Suit No. 500 of 2006
Date of hearing 16.3.2011
1. For order as to maintainability of Suit in view
of the court’s order dated 24.10.2007
2. For hearing of CMA No. 3033/06
(U/O 39 Rule 1&2 CPC)
3. For Issues
Plaintiff : Delhi Mercantile Cooperative Society Ltd.
Defendants : Registrar Cooperative Societies and others.
M/s. Abid S. Zuberi along with Mr. Omer Lakhani, Mr.Rasheed Ashraf and Mr. Shakeel Rabani Advocates for the Plaintiff
Mr. Nazar Akbar Advocate along with Mr. Farhan Zia Abrar Advocate for the defendant No.1 & 2.
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, malafide, arbitrary and devoid of reason and in violation of natural justice and constitutional rights of the plaintiff.
b. Declare that the Defendant No.2’s 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.
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.
e. 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 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 defendant 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 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 No. 1 and 2 had raised an objection that the suit is barred under section 70-A of the Cooperative Housing Society Act 1925. The learned single Judge observed that since no application under order 7 Rule 11 CPC 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 defendant No. 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 No. 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 No.1 & 2 had mutually agreed that since in the present suit only questions of law are involved therefore, let this matter be disposed off 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 Acts.
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 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 Cooperatives Societies Act. He further averred that by virtue of section 9 of the CPC, 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 fide, 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 03 (Abbasia Cooperative Bank v. Hakim Hafiz Muhammad Ghous and others). In this matter, the honorable supreme court held that civil courts under S.9 CPC 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 give 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 Statues 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 Statue barring jurisdiction of Civil Court.
2. AIR 1940 Privy Council 105 (Secretary of State v. Mask & Co.). In this matter, the learned Privy Council held that 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.
15. Conversely, the learned counsel for defendants No.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 under section 43 of the Cooperative Societies Act. He relied upon following case law:
PLD 2004 Karachi 01 (Mst. Aqila Begum v. Pakistan Employees Cooperative Housing Societies Limited). In this case, the learned divisional bench of this court has discussed section 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 there under. 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 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 01 (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 honorable Supreme court has already held that civil courts under S.9 CPC 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 give 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 honorable 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 rational 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 can not be remedied under Section 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, re-creative 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 is 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 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 view, 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 fundamental rights. The right of privacy, to carry on the business of one’s choice, access to public information and, large body of social and cultural rights neither relate to status in the traditional sense nor tangible property. Keeping in view the well-settled principle that wherever there is a right there must always be a remedy to enforce it persuaded courts not to remain bound within the technicalities of section 42 for the purposes of granting relief. Moreover, Article 4 of the Constitution guarantees to every citizen the inalienable right to be treated in accordance with law. This guarantees, which has been often described as embodying the right of law does not operate merely against the instrumentalities of the State. Article 5 stipulates obedience to the law and the Constitution as the inviolable obligations of every citizen. It would indeed be anomalous to suggest that a victim of illegal action has to go without redress because sub-constitutional legislation does not lay down the mode for enforcing his rights. For this reasons too, we are persuaded to hold a view that the provisions of section 42 of Specific Relief Act are not exhaustive seems to be preferable.
2. PLD 1965 SC 698 (Muhammad Jamil Asghar v. Improvement Trust Rawalpindi). In this case, the honorable supreme court held that a purely administrative officer who is empowered to pass an order if certain circumstances exist has no jurisdiction to determine those circumstances and the objective existence of those circumstances is an essential condition of the validity of his order. In respect of every order passed by him the Court can make an enquiry and if it finds that all the circumstances needed for passing the order were not present it will declare the order to be void. Of course, although the officer has been granted no jurisdiction to determine any facts he will have to ascertain whether the requisite circumstances exist for, otherwise he cannot pass order, but his conclusion as to the existence of those circumstances binds nobody and it is open to any person affected to challenge his act on the ground that those circumstances do not in fact exist. An administrative officer or authority may be given jurisdiction to determine some facts on proof of which he can pass an order and in that case he will act in a quasi-judicial manner for the determination of those facts and his determination validly reached will support his order in relation to those fact. So far as special judicial tribunals are concerned they are given jurisdiction to determine certain facts but they are not judges of the facts which are the foundation of their jurisdiction nor can they define the limits of their own jurisdiction. It is possible, of course, that special tribunal may be made the judge of its own jurisdiction, but this would be a very exceptional provision and one which should be made by altogether clear words. However, with respect to mala fides, the jurisdiction of the civil Court can never be taken away for a mala fide act is in its very nature an illegal and void act and the civil court can always pronounce an act to be mala fide and therefore void.
21. The learned counsel for the defendant No.1 & 2 argued that since the denial of legal character of the plaintiff is not in issue hence no suit for declaration could be filed by the plaintiff and the present suit is hit by section 42 of the Specific Relief Act as the defendants are performing public duties under the Cooperative Societies Act. Issuance of an Order under Section 43 of the Cooperative Societies Act does not tantamount to the denial or disputing the legal character of the plaintiff, therefore, the suit is outside the domain and scope of Section 42 of the Specific Relief Act. In support of his arguments, the learned counsel referred to following case law:-
1.PLD 1954 Sindh 107 (Shafqatullah Qadri v. University of Karachi). In this case, the learned single judge of this court held that the proviso to section 42 says that no Court shall make any declaration where the plaintiff being able to seek further relief than a mere declaration of title to do so. If mere declaration could be given outside the provisions of section 42 the proviso would lose its efficacy. I, therefore, hold that section 42 of the Specific Relief Act is exhaustive of the relief provided by it. No person can file a suit under section 42 of the Specific Relief Act unless he be entitled to any legal character. The plaintiff has failed to show that he was entitled to be a candidate for appearance at the First LL.B Examination or that he passed the First LL.B Examination at which he was allowed to appear provisionally. The plaintiff, therefore, has failed to show that he is entitled to any legal character and consequently the suit must fail.
2. 1998 CLC 156 (Global Produce Limited v. Habib Credit and Exchange Bank Limited). In this case, while referring to various pronouncement of the Superior Courts, the learned Single Judge of this Court finally held that it is clear from these authorities that section 42 would be attracted to a case in which the plaintiff approaches the Court for the safeguard of his right to legal character of property but where right to his own legal character or property is not involved, the suit is not maintainable. The suit must be one which must bring benefit to him in regard to these two rights. No suit involving any other right, hypothetical or abstract would be competent under that section. The Court will not, therefore, entertain suits in which no benefit accrues to the plaintiff or where the plaintiff sets up merely an abstract right to satisfy his ego or satisfy his grudge against another person. Section 42 cannot be invoked in matters of mere sentiments which have no concern with the vindication of the plaintiff’s title to status and property.
22. After considering the pros and cons on this issue, I have reached to the conclusion that in the case of Karachi Grammar School, reported in 2004 CLC 1029, the plaintiff sought the declaration that the removal of his children from the roll of school is void ab initio with further declaration that children of the plaintiff are entitled to continue their studies at Karachi Grammar School without any interruption and hindrance of the defendant. The defendant in that suit filed written statement along with an application under order 7 Rule 11 CPC with the plea that the suit was barred by the provisions of section 42 and 54 of the Specific Relief Act. On this application, the learned Single Judge rejected the plaint which order was assailed in High Court Appeal in which the learned divisional bench of this Court thoroughly considered section 42 of the Specific Relief Act and held that 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 fundamental rights. The right of privacy, to carry on the business of one’s choice, access to public information and, large body of social and cultural rights neither relate to status in the traditional sense nor tangible property. Keeping in view the well-settled principle that wherever there is a right there must always be a remedy to enforce it persuaded, Courts not to remain bound within the technicalities of section 42 for the purposes of granting relief. It was further held that Article 4 of the Constitution guarantees to every citizen the inalienable right to be treated in accordance with law. This guarantee, which has been often described as embodying the right of law does not operate merely against the instrumentalities of the State. Article 5 stipulates obedience to the law and the Constitution as the inviolable obligations of every citizen. It would indeed be anomalous to suggest that a victim of illegal action has to go without redress because sub-constitutional legislation does not lay down the mode for enforcing his rights. Finally, the court held that the provisions of section 42 of Specific Relief Act are not exhaustive seems to be preferable.
23. In the present case, the order of inquiry has been challenged on the ground that no reasons have been assigned in the order itself for holding an inquiry and even it is also claimed that the order is in violation of principles of natural justice therefore, in my view the plaintiff can maintain the suit for declaration particularly in the circumstances where the plaintiff is a registered Cooperative Housing Society and if any further order is passed on the basis of the order in question then naturally it will affect the affairs of the plaintiff, therefore, they have a right to challenge the order. The case law cited by the learned counsel for defendant No. 1 and 2 in relation to section 42 of the Specific Relief Act are distinguishable and even in one of the case reported in 1998 CLC 156, the learned Single Judge of this Court while referring to various pronouncement of the Superior Courts, held that section 42 would be attracted to a case in which the plaintiff approaches the Court for the safeguard of his right to legal character of property but where right to his own legal character or property is not involved, the suit is not maintainable. The suit must be one which must bring benefit to him in regard to these two rights. No suit involving any other right, hypothetical or abstract would be competent under that section. The Court will not, therefore, entertain suits in which no benefit accrues to the plaintiff or where the plaintiff sets up merely an abstract right to satisfy his ego or satisfy his grudge against another person. Section 42 cannot be invoked in matters of mere sentiments which have no concern with the vindication of the plaintiff’s title to status and property.
24. In the present case the plaintiff has not approached this Court for claiming any hypothetical or abstract right nor for satisfaction of any ego nor for mere sentiments but the suit has been filed to protect and safeguard the right to its legal character therefore, I have no hesitation to hold that the suit is not barred by Section 42 of Specific Relief Act.
25. Now I would like to take up last preliminary issue for discussion and findings. The learned counsel for the plaintiff argued that the order passed by the defendant No.1 under section 43 sub-section 1 of the Cooperative Societies Act is in violation of principle of natural justice. In this regard the learned counsel for the plaintiff argued that though under section 43 sub-section 1, the defendant No.1 may hold an inquiry into the constitution, working and financial condition of a society but while issuing order for the inquiry, there must be some cogent reasons assigned for the action but in the present case the defendant No.1 has simply passed the order for inquiry without assigning any reason which is not only a violation of principle of natural justice but also a contravention of section 24-A of the General Clauses Act. The defendant No.1 in a mechanical manner and without application of mind issued a order against the plaintiff and it is clear from the order that not a single ground has been mentioned necessitating the inquiry against the plaintiff. He further argued that the discretion should be exercised according to rational based on good evidence. In this regard, learned counsel for the plaintiff relied upon following case law.
1. 1998 SCMR 2268 (M/s. Airport Support Services v. The Airport Manager Quaid-e-Azam International Airport). In this case the honorable court has discussed section 24-A of the General Clauses Act and held that the doctrine has further been recognized and augmented by the recent insertion of section 24-A in the General Clauses Act, 1897, which declares that where a statue confers a power to make any order or to give any direction to any Authority, office or person, such would be exercised reasonably, fairly, justly and for the advancement of the purpose of the enactment. What is more the order or direction, so far as necessary or appropriate would reflect reasons for its making or issuance.
2. 2004 CLC 1090 (Muhammad Younis and 2 others v. Election Tribunal Ferozewala). In this matter, the learned single judge of Lahore High Court held that after addition of section 24-A in the General Clauses Act, it is the duty and obligation of the statutory authorities to give reasons at the time of deciding the controversy between the parties as the law laid down by the honorable Supreme Court while interpreting section 24-A in the General Clauses Act in Messrs Airport Support Service’s case 1998 SCMR 2268 and Zain Yar Khan’s case 1998 SCMR 2419.
3.PLD 1990 S.C 1092 (Amanullah Khan v. Federal Government of Pakistan). In fact this case is based on structuring of discretionary power in which the honourable Supreme Court held that wherever wide-worded powers conferring discretion exist, there remains always the need to structure the discretion and it has been pointed out in the Administrative Law Text by Kenneth Culp Davis (page 94) that the structuring of discretion only means regularizing it, organizing it, producing order in it so that decision will achieve the high quality of justice. The seven instruments that are most useful in the structuring of the discretionary power are open plans, open policy statements, open rules, open findings, open reasons, open precedents and fair informal procedure. Somehow, in our context, the wide worded conferment of discretionary powers or reservation of discretion, without framing rules to regulate its exercise, has been taken to be an enhancement of the power and it gives that impression in the first instance but where the authorities fail to rationalize it and regulate it by Rules, or Policy statements or precedents, the Courts have to intervene more often, than is necessary, apart from the exercise of such power appearing arbitrary and capricious at times.
4. 2010 SCMR 1301 (Tariq Aziz-ud-din and others in Human Right Cases). In this case also, the honorable Supreme court has considered the principles of structuring of discretion and held that it has actually been derived from the concept of rule of law which, inter alia, emphasize that action must be based on fair, open and just consideration to decide the matters more particularly when such powers are to be exercised on discretion. In other words, the arbitrariness in any manner is to be avoided to ensure that the action based on discretion is fair and transparent. In Indian Supreme Court in the case of Delhi Transport Corporation (ibid), while examining a proposition of law, in view of facts of the case mentioned therein concerning removal of an employee under Regulation 9 (b), where opportunity of hearing was not to be provided before taking action, made the following observation:-
“Any action taken without any modicum of reasonable procedure and prior opportunity always generates an unquenchable feeling that unfair treatment was meted out to the aggrieved employee. To prevent miscarriage of justice or to arrest a nursing grievance that arbitrary, whimsical or capricious action was taken behind the back of an employee without opportunity, the law must provide a fair, just and reasonable procedure as is exigible in a given circumstances as adumbrated in proviso to Art. 311 (2) of the Constitution. If an individual action is taken as per the procedure on its own facts its legality may be tested. But it would be no justification to confer power with wide discretion on any authority without any procedure which would not meet the test of justness, fairness and reasonableness envisaged under Arts. 14 and 21 of the Constitution. In this context it is important to emphasis that the absence of arbitrary power is the first essential of the rule of law upon which our whole constitutional system is based. In a system governed by rule of law, discretion, when conferred upon executive authorities, must be confined within defined limits. The rule of law form this point of view means that decisions should be made by the application of known principles and rules and, in general, such decisions should be predictable and the citizen should know where he is. If a decision is taken without any principle or without any rule it is unpredictable and such a decision is the antithesis of a decision taken in accordance with the rule of law. (See Dicey-“Law of the Constitution”-10th Edn. Introduction ex). “Law has reached its finest moments”’ stated Douglas, J, in United States v. Wunderlich, (1951) 342 US 98, “when it has freed man from the unlimited discretion of some ruler. Where discretion is absolute, man has always suffered”. It is in this sense that the rule of law may be said to be the sworn enemy of caprice. Discretion, as Lord Mansfield stated it in classic terms in the case of John Wilkes “means should discretion be guided by law. It must be governed by rule, not by humor; it must not be arbitrary, vague and fanciful,” as followed in this Court in S.G. Jaisinghani v. Union of India, (1997) 2 SCR 703. (AIR 1967 SC 1427)”.
26. The learned counsel for defendant Nos. 1 and 2 argued that under section 43 (1) of the Cooperative Societies Act, the Registrar is empowered to hold an inquiry suo motu into the constitution working and financial condition of a society, therefore, in the present case, the Registrar has rightly exercised his discretionary powers and he further argued that for the purposes of an inquiry envisaged under section 43 (1) the Registrar is not required to communicate the reasons necessitating the inquiry against the society. He further argued that the C.P. No. 301 of 2006 has no nexus with the order of inquiry. He further added that the plaintiff provided a list of developed amenity plots without any details as to how the funds of the society were utilized on the development of amenity plots. The Audit Inspector therefore, requested the secretary of the plaintiff for furnishing the required details which were not supplied since heavy amount was involved therefore, it was necessary to ascertain the income and expenditure and the society was not providing the requisite details therefore, the defendant No.1 with a view to ascertain the working and financial condition of the plaintiff has exercised his discretionary powers. He further argued that there is no question of any violation or infringement of the principle of natural justice in this case. He further averred that under section 43 two different provisions have been created for the purposes of inquiry under subsection 1, the Registrar can hold the inquiry suo motu while under subsection 2 certain prerequisites have been provided for the purposes of inquiry in the later part. An inquiry under section 43 of the Act is a preliminary probe into the affairs of the society and this is not correct to say that the Registrar or his nominee should conduct this inquiry on the pattern of trial. In this regard, the learned counsel for the defendant Nos. 1 and 2 relied upon following case law.
1. 1968 SCMR 423 (Pir Illahi Bukhsh Cooperative Housing Society Limited v. Registrar Cooperative Societies Karachi). In this matter, the honorable supreme court held that it seems clear enough that none of the conditions specified in subsection 2 of Section 43 was in existence when the order in question was made, so that the Registrar did not act under any obligations such as that created by the subsection. His action therefore, clearly lay under sub-section (1) i.e. he acted in exercise of discretion conferred by that subsection and it does not translate his action to the second subsection that he was moved so to act by reason of complaints reaching him of maladministration of the societies’ affairs.
2. 2009 CLC 143 (Saddar Cooperative Market Limited v. Province of Sindh and others). In this case, the honorable full bench of this Court has held that power vested in and exercised by the Registrar under section 43(1) is independent of subsequent subsection (2), hence it is not necessary that the Registrar, even after receipt of information in respect of allegations against a society, should wait for receipt of said information in a particular way. In the circumstances, we hold that the notice under section 43 (1) of Cooperative Societies Act has been issued validly with further observation that the rule of natural justice demands that a person proceeded against should be provided material at the time when he has been heard so he may be in a position to rebut the allegations. It is not necessary for the Registrar to issue a proper show-cause notice or give details of allegations but after receipt of the complaint or information, he may give gist of the allegations to the Society at the time of hearing and thereafter may decide the issue involved.
27. After hearing the point of view of both the learned counsel, I have reached to the conclusion that sub-section 1 and subsection 2 of the section 43 of the Cooperative Societies Act both have altogether different premise and can not be overlapped or extended beyond its sphere. There is no uncertainty and reservation that under sub-section 1, the Registrar has suo motu discretionary powers to conduct or hold an inquiry into the constitution, working and financial condition of a society but the facts remains that whether this discretionary power is unbridled or uncontrolled or while deciding to hold an inquiry, the Registrar at least communicate the reasons for the inquiry as envisaged under section 24-A of the General Clauses Act or keeping in mind the principle of natural justice that no one should be condemned unheard. Under subsection 1 of section 43, three different reasons are provided for conducting inquiry i.e. the constitution, working and financial condition of a society. It is a matter of fact that the defendant No.1 in the present case passed an order on 13.4.2006 for holding an inquiry into the constitution, working and financial condition of the plaintiff society and appointed Assistant Registrar Cooperative Societies (Audit) East Karachi as inquiry officer but in this short order nothing has been mentioned as to why the order for holding inquiry has been passed. At this juncture, I would like to quote a judgment reported in 2004 Y L R 1070, (Karachi Administration Employee Cooperative Housing Society Ltd. versus Government of Sindh), in which, the learned divisional bench of this Court held that no doubt, the Registrar of his own is empowered to hold inquiry under the provisions of subsection (1) of section 43 ibid but such power is exercisable on the basis of complaint alleging the mismanagement or running of the Society against its constitution or utilization of its finances other than the purpose of the Society on subjective assessment of such allegations. An order for holding an enquiry under suo motu power by Registrar bereft of reasons or material warranting the exercise of such powers in terms of section 43 (1) would be a colorable exercise of the power against the mandate and in excess of jurisdiction. As a consequence thereof, the court struck down the orders and the subsequent action with the liberty to initiate inquiry provided sufficient material is available for initiation of suo motu powers. In the judgment of full bench of this court reported in 2009 CLC 143 (supra), it was held that section 43 can be divided in two types of inquiries, one is to be held by the Registrar on its own motion for which no criteria or condition has been provided while in respect of the inquiry not on suo motu basis but otherwise for which some criteria has been provided in sub clauses (a) (b) and (c) of subsection 2. Section 43 (1) gives the power to the Registrar to hold an inquiry at his own motion for which no procedure has been provided nor the same suo motu inquiry require fulfillment of conditions mentioned in subsection (2). In fact the full bench judgment of this court is based on Pir Illahi Bukhsh Cooperative Housing Societies. In the Pir Illahi Bukhsh case (supra), the honorable supreme court had affirmed the notice issued under section 43 (1) and the petition was dismissed but the most important aspect was that the Registrar had issued a notice under section 43(1) with the following reasons.
“As this office has received various complaints and representations from the Members of the Society against the Managing Committee”.
28. This notice was treated under section 43 (1) with the observation that none of the conditions specified in subsection (2) of section 43 was in existence when the order in question was made so that the Registrar did not act under any obligation such as that created by this sub-section. His action therefore, clearly lay under subsection (1) i.e. he acted in exercise of the discretion conferred by that sub-section and it does not translate his action to the second subsection.
29. In the case in hand, it is clear beyond any shadow of doubt that the Registrar has issued the order without assigning any reason. In the full bench judgment of this Court delivered in the case of Saddar Cooperative Market Limited supra though the honourable full bench affirmed the issuance of notice under section 43 (1) but also observed that rule of natural justice demands that a person proceeded against should be provided material at the time when he has been heard so he may be in a position to rebut the allegations. The mark distinction in the case decided by the honourable full bench and in this present case is that the Registrar in the case of Saddar Cooperative Market case issued a notice under section 43 (1) in which the full bench of this Court secured and safeguarded the principle of natural justice and held that a person proceeded against should be provided material at the time when he has been heard so he may be in a position to rebut the allegations while in the present case the Registrar has not issued the notice but issued an order directly without assigning any reason and without complying with an age old and golden rule of principle of natural justice, therefore the facts in circumstances of the case available before the learned full bench is distinguishable to the facts of this case, however, the case reported in 2004 YLR 1070 (supra) is directly attracted in which the learned divisional bench of this court held that an order for holding an enquiry under suo motu power by Registrar bereft of reasons or material warranting the exercise of such powers in terms of section 43 (1) would be a colorable exercise of the power against the mandate and in excess of jurisdiction. Section 24-A of the General Clauses Act, 1897 declares that where a statue confers a power to make any order or to give any direction to any Authority, office or person, such would be exercised reasonably, fairly, justly and for the advancement of the purpose of the enactment. What is more the order or direction, so far as necessary or appropriate would reflect reasons for its making or issuance.
30. The whys and whereforces lead me to irresistible conclusion that whether the order issued by the Registrar is mala fide or not, this aspect can not be decided without recording the evidence but since, both the learned counsel had mutually agreed to argue and craved the decision on issues of law, therefore, the proprietary, validity and or sanctity of the order can be decided on legal plain but whether the order was issued with mala fide intention or not, this particular aspect can not be decided without recording evidence. Since, the parties preferred the decision on issues of law only, therefore, no findings can be given on the plea of mala fide.
31. Though the Registrar under section 43(1) of the Cooperative Societies Act has been vested in suo motu powers to hold an inquiry into the affairs of constitution, working and financial condition of a society but this discretionary power does not give any unbridled right to hold an inquiry in violation of principle of natural justice or section 24-A of the General Clauses Act. The facts of full bench case of this court (supra) though distinguishable to the extent that in the case before full bench a notice was challenged while in this case an order is under challenge. Despite holding the notice valid, the honorable full bench of this court add much emphasis on the fulfillment of basic principle of natural justice and directed the authority to provide gist of allegations at the time of hearing but in the case in hand order for inquiry has been issued without providing any gist of allegations.
32. The upshot of this discussion is that the impugned order 13.4.2006 is declared to have been issued devoid of any reason and in violation of natural justice and the letter dated 18.4.2006 issued by the Assistant Registrar consequent upon the order issued by the Registrar both are set aside.
33. It is clarified that this judgment will not preclude or prevent or affect the discretionary/suo motu powers of the defendant No.1 from issuing fresh notice and holding the fresh inquiry against the plaintiff in accordance with law. However, no inquiry notice/order will be issued to the plaintiff without providing the niceties of allegations warranting the inquiry and notice should be in the fashion and manner as issued by the Registrar with the gist of precise allegations in case of Pir Illahi Bukhsh Cooperative Housing Society Limited v. Registrar Cooperative Societies Karachi, reported in 1968 SCMR 423 in which the principle of natural justice was followed and reasons for inquiry were assigned in the order. The order of Registrar in the above case was treated to have been issued in exercise of powers conferred upon the Registrar under Section 43 (1) of the Cooperative Societies Act and finally, this order was affirmed by the honorable Supreme Court.
34. The jurisdiction of holding an inquiry against the Cooperative Society by the Registrar under his discretionary powers under Section 43 are focused on the circumstances and or phenomenon i.e the “constitution” and “working and financial condition” of the Society. No doubt the language of Section 43 is unambiguous and the Registrar can hold the inquiry but this section does not articulate any intention of legislature to allow the Registrar an unbridled or unconstrained power to pass the order of inquiry in violation of natural justice. The absence of arbitrary power is the first essential of the rule of law. In a system governed by rule of law, discretion, when conferred upon authorities, must be confined within defined limits. The decisions should be made by the application of known principles and rules.
At this juncture, I would like to refer to a judgment, reported in 1993 PLC 673, (Independent Newspapers Corporation (Pvt.) Ltd. versus Chairman Fourth Wage Board & Implementation Tribunal for Newspaper Employees), in which, the honorable Supreme Court has held that when express statutory power is conferred on a public functionary, it should not be pushed too far, for, such conferment implies a restraint in operating that power, so as to exercise it justly and reasonably. In the words of Scar man L.J. "excessive use of lawful power is itself unlawful”. (The Development of Administrative Law, published in Public Law 1990, page 490 at 491). It is further held in the same judgment that there is a presumption that the legislature does not transgress its jurisdiction and invade the fundamental rights given by the Constitution.
35. The Suit is decreed in the above terms and pending application is also disposed off accordingly.
Karachi:-
Dated. 25.5.2011
Judge