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Official Citation: 2024 CLC 1206
Court / Jurisdiction: Sindh High Court
Year of Decision: 2022
Decision Date: 2022-12-31
Parties: M/s. Meerut Cooperative Housing Society Ltd vs Shahid Akhtar Qureshi and JUDGMENT
Ruling Summary: This decision was rendered by the Sindh High Court on 2022-12-31, officially reported as 2024 CLC 1206. In this matter between M/s. Meerut Cooperative Housing Society Ltd and Shahid Akhtar Qureshi and JUDGMENT, the court adjudicated key questions of statutory construction, procedural regularity, and legal precedent under Pakistani law.
Core Holding: The honorable bench evaluated governing statutory provisions and judicial authorities to establish the rights of the parties, delivering the binding reasoning set out below.
Case cited as 2024 CLC 1206
Court Name: Sindh High Court Judge(s): Salahuddin Panhwar Title:M/s. Meerut Cooperative Housing Society Ltd vs Shahid Akhtar Qureshi and
JUDGMENT
Reported As: 2023 SHC 1120, 2024 CLC 1206 Result: Order Accordingly Judgment JUDGMENT SALAHUDDIN PANHWAR, J. While hearing this appeal, a legal question was raised that whether Cooperative Societies Act 1925 and amended in year 2020 (The Act) was enacted for the housing scheme(s) Accordingly, this bench with the consent of the parties decided to answer the legal issue with the assistance of respective counsel and the amici appointed by this Court. Henceforth, by order dated 04th September 2023, it was inter-alia observed that:- "Needless to mention that a bare perusal of Act, 1925 shows that act was not mainly meant for housing schemes, though this was only one aspect, whereby a segment of societies/persons pertaining to agriculture sector, having low income, were required to be facilitated through former (farmer) organizations and even banks were established for the loaning purpose to uplift them and housing aspects for them were linked with that object and not in isolation."
AMICUS REPORTS 2. Accordingly, since intrinsic questions of import of the Act, its essence and necessity were involved, therefore this court deemed appropriate to seek assistance of M/s Abad ul Hasnain, Muzamil Hussain Jalbani, Akash Gehani, Ms. Sara Malkani and Ms. Saira Shaikh Advocates, assisted this Court appointed as Amicus with regard to propositions as framed above. Needless to mention, that this proposition will not directly affect upon the merit of the case in hand, however, will examine the object and applicability of Acts 1925 and 2020 keeping in view its lack of enforcement in its letter and in sprit owing to lack of focus in its essence. The extract of the comprehensive reports of Amici reproduced hereunder:-
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3. Firstly, Mr. Muzammil Hussain Jalbani in his report submitted that "the first example Of Cooperative Movement started in England followed by the principal known as (Rochdale Principal 1844) till today same is being followed by the Cooperative Societies worldwide. He enlightened "The Principles of Rochdale", which are: Voluntary and open membership Democratic Member Control (Equal voting rights one Vote each member). Member Economic Participation. Autonomy and independence. Education, Training and information. Co-operation among Co-operatives. Concern for community. He further expressed in the report that with the current situation of cooperative societies in Pakistan and specifically with reference to province of Punjab, 06 types of societies are registered with the Joint Registrar Co-operative under The Cooperative Societies Act, 1925. IN PAKISTAN (GENERALLY) There exist 6 types of societies which are as under; CONSUMER COOPERATIVE SOCIETY: Such societies directly buy good from manufacturers and supply them to consumers, thus eliminates the role of middleman in distribution. PRODUCER COOPERATIVE SOCIETY: Safeguard the interest of small-scale producers. And to facilitate the essential items to producers like machinery, raw material, equipment, etc. COOPERATIVE MARKETING SOCIETY: All the members pool together and then sell via centralized agency (such as Sunday Bazar, etc.). COOPERATIVE CREDIT SOCIETY: Accepts deposits from its members and grants them loan at reasonable interest, when needed. (Urban Cooperative Banks is classic example of such cooperative society). COOPERATIVE OR FARMING COOPERATIVE SOCIETY: Short-term credit is provided for purchase of seed, fertilizer, pesticides etc. and medium and long-term loans are given for purchase of tractors, agricultural machinery, cattle, installation of tube well, etc. also referred as Agricultural cooperative society. COOPERATIVE HOUSING SOCIETY: Housing Cooperatives societies purchases land, construct houses/flats and allot the same to its members. Some housing societies also offer credit or loan facilities to the members at a lower rate of interest to members to build their own houses. Whereas, Amicus reported that in province of Punjab (Specifically) under the Government of Punjab and Cooperative Societies Act 1925, the societies are established as under; APEX SOCIETIES: It is engaged in all types of banking and credit business with societies and individuals, to promote growth of the Cooperative movement, carry on banking and credit business to facilitate working of the members of Cooperative Societies and individuals as well, to Inspect, supervise and assess credit requirements of the members of the societies. CREDIT COOPERATIVE SOCIETIES: In order to provide credit to its members, these societies raise funds through share capital and borrowings from the Punjab Provincial Cooperative Bank Ltd. Further Credit operative societies are divided in two categories which are; o Farm Service Centers: Assist in introduction of mechanized farming among the farmer members of Cooperative Societies by making available tractors and other agricultural implements on hire and through repairs, overhauling facilities of these implements. o Markaz Associate Farms Ion IRDP (Integrated Rural Development Program) Cooperative: The objective of providing credit and agricultural marketing facilities on cooperative basis in Integrated Rural Development Project (IRDP) areas and were patterned after the Cooperative Farm Service Centers already existing in the province.
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HOUSING COOPERATIVES SOCIETIES: Provide better and cheaper houses especially to the low- and middle-income groups who, otherwise, cannot afford to own houses through individual efforts. INDUSTRIAL COOPERATIVES SOCIETIES: This medium could purchase raw material and appliances at a fair price, raise capital and market their products on favorable terms, enabling greater industrial self-determination, Raising status of workers from wage-earners to the partners, The workers participation in the surplus from their associated labor. (The prominent Industrial Cooperatives of Punjab is Pakistan Cycle Industrial Cooperative Society Lahore. This is the largest Industrial Society. It was set up in 1953 and produces bicycles with the brand names of "RUSTAM" and "SOHRAB" and also manufactures different models of motorcycles with the brand name of "SOHRAB".) WOMEN SOCIETIES: The women's section is responsible for establishing, registering, and overseeing the operation of women's Cooperative Thrift & Industrial Societies. These societies offer industrial training programs, including tailoring, embroidery, knitting, fabric painting, flower making, and beauty parlor skills. To bolster the economic well-being of women at the micro-level, alleviate poverty, and augment the income of impoverished families, a micro-finance policy has been introduced for women's cooperative societies in the province. The maximum finance limit per society is set at Rs.0.3 million, allocated against their approved maximum credit limit (MCL). The funds are distributed equitably among society members, with each borrower eligible for up to Rs. 0.05 million. The finance is repayable over four years, featuring a six-month grace period, and can be paid back in 48 monthly or 16 quarterly installments, offering flexibility depending on the project's nature. FARMING SOCIETIES: Cooperative Farming grew in Punjab in 1948, To rehabilitate landless refugees from East Punjab and local landless tenants on state land, to increase agricultural production through improved methods of cultivation, credit, supply and marketing facilities and supplementing canal irrigation by installing tube-wells, to develop facilities like education, medical aid, storage, recreation, etc., on self-help. Currently supplies agricultural inputs. MULTIPURPOSE SOCIETIES: The multipurpose co-operative society has large number of functions to discharge. As the name indicates its responsibility for different purpose for which it has been set up. It can work for arranging credit, improved seeds, agricultural implements, fertilizers, sanitation, health etc. for its members. Normally it discharges the following functions. Established as an apex society in 1985 under a development scheme, Consists of 31 District Supply & Marketing Federation (DCFs). Lastly, the report is concluded that the Act in year 1925 was not meant only for establishing housing schemes, as the purpose of Credit Cooperative Societies as well as Consumer Cooperative societies & Others. He opined that that even otherwise the Cooperative Department of Punjab is best example for the formation of different Cooperative Societies under Cooperative Societies Act 1925 as stated above." 4. Mr. Abbadul Hussnain, Amicus in his report, similarly described the concept, history and background of cooperative societies the same as Mr. Muzammil Hussain Jalbani and Ms. Saira Sheikh. However, his research speaks about the three types of Farming Societies which are as follows; PEASANT PROPRIETORSHIP: In Pakistan, agriculture primarily serves as a means of livelihood rather than a commercial venture. Most farmers engage in agricultural activities for subsistence rather than profit, cultivating food crops to sustain their families. Those who own and work their own land are known as peasant proprietors; they consume a portion of their harvest and sell any surplus, referred to as the marketed surplus, to purchase additional goods. These sole proprietors bear the risks of farming, experiencing losses in the event of crop failures but reaping the rewards of bumper crops. They do not pay rent to landowners as they cultivate their own land but may
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borrow money and pay interest on it. Small and marginal farmers often resort to cultivating others' land to supplement their income, making a distinction between land ownership and operational holdings necessary. Medium and large landholders are also sole proprietors, employing hired labor for cultivation, while wealthy farmers rely on wage labor and not direct family involvement in farming activities.+ TENANT FARMING: In certain cases, landowners are unable to personally cultivate the land they own, so they choose to lease it out. Landless farmers, who do not possess their own land, cultivate the land owned by others and, in return for the right to use the land, pay rent. These individuals are commonly known as tenant farmers or simply tenants. Further classified Tenants in 3 categories; i. OCCUPANCY TENANTS: These tenants possess permanent and inheritableland rights, offering them security of tenure and the potential to seek compensation from landlords for significant land improvements. ii. TENANTS-AT-WILL: On the other hand, a "tenant at will" lacks the assurance of keeping the land long-term and can be forced to leave the land whenever the landowner wishes. iii. SUB-TENANTS: Sub-tenants are like tenants-at-will, but the key difference is that while landlords choose tenants-at-will, sub-tenants are selected by the main tenants who already rent the land. COOPERATIVE FARMING: Concept of Co-operative farming was introduced to solve the problem created by sub-division of holdings. The idea is that farmers having small holdings join heads and pool their land for the purpose of cultivation. Cultivation of such small farmers is not profitable. At most they can provide a means of subsistence to the farmers. 5. Mr. Abbadul Hussanain has reported the statistics of Land acquired by the Punjab Cooperative Societies Department under Land Utilization. According to his research approximately142,928 acres of State land has been allocated to 132 Cooperative Farming Societies in several districts of Punjab including Multan, Sahiwal, Vehari, Khanewal, Okara, Lodhran, and Toba Tek Singh. Out of this allocation, 135,318 acres were leased to 9,534 members in units of 12-1/2 acres, while the remaining 7,610 acres were designated for various purposes such as village sites and water channels. He has also discussed the variants of cooperative farming societies which can be taken up to maintain the stability and performance. COOPERATIVE JOINT FARMING SOCIETY: The members pool their land and other productive assets and carry on all the pre-sowing the pooling and post harvesting functions besides the cultivation of the pooled land on cooperative basis. COOPERATIVE BETTER FARMING SOCIETY: The members do not cultivate their land jointly. Each member cultivates his own land; however, they co-operate with each other for pre-sowing and post harvesting operation and they sell the crops jointly. COOPERATIVE TENANT FARMING SOCIETY: The society purchase or leases land from the Government or some private persons and then in turn leases out the land to its members. COOPERATIVE COLLECTIVE FARMING SOCIETY: This type of society involves pooling of their land by the members on a permanent basis, a member who joins this society cannot ever withdraw his land from the society, he can only transfer his land to some other person who will now become a substitute member of the society. Additionally, the report is consisting of arguments in favor of cooperative farming as; 1. Consolidating land into larger, contiguous blocks enables more efficient cultivation and facilitates profitable investments that are impractical on small, scattered plots. Costly agricultural machinery, such as pump-sets, tractors, and threshers, can be used effectively only on larger areas. Moreover, irrigation schemes are more efficient on consolidated land, as they prevent the wastage of costly irrigation water.
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2. Enhancing agricultural productivity is a crucial factor in economic advancement, as it allows for a shift of workers from agriculture to non-agricultural sectors, which grow with economic progress. This transition sustains the supply of agricultural products for those engaged in non- agricultural occupations. Furthermore, the success of industrialization heavily relies on the improved productivity of agricultural workers, underpinning overall economic growth. 3. Cooperative farming can boost the marketable surplus of agricultural products by streamlining surplus collection, which is typically more challenging under individual farming. The quantity of marketable surplus produced in the agricultural sector plays a pivotal role in a nation's material development, signifying its economic progress. 4. Cooperative farming benefits the government by simplifying tax collection, subsidy distribution, and the implementation of advanced agricultural techniques due to the reduced number of farms, streamlining administrative processes and facilitating the adoption of modern, technology-based cultivation methods. 5. Large farms, being more creditworthy than smaller ones, can access substantial financing essential for agricultural improvement. Adequate credit is crucial for reaping the benefits of large- scale commercial farming, enabling investments in modern technology and infrastructure, leading to enhanced productivity and economic development. Besides, the report contains "The Features Of Cooperative Joint Farming"; i) Recognition of the Right of Ownership, ii) Voluntary Membership, iii) Democratic Management, iv) Distribution of Rewards According to Contribution, v) Various Other jobs to promote General Welfare. Afterwards, the report is talking about "The Advantages of Cooperative Joint farming"; i. Increase in the size of the holding. ii. Use of non-traditional inputs (such as seeds, fertilizers, and insecticides). iii. Increase in output. iv. Social Justice and cohesion (The management is elected democratically on the basis of one member-one vote). v. Provisions of social services (educational and healthcare facilities). vi. Research (in cultivation and allied activities). vii. Closer contact of the farmers with the Government. 6. Ms. Sara Malkani Advocate in her contribution as Amicus added through her report and proposed that the model of farmers' cooperative cannot last longer as there is a lack of mindset to work in an association and the absence of belief of the farmers as they have fear of losing their lands as a consequence to join the cooperatives. Farmers of Pakistan are less educated and Government has never taken any responsibility to properly educate them as a result Pakistan is failed to establish even a single "Farmer cooperative of National standing". She while referring Sindh Government has reported that it is evidently seen that the concept of cooperative farming was hugely welcomed back in 2011, when its structure and benefits were explained to them in simple terms when the flood of 2011 damaged the agriculture system of Sindh. Correspondingly, the cooperative was formed based on 300 farmers including women in isolated areas of Khairpur District. The cooperative members were educated and trained to use the modern techniques and were connected to the vegetable exporters and superstores in Karachi and Lahore. Finally, her report concluded by focusing on the education and training of the farmers of the remote areas in Pakistan, that can bring a change in agricultural sector in Pakistan. 7. Ms. Saira Sheikh as amicus in her research report briefed the concept and history of Cooperative Societies Act, 1925 and The Sindh Cooperative Societies Act, 2020 referring to the Case
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law reported as (PLD 1979 BJ 1), wherein it has been observed that the Cooperative organizations founded for mutual economic aid exist in most countries of the world in advance as well in developing countries and in urban as well in rural areas. The cooperative way of doing business takes many forms, ranging from local to centralized and federated organizations, and from highly specialized to multipurpose societies. Her report also talks about the Preambles of both Act as same. She has acknowledged same number of societies and their types in Punjab and Pakistan as Mr. Muzammil Hussain Jalbani apprised report. Moreover, she has added the names of cooperative societies in India, which are registered under The Union Ministry of Cooperation. The names are as under; Cooperative Banks at National Level. Core Cooperative Society at National Level. Development Cooperative Banks at National Level. Consumer Cooperative Societies at National Level. Worker Cooperative Societies at National Level. Housing Cooperative Societies at National Level. National Federation of Industrial Cooperative Limited. Indian Farmers Fertilizer Cooperative Limited. Krishak Bharati Cooperative Limited. All India Federation of Cooperative Spinning Mills Limited. National Cooperative Dairy Federation of India Limited. National Heavy Engineering Cooperative Limited. All India Handloom Fabrics Marketing Cooperative Society Limited. National Federation of Fishermen's Cooperative Limited. National Cooperative Tobacco Grower's Federation Limited. Tribal Cooperative Marketing Development Federation of India Limited. National Federation of Cooperative Sugar Factories Limited. National Agricultural Cooperative Marketing Federation of India. 8. Ms. Saira Sheikh concluded that the Cooperative Societies Act 1925 and the Sindh Cooperative Societies Act 2020, originally intended to support agriculturists and individuals with their common economic needs to improve their living standards through government and cooperative society cooperation, have been applied in a divergent and functional manner in regions other than Sindh. However, in Sindh, the enactment's primary purpose has been overshadowed by the self- interest of a few powerful individuals, resulting in the continued suffering of the people of Sindh, similar to their situation in 1925. This conclusion was reinforced by an official statement made on 19-09-2023, indicating that no credit or housing societies for agriculturists have been registered under the law to date. AGRICULTURE REFORMS SUGGESTED 9. This court also enlightened from the comprehensive research published in Daily Dawn dated 27.09.2023, based on a report, led by Alexandra Horst and Steven Watkins from the World Bank and Food and Agriculture Organization, respectively, and overseen by Loraine Ronchi and Willem Janssen, acknowledges the contributions of a team of experts in the field. These experts include Heman Das Lohano, Mubarik Ali, Khuram Nawaz Sadozai, Inshan Ali Kanji, and Zeeshan Mustafa, who provided background papers. Additionally, David Tuchschneider, Azeb Fissha, and Amanullah Alamzai served as peer reviewers. 10. The report is part of the Pakistan Agriculture Sector Review, which aims to enhance agricultural development and transform Pakistan's agriculture and rural sector. This report is closely related to other analytical pieces within the review, such as a study on the Urban Food System in Pakistan, which offers policy recommendations for improved urban food systems.
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Another piece explores rural development in Pakistan, suggesting ways to enhance productivity in rural areas. 11. While summarizing the report it needs to be highlighted, that it is researched and elaborated briefly that Pakistan's agriculture industry is not performing up to its potential and has to shift its focus from productivity gains to high-value production. Recent data from the World Bank Group has shown how important it is for Pakistan to improve its weak business climate, financial inclusion, and low agricultural productivity. On other hand several initiatives are in the works that will boost the expansion of the green and inclusive private sector in Pakistan's agriculture sector, in line with the World Bank's development goals of boosting competitiveness and promoting equality and inclusion. At the moment, the Sindh Livestock and Aquaculture (LIVAQUA) Project and the Punjab Resilient and Inclusive Agricultural Transformation Project (PRIAT) were in the process of being prepared. Their goals were to: i. Overcome unsustainable production practices and low productivity; ii. Address information asymmetries and promote more inclusive market integration; iii. Improve the business-enabling environment; and iv. Strengthen supply chain resilience and reduce the risk of environmental damage. In rural areas, agriculture remains the primary source of income, and the country's urbanization presents significant opportunities for the growth of inclusive sectors, approximately 40% of the workforce is employed in agriculture in Pakistan, which contributes around 20% of the country's GDP. With 37% of the population residing in cities, Pakistan's relative rural migration trends are negligible. Because the farming industry in Pakistan is extremely dispersed, Still the agricultural sector in Pakistan is not reaching its full potential, while agriculture is practiced throughout Pakistan, the majority of crops are produced in the Punjab and Sindh Indus River basin, which accounts for about 80% of the country's total output. The majority of fresh produce is sold to consumers via conventional marketing channels. 12. An increase in the production of higher-value crops was spurred by the rising domestic demand for fruits and vegetables in Punjab, such as fruits and vegetables. With the exception of the potato industry, increased cultivated area rather than increased productivity drove increased production. The Punjab Agriculture Marketing Regulatory Authority (PAMRA) Act is a noteworthy recent reform in produce marketing that attempts to boost competition in agriculture markets. 13. Also, Sindh has seen an increase in the consumption of foods derived from animals. Despite this, the majority of consumers still favor unpackaged meat, live chickens, and raw, warm milk. These patterns are exacerbated by the absence of contemporary services and infrastructure along important commodity supply chains. The market linkage lessons from the past are reflected in the feasibility reports for each commodity, and the project experiences that are tailored to enhance smallholders' marketing results are the basis for the suggested project activities that follow. Determine the market opportunities that will direct the next steps in the project. In order to comprehend important topics like market demand, regional production conditions, the business environment, the interests of farmers, traders, and agribusinesses, as well as the farmers' access to business support services like extension advice, support organizations conduct a number of studies. 14. In this report, it is advised that province governments institutionalize market integration work by creating a permanent Project Management Unit (PMU). Units in charge of social mobilization, project implementation, market integration, finance and administration and capacity building would be included in the PMU. 15. The report speaks crucial takeaways from success and failure of approaches recommended in the report are also discussed Market demand should be the basis for…
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