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Petitioner: MUHAMMAD NAJIB and others VS Respondent: REGISTRAR, COOPERATIVE SOCIETIES, AZAD JAMMU AND KASHMIR and others
Court Name: High Court of Azad Jammu and Kashmir Judge(s): Sardar Muhammad Ashraf Khan, Abdul Majeed Malik Title:MUHAMMAD NAJIB and others vs REGISTRAR, COOPERATIVE SOCIETIES, AZAD
JAMMU AND KASHMIR and others Case No.:Writ Petitions Nos, 11 of 1984, 28, 29, 30, 31, 67 of 1985; 42, 44, 45 of 1986, 7 and 46 of 1987,.37, 38, 56, 61 of 1980 Date of Judgment:1987-08-02 Reported As: 1987 CLC 2446 Result: Order accordingly Judgment ORDER ' ABDUL MAJEED MA LLICK, C J.--The petitions addressed under section 44 of the Azad Jammu and Kashmir Interim Constitution Act, 1974, though contain distinct and different facts and grounds challenging orders and decisions of Registrar and Deputy Registrar, Co-operative Societies, Azad Jammu and Kashmir, yet confine to attack the propriety and validity of such decisions for their being violative of subsections (2) and (3) of section 5 of the Co-operative Banks (Repayment and Recovery of Loans) Act, 1977 (hereinafter to be referred as the Act). One category of the petitions is that the Registrar failed to issue show cause notice contemplated under subsection (2) of section 5 before passing the impugned orders for recovery of alleged loans. The other category is that. The Registrar refused to exercise jurisdiction under subsection (3) of section 5 to decide the liability of loan by providing opportunity of hearing to the petitioners. Thus, the orders challenged in the petitions are described violative of the provisions of subsection (2) and subsection (3) of section 5 of the Act, as such without jurisdiction and mala fide. 2. Detailed facts of each petition need not be described as the controversy desired to be resolved at this stage confines to (1) writ jurisdiction of the High Court under the Interim Constitution Act and (2) whether the presence of Special Tribunal constituted under subsection (4) of section 5 of the Act to hear appeals against the decisions of Registrar under subsection (6) of section 5, amounts to adequate remedy, contemplated under section 44 of .The Interim Constitution Act. Here it may be stated that these propositions are raised by the learned counsel defending the Registrar,
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particularly on establishment of the Special Tribunal enjoying appellate jurisdiction against the decisions of Registrar, Co-operative Societies. 3. In Azad Jammu and Kashmir, various co-operative banks were registered .Under the Co- operative Societies Act, 1925, and were permitted to function in combined fashion of co-operative societies and modern banking system. In order to achieve the intended objectives, the banks were allowed to raise funds by following means:- (i) by issue of shares; (ii) by receiving deposits; (iii) by inviting investments; (iv) by raising loans; (v) by admission fee; (vi) by other means as decided by the Board; and (vii) by subsidies or grant-in-aid from the Government. ' It is apparent from the record that the main source of funds of the co-operative banks, was individual deposits. The co-operative banks operated private accounts and advanced loans to the account-holders on the pattern of scheduled banks. The controlling authority was Registrar Co- operative Societies. The Government dissolved all the co-operative banks by adapting the Federal Bank for Co-operative and Regulation of Co-operative Banking laws, throuh Ordinance No.XXXIV of 1977, with effect from January 7, 1977. The Management, estates and liabilities of the dissovled banks were taken over by the authorities envisaged under law. The Registrar was empowered to recover the loans advanced to various borrowers and to pay the amount to depositors of the said banks. Legislative measures, thus, were effectively taken but it seems that the intended object was yet to be achieved. It was in this background that the present Act was enforced. 4. In order to appreciate and analyse the scope of controversy raised before us, it appears expedient to examine the scheme of law under which the impugned actions of the respondents have taken place. Section 3 of the Act postulates the crux of scheme for recovery of loans payable to dissolved co-operative banks. It provides that every loan payable to a co-operative bank shall, unless repaid earlier, be paid to the Provincial Co-operative Bank in case of co-operative banks dissolved under section 42, subsection (4) of the Establishment of the Federal Bank for Co- operative and Regulation of Co-operative Banking Ordinance, 1976 and to the successor Co- operative Society in case of co-operative banks which have been converted into non-banking societies. The manner of payment of loan was described as: (a) that not less than 20% of the loan shall be paid within sixty days from the enforcement of the Act No. XXXIV of 1977 or in such extended period not exceeding thirty days as the Registrar may fix; and (b) the balance of the loan was to be paid within one month from the expiry of the period mentioned above or to be secured by mortgage, pledge, hypothecation or assignment of such property of the borrower or his surety or of both as the Registrar may think adequate. The balance was to be paid in instalments within a period not exceeding one year from the commencement of the Ordinance No.XXXIV of 1977. Nevertheless, the Registrar, in fit cases, was empowered to extend period but not for more than nine months in cases where 50% of the loan was already paid. ' The manner and mode of payment of the loan is explicitly described in section 3. It has defined the device as well as period in which repayment was to be made. 5. Section 4 of the Act contemplates the position uncovered by section 3 and lays down that when the loan or any part thereof is not paid within the statutory period, the Registrar was empowered to recover the same as arrears of land revenue. He was conferred with powers of Collector under the Land Revenue Act. Section 5 of the Act makes provision for settlement of liability of loan. It postulates that the Provincial Co- perative Bank and Co-operative Societies shall furnish to the
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Registrar full particulars in respect of all cases of loans required to be repaid under section 3, within 30 days, or within such extended period as the Registrar may allow, from the commencement of Ordinance No.XXXIV of 1977. On receipt of information of the amount of loan, the Registrar has to issue notice to the borrower to repay or secure the loan. On receipt of the notice, when the borrower repudiates the loan or liability ascribed to him, he is enjoined to deny the liability within 30' days from the receipt of the notice or within such further period as the Registrar may extend. In case of denial of liability of loan, it is enjoined upon the Registrar to issue notice to the Bank of the Society, as the case may be, and to hold inquiry necessary to settle the question of loan. Subsections (2) and (3) of section 5 of the Act are reproduced below:- "(2) On receipt of information under subsection (1) in respect of any loan the Registrar may cause notice to be issued to borrower requiring him to repay and secure the loan. (3) Where any borrower to whom notice under subsection (2) is issued does not admit the loan or any liability arising therefrom, he shall within thirty days of the receipt of notice, or within such further period as the Registrar, may, in special circumstances allow, submit either personally or by registered post (acknowledgment due), a written statement to that effect to the Registrar, who thereupon shall cause notice to be issued to the Bank or society concerned, and shall, after making such inquiry as he considers necessary, and giving the parties reasonable opportunity of being heard, decide about the liability." ' The decision of Registrar made under subsection (3) of section 5 of the Act is subject to appeal before Special Tribunal appointed by the Government under subsection (4). Here it is relevant to mention that only such decisions of Registrar or Deputy Registrar as are made under the provisions of subsection (3) of section 5, are made subject to appeal before the Special Tribunal. The orders and decisions of Registrar passed under other provisions of the Act, however, are not appealable before the Special Tribunal. 6. It is evident from the aforesaid provisions that subsection (2) makes it imperative for the Registrar to cause notice to the borrower to repay or secure the loan. It is in consequence of issuing notice under subsection (2) that the manner of inquiry contemplated by subsection (3) comes into force. Unless the condition laid down under subsection (2) is fulfilled, Registrar cannot step further to finalise the liability of a borrower. Likewise, when notice is issued to a borrower, subsection (3) postulates that if the borrower does not admit the loan or liability arising therefrom, he shall, within thirty days of the receipt of notice, submit personally or by registered post, a written statement to that effect to the Registrar. On repudiation of liability of loan, it is enjoined upon Registrar to cause notice to the Bank or society concerned and the alleged borrower, his surety or the beneficiary, as the case may be, to join the inquiry necessary to decide the question of loan or liability. In inquiry, the Registrar has to give reasonable opportunity of hearing to the parties before deciding the liability. The rule laid down under subsection (3) is based on the rule of natural justice of audi alteram partem. Thus, any departure from the conditions listed under subsection (3) renders the decision of Registrar invalid and without jurisdiction. It is these provisions of law which are alleged to be violated by the Registrar while realising loan from the petitioners. 7. Subsection (6) of section 5 of the Act further provides the scope of appeal against the decisions of Registrar before the Special Tribunal. The right of appeal conferred under subsection (6) confines to decisions of Registrar contemplated under subsection (3) alone. The effect of right of appeal under subsection (6) shall be examined elsewhere, but suffice it to say that introduction of right of appeal under subsection (6) in one of the grounds for ouster of writ jurisdiction of the High Court. According to the learned counsel for the respondents, the forum of appeal is adequate remedy contemplated under section 44 of the Azad Jammu and Kashmir Interim Constitution Act and in presence of remedy of appeal, writ jurisdiction cannot be invoked. But before dealing with this aspect of the case, we propose to first decide the question of ouster of jurisdiction of High
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Court as contended by Agha Ashiq Hussain in the light of provisions of section 47, subsection (1), clause (h) of the Interim Constitution Act. 7. Section 47 of the Interim Constitution Act deals with constitution of Administrative Courts and Tribunals. It is reproduced below: "47. Administrative Courts and Tribunals.--(1) Notwithstanding anything hereinbefore contained, the Council in respect of matters to which its executive authority extends, and the Assembly in respect of matters to which the executive authority of the Government extends, may by Act provide for the establishment of one or more Administrative Courts or Tribunals to exercise exclusive 'jurisdiction in respect of-- (a) matters relating to the terms and conditions of persons who are or have been in the service of Azad Jammu and Kashmir including disciplinary matters; (b) matters relating to claims arising from tortious acts of the Council or the Government or any person in the service of Azad Jammu and Kashmir or of any local or other authority empowered by law to levy any tax or cess and any servant of such authority acting in the discharge of his duties as such servant; or (c) matters relating to acquisition, administration and disposal of any property which is deemed to be enemy property under any law. (2) Notwithstanding anything hereinbefore contained, where any Administrative Court or Tribunal is established under subsection (1), no other Court shall grant an injunction, make any order or entertain any proceeding in respect of any matter to which the jurisdiction of such Administrative Court or Tribunal extends and all proceedings in respect of any such matter which may be pending before such other Court immediately before the establishment of the Administrative Court or Tribunal shall abate on such establishment. (3) An appeal to the Supreme Court of Azad Jammu and Kashmir from a judgment, decree, order, or sentence of an Administrative Court or Tribunal shall lie only if the Supreme Court of Azad Jammu and Kashmir being satisfied that the case involves a substantial question of law of public importance, grants leave to appeal." ' The language used in clause (h) of sub-section (1) of section 47 of the Interim Constitution Act manifests the true object of the framers of the Constitution as it relates to Administrative Courts or Tribunals empowered to exercise exclusive jurisdiction in matters relating to claims arising from tortious acts of the Council or the Government or any person in the service of Azad Jammu and Kashmir or any local or other authority empowered to levy tax or cess. This provision also finds place in other Constitutions of free States and its obvious purpose is confined to such matters which relate to claims admissible against tortious acts of the Council or the Government. The use of word "claims" refers to demand for compensation or property as one's right. The word "claim", as defined in Black's Law Dictionary, means: "To demand as one's own or as one's right; to assert; to urge; to insist. Cause of action. Means by or through which claimant obtpins possession or enjoyment of privilege or thing. Demand for money or property, e.g. Insurance claim. ' Right to payment, whether or not such right is reduced to judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured; or right to an equitable remedy for breach of performance if such breach gives rise to a right to payment, whether or not such right to an equitable remedy is reduced to judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured or unsecured." ' The term "tortious act" emanates from the word "tort", which, again, is defined in Black's Law Dictionary as:- "A private or civil wrong or injury, other than breach of contract, for which the Court will provide a remedy in the form of an action for damages. A violation of a duty imposed by general law or
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otherwise upon all persons occupying the relation to each other which is involved in a given transaction.... ' Three elements of every tort action are; Existence of legal duty from defendant to plaintiff, breach of duty, and damage as proximate result. ' A legal wrong committed upon the person or property independent of contract. It may be either (1) a direct invasion of some legal right of the individual; (2) the infraction of some public duty by which special damage accrues to the individual; (3) the violation of some private obligation by which like damage accrues to the individual." ' In civilised and advanced States, law is enforced to provide remedy to a wrong made to a citizen. Thus, wherever a citizen bring a complaint of tortious act of the Government or any local authority, forum is provided to redress grievance of such citizen by granting adequate compensation for the wrong suffered by him. In the United States, a law named "Federal Tort Claims Act, 1946" is in force. The law largely abrogated the Federal Government's immunity from tort liability and established the conditions for suits and claims against the Federal Government. But this, again, is subject to certain exceptions. In our country, a tortious act, whether of an individual or of the Government, is equally subject to remedy by way of compensation under the ordinary law. Whenever a person suffers a civil injury or criminal injury, less than a penal offence, he is free to seek his redress by pressing demand for claim through the Court of law. Nevertheless, a provision is made in clause (b) of subsection (1) of section 47 of the Azad Jammu and Kashmir Interim Constitution Act, 1974, to establish administrative Courts or tribunals for the settlement of matters relating to claims for tortious acts of the Government or the Council, as the case may be. This is just to point out that the provisions contained under clause (b) of subsection (1) of section 47 of the Azad Jammu and Kashmir Interim Constitution Act, 1974, have nothing to do with the establishment of Special Tribunal under subsection (4) of section 5 of the Act. 8. Agha Ashiq Hussain, the learned counsel for the respondents, forgets that the authority and jurisdiction to decide the liability of loan, is created and controlled under the Act. Likewise the decisions of Registrar made under subsection (3) are appealable before the Special Tribunal, but the Special Tribunal, again, owes its creation only to the Act. It is amusing to hear from the mouth of a senior Counsel that the Special Tribunal enjoying appellate jurisdiction against the decisions of Registrar owes its establishment to section 47, subsection (1), clause (b), of the Interim Constitution Act, 1974. There is no force in the contention. It is, therefore, repelled. 9. Next, it was argued that section 14(1) of the Act placed a complete bar to the jurisdiction of all Courts and subsection (3) further provided that all proceedings pending before any Civil Court, including the High Court and the Supreme Court, in respect of any matter to which the Act relates, shall abate forthwith and no such proceedings shall henceforth be taken cognizance of by any such Court. It is accepted that section 14 of the Act contemplated bar of jurisdiction, but this again is to be decided in the light of the force of law applicable to the proposition under consideration. It is already seen that the writ jurisdiction is conferred on the High Court under section 44 of the Azad Jammu and Kashmir Interim Constitution Act, 1974. Constitution is the supreme law of the State. The Supreme law of, course, supersedes subordinate legislation. The objection of bar of jurisdiction of the High Court is unsustainable as subordinate legislation cannot oust jurisdiction of the High Court conferred by the Constitution. We need not dilate on this point as we understand that the learned counsel for the respondents shall have no quarrel with this observation, but for the satisfaction, we would like to cite the dictum of the Supreme Court of Azad Jammu and Kashmir laid down in Muhammad Ishaque's case PLD 1985 SC (AJK) 56. That was also a case of recovery of loan. In that case, the Registrar confiscated a bus of Muhammad Ishaque treating it in the ownership of one Najmul Hassan who had obtained loan from a dissolved bank. The action of Registrar was challenged before the High Court through a writ petition, where the impugned order
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was set aside by restoring the bus to the owner. The Registrar feeling dissatisfied with the decision of the High Court, preferred an appeal before the Supreme Court. Among others, the learned counsel representing the Registrar-appellant, challenged the writ jurisdiction of High Court in matters of recovery of loan under the Act. The learned Chief Justice of the Supreme Court turned down the objection and observed that jurisdiction of High Court is only barred when the impugned action is taken in strict conformity with the provisions of the Act which gave power to the authority and not otherwise. If an action is taken in violation of law, naturally Civil Court has authority to intervene and undo the wrong done to a subject. The Supreme Court of Pakistan examined the proposition in Nagina Silk Mill's case PLD 1963 SC 322. It was a case of assessm ent of income tax under section 67 of the Income-ax Act, 1922. The law provided a bar to civil suit to set aside or modify the assessm ent made under the Act. The objection of ouster of writ jurisdiction was turned down with the following observation: "Notwithstanding section 67, Income-tax Act, 1922, which bars civil suit to set aside or modify an assessm ent made under the Act, the extraordinary writ jurisdiction of the High Court can be invoked in challenging an income tax assessment on the basis that the officer concerned lacked jurisdiction to pass the impugned order. The writ jurisdiction was conferred on the High Court by a constitutional provision and even if there be a conflict between such a provision and another statute, the constitutional provision must prevail." 10. Now we come to the last objection pertaining to adequate remedy as contemplated under section 44 of the Interim Constitution Act, 1974, by which writ jurisdiction was conferred on the High Court. Section 44 is reproduced below:- "44. Jurisdiction of High Court.--(1) The High Court shall have such jurisdiction as is conferred on it by this Act or by any other law. (2) Subject to this Act, the High Court may if it is satisfied that no other adequate remedy is provided by law: - (a) On the application of any aggrieved party, make an order:- (i) directing a person performing functions in connection with the affairs of Azad Jammu and Kashmir or a local authority to referain from doing that which he is not permitted by law to do, or to do that which he is required by law to do; or (ii) declaring that any act done or proceedings taken by a person performing functions in connection with the affairs of the State or a local authority, has been done or taken without lawful authority, and is of no legal effect; or (b) on the application of any person, make an order:- (i) directing that a person in custody in Azad Jammu and Kashmir be brought before the High Court so that the Court may satisfy itself that he is not being held in custody without lawful authority or in an unlawful manner; or (ii) requiring a person holding or purporting to hold a public office in connection with the affairs of Azad Jammu and Kashmir to show under what authority of law he claims to hold that office; or (c) on the application of any aggrieved person, make an order giving such directions to the person or authority, including the Council and the Government, exercising any power and performing any functions in, or in relation to, Azad Jammu and Kashmir as may be appropriate for the enforcement of any of the fundamental rights conferred by this Act. (3) An order shall not be made under subsection (2) of this section on application made by or in relation to a person in the defence services in respect of his terms and conditions of service, in respect of any matter arising out of his service or in respect of any action in relation to him as a member of the Defence Services . (4) Where-- (a) application is made to the High Court for an order under clause (a) or clause (c) of subsection (2); and
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(b) The Court has reason to believe that the making of an interim order would have the effect of prejudicing or interferring with the carrying out of a public work or otherwise being harmful to the public interest the Court shall not make an interim order unless the Advocate-General has been given notion of the application and the Court, after the Advocate-General or any officer authorised by him in this behalf has been given an opportunity of being heard, is satisfied that the taking of the interim order would not have the effect referred to in clause (b) of this subsection. (5) In this section, unless the context otherwise requires, 'person' includes any body politic or corporate, any authority of or under control of the council or the Government and any Court or tribunal other than the Supreme Court of Azad Jammu and Kashmir, the High Court or a Court or Tribunal established under a law relating to the Defence Services." ' A reading of the operative part of the section shows that High Court is empowered to exercise its jurisdiction if it is satisfied that no other adequate remedy is provided by law, on the application of an aggrieved party, to make an order in the cases described therein. The condition precedent, therefore, is that High Court shall only undertake the exercise of its special jurisdiction if it is satisfied that no other adequate remedy under law is available to the person invoking special jurisdiction of the Court. This provision, namely, "adequate remedy", finds no mention in Article 170 of the Constitution of Islamic Republic of Pakistan, 1956 or in Article 226 of the Indian Constitution. The provision was incorporated, first time, in Article 86(2) of the Constitution of Islamic Republic of Pakistan, 1962 and later on in Article 99(1) of the Constitution of Islamic Republic of Pakistan, 1973. The provision in our Constitution was obviously introduced on the pattern of present constitution…
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