1974 PLP 177 (SCMR)

Nemo for Respondent No.

2. Date of hearing : 10th October 1973. ANWARUL HAQ, J.‑This petition for special leave to appeal is directed against an order made by a learned Single Judge of the Lahore High Court on 15‑2‑ 1 973, whereby a constitution petition, filed by the petitioners to challenge certain notices issued by the Deputy Registrar of Co‑operative Societies, Lahore, under section 5 of the West Pakistan Co‑operative Societies and Co‑operative Banks (Repayment of Loans) Ordinance (XIV of 1966), was dismissed. The petition recites at great length the history of fiduciary relations between the petitioner firm, functioning under the name and style of M/s. Atlas Travels Limited, and the Punjab Provincial Co‑operative Bank Limited (respondent No. 2), but it is not necessary, for the disposal of the present petition, to narrate those details here. Suffice it to say that at one stage the company entered into an agreement with the respondent‑bank for allowing overdraft and other financial facilities. Subsequently, by another agreement executed in 1965 the bank took full control of the functioning of the firm and this arrangement continued until at least 1968. On disputes arising between the parties, references were made to arbitration, and at one stage the writ jurisdiction of the High Court of West Pakistan at Karachi was invoked as to the nature of the arbitration which was permissible under the various agreements subsisting between the parties. On 22‑10‑1970, a suit was filed by the company on the original side of the High Court of Sind & Baluchistan for rendition of accounts by the respondent. That suit is still pending. Again on 17‑11‑1970, the bank moved an application under section 34 of the Arbitration Act, which was dismissed by a learned Single Judge of that High Court, and now an appeal under clause 10 of the Letters Patent is pending. During the pendency of all these disputes and litigation, the bank sent information to the Registrar of Co‑operative Societies, under section 4 of the Ordinance mentioned above, regarding the loan said to be outstanding against the petitioners, amounting to Rs.27,72,697.69, which led the Registrar to serve on the petitioner‑company notices prescribed under section 5 of the Ordinance requiring them to repay and secure the loan in accordance with the provisions of section 8 of the Ordinance. In the High Court, the validity of the notices issued by the Deputy Registrar of Co‑operative Societies was challenged on a large number of grounds, which have been summarised by the learned Judge in paragraph 6 of the judgment under appeal. However, these pleas were not dealt with on merits on the ground that they should first be raised before the statutory authority concerned as permitted by section 6 of the Ordinance, which contemplates a proper enquiry and opportunity of being heard if the debtor disputes his liability. The learned counsel appearing for the petitioners contends that a funda mental question regarding the jurisdiction of the Deputy Registrar of Co‑operative Societies had been raised before the High Court and the same should have been decided, as the Deputy Registrar would not be in a position to adjudicate thereon. The learned counsel submits that the respondent bank having been notified as a scheduled bank by the State Bank of Pakistan, under section 37 of the State Bank of Pakistan Act, 1956 Act, XXXIII of 1956), the transactions which took place between the petitioner‑company and the Co‑operative Bank were in the nature of commercial transactions, more appropriate to a commercial bank, and clearly falling outside the purview of the functions of a co‑operative society or bank, with the result that the loan, if any, outstanding against the petitioners would not fall within the scope of the Ordinance. In support of this contention, the learned counsel invites our attention to certain observations made by the High Court in the previous writ petition instituted by the petitioner, to the effect that the arbitration proceedings between the parties were governed by the ordinary law of arbitration and not by the special provisions contained in the co‑operative Societies Act. After hearing the learned counsel at some length, we are of the view that there is no substance in these submissions. The notification, of the Punjab Central Co‑operative Baak as a scheduled bank under section 37 of the ;State Bank of Pakistan Act, 1956, does not have the effect of altering, in an manner, the character of the respondent bank, and it continues to remain a co‑operative institution. According to the definition given in clause (c) of section 2 of the Ordinance, a "Co‑operative bank" means a co‑operative society established For carrying on banking business and having as its principal object tile financing of other co‑operative societies registered or deemed to be registered under the Act". It will be seen that the definition does not exclude the possibility of transactions other than the financing of co‑operative societies, although that would be its principal object. In any case, a factual enquiry would be needed to hold that the transactions entered into between the parties fell completely outside the scope of the functions of the respondent bank, so as to exclude the applicability of legislation applying to co‑operative banks. On the facts as at present emerging on the record, it seems clear to us that the respondent‑bank continues to remain a co‑operative bank in spite of its being notified as a scheduled bank, with the necessary consequence that the money advanced by this bank to the petitioner‑company would fall within the definition of the term "loan" as contained in clause (f) of section 2 of the Ordinance. Such being the case, the respondent bank was under an obligation to supply the requisite information to the Registrar of Co‑operative Societies under section 4 of the Ordinance, and on receiving such information the Registrar or his Assistant were clearly competent to act under section 5 thereof. There is thus no question here of any lack of jurisdiction on the part of the Registrar or his Assistant. Section 6 of the Ordinance, as already stated, provides that an opportu nity of being heard shall be given to the debtor if he denies his liability. We see no reason why the petitioners should not avail of this statutory opportu nity to satisfy the authority concerned that the loan is in fact not due from them, All the pleas which the petitioners want to urge in this behalf can certainly be placed before the Registrar or the Assistant Registrar as the case may be. Section 3 of the Ordinance makes it clear that the pendency of civil litigation is no bar in the way of the Registrar of Co‑operative Societies acting under this Ordinance. For the foregoing reasons, no justification is made out for our interference in the matter. The petition accordingly fail and is hereby dismissed. Leave refused.