2018 PLP 313 (CLC)

MUHAMMAD SHERAZ KIANI, J.

The above titled appeal has been preferred against the judgment and decree passed by the Additional District Judge, Camp Mirpur on 06.07.2009 whereby, the learned Court be1ow has decreed the suit for recovery of Rs.65,92,824/- filed on behalf of Muhammad Maqsood Butt and others against the appellants and proforma respondents.

2. Summarized facts, culminating into the filing of the above appeal are that Muhammad Maqsood Butt, plaintiff/respondent, herein filed a suit for recovery, against Mian Imtiaz Hussain and others, defendant/appellants herein before the Court of Additional District Judge, Dadyal, Camp Mirpur on 03.12.2002. It was averred that defendant No.11 granted approval of Kashmir Co-operative Development Corporation, under Section 9 of Co-Operative Societies Act, 1925, Schedule A Rule 1927(6). The society was given the name of KCDC with its headquarter at Muzaffarabad. It was alleged that the Society framed its bye-laws which were flexible and defective, however, the defendant No.11 granted approval of the registration of the Society on 21.05.1998. It was further alleged that the Society was converted into a Banking Society and it started its banking business in Mirpur and the matter was brought into the notice of the Circle Registrar, Mirpur that the Bye-laws are being violated but despite this fact, the Registrar, defendant No.12 granted approval of two branches in the meeting of the Society dated 17.02.2000. It was alleged that due to its fake business, the Society stood liquidated vide order dated 03.04.2001 and an FIR under Sections 419, 420, 467/468, 471/109, A.P.C. was also lodged on 20.09.2000. It was claimed that a committee was constituted for auction of the assets of KCDC but no proceedings have been initiated, so far.

3. The suit was contested by the defendants Nos.8 to 13, whereas, defendants Nos.1 to 7, 14, 23 were proceeded ex parte due to non-appearance. In the written statement, respondents No.8 to 13 took the plea that the plaintiff has got no cause of action. The suit is not maintainable in its present form. Under the Co-Operative Societies Act, the plaintiff is barred from filing the suit. Jurisdiction of the Court was also called in question and it was also stated that necessary parties have not been impleaded as party, therefore, the suit is not maintainable and a request was made for declaration as such.

4. In light of the pleadings of the parties, the learned Court below framed issues and the parties were directed to lead evidence. On completion of the proceedings, vide judgment and decree dated 06.07.2009 decreed the suit, hence, the above titled appeal before this Court.

5. Ch. Jahandad Khan, Advocate, the learned counsel for the appellants submitted that the learned Court below erred in law, while holding that the Society was not registered as there was no security deposit. The learned counsel maintained that the fact of the matter is that the Society was registered properly in accordance with law. The learned counsel contended that the Court below misinterpreted the evidence and law, hence, the judgment and decree under challenge is based on no evidence. The learned counsel further contended that the learned Court below was also not justified while declaring appellants Nos.3, 4 and 5 as abettors in all illegal activities. The learned counsel suggested that if the above defendants/respondents were abettors, why they have issued the award against proforma respondents Nos.2 to

8. The learned counsel stressed on the point that under Sections 51 and 57 of the Act, the jurisdiction of the Court below was barred but even then, the learned Court decided the controversy and granted the decree vide impugned judgment and decree which is not maintainable in any manner. The learned counsel submitted that after finalization of award, the plaintiff could file appeal under Section 64 but the needful has not been done and the award has attained finality. The learned counsel stressed the point that Co-Operative Societies Act is a special law, which shall prevail and general law is not applicable in presence of special law. In support of his submissions the learned counsel referred to and relied upon the following case law and craved for acceptance of the appeal:- (1) 2004 YLR 2074, (2) 1980 CLC 789, AJK. (3) PLD 2008 Pesh 35

6. On the contrary, Sardar Muhammad Azam Khan , Advocate, the learned counsel for defendant/respondent, herein negated the claim of the appellants in toto and while supporting the impugned judgment on all counts contended that the judgment of the Court below has been challenged and the decree has not been challenged, whereas, under Section 96 of the C.P.C. read with Order XLI, rule 1 C.P.C., every decree must be challenged. The learned counsel contended that the application for challenging the decree has been filed after the prescribed period of limitation which is liable to be dismissed. The learned counsel further contended that the case in hand is not a case of Co-operative Society as the Society had started its business as Banking company and committed fraud with the connivance of the appellants. The learned counsel supported his version by the following precedent case law and prayed for dismissal of the appeal:

(1) 2003 YLR 2764, (2) 2014 SCR 936 (sic), (3) PLD 2002 Kar. 414, (4) PLD 1997 SC 3, (5) 2005 YLR 1745 (6) PLD 2003 Pesh. 203.

7. I have heard the learned counsel for the parties at length and gone through the record and considered the controversy with due care.

8. The first objection raised by the learned counsel for the respondent is that, as the appellants have not challenged the impugned decree through the present appeal and due to this reason, the appeal is not maintainable in view of section 96 read with Order XLI, rule 1 of the C.P.C. It is true that the word `decree' has not been mentioned in the memorandum of appeal and only a prayer has been made that the judgment dated 06.07.2009 of the Additional District Judge, may be set aside but at the same time, not only a copy of the judgment but also a copy of the decree sheet has been appended with the memorandum of appeal. In such circumstances, when an appeal has been filed against a judgment and decree and the word `decree' has not been mentioned in the memorandum of appeal but certified copy of the decree sheet is annexed with the appeal. Then, it would be said that the requirement of Order XLI rule 1 of the C.P.C. has been complied with because in the said rule, the mandatory requirement is that the copy of the decree should be attached with the memorandum of appeal. It does not specify any specific wording of the memo of appeal. To elucidate the matter, usefully, the relevant rule is reproduced, hereunder: - ORDER XLI "

1. Form of appeal. What to accompany memorandum.

(l) Every appeal shall be preferred in the form of a memorandum signed by the appellant or his pleader and presented to the Court or to such officer as it appoints in this behalf. The memorandum shall be accompanied by a copy of the decree appealed from and (unless the Appellate Court dispenses therewith) of the judgment on which it is founded."

9. The identical proposition came before the Peshawar High Court in case titled 'Sham v. Gulzada, [PLJ 2004 Peshawar 240], and it was held that when, the requirement of Order XLI, rule 1, C.P.C., by annexing the copy of the decree sheet has been fulfilled, then, mere non-mentioning of word 'decree' does not invalidate the appeal. Relevant portion of the judgment is reproduced, hereunder: "8. .. The other question which need consideration at this stage is as to whether non-mentioning the word `decree' in the memorandum of appeal could invalidate the appeal filed by the petitioner, answer to this question that when the requirements of provisions of Order XLI, rule 1, C.P.C. were duly complied with in filing appeal, such appeal could not be invalidated by mere omission to mention that the same was being filed against decree."

10. So, in view of the above law, the objections of the learned counsel for the respondents, in this regard is hereby repelled.

11. The learned counsel for the appellants, mainly contended that in view of the bar contained in Sections 51 and 70(A) of the Cooperative Societies Act, 1925, the learned Additional District Judge had no jurisdiction to pass the impugned judgment and decree and according to the version of the learned counsel, the impugned decree should be declared a nullity in the eye of law. I have no quarrel with the law given in the said sections [51 and 70(A)] of the Act, but these provisions of law bar the jurisdiction of civil Court, only in those matters, which are decided by the functionaries of the Department after taking proceedings under chapter VIII-A of the Act, relating winding up or liquidation of a society under the said Act. In the light of the said provisions of law, it is to be seen, whether, the appellants/functionaries of the Department have taken the proceedings in accordance with the relevant law and redressed the grievances of the respondents/plaintiffs and other effectees, and secondly, whether the society 'Kashmir Cooperative Development Corporation Ltd.' acted as a society, registered under the Cooperative Societies Act, 1925. A perusal of the record shows that in-fact, it was not a society within the meanings given in the Act, rather without any scrutiny, approval was granted to the proforma respondents and it was aimed to loot the money of the people of the area through illegal and fraudulent banking business. No legal formalities have been fulfilled before registration of the society. No property or other assets of the applicants/members of the society were taken into consideration or any charge was created upon any property by the then, Registrar and even, after its registration, the alleged society was not supervised by the Department in a proper manner rather they have turned a blind eye towards their fraud in-spite of the fact that their illegalities, irregularities and scandals of corruption and embezzlement were brought into the notice of the concerned functionaries of the Department. They have not taken legal action immediately under Section 43 and particularly under section 44(E) rather in its meeting held on 17.02.2000, the society was allowed to open (7) more branches, which shows collusion of the functionaries of the Department with the officers of the society/proforma respondents. The plaintiff/respondents, made complaint about the society before the Registrar/appellant but no prompt action was taken and when the scandals spread in all the area, then, finally on 21.10.2000 the District Magistrate, Mirpur took the action sealed the offices of the society and Chief Executive of the Corporation was arrested. In such circumstances, the Registrar should have taken steps under section 44(E) of the Act by entering and searching the premises of the society, by seizing the books of accounts and other documents and taking into custody all moneys, cash, securities, title deeds, properties, etc. but no such action has been taken by the Registrar. So, in these circumstances, one cannot say that the matter in issue was totally in connection with the affairs of the society, done in accordance with law. When, the registration of the Society was highly doubtful, the transactions by officers of the society were not in accordance with law, they had started banking business by opening accounts and depositing money from the account holders, which has no room in the Cooperative Societies Act, 1925, thus, in other words, a fraud has been committed on the statute. The purpose of formation of a Cooperative Society given in the preamble of the Act is "promotion of thrift, self help and mutual and among agriculturists and other person, better business and better methods of production in such manner to achieve the better living and economic condition of its members.

12. The formation of a society is not meant to do the banking transactions and fetch the money of the innocent people by playing tactics in the garb of a society. When, these things have been established, then, it cannot be said that the jurisdiction of the Civil Court was ousted.

13. It is celebrated principle of law that when there is bar of jurisdiction, the barring statute should be interpreted, so as to lean in favor of conferment of jurisdiction on the civil Court a special tribunal or the functionaries empowered in the statute must act within the four corners of their jurisdiction, as conferred upon them by the statute. When, they step out of their jurisdiction, then, the civil Court will sit as a court of corrective processes to undo the wrong done by those functionaries as held in case titled Abdul Hameed v. Government of West Pakistan, reported as PLD 1969 Peshawar 324, and in the case titled 'Mian Muhammad Lateef v. Province of West Pakistan, [PLD 1977 SC 180] and in {PLD 1997 SC 03}. In those cases, in which, the functionaries of the Department or special tribunal had violated the provisions of the relevant law, travelled beyond their jurisdiction, acted with mala-fide, in such situation, if the jurisdiction of the civil Court, even, barred by the statute and conferred upon the special tribunal , even the, the Civil Court, being the court of ultimate jurisdiction can examine; whether these functionaries/tribunal, has acted in accordance with law or illegally or even with mala-fide. My this view finds support from the following case law: 1. 1973 SCMR 356, 2. 2009 CLC 659 Pesh. 3. 2007 SCMR 914 and 4. 1984 CLC 478 Lah.

14. In the present case, when all the illegal, fraudulent activities were going on in presence and collusion of the officials of the Department, particularly the Registrar and he had not taken any action under the relevant provisions of law, rather it was the Deputy Commissioner /District Magistrate, Mirpur who stopped their activities and got registered a criminal case against the delinquent defendants and only then, the Registrar issued the award on 03.04.2001 bearing No.1418-20. The wording of the said award, itself is sufficient to show that what was done by the alleged society and in-spite of that, no corrective provision of law was invoked to get the things corrected in time. To clear the picture, relevant portion of the award is given below:-

15. Even, by issuing the said award, the legal procedure has not been adopted. In fact the award is issued by the Arbitrator and confirmed by the Registrar. No arbitrator was appointed. Suppose, the award was issued directly by the Registrar, even then, when the society was wound up, it was enjoined upon him to appoint a liquidator under section 47 of the Act. Just issuance of award, without specifying the dues, liabilities etc. of the individuals/members were not sufficient because after issuance of award, the payments are made, the outstanding amount is recovered by the liquidator under Section 50 of the Act. No action under section 50(A) of the Act has been taken by the Registrar. So, in my view, the award was issued just to cover up all the illegalities and to show that something has been done but nothing in accordance with law has been done. When it is established from the record that neither, the members/officers of the society nor the officers of the Department were acting with bona-fide, in accordance with law and it was a fraudulent show and the relevant provisions of law have been violated, clearly by all the concerned, then, in such circumstances, the jurisdiction of the civil Court cannot be ousted. In the above mentioned case, reported as 2007 SCMR 914, titled Azram Masood v. Noshaba Moeen and others, the Hon'ble Supreme Court of Pakistan held as under: "The law is clearly settled that an ouster clause in any statute will only apply when the authorities constituted therein act within the four corners of the statute and if they step out of it, the protection available to the orders passed by a Tribunal or special jurisdiction is no more available and court of plenary jurisdiction could examine the controversy."

16. The contention of the learned counsel for the appellants that the appellants are not liable and responsible for payment of the amount of the plaintiff and the proforma respondents/defendants is also without any substance because in the above paras, it has been held that in-spite of all the fraudulent transactions and illegal banking business, the society was also allowed to open more branches in Mirpur and Kotli and in-spite of all the knowledge of such embezzlement, illegal activities, scandals, the appellant, who remained Registrar, at the relevant time, kept mum and turned blind eye towards the so-called officers of the society. No disciplinary action has been taken against the appellant, as well. When, it is proved that the so-called society was established and registered with the connivance and collusion of the then, Registrar/appellant, then, they cannot be exonerated from the liabilities occurred due to embezzlement and illegalities of the officers/members of the society. They are equally responsible for payment of all the looted money and in such circumstances, the learned Court below has rightly passed the decree. All the defendants are collectively and severally responsible for the above miss-deeds.

17. Now coming to the evidence of the plaintiffs, it may be observed that the plaintiff/respondent, himself entered into the witness box and got recorded his statement, besides producing witnesses, namely; Altaf Hussain Circle Registrar, Javed Akhtar Rathor, Clerk/record Keeper, Muhammad Iqbal Chaudhary, Manager, Arshad Mehmood, Senior Clerk, Abdul Saboor and Arshad Mehmood and all the witnesses, supported the version of the plaintiff, whereas, only one witness was produced by the defendant, namely; Noor Hussain, retired Circle In-charge, who also supported the claim of the plaintiff.

18. As far the documentary evidence, produced by the plaintiff is concerned, the plaintiff has produced the audit report, copies of the letters, inquiry report, copy of award and the order of liquidation as well as the copy of the minutes of the meeting and all the documentary evidence, produced by the petitioner remained un-rebutted. It is crystal clear from the file that defendants Nos.8 to 13 could not produce any evidence that they have any security from defendants Nos.1 to

7. It has also been established that without security and guarantee, the corporation was not only registered but also was allowed to open further branches. Hence, the claim of the plaintiff/respondent, herein stood proved before the trial Court.

19. I have also examined the judgment and decree under challenge, critically, but could not find any illegality or irregularity in the same. The impugned order is well reasoned, comprehensive enough and self speaking one, which a judicial order must be. All the issues have been addressed, discussed and resolved under law, hence, the impugned judgment and decree merits endorsement, instead of reversal.

20. In light of what has been stated above, finding no force in this appeal, the same is hereby dismissed. ZC/22/HC(AJ&K) Appeal dismissed.