IN THE SUPREME COURT OF PAKISTAN 
(Appellate Jurisdiction) 
 
 
PRESENT: 
 
 
MR. JUSTICE MIAN SAQIB NISAR  
MR. JUSTICE SH. AZMAT SAEED 
MR. JUSTICE MUSHIR ALAM 
 
 
CIVIL APPEAL NO.1890 OF 2002   
(Against the judgment dated 24.8.2001 of the High 
Court of Sindh, Karachi passed in Constitution Petition 
No.D-1807/1999) 
 
 
Government of Sindh through Secretary & Director General, Excise & 
Taxation and another 
 
…Appellant(s) 
VERSUS 
Muhammad Shafi etc. 
 
 
…Respondent(s) 
 
 
 
For the appellant(s): 
Mr. Qasim Mirjatt, Addl. A.G. Sindh 
 
 
For respondent No.1: 
Mr. M. Bilal, Sr. ASC 
 
For respondent No.3: 
 
Mian Qamar-uz-Zaman, ASC 
Raja Abdul Ghafoor, AOR 
 
Date of hearing: 
16.03.2015 
  
 
JUDGMENT 
 
 
MIAN SAQIB NISAR, J.- This appeal, with the leave of the 
Court dated 23.12.2002, involves two primary propositions, namely:- 
 
a) 
Whether under Section 4(a) of the Urban Immovable Property Tax Act, 1958, 
the property owned by the Evacuee Trust Property Board which is in 
possession of respondent Muhammad Shafi, is exempted from the tax? 
 
b) 
Whether the learned High Court had rightly applied the principle of law 
discussed by this Court in the case of Mehran Associates Ltd. Vs. 
Commissioner of Income Tax, Karachi {(1992) 66 Tax 246(S.C.Pak)}? 
 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 2 :-
2.  
 
Brief facts of the case are:- the property(ies) in question 
bearing Nos. RC 1/12 and RC 10/12 were admittedly owned by 
respondent No.3/Evacuee Trust Property Board (The Board). The Board 
leased out these properties to respondent No.1, Muhammad Shafi, for 
a period of 30 years with the right to raise superstructure (construction) 
over the said land/plot and to let out the constructed property (the 
property). And upon expiry of the lease period, such constructed 
property was to revert back to the Board, forming part of its 
ownership.  
The appellant is the property tax department, which claims 
property tax on the property on the ground that as the property has 
been leased out by the Board, therefore it does not fall within the 
exemption category, as has been provided (granted) to the Federal 
Government properties under the law. This action/demand of the 
appellant when challenged by respondent No.1 has been declared 
contrary to law by the learned High Court vide impugned judgment 
dated 24.8.2001. Leave in this case was granted on the two points, 
referred to in the preceding part of this judgment.   
3.  
  
In order to appreciate the arguments made before us, it is 
expedient to reproduce the provisions of Sections 3 and 4 of Urban 
Immovable Property Tax Act, 1958 (The Act)  and the clauses 1, 2, 3, 9,   
11, 13 and 16 of the lease agreement dated 30.7.1983 (the lease deed) 
which read as under:- 
Relevant sections of the Act 
“3.  
Levy of tax. (1) Government may by notification specify urban 
areas where tax shall be levied under this Act. 
  
Provided that one urban area may be divided into two or more 
rating areas or several urban areas may be grouped as one rating 
area. 
(2) The tax shall be charged, levied and collected at the rate of 
twenty percent of the annual value of the lands and buildings.  
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 3 :-
(3AA)The tax under sub-section (2) shall also be levied and 
collected on buildings and lands used partly or exclusively for 
industrial purposes in the industrial areas of Dhabeji Gharo and Kotri 
as are within urban area. 
[(3B)*****] 
 
 
[(4)  *****] 
 
 
(5) 
The tax shall be due from the owner of buildings and 
lands.  
4.  
Exemptions.— The tax shall not be leviable in respect of the 
following properties, namely:— 
(a) buildings and lands, other than those leased in perpetuity, vesting 
in the Federal Government; 
(b) buildings and lands other than those leased in perpetuity. 
(i) Vesting in any Provincial Government and not 
administered by a local authority; 
(ii) Owned or administered by a local authority when used 
exclusively for public purposes and not used or intended to be 
used for purposes of profit; 
 
(c) 
. . . . . . . . . . . . . . . . . . . . . . . .  
 
(d) 
. . . . . . . . . . . . . . . . . . . . . . . .  
 
(e) 
. . . . . . . . . . . . . . . . . . . . . . . .  
 
(f) 
. . . . . . . . . . . . . . . . . . . . . . . .  
 
(g) 
. . . . . . . . . . . . . . . . . . . . . . . .  
 
 
Relevant clauses of the lease deed are:- 
 
(1) 
That the lease money payable by the Lessee has been fixed on 
the basis of assessment of rent made in the year 1964 at Rs. 
4,000/- per month subject to enhancement by 25% after every 
five years. (Increase in rent)  
 
(2) 
That the lease period is 30 years with effect from 30th July, 
1983 after the expiry of this period the property alongwith the 
superstructure etc. shall vest in the Lessor and become the 
property of the Evacuee Trust Property Board without 
payment of any compensation whatsoever to the Lessee. The 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 4 :-
period of lease can be extended by the Lessor for another 
period of 30 years on such terms and conditions as laid down 
by the Lessor and agreed upon by the Lessee. (fixed term and 
return of property)  
 
(3)  
That the Lessee shall pay the lease money at the rate of 
Rs.4,000/- per month with effect from 1.1.1964 and the arrears 
shall be paid by the Lessee in 36 monthly installments. 
 
(9) 
That the Lessee shall be entitled to raise new construction  
(Commercial/residential, permissible) on the plot but only 
with the prior approval of the Chairman, Evacuee Trust 
Property Board, and the local competent authority.  
 
(11) 
That the Lessee shall have no right to sublet or sublease the 
demised property or any portion thereof except with the prior 
approval of the Administrator concerned and the period of 
lease/tenancy so granted shall not exceed the period of lease 
specified in this Agreement i.e. 30 years. The Administrator 
shall decide the question of approval within seven days.  
 
(13) 
That the Lessee shall have no right to mortgage, alienate or in 
any manner encumber the property except the right granted by 
the Agreement of Rent our or Lease out the premises.  
 
(16) 
That in case of breach of any of the conditions as aforesaid 
the lease shall be liable to be cancelled by the Lessor and the 
eviction shall be caused under the provisions of the Evacuee 
Trust Properties (Management and Disposal) Act, 1975. 
 
(termination clause) 
 
 
 
 
 
4. 
 
It has been argued by the learned Additional Advocate 
General, Sindh that as the lease deeds, executed for an initial period of 
thirty years, could also have been extended for a further period of 
thirty years, the lease of the property to respondent No. 1 was, in fact, 
a lease in perpetuity and, therefore, the tax was leviable thereupon. It 
is submitted that the property vested in respondent No.1/lessee, who 
has raised his own superstructure, and consequently, the view set out 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 5 :-
by the Courts below that it falls within the exempted properties is 
erroneous and illegal.  
The learned counsel for respondent No. 3/Board, however,  by 
making reference to Section 6 of the Evacuee Trust Properties 
(Management and Disposal) Act, 1975 and also Article 165 of the 
Constitution of the Islamic Republic of Pakistan, 1973 has submitted  
that Provincial legislation cannot levy tax upon the properties owned 
by the Federal Government. 
5. 
 
Heard. Before resolving the proposition(s) in hand, we may 
like to mention that the charging section in a fiscal statute,  as per the 
settled law, demands its strict interpretation and application in so far 
as the revenue is concerned, but where it is susceptible to two possible 
interpretations,  it should be liberally construed in favour of the tax 
payer/citizen; particularly, where there is substantial doubt about the 
true import and application of a charging section, it (the doubt) should be 
resolved in favour of the tax payer/citizen1. Anyhow, from the relevant 
provisions of the Act, provided above, there seems wee room for 
holding otherwise than that the properties which are owned by the 
Federal Government are exempted and thus cannot be subjected to 
property tax. In the instant case, it is not disputed by the appellant 
that the property is owned by the Board and if it was not leased out 
(allegedly in perpetuity), it would fall within the ambit of the Federal 
Government properties and shall be exempted from property tax under 
Section 4 of the Act.   
6.  
 
The ancillary proposition which would arise in the matter 
shall be, whether the properties in question have been leased out by 
respondent No.3 to respondent No.1 in perpetuity or not as it has 
                                       
1 (1992) 66 Tax 246 SC Pak 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 6 :-
been specifically mandated in Section 4 that the exemption shall not 
be available to those property(ies) which have been given in perpetuity 
even by the Federal Government.  
7. 
 
In order to explore whether the present lease is a lease in 
perpetuity, we have examined the provisions of the Act and find that 
neither it defines the same (lease in perpetuity) nor any other part of it 
throws some light on this subject. Therefore, in order to ascertain the 
meaning and the concept thereof, we have looked at the Transfer of 
Property Act, 1882 (TPA), which is the general law dealing with, inter 
alia, the subject of leases. In this law, lease has been defined in 
Section 105 of the TPA, which reads as:- 
“A lease of immovable property is a transfer of a right to enjoy 
such property, made for a certain time, express or implied, or in 
perpetuity, in consideration of a price paid or promised, or of 
money, a share of crops, service or any other thing or value, to be 
rendered periodically or on specified occasions to the transferor 
by the transferee, who accepts the transfer on such terms.”  
 
With respect to how a lease is made, Section 107 of the TPA prescribes 
as below:- 
“107. Leases how made.      A lease of immovable property from 
year to year, or for any term exceeding one year, or reserving a 
yearly rent, can be made only by a registered instrument. 
 
All other leases of immovable property may be made either by 
a registered instrument or by oral agreement accompanied by 
delivery of possession. 
 
Where a lease of immovable property is made by a registered 
instrument, such instrument or, where there are more instruments 
than one, each such instrument shall be executed by both the lessor 
and the lessee: 
 
Provided that the Government may, from time to time, by 
notification in the [official Gazette], direct that leases of 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 7 :-
immovable property, other than leases from year to year, or for any 
term exceeding one year, or reserving a yearly rent, or any class of 
such leases, may be made by unregistered instrument or by oral 
agreement without delivery of possession.” 
 
8.  
 
In Section 105 ibid, though there is a mention of a lease in 
perpetuity, we feel handicapped and are unable to ascertain its  true 
meaning as neither the exact connotation thereof, nor the concept, 
factually and/or legally, of such lease (lease in perpetuity) can be  spelt out 
and unfolded therefrom. Thus for the purposes of elucidating and 
comprehending such a lease, it shall be appropriate to give the key 
word/expression perpetuity, its ordinary meaning. Franklin language 
master (dictionary) defines it as endless time, eternity, the quality or the 
state of being perpetual. According to Oxford Dictionary, perpetuity 
means, the State or quality of lasting forever. The expression 
perpetuity has been defined in the Black’s Law Dictionary as “the state of 
continuing forever; an inalienable interest; an interest that does not take effect or vest within 
the period prescribed by law”.  
9. 
 
From the above, it is clear that the word perpetuity, 
without much difficulty and improvisation, can also be construed in 
the sense of permanence and therefore a lease in perpetuity can be 
held to be a transaction of immovable property which is irreversible or 
non-returnable. But the question is how it should be ascertained and 
adjudged if a particular lease is in perpetuity or otherwise. To our 
mind, in this regard, no precise criteria can be fixed. This is so 
especially for the period prior to the coming into force of the TPA and 
the Registration Act, 1908, because in those days (prior to the two 
enactments) leases were usually made orally and due effect was given in 
the revenue record in different expressions. The determination of the 
aforementioned question for leases executed during such time, thus, 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 8 :-
would revolve around the terms and conditions orally settled between 
the parties and so proved, including the interpretations of the entries 
in the revenue record, the conduct of the parties while dealing with the 
property, the object and the nature of the lease including the 
entitlement of the lessee to raise structure over the property and also 
the terms relating to the payment of rent and its periodical 
enhancement thereof etc. Multiple factors would be relevant in this 
regard (note: in view of and subject to the provisions of Section 117 of the TPA, this opinion 
should not be construed to relate to agricultural properties; even otherwise the subject matter 
of the present case is Urban Properties and, therefore, we are confining ourselves to that 
effect only).  
After the enforcement of the two enactments referred to above, 
however, the question of determination of whether a lease is one in 
perpetuity or not stands simplified. Section 17 of the Registration Act 
ibid mandates certain instruments to be compulsorily registerable and 
Sub-Section (d) of Section 17 provides in the list of such documents “a 
lease of immovable property from year to year, or for any term exceeding one year, or 
reserving a yearly rent”. The effect of non-registration of such instruments 
is provided by Section 49 of the Registration Act in the manner:- 
“49. 
Effect of non-registration of documents required to be 
registered. No document required to be registered under this Act 
or under any earlier law providing for or relating to registration 
of documents shall – 
(a) 
operate to create, declare, assign, limit or extinguish, 
whether in present or in future, any right, title or interest 
whether vested or contingent, to or in immovable 
property, or 
(b) 
confer any power to adopt, unless it has been registered.” 
 
Similarly it is clear from Section 107 of TPA that a lease of any 
property beyond one year could only be effected by a registered 
instrument (note:- subject to the exemption qua other leases orally made coupled with 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 9 :-
delivery of possession). This is the express and unequivocal mandate of 
the law. It is settled principle of law that where law requires an act to 
be done in a particular manner, it has to be done accordingly and not 
otherwise. At this point, we may also add that if an act is done in 
violation of law, the same shall have no legal value and sanctity, 
especially when the conditions/circumstances which may render such 
an act invalid have been expressly and positively specified in law (see 
Section 49 ibid). 
10. 
 
Be that as it may, to further shed light on the above 
proposition, we deem it proper to discuss relevant legal material and  
case law available on the subject and to start with, the comments 
made in the book titled Transfer of Property Act, 9th Edition by Mullah; 
(a renowned law scholar and researcher of the Subcontinent) may be referred to. The 
author while dealing with the subject opines:- 
“Leases in perpetuity. – In India, such a lease is created either by 
an express grant or by a presumed grant. Such leases are 
generally agricultural leases or they are leases executed before 
the Transfer of Property Act. As s 107 of the Transfer of Property 
Act excludes the Agricultural lease from the operation of the Act. 
 
 
 
Express grant 
 
Words which suffice by themselves to import permanency 
are – miras or mirasdar; mourasi; mulgni; nirantar; patnr, so 
also, words indicative of a heritable grant such as Ba Farzandan 
or Naslan bad Naslan. The words istemari mourasi mokurari in a 
lease mean permanent and heritable. The tenancy created by a 
taluka putta is presumed to be permanent unless there are 
indications to the contrary in the surrounding circumstances. 
 
On the other hand, the following words are not per se 
sufficient to import permanency of tenure Paracudi and Ulavadi 
Mirasidar; Mokarari; Istemari Mokarari; Kyam and Saswatham 
Mukkaddami. But these words do not exclude the notion of 
permanency, and when they occur, their effect is a matter of 
construction having regard to the other terms of the instrument, 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 10 :- 
the object of the lease, the circumstances under which it was 
granted and the subsequent conduct of the parties. Such 
considerations may show that a bemiadi lease, that is, a lease 
without, a term, is a permanent lease. Where a contract of lease 
provided that the tenant was to continue in possession as long as 
he paid rent, it was a tenancy for the lifetime of the tenant and not 
a permanent tenancy. 
 But a tenancy, though permanent in its inception, ceases 
to be permanent, if the tenant executes rent deeds for a specified 
period and admits his ability to ejectment and enhancement of rent  
(emphasis supplied by us).” 
 
In the commentary on TPA by Shaukat Mehmood, while 
analyzing various case laws, mostly from Indian Jurisdiction, the 
author has remarked as under:- 
“Where the terms of a lease showed that if was (a) a lease for 
building purposes; (b) it was to enure, in the first instance for a 
period of thirty years; (c) the lessee had a right to continue to 
enjoy all the rights under the lease even after the expiry of the 
initial period of thirty years; (d) the rent was fixed and the lessor 
had no right to increase it in any manner; (e) the rights of the 
lessee were heritable and transferable and the lessee was allowed 
to construct a pucca structure thereon and even after the death of 
the original lessee his heirs were allowed to continue without 
demur and rent was accepted from them. It was held that in view 
of the terms of the lease as a whole and taking into account the 
conduct of the parties, the lease was intended to be a permanent 
lease.” 
 
In a case reported as Lala Suraj Bhan and others Versus Hafiz 
Abdul Khaliq (AIR 1941 Lahore 195) it has been held “even if the 
tenancy is at its inception a permanent tenancy, it becomes no longer a permanent 
tenancy if the tenant or his predecessor-in-title executes rent deeds for specified 
periods of time and admits his liability to ejectment  and enhancement of rent”. (See 
also AIR 1927 PC 102, which has relevance to the point). 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 11 :- 
In Bejoy Gopal Mukherji Versus Pratul Chandra Gose (AIR 
1953 SC 153), it has been held:- 
 
“The question of permanency of the tenancy was not, therefore, 
directly or substantially in issue. We find ourselves in agreement 
with the High Court that the permanency of tenure does not 
necessarily imply both fixity of rent and fixity of occupation. The 
fact of enhancement of rent in 1859 may be a circumstance to be 
taken into consideration but it does not necessarily militate 
against the tenancy being a permanent one, as held by the Privy 
Council in the case of an agricultural tenancy in Shankarrao v. 
Sambhu, A.I.R. 1940 P.C. 192(B). The principle of that decision 
was applied also to non-agricultural tenancies in Jogendra 
Krishna v. Sm. Subashini Dassi, A.I.R. 1941 Cal. 541(C). In 
Probhas Chandra v. Debendra Nath, 43 Cal. W.N. 828 (D) also 
the same view was taken. We, therefore, hold that the plea of res 
judicata cannot be sustained.  
[4] Shri N. C. Chatterjee then contends, relying on the 
decisions in Rasamoy Purkait v. Srinath Moyra, 7 Cal. W. N. 132 
(E); Digbijoy Roy v. Ata Rahman, 17 Cal. W. N. 156(F); 
Satyendra Nath v. Charu Sankar, A.I.R. 1956 Cal. 100(G) and 
Kamal Kumar v. Nanda Lal, A.I.R. 1929 Cal. 37(H) that the 
tenancy in this case cannot be regarded as a permanent one. The 
decisions in those cases have to be read in the light of the facts of 
those particular cases. The mere fact of rent having been received 
from a certain person may not, as held in 7 Cal. W. N. 132(E) 
(supra) and 17 Cal. W. N. 156 (F) (supra), amount to a 
recognition of that person as a tenant. Mere possession for 
generations at a uniform rent nor construction of permanent 
structure by itself may not be conclusive proof of a permanent 
right as held in A.R.P. 1929 Cal. 37 (H) (supra) but the cumulative 
effect of such fact coupled with several other facts may lead to the 
inference of a permanent tenancy as indicated even in the case of 
A.I.R. 1936 Cal. 100 (G) (supra) on which Shri N. C. Chatterjee 
relies.” 
 
In Bastacolla Colliery Co. Ltd. Versus Bandhu Beldar and 
another (AIR 1960 Patna 344), it was held that the mere fact that a 
building has been erected on a leased land and portions of the same 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 12 :- 
have been sold off to others who also have built structures thereupon 
will not enable Court to hold the lease to be one in perpetuity. In the 
same judgment, it was held that if the meaning of the words used in 
the deed is not ambiguous, the Court has to confine itself to the words 
used in the lease instrument for deciding in support or otherwise of a 
permanent lease.  
From our jurisdiction, we have a judgment reported as Abdul 
Hafeez alias Bacha Meah Versus Arshad Ali Chaudhry and others 
(PLD 1967 Dacca 145), in which it has been held:- 
  
“It is evident from the terms of the lease, as stated above, that it is 
a lease for a fixed term and not a lease in perpetuity. A lease in 
perpetuity is unknown to English law. In this country a lease in 
perpetuity can be created by an express grant to that effect or by a 
necessary presumption raised by the terms of a grant and by an 
unambiguous and long possession. In this particular case there 
can be no manner of doubt that the lease was for a fixed period 
and not a lease in perpetuity within the meaning of the Transfer of 
Property Act.”  
 
In Dr. Aman Ullah Khan Versus Province of NWFP through 
Secretary, Finance, Government of NWFP Peshawar and 2 others 
(1994 MLD 2329), where a time had been fixed for the determination 
of lease, it was ordained that such (lease) cannot be said to be a lease in 
perpetuity in the following terms:- 
 
A “lessee in perpetuity” in the light of the actual connotation of 
the word and also in light of Dictionary meaning of the word 
perpetuity, means and refers to a state of being perpetual; endless 
time: duration for an indefinite period; something lasting for ever; 
an agreement whereby property is tied up, or rendered 
inalienable, for all time or for a very long time. The petitioner-
plaintiff seems to be intelligently advised when one looks at the 
rent deed or deeds on file which he executes with the Municipal 
Committee for a period of one year only. By no stretch of any 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 13 :- 
possible imagination the rent deed executed by the petitioner can 
be termed as deeds of a “lease in perpetuity”……So far as his 
construction of the superstructure is concerned, this by itself does 
not make him an absolute owner. It was for the Municipal 
Committee to have made him, through writing a “lessee in 
perpetuity” of the land as well as the superstructure. Only then 
Dr. Amanullan petitioner would be or would have been liable to 
pay the tax of the land as well as the superstructure, being “lessee 
in perpetuity” and hence owner within the meanings of section 
2(e) and 3(3) of the Act (Urban Immovable Property Tax Act, 
1958).”  
 
11. 
 
From the analysis of the legal material on the subject and 
the case law, referred to above, we are of the considered view that no 
hard and fast rules can be laid down so as to determine what exactly is 
a lease in perpetuity and the answer to this question depends upon 
the facts and circumstances of each case. But we have conspicuously 
noticed one single most important factor in relation to this subject 
matter which is that in none of the materials/decisions have the 
provisions of the TPA or the Registration Act been adverted to or the 
effect of such mandate of law been considered. But these provisions 
unmistakably, in our opinion, are of great importance and relevance 
and are foundational for determining whether a lease is one in 
perpetuity or otherwise. 
From the reproduced part of the two statutes above, it is 
abundantly and unequivocally clear that no lease in Pakistan (note: 
subject to Section 117 of the TPA and leaving aside for the time being even Section 17 (d)  of 
the Registration Act relating to agricultural properties) can be effected beyond the 
period of one year except by a registered instrument and if any lease is 
not so accomplished, it has no legal validity and sanction beyond the 
period of one year and would neither create nor purport  to create any 
lease for the period exceeding one year (see Section 49 ibid). Therefore, on 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 14 :- 
account of this clear mandate and compulsion of law, no lease which 
is not in consonance with these imperative provisions can at all be 
said or held to be permanent in nature under any circumstances 
whatsoever. It shall be ridiculous and ludicrous to conceive and hold, 
on account of the said law, that a lease which is for a period of less 
than one year is one in perpetuity only for the reason that the 
instrument of lease or even verbal stipulation between the parties 
enables the lessee to raise some structure of permanent nature or the 
lease is capable of being renewed or could be further transferred to a 
third party.   
12. 
 
Therefore, in our view, if the lease is through an 
unregistered instrument, there is no question at all about it being in 
perpetuity. But where it has been created by a registered lease 
document, determination of whether it is permanent in nature or not, 
will depend on the interpretation of the lease deed. Such interpretation 
shall obviously be done keeping in view the known rules for the 
interpretation of the statues as a contract between the parties is a 
piece of private legislation and the primary function of the law is 
facultative leaving the parties to make their own contract on terms of 
their choice. It is treated as a piece of private legislation and the 
function of the Court is merely to resolve a dispute arising between the 
parties for the actual operation of the contract2.   
Therefore from the language of the lease document, when it is 
clear that the tenancy is for a fixed period of time, even if it (the deed) 
contains a clause for renewal, but such renewal is left at the option of 
the lessor, the lease cannot be held to be permanent in nature. The 
fact that the lessee has been allowed to raise construction over the 
                                       
2 Interpretation of Contract, Second Edition by M.A. Sujan 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 15 :- 
property of a permanent nature and to even sub-let/sublease the same 
specifically where the same is subject to the consent/approval of the 
lessor, by itself shall not be a factor for holding a lease to be one in 
perpetuity.  
  
It may be pertinent to mention here, that for construing a 
contract of lease in ascertaining its permanency or not, object for 
which the lease has been granted shall also be germane and 
important. Where a lease of the property has been given by the lessor 
to the lessee for a particular and a specific purpose, but no time is 
fixed, for all intents and purposes it shall be an object specific lease, 
which means that the purpose/object should be considered as the 
time/period fixed by the parties for the determination of the lease and 
thus the moment the purpose is achieved and accomplished, the 
purpose shall be held to have extinguished (come to an end). Therefore, the 
lease which at its very inception may have been perceived to have 
some overtones of permanency in its nature, regardless of whether a 
period has been fixed or not, such lease even if construed to be 
permanent on the basis of its object/purpose initially, shall 
automatically come to an end when the object of the lease is 
extinguished; even if the lessee under the terms of lease has raised the 
construction as such structure shall either be treated as an accretion 
to the original leased out property and would go to the lessor or the 
lessor has to compensate the lessee for such construction, but this 
depends upon the facts and circumstances of each case and on the 
basis of the terms and conditions settled  between the parties.  
The point which needs emphasis is:- that once the purpose of 
the lease is  finally achieved and the purpose for which the property 
was leased out comes to an end, the lease which may at its inception 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 16 :- 
have some colors of perpetuity shall also end with it and the lease 
shall then be rendered to be that of “holding over” entitling the landlord 
to determine/terminate the lease and ask for the vacation of the leased 
property.  
13. 
 
Now, reverting to the facts and circumstances of the 
present case, for the purposes of evaluating if the lease in question is 
perpetual or otherwise. We have conspicuously noticed that in clause 
2 of the lease deed, the period of lease has been mentioned to be thirty 
years with effect from July, 1983 and on the expiry of the lease period 
the superstructure raised by the lessee (respondent No.1) shall vest with 
the Board without payment of any compensation whatsoever to the 
lessee. This condition is quite cardinal and pivotal for determination of 
the nature of the lease, in that, it is not perpetual, rather the return of 
the superstructure in the ownership of the Board makes the lease in 
the nature of a Build, Operate and Transfer (BOT) contract.  
  
Besides, respondent No.1 is not free to raise construction at his 
own free will, but only with the prior approval of the Chairman. The 
subletting/sub-lease of the constructed property has also been 
subjected to the approval of the concerned Administrator and in any 
case, such sub-lease cannot travel beyond the period of thirty years 
i.e. the original lease period. The rights of the lessee have been 
restricted in that, he shall neither mortgage nor alienate or encumber 
the leased out property. Moreover, it is clearly and unequivocally 
stipulated that breach of any of the conditions of the lease shall make 
the lease liable to be cancelled at the prerogative of the lessor and the 
lessor shall have authority to evict the lessee under the provisions of 
Evacuee Trust Properties (Management and Disposal) Act, 1975.  
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 17 :- 
When all these stipulations of the lease deed are read as a 
whole, these militate against the concept of lease in perpetuity. Only 
for the reason that there is a clause for renewal for a further period of 
thirty years, regardless of whether renewal has been factually granted 
or not, which otherwise seems to be the exclusive privilege of the 
Board and respondent No.1 cannot claim it as a matter of right, this 
lease cannot be held to be one in perpetuity. We are thus of the 
considered view that the instant lease inter se the Board and 
respondent No.1 is not in perpetuity and, therefore, the appellant has 
no lawful authority to demand/levy property tax from the said 
respondent in terms of the provisions supra.   
  
Besides the judgment reported as Mehran Associates Ltd. (supra) 
is distinguishable on its own facts. It may be pertinent to mention here 
that in the same, the question of ownership of lease property was 
being considered, conceived and dilated upon in light of the law on 
income tax and not vis-à-vis the specific provisions of Section 4(a) and 
the concept of lease in perpetuity which has been now elucidated 
comprehensively in this opinion.  
14. 
 
Before parting with this judgment, it may be mentioned 
that as we have decided this appeal on points having nexus to the 
leave granting order, we therefore deliberately refrained ourselves from 
making any comments regarding points raised by the learned counsel 
for the Board in relation to Section 6 of the Evacuee Trust Properties 
(Management and Disposal) Act, 1975 and also Article 165 of the 
Constitution of the Islamic Republic of Pakistan, 1973 which (points) 
shall be considered in some other appropriate case. Moreover, this 
opinion  shall also neither apply nor be relevant for the grants and the 
leases pertaining to and made in the cantonment areas, or border 
C.A.1890 of 2002 & C.M.A.776 of 2003 (1) 
-: 18 :- 
areas etc., as we do not have the privilege and advantage of examining 
such transactions and the relevant law, the rules and the policies 
applicable thereto and under which those (leases) have been given.   
15. 
 
In light of the law discussed above, we do not find any 
merit in this appeal, which is hereby dismissed. 
  
  
JUDGE 
 
 
 
JUDGE 
 
 
 
JUDGE 
 
Announced in open Court 
on  
 
at  
 
 
Approved for reporting 
Ghulam Raza/*