum then, though the decree or order under challenge continues to be effective and binding, nevertheless its finality is put in jeopardy. Once the superior court has disposed of the lis before it either way – whether the decree or order under appeal is set aside or modified or simply confirmed, it is the decree or order of the superior court, tribunal or authority which is the final, binding and operative decree or order wherein merges the decree or order passed by the court, tribunal or the authority below. However, the doctrine is not of universal or unlimited application. The nature of jurisdiction exercised by the superior forum and the content or subject matter of challenge laid or which could have been laid shall have to be kept in view.” – (Corpus Juris Secundum, Vol. LVII, pp. 1067-68). – quoted in “Supreme Court on Words & Phrases” by Justice R. P. Sethi, Former Judge, Supreme Court of India (Edition-2004).

An interpretation which relegates the intent and purpose of the statute has to be avoided. Provisions of a statute should be so interpreted that due weight can be given to different sections of the same. Seeking intentions of the law makers and applying these to facts of the case in overall context and layout of the statute are the most accepted canons of interpretation of statutes. On filing appeal against it, the order appealed against acquires the statutes of sine die.

If appellate authority comes up with the order in appeal within the allowed time there is no problem. This is only when the appeal is declared to be a success or otherwise. Its outcome is written within the time provided. Trouble starts when order of the appellate authority does not surface within the time allowed. Stale is such order when issued after the mandated time. It turns stale because of non performance by the appellate authority within the prescribed time. In the event of non performance of the appellate system by non-release of an order within the time laid down by law, appellant cannot be made to suffer. Not only that he has not defaulted. After undergoing the ordeal in filing the appeal, he remained available to face rigor of proceedings of the appeal.

Working against the natural flow of justice or flouting dictates of logic cannot be attributed to the legislature. Position of an order which appears after expiry of the time limit for its dawning is clearly provided by the law. Declaring law provisions being discussed ‘directory’ is to say that these are surplus. These will turn, surplus due to their being rendered ‘non-effective’. One of the canons of interpretation is that surplusage has to be avoided.

On expiry of the period laid down by law for decision by a judicial or quasi judicial authority, ‘jurisdiction’ becomes irrelevant. It no more subsists in relation to a dispute time for giving an appeal order in relation to which time has run out. There is no way of acquiring or vesting a jurisdiction after that period. How can there be a judicial dispensation delivery of an order by or under the authority of a forum whose jurisdiction, had evaporated with expiry of the period allowed by law for the purpose? The old order fades on the filing of appeal against it by the aggrieved. Dispensation of an appeal, flowing after acquiring a wrong/self-assumed jurisdiction, cannot bring into being a lawful order.

Because of the appellant authority, before whom the appeal is filed, loosing jurisdiction, due to operation of the subsisting law or due to any other reason, a valid order in appeal cannot be passed. In such a situation there is none to lawfully argue against the appeal. With no one contesting the appeal, in a situation of coram non judice, appellant gains in terms of prayers in the appeal. The appeal gets a success.

But what about a case in which the authority, before whom the appeal is validly filed, fails to proceed in the matter. The corpse of appeal remains. This may be so due to change of law with reference to jurisdiction of the appellate authority or because of the fact that the action prayed before the appellate authority, through appeal or otherwise, becomes time barred. It may also be due to subsequent induction or dropping of a provision in the law. Appellate authority may become dysfunctional or the appellant forum may be abolished eg abolition of the post of Collector (Appeal) through amendment in sales tax law etc in FY 2000. What some would believe is that, in a situation likewise, the event of ‘time barring’ or infirmity of the authority charged to take-up the appeal will not affect the lower court’s order. They may believe that the order would remain intact, notwithstanding ‘limbo’ state of the appeal due to non-decision. Similarly, an order to the effect of presentation of appeals to the next higher forum would not be lawful.

It is argued that ‘sine die’ position of the order appealed against creeps in on the point of filing the appeal. Argument in support is that to the appellant a vested right accrues on his filing the appeal. He gets this due to and because of his waning rights he came to have in lieu of surrender of the order appealed against. He has to be heard. Contents of his appeal are required to be examined. Any order or rule seeking to overture, without his being given a hearing, will be hit by the rule audi alteram partem whereas the adjudication authority is already turned coram non judice. Therefore, to the extent of his prayer, if otherwise lawful, his appeal has to succeed, also because order of the adjudication forum turning a corpse, not remaining live or unable to act upon. It is only an order by a valid judicial forum which can be seized with the matter on the basis of a fresh presentation before it, if the law permits that in the wake of earlier appeal having attained the status of finality.

Appeal’s turning ‘stale’ during its pendency does not affect appellant’s right to having a judicial verdict. The appellant had no doing in turning his appeal stale. It was the appellate authority, a state functionary, not-deciding the matter in time – within the period it should have decided according to words of the law.

Since default on the part of the appellate authority is not caused by the appellant, the same should not adversely affect him. To get to the position of an honest stakeholder, he has done what was due on his part. There can be no rationale for his being dethroned from that position. The default has to go to debit of the party defaulting, the state, through the state’s functionary, if defendant in the case is the state, due to its inability to proceed with the petitioner’s appeal.

Adversely affected would be the state in terms of loss of revenue that could accrue to it by way of tax. Similar is the case in the event of change in law during pendency of the appeal, misplacement or loss of the case file in the office of the authority charged to hear the case. Such event is also not brought into being, not caused by an act of the appellant. As such due to these developments his expectation to have a favourable verdict is not doomed. If hearing to him does not take place, he has his booty. He can question a development which seeks to adversely affect his case, inter alia, in keeping also with the principle of audi alteram partem.

Qaisar Mufti, "Jurisdiction lost with passage of time – I," Business Recorder. 2016-07-30.
Keywords: Law and Humanities , Jury commissioners , Income Tax , Vested rights , Sustainable development , Human rights , Pakistan , SCMR , PTD , CIT