Legal Principle & Question Decided

Ruling Summary: This decision was rendered by the Islamabad High Court on 2023-08-15, officially reported as 2023 IHC 100. In this matter between Islamabad Cooperative Housing Society, Islamabad through its Secretary and Additional Commissioner (G)/Director Admin, ICT & 2 others, 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.

Full Judgment Text & Judicial Ruling

Court Name: Islamabad High Court Judge(s): Arbab Muhammad Tahir Title:Islamabad Cooperative Housing Society, Islamabad through its Secretary

vs Additional Commissioner (G)/Director Admin, ICT & 2 others Case No.: W.P. No.3609/2022 Date of Judgment:2023-08-15 Reported As: 2023 IHC 100 Result: Order Accordingly Judgment ORDER Arbab Muhammad Tahir, J.- Through this consolidated judgment, I shall decide the petitions listed below as common questions of law and facts have been raised in all these petitions. 1) W.P. No.3609/2022, Islamabad Cooperative Housing Society, Islamabad through its Secretary v. Additional Commissioner (G)/Director Admin & 2 others. 2) W.P. No.369/2023, Ch. Tahir Mehmood & another v. Additional Commissioner (G)/Director Admin & others 3) W.P. No.3698/2022, Ch. Sultan Mehmood & another v. Additional Commissioner (G)/Director Admin & others 4) W.P. No.3711/2022, Javed Iqbal Khan v. Federation of Pakistan through Secretary & others 5) W.P. No.3712/2022, Khalid Farooq v. Federation of Pakistan through Secretary & others 6) W.P. No.3714/2022, Ch. Muhammad Ayub v. Federation of Pakistan through Secretary & others 7) W.P. No.3721/2022, Shaukat Ali & another v. Additional Commissioner (G)/Director Admin & others 8) W.P. No.3733/2022, OGDC, Officers Cooperative Housing Society, Islamabad through its President v. Additional Commissioner (G)/Director Admin & others 9) W.P. No.3847/2022, OGDC Employees Cooperative Housing Society Islamabad through its Secretary v. Additional Commissioner (G)/Director Admin & others 10) W.P. No.3857/2022, Saif Ullah & another v. Registrar Cooperative Housing Societies & others 11) W.P. No.3900/2022, Pakistani Professionals Cooperative Housing Society, Islamabad through its Secretary v. Additional Commissioner (G)/Director Admin & others

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12) W.P. No.3713/2022, Khurram Shehzad & another v. Federation of Pakistan through Secretary & others 13) W.P. No.3605/2022, Work, No Word Cooperative Housing Society Ltd. Islamabad through its Secretary v. Additional Commissioner (G)/Director Admin & others 14) W.P. No.3611/2022, WAPDA Employees Cooperative Housing Society, Islamabad through its Management Committee v. Additional Commissioner & others 15) W.P. No.3623/2022, Ch. Waqar Hussain & others v. Federation of Pakistan through Secretary & others 16) W.P. No.3632/2022, Engr Maj. Gen. Viqar Ul Haq Khan Khalid & others v. Federation of Pakistan through Secretary & others 17) W.P. No.3645/2022, Muhammad Ramzan & another v. Additional Commissioner (G)/Director Admin & others 2. The petitioners, through the listed petitions, have assailed orders passed by the Deputy Commissioner/Registrar Cooperative Societies, I.C.T., Islamabad whereby registrations of the petitioner Societies have been cancelled while invoking powers under section 47 of the Cooperative Societies Act, 1925 on the ground that the "areas of operation" of the Societies fall outside the jurisdiction of the Islamabad Capital Territory. 3. The facts, relevant for adjudication of the petitions are that the petitioner Societies are registered under section 10 of the Cooperative Societies Act, 1925 (hereinafter the "Act of 1925") with the Cooperative Societies Department, Islamabad Capital Territory. The areas of operation mentioned in the approved Byelaws of the Societies in almost all the Societies are Islamabad Capital Territory, District Rawalpindi and District Attock. The Circle Registrar, Cooperative Societies Department, ICT issued Circular, dated 18.05.2022 directing the respective Management Committees to get the Societies registered with the Cooperative Societies Department of the Province concerned i.e. the area of operation, within 30 days. Perusal of circular shows that it was issued by order of the Deputy Commissioner/Registrar Cooperative Societies, Islamabad. Some of the Societies assailed the circular through filing revision petitions under section 64-A of the Act of 1925. The Secretary, Cooperative Societies, ICT adjudicated upon the revision petitions. The revision petitions were decided vide order, dated 13.09.2022 whereby circular, dated 18.05.2022, was upheld. However, the matter was remanded to the Registrar Cooperatives, for cancellation of registrations of the Societies under the Act of 1925 and the rules. The Registrar, Cooperative Societies, ICT vide order, dated 23.09.2022, passed the impugned orders, whereby the registrations of the Societies have been cancelled in exercise of powers conferred under section 47 of the Act of 1925 with the direction to get the Societies registered with the concerned Registrar Cooperative Societies of the Provinces where the housing schemes of the Societies are established. 4. The learned counsels for the petitioners have argued that; the Societies were duly registered in the Islamabad Capital Territory and running its business in accordance with the Act of 1925 and the rules made thereunder; the areas of operation mentioned in the Byelaws of the Societies include the area of Islamabad Capital Territory; the Societies can establish projects in other Provinces in accordance with the Multi Unit Cooperative Societies Act, 1942 (hereinafter the "Act of 1942"); the projects of the Societies are outside the domain of the Registrar Cooperative Societies (hereinafter the "Registrar"); the Registrar can only look into the matters of AGM, Elections and audit of the Society; section 47 of the Act of 1925 envisages winding up of a society and that too after inquiry under section 43 and conducting inspection under section 44/44-A on application of two-third members of the society; the Registrar, before invoking section 47 of the Act of 1925 did not fulfill the pre-requisites contemplated in sections 43 and 44 ibid; the winding up proceedings culminates in initiation of liquidation proceedings; there is no order as to liquidation of the Societies; there is no allegation that the prerequisites for registration under section 10, contained in sections 7, 8 and 9

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of the Act of 1947 were not fulfilled; the ground "area of operation" for cancellation of the registration of the Societies is alien to the scheme of the Act of 1925; the impugned order is against the mandate of Article 10A of the Constitution of the Islamic Republic of Pakistan, 1973; no inquiry was mandated under the Act of 1925 before cancellation of the Society was conducted before passing the impugned orders; a Society cannot be registered in two different areas simultaneous, however, it can establish projects in more than one province simultaneously; the approved Byelaws of the Societies, unless amended, are binding on the Societies as well as Registrar; the Societies registered at Islamabad Capital Territory can operate and function in other Provinces under section 3A of the Act of 1942; the layout plan etc., of the Societies is approved by the civic bodies having control and the power to regulate the area where the project is situated; the Registrar has no power to deal with the projects of the Society and the area of operation; the Society cannot act in contravention of the Byelaws and any order issued by the Registrar in contravention thereof is unlawful; the authority to amend the Byelaws vests in the AGM under Rules 5, 6 and 6-A of the Islamabad Cooperative Societies Rules, 2018 (hereinafter the "Rules of 2018"); the impugned order has completely disrupted the affairs of the Societies; the properties vests in the Society and not member; the Registrar has ignored the fact that the Society once registered cannot be cancelled without liquidation of assets and disbursement of shares; the Registrar was not duly notified under the Act of 1925 at the time of issuance of the impugned orders; the direction of the Registrar to get the Societies registered in Punjab is unlawful as the Punjab Undesirable Cooperative Societies Act, 1993 prohibits registration of Societies in Punjab; some of the Societies have directly approached this Court without preferring revision for the reason that the impugned order of the revisional authority has already decided the question involved; when an order is passed on the direction of the appellate authority, no appeal/revision is required to be filed; reliance has been placed on the cases titled "Lt. Col. (Retd) Muhammad Azhar v. Federation of Islamic Republic of Pakistan through Chief Commissioner and others" [2013 MLD 338 Islamabad], "Tayya b Ahmad Khan and others v. Secretary Cooperatives and others" [2012 CLC 1067 Lahore], "Bahadur Yar Jang Cooperative Housing Society Ltd. v. Feroze Shamsi and others" [PLD 2010 SC 1058], "Muhammad Tahir Pervaiz and others v. Province of Punjab and others" [2022 MLD 1777 Lahore], "Federal Government employee's Housing Foundation and others v. Malik Ghulam Mustafa and others" [PLD 2019 Islamabad 1], "Haji Khuda Bakhsh and 9 others v. Deputy Registrar, Cooperative Societies Punjab, Lahore and 2 others" [PLD 2007 Lahore 341], "Ch. Khalil-ur-Rehman v. The Registrar, Cooperatives, Punjab, Bank Square, Lahore and 2 others" [1994 MLD 1637 Lahore], "Siraj Din Orfi and others v. Circle Registrar of Co-operative Societies and others" [2010 MLD 1974 Lahore], "Khalid Mahmood v. N.-W.F.P. through Chief Secretary, Peshawar and 4 others" [PLD 2011 Peshawar 120], "Tariq Mahmood v. Government of Pakistan through Joint Secretary Ministry of Minorities (Minorities Affairs Division) Islamabad and 3 others" [2008 CLC 102 Lahore], "Sohail Ahmed and 7 others v. Province of Sindh through Secretary and 2 others" [2017 PLC (CS) 510 Sindh High Court], "Government of Sindh through Secretary Agriculture and Livestock Department and others v. Messrs Khan Ginners (Pvt) Ltd and 57 others" [PLD 2011 SC 347], "Muzaffar Khan and others v. Evacuee Trust Property through Deputy Administrator" [2002 CLC 1819 Lahore], "Malik Muhammad Hashim Awan and another v. Chief Secretary Government of Punjab, Lahore and 3 others" [12017 PLC (CS) 1085], "JDW Sugar Mills Ltd. v. Province of Punjab through Secretary Department of Irrigation and Power, Lahore and another" [PLD 2005 Lahore 506], "Senior Member BOR and others v. Sardar Bakhsh Bhutta and another" [2012 SCMR 864], "Collector of Customs, Custom House, Lahore v. Sahib Ullah" [2004 PTD 819 Lahore], "Imtiaz Ahmed and others v. Punjab Public Service Commission through Secretary, Lahore and others" [PLD 2006 SC 472], "Azhar Ali Khan v. Municipal Corporation, Rawalpindi through Administrator" [1997 CLC 1486 Lahore], "Kashmir Development Cooperative

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Finance Corporation Ltd. Mirpur (through its Chairman) and another v. Registrar, Cooperative Societies Azad Jammu and Kashmir Government and another" [1986 CLC 2279 AJ&K] and unreported judgment of this Court, dated 02.01.2023, passed in W.P. No.3435/22 titled "Lt. Col. Nazar Hussain Islam v. Cooperative Societies Department, through its Director General/Secretary, ICT Islamabad and others". 5. On the other hand, the learned State Counsel, representing the Registrar, has contended that; the Registrar is competent to initiate proceedings on his own motion; the Society was registered under section 10 of the Act of 1925; the Act of 1942 mandates that a Society which extends to other Province shall get itself registered in that Province; the Registrar notified under the Act of 1925 is appointed by the Chief Commissioner, ICT while exercising powers of Provincial Government; the Societies have not been registered by the Federal Registrar appointed under section 4 of the Act of 1942 by the Federal Government; unless registered by the Federal Registrar, the Societies cannot operate in other Provinces; the Societies have not provided any revenue record that they have acquired land within the limits of Islamabad Capital Territory and initiated projects; the Government of Punjab has banned registration of housing societies in Punjab, therefore, the Societies have merely got registration from Islamabad and launched projects in Punjab; the Societies have deliberately opted not to register in the Province of Punjab before initiating projects; the loss caused to the Societies is due to the conduct of respective management committees; the Societies have initiated projects in the Province of Punjab at their own risks and costs; innocent people have invested their hard earned money in the Societies considering it to be situated in the Islamabad Capital Territory; the AGM of the respective Societies is conducted at the project site after 70/80% development; the Societies have hardly developed 20/30% of their projects, therefore, they conduct AGMs at different venues in Islamabad; the potential buyers and members remain under the impression that the Society is situated in the Islamabad Capital Territory. 6. The learned Assistant Attorney General has adopted the arguments advanced by the learned State Counsel and has argued that the actions taken by the Societies in the intervening period i.e. after cancellation of registration may be declared void. 7. Heard, record perused. 8. The petitioner Societies were registered with the Cooperative Societies Department, Islamabad Capital Territory under section 10 of the Act of 1925. The Byelaws of the Societies are duly approved. The registrations of the Societies have been cancelled under section 47 of the Act of 1947 on the ground that the projects of the Societies fall outside the territorial limits of Islamabad Capital Territory. The first legal question which has emerged in the petitions in hand is whether in the circumstances involved in the petitions in hand, the registration of the Societies could have been cancelled under section 47 of the Act of 1947 without recourse to the due process provided under sections 43, 44 and 44-A ibid? 9. The Cooperative Societies Department, Islamabad (hereinafter the "Department") admits that the Societies have been registered under section 10 of the Act of 1925 after fulfilling the requisite eligibility threshold contained under the Act ibid. The impugned orders whereby the registrations of the Societies have been cancelled have been passed under section 47 of the Act of 1925. Chapter VII of the Act of 1925 deals with "Inspection of Affairs". Sub-section (1) of Section 43 of the Act of 1925 provides that the Registrar may of his own motion, by himself or any person duly authorized by him in writing, hold an inquiry into the constitution, working and financial condition of a society. Sub-section (2) of section 43 of the Act of 1925 provides that in inquiry into the constitution, working and financial condition of a society shall also be held, (i) on receipt of a requisition from the society duly authorized by the rules in respect of its members, such member being itself a society, (ii) on application of majority of the committee of the society, (iii) on the application of one-third of the members of the society. The powers of the Registrar to hold an inquiry under section 43 is twofold.

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He can hold an inquiry suo-motu, on his own motion and on receipt of requisition/application under sub-section (2) of section 43. The exercise of powers of the Registrar to hold an inquiry on his own motion under sub-section (1) is independent of sub-section (2) of section 43. Reliance is placed on the on the cases titled "Pir Illahi Bukhsh Cooperative Housing Society Ltd. Karachi v. Registrar Cooperative Societies and others" [1968 SCMR 423] and "Saddar Cooperative Market Ltd, through Honorary Secretary v. Province of Sindh, Department of Cooperation and others" [2009 CLC 193 Karachi]. Section 44 empowers the Registrar to inspect the books of the society on the application of creditor in the eventuality where the debt is a sum then due and it is not repaid after such demand by the creditor. Section 44-A provides that the Registrar or his authorized representative shall have access and right to inspect the books, accounts, cash, documents, properties and securities of a society and every employee, past or present, of the society shall produce the same and furnish such information with regard to transactions and working of the society as the person making such inspection may require. Section 47 provides that if the Registrar, after an inquiry has been held under section 43 or after an inspection has been made under section 44 or section 44-A or on receipt of an application made by two-third of the members of a society present at a special general meeting, called for the purpose or of his own motion, in case of a society that has not commenced working, or has ceased working, is of opinion that the society ought to be wound up he may issue an order directing it to be wound up, and then when necessary, may appoint a liquidator for the purpose and fix his remuneration. 10. In the case in hand, the proceedings were initiated against the Societies by the Department by issuing a circulars/directions, dated 18.05.2022. For the sake of convenience the text of circular, dated 18.05.2022, is reproduced below.- "Please refer to the subject noted above. 2. You are directed to get your Society registered in the Province of the Area of Operation of your Society within 30 days from receipt of this notice, failing which the registration with the Cooperative Societies Department, ICT, Islamabad shall be cancelled without serving any further notice. 3. By the orders of the Deputy Commissioner/Registrar Cooperative Societies, ICT, Islamabad." Feeling aggrieved by issuance of the above circular, some of the Societies filed revision petitions under section 64-A of the Act of 1925. The Secretary Cooperatives of the Department vide order, dated 13.09.2022 upheld circular, dated 18.05.2022. However, the matter was remitted to the Registrar for cancellation of the Societies. The operative portion of the order is reproduced below.- "I have heard the counsels for the Petitioners and considered the point of the view of the department. I am of the opinion that this measure taken by the registrar is in the right interest as well as better administration of the societies. Therefore, this matter is remanded back to the worthy Registrar Cooperatives, who may proceed for cancellation of registration of the Societies as provided under relevant provisions of law, and following the procedure laid down in Cooperative Societies Act and the Rules." After the above order of the revisional authority i.e. Secretary Cooperatives, the Registrar, vide order, dated 23.09.2022, cancelled the registrations of the Societies under section 47 of the Act of 1925. The text of notification, dated 23.09.2022, is reproduced below. "Whereas, the Islamabad Cooperative Housing Society was registered in this office vide registration No.313 dated 28-08-1988. 2. Whereas, the project of the Society falls outside the jurisdiction of Islamabad Capital Territory. 3. Whereas, a circular No.1790/CR/ICT/B dated 18-05-2022 was issued to Islamabad Cooperative Housing Society to get itself registered in the province of the area of operation within 30 days from receipt of this notice, failing which the registration with the Cooperative Societies Department ICT, Islamabad shall be cancelled without serving any further notice.

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4. Whereas, the Managing Committee of the Society has failed to get the Society registered with the concerned Cooperative Department of the area of the respective jurisdiction. 5. In view of the above, I, Irfan Nawaz Memon Deputy / Registrar Cooperative Socities, ICT, Islamabad in exercise of powers conferred upon me under section 47 of the Cooperative Societies Act, 1925 do hereby cancel registration of Islamabad Cooperative Housing Society and with the direction to Islamabad Cooperative Housing Society to get itself registered with the concerned Registrar Cooperative Societies of the province where the housing scheme of the Society is established, which is Registrar Cooperative Societies, in their case." 11. The above reproduced orders passed by the Cooperative Societies Department are silent as to how and why the proceedings were initiated. In order to issue an order under section 47, initiation of proceedings as contemplated in sections 43, 44 or 44-A, as the case may be, are mandatory. Section 47 stipulates two further eventualities for winding up of societies (a) on receipt of an application by the Registrar, made by two-third of the members of a society present at a special general meeting, called for the purpose or (b) the Registrar, of his own motion, in case of a society that has not commenced working, or has ceased working. Insofar as the instant case is concerned, the Registrar initiated proceedings on the ground that the "areas of operation" of the Societies fall outside the jurisdiction of Islamabad Capital Territory. This ground is alien to the scheme of the Act of 1925 and the Act of 1942, particularly for initiating proceedings for the purposes of section 47 ibid. The circulars, dated 18.05.2022, issued to the Societies by the Registrar nowhere mentions that any inquiry as mandated under sections 43, 44 or 44-A had been conducted and the result thereof was communicated to the Societies under sections 43(4) or 44(2) ibid. The order of the revisional authority is reproduced above. Bare perusal of the said order reveals that it is a non-speaking order. The revisional authority failed to record reasons in support of the said impugned order. 12. Section 24-A of the General Clauses Act, 1897 provides that where, by or under any enactment, a power to make any order or give any direction is conferred on any authority, office or person such power shall be exercised reasonably, fairly, justly and for the advancement of the purpose of the enactment. The Hon'ble Supreme Court in the case titled "Muhammad Amin Muhammad Bashir Limited v. Government of Pakistan, through Secretary Ministry of Finance, Central Secretariat Islamabad and others" [2015 SCMR 630] has held that any action which is violative of the principles contained in section 24-A of the General Clauses Act, 1897 is liable to be struck down. 13. The learned counsel for the Societies have argued at length that the Societies registered at Islamabad can engage in other provinces and launch projects/schemes. They heavily relied on the provisions of the Multi Co-operative Housing Societies Act, 1942. They argued that a Society registered at Islamabad can launch projects/schemes in other provinces and registration in other Provinces for this purpose is not required and in this regard they relied on sections 3 and 3-A of the Act of 1942. 14. The Hon'ble Supreme Court in the case titled "Riasat Ali Gondal, Chief Manager, National Industrial Corporation Finance Cooperation Limited, Gujranwala Zone v. The Registrar/Deputy Commissioner, Cooperative Societies, Islamabad and others" [1991 SCMR 561] has examined the provisions of the Act of 1942. In the afore-referred judgment i.e. Riasat Ali Gondal's case, the Society was registered under the Act of 1925 at Lahore and in line with its byelaws, one of its registered offices was situated at Islamabad. Upon receiving several complaints regarding affairs of the Society, the Deputy Commissioner/Registrar Cooperative Societies, Islamabad proceeded to supersede the Board of Directors of the said Society and appointed administrator to perform functions of the Board of Directors. It is worth-mentioning here that Head Office of the Society was situated at Lahore. The august Supreme Court in Riasat Ali Gondal's case held that the power to regulate registration, control and dissolution shall vest in the Registrar Cooperative Societies of the Province where the Society was actually registered, which in that case was at Lahore, whereas, the

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Deputy Commissioner, Islamabad was vested with the limited power of audit, inspection and/or calling for the information and returns. The relevant portion of the judgment in Riasat Ali Gondal's case supra is reproduced below.- "The specific portions of the law quoted above which deserve particular attention are the words "actually registered" used in subsections (1) ,(2) and (3) of sections 2 and 3 and the same expression used in subsections (2) of sections 3-A and of section 4 of the Act. The law applicable and the jurisdiction exercisable has been indicated in all these provisions by reference to the place of actual registration. Additionally, the expression actually registered has been used to distinguish a situation where the registration is deemed to exist elsewhere for specified purposes. In this context the reservation made that the Corporation or society, as the case may be, is subject for all the purpose of registration, control or dissolution, to the law relating to Corporation/Society in force for the time being in the Province in which it is actually registered, makes the jurisdiction beyond any doubt. The exclusions enjoyed from this general proposition on the strength of the deeming part…

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