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Petitioner: DELHI MERCANTILE COOPERATIVE SOCIETY LTD. Through General Secretary VS Respondent: REGISTRAR COOPERATIVE SOCIETIES, SINDH HYDERABAD And Another
Court Name: Sindh High Court Judge(s): Muhammad Ali Mazhar Title:DELHI MERCANTILE COOPERATIVE SOCIETY LTD. Through General Secretary vs
REGISTRAR COOPERATIVE SOCIETIES, SINDH HYDERABAD And Another Case No.: C.M.A. No.3033 of 2006 Date of Judgment:2011-05-25 Reported As: 2011 YLR 2121 Result: Suit decreed Judgment ORDER MUHAMMAD ALI MAZHAR, J.---The plaintiff has filed this suit for declaration and permanent injunction with the following prayers:-- (a) Declare that the order dated 13-4-2006 passed by the Defendant No.1 in purported exercise of powers under section 43(1) of the Cooperative Societies Act, 1925 is without jurisdiction, illegal, mala fide, arbitrary and devoid of reason and in violation of natural justice and constitutional rights of the plaintiff. (b) Declare that the defendant No.2s letter dated 18-4-2006 is illegal and void being of no legal effect and perpetuates a fishing and roving inquiry being based on the order. Dated 13-4-2006 under section 43(1) Cooperative Societies Act, 1925. (c) Grant permanent injunction against the defendants, their officers, representatives, agents, subordinates and/or any other person(s) acting through or under them from taking action or passing order pursuant to the illegal order dated 13-4-2006 and letter dated 18-4-2006 and further from taking any action including but not limited to calling or summoning the records of the Society and or directly or indirectly interfering in the working and affairs of the Society and any other adverse and coercive action subsequent thereto against the plaintiff. (d) Any other relief which this honourable Court deems fit and proper under the circumstances of the case. (c) Cost of the proceedings. 2. The facts forming the background of the present suit are that the plaintiff is a Society registered under Cooperative Societies Act, 1925. The plaintiff is member of the Karachi Cooperative Housing Societies Union Ltd., which is a union of different housing societies operating in the Province of
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Sindh. The defendant No.1 is the Registrar, Cooperative Societies in the Province of Sindh and exercising powers under the Cooperative Societies Act, 1925. 3. It is further stated in the plaint that defendants are under obligation to perform their duties in accordance with law. The Managing Committee of the Karachi Cooperative Housing Society Union had proposed amendments in its bye-laws, which were amongst other things, regarding the illegal increase in the tenure of the office held by the Managing Committee. The incumbent Managing Committee along with the aforesaid illegality had also failed to present the audited accounts of the K.C.H.S.U. Before its members as well as failed to hold AGM. The said actions as well as the amendments were mala fide, unreasonable and were designed to act retrospectively in order to illegally increase the term of office of the Managing Committee from a period of two years to a period of four years. The Managing Committee vide its notice dated 18-2-2006 called for a Special General Meeting of its members on 10-3-2006 to discuss and approve the proposed amendments in the Bye-Laws of the Union. The plaintiff, aggrieved by the illegalities of the Managing Committee filed a C.P. No. 301 of 2006 in this Court challenging the meeting as well as the proposed amendments in the bye-laws. 4. The plaintiff had also challenged the non-presentation of accounts by the Managing Committee of the Union. The learned Division Bench of this court vide its order dated 10-3-2006 was pleased to restrain the meeting convened by the K.C.H.S.U. And from proposing any amendments in the bye- laws of the Union. The defendant No.1 was also arrayed as a party to the petition and the orders of the learned Bench in C.P. No. 301 of 2006 are equally binding on the defendant. 5. It is further submitted that the audit of the plaintiff has been conducted by the defendant No.2 till 2004. Subsequent to the filing of the above mentioned C.P. No. 301 of 2006, the defendant No.2 vide letter dated 18-4-2006, informed the plaintiff-Society that the defendant No.1 had vide his order dated 13-4-2006, in exercise of powers under section 43(1) of the Cooperative Societies Act, 1925, has appointed him as Enquiry Officer to enquire into the constitution, working and financial condition of the plaintiff-Society. It is submitted that the appointment of the defendant No.2 as Enquiry Officer for the plaintiff-Society is arbitrary, mala fide and in excess of the powers and jurisdiction conferred upon the defendant No. 1. 6. The Order under section 43(1) of the Act of 1925 is a non-speaking order and is in violation of section 24-A of the General Clauses Act and 43(2) of the Act of 1925. Further the order dated 13-4- 2006 appointing the defendant No.2 as Enquiry Officer to hold inquiry into the constitution working and financial condition of Delhi Cooperative Housing Society Ltd., Karachi is a mechanical order without application of mind and amounts to a fishing and roving inquiry into the affairs of the plaintiff. The defendant No.1 has failed to give any reasons for the appointment of the Enquiry Officer nor allege any wrong doing or violation of law against the plaintiff. The order dated 13-4- 2006 is against the principles of natural justice, mala fide, without jurisdiction and of no legal effect. It was further submitted that purported inquiry is albeit, discriminatory and violative of equitable principles as the defendant No.1 has deliberately failed to exercise its powers of inquiry to check the blatant violation of law which is being-committed by the K.C.H.S.U. The plaintiff has not been made aware of any alleged complaint, if any. 7. The defendants Nos. 1 and 2 filed their written statement in which it was inter alia contended that the suit is not maintainable as the defendants have not denied any right, title or status of the plaintiffs. The suit is hit by the provisions of section 56(d) of the Specific Relief Act, 1877 as the defendants are performing public duties under the Cooperative Societies Act, 1925. The order dated 13-4-2006 and letter dated 18-4-2006 have nothing to do with the Constitutional Petition No.301 of 2006. 8. It was also refuted that the defendant No.1 has acted arbitrarily or in excess of powers conferred upon him under section 43(1) of the Cooperative Societies Act, 1925. The defendant No.1 has acted
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in exercise of the discretion conferred by section 43(1) of the Cooperative Societies Act, 1925 and appointed an Enquiry Officer to hold enquiry into the constitution, working and the financial condition of the plaintiff-Society. The factual position is that the plaintiff-Society has at the commencements of the Audit provided a list of developed amenity plots without any details as to how the funds of the society were utilized on the development of these plots. The Audit Inspector therefore, requested the Society for furnishing the required details, which were not supplied. The Government Auditors in their audit report of the Society for the year ended 30-6-2004 had highlighted this position in their audit report and requested the details of all the amenity plots/projects mentioned in the audit report. Since heavy amount was involved in these projects/amenity plots and it was necessary to ascertain the income and expenditure over them and since the management of the society was adamant and avoiding to provide the details of these projects keeping them as a well guarded secrets, therefore, the defendant No.1 with a view to ascertain the working and financial condition has exercised his discretionary powers under section 43(1) of the Cooperative Societies Act, 1925. 9. On 24th October, 2007, the learned counsel for defendants Nos.1 and 2 had raised an objection that the suit is barred under section 70-A of the Cooperative Societies Act, 1925. The learned single Judge observed that since no application under Order VII Rule 11, C.P.C. Has been filed but the learned counsel for plaintiff was put on notice to come prepared on this point of law. It appears that in the order due to typing error it has been wrongly mentioned that the suit is not maintainable for want of statutory notice under section 70-A of the Cooperative Societies Act. In fact the provision of mandatory notice is provided under section 70 of the Cooperative Societies Act that no suit shall be instituted against a society or any of its officers in respect of any act touching the business of the society until the expiration of two months next after notice in writing has been delivered to the Registrar, or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims and the plaint shall contain a statement that such notice has been so delivered or left. All the learned counsel appearing for the parties candidly conceded to that due to typing error want of statutory notice has been typed and in fact section 70-A does not speak about any statutory notice. However, the learned counsel for the defendants Nos. 1 and 2 stated that he will address his arguments on the maintainability of suit on the basis of section 70-A and not on section 70 of the Cooperative Societies Act. 10. On 8-3-2011, I had partly heard the arguments of learned counsel for the plaintiff on the issue of maintainability of the suit and adjourned the matter for 15th March, 2011 for the arguments of the learned counsel for defendants Nos. 1 and 2 and after hearing his arguments, the matter was adjourned for 16th March, 2011 for the rebuttal of learned counsel for the plaintiff on which date the learned counsel for the plaintiff and the learned counsel for the defendant Nos. 1 and 2 had mutually agreed that since in the present suit only questions of law are involved therefore, let this matter be disposed of on the basis of arguments and the material available on record. They had further agreed that there. Is no need to record the evidence in the matter and let this matter be treated short cause. 11. The main issue involved in the present suit is whether the order dated 13-4-2006 issued by Registrar Cooperative Society Sindh under section 43(1) of the Cooperative Societies Act, 1925 is without jurisdiction, illegal and in violation of natural justice and whether, the suit is barred by section 42 of the Specific Relief Act and section 70-A of the Cooperative Societies Act. 12. After careful examination of the pleadings of the parties following issues of law are settled:-- (1) Whether the suit is barred by section 70-A of the Cooperative Societies Act, 1925? (2) Whether the suit is barred by section 42 of the Specific Relief Act? (3) Whether the order dated 13-4-2006 issued by the defendant No.1 in exercise of powers under
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section 43(1) of the Cooperative Societies Act, 1925 is without jurisdiction, devoid of reason and in violation of natural justice? (4) What should be the decree? 13. The learned counsel for the plaintiff on the issue of maintainability of the suit whether suit is barred under section 70-A of the Co-operative Societies Act, argued that the plaintiff has filed the present suit for declaration and permanent injunction whereby the validity of the order dated 13-4- 2006 issued by defendant No.1 has been assailed, therefore, the suit is not barred by section 70-A of the Cooperative Societies Act. He further averred that by virtue of section 9 of the C.P.C., this Court has jurisdiction to determine the suits of civil nature unless their cognizance is expressly barred. He further argued that the bar contained in section 70-A does not apply in the present case as the question involved in the present suit cannot be decided by the Provincial Government or Registrar or his nominee, any arbitrator or liquidator. Since the order issued by the Registrar is itself under challenge therefore, he has no jurisdiction to decide the validity or fate of the order issued by him, therefore, under no circumstances the suit is barred under section 70-A. 14. The learned counsel further argued that the order issued by respondent No.1 is based on mala tide, therefore, the ultimate jurisdiction vests in this Court to adjudicate upon and decide the legality of the order impugned in the suit. In this regard, the learned counsel for the plaintiff referred to following case-law:-- (1) PLD 1977 SC 3 (Abbasia Cooperative Bank v. Hakim Hafiz Muhammad Ghous and others). In this matter, the honourable Supreme Court held that civil courts under section 9, C.P.C. Were competent to try all suits of civil nature except those which were ousted from their jurisdiction either expressly or by necessary implication. Provisions contained in statute ousting jurisdiction or Courts of general jurisdiction should be construed very strictly and unless case fell within letter and spirit of barring section, no effect should be given thereto. Where jurisdiction of civil courts to examine validity of any action or order of Executive Authority or Special Tribunal was challenged on ground of ouster of jurisdiction of civil court, it must be shown that the Authority or Tribunal was validly constituted under the Act, that order passed or action taken by Authority of Tribunal was not mala fide, that order passed or action taken was such which could be passed or taken under law which conferred exclusive jurisdiction on Authority or Tribunal and that in passing order or taking action, principles of natural justice were not violated. Unless all such conditions were satisfied, order or action of Authority or Tribunal would not be immune from being challenged before civil court. Where, Authority or Tribunal had acted in violation of provisions of Statutes which conferred jurisdiction on them or such action or order was made in excess or in absence of jurisdiction or mala fide or was passed in violation of principles of natural justice, such order could be challenged before civil court in spite of provision in Statute barring jurisdiction of civil court. (2) AIR 1940 Privy Council 105 (Secretary of State v. Mask and Co.). In this matter, the learned Privy Council held that exclusion of the jurisdiction of the civil courts is not to be readily inferred but such exclusion must either be explicitly expressed or clearly implied even if jurisdiction is so excluded, the civil courts have jurisdiction to examine into cases where the provisions of the Act have not been complied with or the statutory tribunal has not acted in conformity with the fundamental principle of judicial procedure. (3) 2008 CLC 1462 (Islamic Republic of Pakistan v. General Traders and Ammunition Manufacturers Ltd.) In this matter, the learned Divisional Bench of this court held that when official order is challenged civil court is court of ultimate jurisdiction. Even if jurisdiction is barred, civil court can see illegality, and mala fide committed by any forum, tribunal or authority.
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15. Conversely, the learned counsel for defendants Nos.1 and 2 argued that the defendant No.1 has rightly issued a notice under section 43 of the Cooperative Societies Act and under the law he is the sole authority to adjudge the fate of notice therefore, the bar contained under section 70-A of the Cooperative Societies Act is fully applicable in this case in which it is clearly provided that no court or other authority whatsoever shall have jurisdiction to entertain or to adjudicate upon any matter which the provincial government, the Registrar or his nominee or any other person as empowered by or under the Act to dispose of or to determine. The learned counsel further averred that by issuing notice under section 43(1) of the Cooperative Societies Act, the defendant No.1 has performed his statutory duty and in no way the legal character of the plaintiff has been denied therefore, the plaintiff has no right under the law to question the validity of an order passed by the defendant No.1 in exercise of his power conferred upon him undr section 43 of the Cooperative Societies Act. He relied upon following case-law:-- PLD 2004 Karachi 1 (Mst. Aqila Begum v. Pakistan Employees Cooperative Housing Societies Limited). In this case, the learned Divisional Bench of this court has discussed sections 54 and 70-A of the Cooperative Societies Act and held that section 54 read with section 70-A of Cooperative Societies Act, abdicates jurisdiction of the court in respect of the matter in which jurisdiction to decide and dispose of the controversy rests either with Provincial Government, the Registrar or his nominee or any other person empowered under the Act of 1925 or the Rules or By-Laws framed thereunder. All acts, deeds, orders and actions taken by the functionary under Cooperative Societies Act, which may touch or relate to the business of Society and have direct bearing on any member or a person claiming through a member of the Society, if both such conditions are fulfilled, then effective remedy is provided under Cooperative Societies Act. Such bar of jurisdiction can effectively be invoked in a dispute, which relates or touches the business of Society, such dispute may be by and between the members, past members or any person claiming through or under such member or by such person against the past or present officer of the Society or inter se between Society/or its Committee. 16. After hearing the arguments of both.The learned counsel on the preliminary issue of maintainability, I have reached to the conclusion that section 70-A of ' Cooperative Societies Act which contained bar of jurisdiction has altogether different premise. In the Cooperative Societies' Act certain powers had been given to the Registrar and the Provincial Government including the provision of Arbitration as provided under section 54 of the Cooperative Societies Act which inter alia provides that if any dispute touching the business of a society or its committee against a paid servant of the society arises it shall be referred to the Registrar for decision by himself or his nominee, or if either of the party so desire, to arbitration of three arbitrators who shall be the Registrar or his nominee and two persons of whom one shall be nominated by each of the party concerned. The parties who may avail the remedy of arbitration are provided in clause (a) to (e) of section 54. 'The remedy of appeal against the award of arbitration delivered by the Registrar's nominee is provided under section 56 and if the arbitration is conducted by the Registrar himself then appeal lies under section 64 of the Cooperative Societies Act to the Provincial Government and the revisional powers of Provincial Government and the Registrar are provided under section 64-A of the Cooperative Societies Act. Since. Equally efficacious remedies in order to solve the cooperative issues and disputes are already provided under the various provisions of the Cooperative Societies Act referred to above, therefore, under section 70-A bar of jurisdiction has been imposed so that the parties should recourse to solve their disputes in the mode and manner which are already explicitly provided under the law itself hence it has been provided under section 70-A that no Court or authority whatsoever shall have jurisdiction to entertain or to adjudicate upon any matter which the
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Provincial Government, the Registrar or his nominee, any arbitrator or liquidator, a society, a financing bank, a cooperative bank or any other person as empowered by or under, this Act, or the rules or bye-laws framed thereunder to dispose of or to determine. The case-law relied upon the learned counsel for the defendant No.1, reported in PLD 2004 Karachi 1 (supra) has also focused on the same powers of the Registrar or Provincial Government under the Co-operative Societies Act. In the case in hand the order of Registrar dated 13-4-2006 has been challenged on the ground that it has been passed without jurisdiction, mala fide and devoid of reason and in violation of natural justice and constitutional right of the plaintiff. 17. In the case of Abbasia Cooperative Bank (supra), the honourable Supreme Court has already held that civil courts under section 9, C.P.C. Were competent to try all suits of civil nature except those which were ousted from their jurisdiction either expressly or by necessary implication. Provisions contained in statute ousting jurisdiction or Courts of general jurisdiction should be construed very strictly and unless case fell within letter and spirit of barring section, no effect should be given thereto. Where jurisdiction of civil courts to examine validity of any action or order of Executive Authority or Special Tribunal was challenged on ground of ouster of jurisdiction of civil court, it must be shown, that Authority or Tribunal was validly constituted under the Act, that order passed or action taken by Authority could be passed or taken under law which conferred exclusive jurisdiction on Authority or Tribunal, and that in passing order or taking action, principles of natural justice were not violated. Unless all such conditions were satisfied, order or action of Authority or Tribunal would not be immune from being challenged before civil court. 18. Keeping in view the dictum laid down by the honourable Supreme Court, there is no cavil to the proposition that the civil court is a court of ultimate jurisdiction even if jurisdiction is barred, the civil court can see illegality done by any forum and since the action of defendant No.1 has been assailed on the ground of violation of principle of natural justice, therefore, I do not find any rationale to hold that the present suit is barred by section 70-A of the Cooperative Societies Act. The challenge to legitimacy and validity of order passed under section 43 of the Cooperative Societies Act, 1925 cannot be remedied under sections 54, 54-A, 56, 64 and 64-A, therefore 70-A in this particular matter has no germane. Since the bar contained in section 70-A does not apply then there is also no bar to challenge the order passed under section 43 of the Cooperative Societies Act through a civil suit, notwithstanding, the plea of mala fide is taken or not in the suit. 19. The next issue pertains to the issue of legal character of the plaintiff. In the written statement, a specific preliminary legal objection has been taken that the suit is not maintainable under the law as the defendants have not denied any right, title or status of the plaintiff, therefore, in order to answer this preliminary objection and to show the locus standi and legal character, the learned counsel for the plaintiff argued that plaintiff is a registered cooperative society and according to its bye-laws the objects of the society is inter alia to carry on the trade of building, and buying, selling hiring, letting and developing land in accordance with the cooperative principles and to establish and carry on social, recreative and educational work in connection with its tenants with further powers to do all things which deems necessary or expedient for the accomplishment of all objects specified in its bye-laws, including the powers to purchase, hold, sell, exchange, mortgage, rent, lease, sublease, surrender, accept surrenders of and deal with lands of any tenure. 20. The learned counsel argued that since the order dated 13-4-2006 has been issued in violation of principle of natural justice and even no reason has been assigned in the order which may necessitate, require or to justify the inquiry against the plaintiff therefore, such illegal letter amounts to denial the legal character of the plaintiff which is a registered cooperative housing society therefore, the plaintiff has rightly claimed the declaration that the impugned order dated 13-4-2006 and the inquiry notice dated 18-4-2006 are illegal mala fide and without jurisdiction. The
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learned counsel further relied the following case-law. (1) 2004 CLC 1029 (Arif Majeed Malik v. Board of Governors Karachi Grammar School). In this matter, the learned Divisional Bench of this Court held that we have given our anxious consideration to the question involved after having noticed that both views, as to section 42 being exhaustive or otherwise have been taken by superior Courts in the Subcontinent. Possibly one reason for divergence of judicial opinion appears to be that when the Specific Relief Act was enacted in 1877 the concept of rights which could be enforced through Courts was largely confined to "status" as understood in a feudal society context or rights pertaining to property in a laissez-faire economy. With the development of jurisprudence over more than a century, a large number of other rights which did not strictly speaking, relate to status of an individual or deal with tangible property came to be recognized by law and some of them in the form of guaranteed…
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