1998 PTD 2017 (PLP)

(5) The property, movable and immovable, belonging to a society registered under this Act, if not vested in' trustees, shall be deemed to be vested for the time being in the governing body of such society and in all proceedings, civil and criminal, may be described as the property of the governing body of such society by their proper title: (6) Every society registered under this Act may sue or be sued in the name of the President, Chairman, or Principal . Secretary, or trustees, as shall be determined by the rules and regulations of the society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion: Provided that it shall be competent for any person having a claim or demand against the society, to sue the President or Chairman, or Principal Secretary or the Trustees thereof, if on an application to the governing body some other officer or person be not nominated to be the defendant. Section 7 provides for non-abatement of suits qtr proceedings and the continuance of such suits or proceedings in the name of or against the successor of the person by or against whom the suit was brought section 8 says that if a judgment is recovered against a person or officer named on behalf of the society, such judgment shall not be put in force against the property, movable or immovable, or against the body of such person or officer, but against the property of the society. Section 10 provides that in certain circumstances mentioned therein a member of the society may be sued by the society; but if the defendant shall be successful in any such suit brought at the instance of the society and shall be adjudged to recover his costs, he may elect to proceed to recover the same from the officer in whose name the suit was brought, or from the society. Sections 13 and 14 provide for dissolution of societies and the consequences of such dissolution. These provisions have also an important bearing on the questions before us and are quoted in full. (13) Any member not less than three-fifths of the members of any society may determine that it shall be dissolved, and thereupon it shall be dissolved' forthwith, or at the time then agreed upon, and all necessary steps shall be taken for the disposal and settlement of the property of the society, its claims and liabilities, according to the rules of the said society applicable thereto, if any, and, if not, then as the governing body shall expedient, provided that, in the event of any dispute arising among the said governing body or the members of the society, the adjustment of its affairs shall be referred to the principal Court of original civil jurisdiction of the district in which the chief building of the society is situate; and the Court shall make such order in the matter as it shall deem requisite:-" Provided that no society shall be dissolved unless three-fifths of the members shall have expressed a wish for such dissolution by their votes delivered in person, or by proxy, at a general meeting convened for the purpose; Provided that whenever Government is a member of or a contributor to, or otherwise interested in any society registered under this Act, such society shall not be dissolved, without the consent of the Government of the State of registration. (14) If upon the dissolution of any society registered under this Act there shall remain, after the satisfaction of all its debts and liabilities any property whatsoever, the same shall not be paid to or distributed among the members of the said society or any of them, but shall be given to some other society, to be determined by the votes of not less than three-fifths of the members present personally or by proxy at the time of the dissolution, or, in default thereof, by such Court as aforesaid: Provided, however, that this clause shall not apply to any society which shall have not applied to any society which shall have been founded or established by the contributions of shareholders in the nature of a joint stock company. (11) Now, the question before us is regard being had to the aforesaid provisions was the Board a corporation? Our conclusion is that it was not. The most important point to be noticed in this connection is that in 'the various provisions of the Societies Registration Act.1860, there are no sufficient words to indicate an intention to incorporate; on the contrary, the provisions show that there was an absence of such intention. Section 2 no doubt provides for a name as also for the objects of the society. Section 5, however, states that the property belonging to the society if not vested in trustees, shall be deemed to be vested in the governing body of the society and in all proceedings, civil and criminal, the property will be described as the property of the governing body. The section talks of property is vested in the trustees or to the governing body for the time being. The expression 'property belonging to the society' does not give the society a corporate status in the matter of holding or acquiring property, it merely describes the property which vests in the trustees or governing body for the time being. Section 6 gives the society the right to sue or be sued in the name of the President, Chairman, etc. and section 7 provides that no suit or proceeding in a Civil Court shall abate by reason of the death etc. of the person by or against whom the suit has been brought. Section 8 again says that any judgment obtained in a suit brought by or against the society shall be enforced against it. It has been submitted before us that sections 6, 7 and 8 clothe the society with a legal personality and a perpetual succession; and section 10 enables the members of the society to be sued as strangers, in certain circumstances, by the society, and the costs awarded to the defendant in such a suit may be recovered, at his election, from the officer in whose name the suit was brought."

19. After discussing some cases from English jurisdiction Mr. Justice S.K. Das of the Supreme Court of India held as follows:-- "It is clear from the aforesaid decision that provisions similar to the provisions of sections 5, 6, 7 and 8 of the Societies Registration Act, 1860 were held not to show any intention to incorporate; on the contrary, the very resort to the machinery of trustees or the governing body for the time being acquiring and holding the property showed that there was no intention to incorporate the society or union so as to give it a corporate capacity for the purpose of holding and acquiring property. It appears to us that the legal position is exactly the same with regard to the provisions in sections 5, 6, 7 and 8 of the Societies Registration Act, 1860. They do not show any intention to incorporate, though they confer certain privileges on a registered society, which would be wholly unnecessary if the registered society were a corporation. Sections 13 and 14 do not carry the matter any further in favour of the petitioners. Section 13 provides for dissolution of societies and adjustment of their affairs. It says in effect that on dissolution of a society necessary steps shall be taken for the disposal and settlement of the property of the society, its claims and liabilities, according to the rules of the society; if there is no rules, then as the governing body shall find it expedient provided that in the event of any dispute arising among the said governing body or the members of the said society, the adjustment of the affairs shall be referred to the Court. Here again the governing body is given legal power somewhat distinct from that of the society itself: because under section 16 the governing body shall be the governors, council, directors, committee, trustees or other body to whom by the rules and regulations of the society the management of its affairs is entrusted.

14. We have, therefore, come to the conclusion that the provisions aforesaid do not establish to main essential characteristic of a corporation aggregate, namely, that of an intention to incorporate the society. We may further observe that the scheme and provisions of the Societies Registration Act, 1860 are very similar to those of the Friendly Societies Act, 1896 (59 and 60 Vict. 25), as amended in certain respects by subsequent enactments."

20. After referring to certain observations in a treatise on the law relating to unincorporated associations and with reference to Friendly Associates Act, 1896 Mr. Justice S.K. Das observed as follows:-- "We think that these observations made with regard to similar provisions of the Friendly Societies Act, correctly and succinctly summarize the legal position in respect of the several provisions of the Societies Registration Act, 1860. These provisions undoubtedly give certain privileges to a society registered under that Act and the privileges are of considerable importance and some of these privileges are analogous to the privileges enjoyed by a corporation, but there is really no incorporation in the sense in which that word is legally understood."

21. At this stage it would be appropriate to refer the attributes of Societies registered under the Friendly Societies Act, 1896. It is shown in the judgment that such societies were not technically incorporated and being so were unable to sue and be sued in their own name. A statutory privilege was given to them of suing and being sued in the name of trustees.

22. In the above judgment Supreme Court of Indian considered the judgment of Bombay High Court reported as AIR 1941 Bom. 312, wherein it was held that, "the position of a society registered under the Societies Act, 1860 is more like that of a club or joint stock company". It was observed that there was no discussion of the question of incorporation and the decision cannot be accepted as authoritatively laying down that a society registered under the Societies Registration Act is a corporation. The judgment delivered by Mr. Justice Bhagwati reported as AIR 1946 B. 516, was also considered and it was observed that the question whether a society registered under the Societies Registration Act was incorporated as that term is legally understood was not under consideration in that case. The judgment of Mr. Justice Bhagwati was not overruled by the Honourable Judges of the Supreme Court of India and it was observed as follows:-- "It is unnecessary for us to consider the correctness or otherwise of the reason given; it is sufficient for us to state that we do not think that the decision proceeds on the footing that a society registered under the Societies Registration Act is a corporation in the sense of being incorporated as that term is legally understood, but if it does, we are unable to accept it as correct. At this juncture we would like to pause for a moment and with great respect for the honourable Judges of the Supreme Court of India, we would like to humbly observe that Mr. Justice Bhagwati specifically referred to the judgment of Justice Kania in the case of A.S. Krishanan v. M. Sundaram wherein it was specifically stated that the position of a society registered under the Societies Registration Act is like that of a club or a joint stock company and that the position of the members of society is similar to that of the shareholders of the company. The Honourable Judges of the Supreme Court of India brushed aside the earlier judgments of the Honourable High Court holding that society registered under the Societies Registration Act, was an incorporated body and that in the earlier decisions the term incorporation was not under consideration, but they have not discussed as to what is meant by incorporation. Before embarking on the discussion as to what is meant by incorporation we would like to point out that the Honourable Judges of Supreme Court of Indian although took pains but they were not able to outright reject the corporate status of the societies registered under the Societies Registration Act, 1860. As already observed earlier by us the Supreme Court of India was examining the question with reference to the vires of act of Provincial Legislature. In this regard we refer to the judgment of Bombay High Court reported as AIR 1962 Bom. 12, in the case of Servants of India Society, Poona v. Charity Commissioner of Bombay. In that case, Mudholkar, Judge, after referring to the judgment of Justice Bhagwati AIR 1946 Born. 516 held that Servants of India Society registered under the Societies Registration Act was a legal entity and a quasi-corporation. In that case also the issue was being considered with reference to the vires of the Bombay Public Trust Act, 1950 and it was held by Mudholkar, Judge, that quasi-corporations would come. under the category of provisions in the Constitution dealing with the matters relating to incorporation, regulations and winding up of a corporation. A different view was taken by Justice Patel, and the matter was referred to third Judge Mr. Justice Gokhale. Mr. Justice Gokhale observed as follows:-- 'The juxtaposition is between incorporated societies and unincorporated societies and there can be no doubt as to which of the two parts in which a society registered under the Societies Registration Act, 1860 will fall, be it called a quasi-corporation or by any other name. A society registered under the Societies Registration Act may have characteristics whether analogous to some of the .characteristics of a corporation; yet it is not incorporated and remains an unincorporated society. Since it is held that it is an unincorporated society it must come under the second part of entry 32 of list II. "

23. It is evident from entire discussion that the status of society was being considered with reference to the vires of a Provincial Act and the superior Courts while considering the vires of an Act of Legislature take strict views and, therefore, without any discussion as to what is meant by incorporation it was held by Supreme Court of India as follows:-- "On registration under the Societies Registration Act the old Board did not become a corporation in the sense of being incorporated within the meaning of Entry 44. of List 1; it remained and continued to be an unincorporated society though under the several provisions of the Societies Regulation Act, 1860 it had certain privileges some of the privileges being analogous to those of corporations."

24. As the Supreme Court of India had not discussed as to what is meant by incorporation, therefore, we would like to reproduce discussion in this behalf by a Division Bench of this Tribunal in the judgment reported as 1993 PTD (Trib.) 702 (the said judgment is authored by one of us (Muhammad Mujibullah Siddiqui). It reads as follows:-- "According to Mr. Akbar Merchant the cumulative effect of all the provisions contained in Modaraba Ordinance and rules referred to by him and reproduced in the earlier part of this order is that each Modaraba is a body corporate under the law for the time being in force and as such each corporate is a company under sub-clause (b) 1 of section 2(16) of the Income Tax Ordinance. Since the expression 'body corporate' has not been defined in the Income Tax Ordinance, therefore, Mr. Akbar Merchant has referred to the meaning assigned to the expression 'body corporate' and corporation' in dictionaries. In Black's Law Dictionary, the expression 'body corporate' has been defined as a public or private corporation. In the treatise 'Law Terms and Phrases Judicially Interpreted' by Sardar Muhammad Iqbal Khan Mokal, 'body corporate' has been defined as a corporation aggregate like a trade union having perpetual succession, a common seal and right to acquire and hold property. The corporation has been defined to mean a number of persons united together in perpetuity. An association which is independent so far as its existence is concerned of those who compose it, i.e. it is never terminated by the death of any member. The essentials of corporation have been given as follows:-- (i) lawful authority of incorporation (ii) the persons to be incorporated, (iii) a name by which the persons are incorporated, (iv) a place, and (v) words sufficient in law to show incorporation. No particular words are necessary for the creation of a corporation; any expression showing an intention to incorporate will be sufficient. The chief characteristics of a corporation have been described to be its intangibility and its capacity for indefinite duration and its being a separate legal person. The term 'incorporation' has been defined to mean the formation of legal or political body with the quality of perpetual existence and succession, except so far as limited by the act of incorporation. In Black's Law Dictionary the term 'corporation' has been defined to mean, an artificial person or legal entity created by or under the authority of laws of a state of nation, composed, in some rare instances, of a single person and his successors, being the incumbents of a particular office, but ordinarily consisting of an association of numerous individuals. Such entity subsists as a body politic under a special denomination, which is regarded in law as having a personality and existence distinct from that of its several members, and which is, by the same authority, vested with the capacity of continuous succession, irrespective of changes in its membership, either in perpetuity or for a limited term of years, and of acting as a unit or single individual in matters relating to the common purpose of the association, within the scope of the powers and authorities conferred upon such bodies by law'. The term 'corporate entity' has been defined in Black's Law Dictionary to mean, 'the distinct status of a corporation which sets its existence apart from the status of its shareholders; its capacity to have a name of its own, to sue and be sued in its own name'. In Black's Law Dictionary the term '-incorporation' has been defined as, 'the act or process of forming or creating a corporation'. In the Cassel's English Dictionary the word 'corporate' has been defined as 'united in a body and acting as an individual' and the word 'corporation' has been defined, as, a united body or a corporate body empowered to act as an individual '. The word 'incorporation' has been defined in the same Dictionary as follows:-- To unite, combine, or mingle into one mass or body (with); to combine into one body (with); to form into a legal corporation; to receive into a corporation; to embody; to form a limited company. To become united or incorporated so as to form one body. The act of incorporation the state of being incorporated; embodiment; formation of or reception into a corporate body; a corporate body, a corporation'. According to Shorter Oxford English Dictionary the expression 'body corporate' means an artificial person created by law. In the same dictionary the word 'corporate' has been given the meaning to combine in one body or to unite in one body. According to the same dictionary the term 'incorporation' has been defined as an act of combining or uniting into one body, society or organization. The incorporation also means the document creating or legalising a corporation. In Whartson Law Lexicon 'corporate body' has been assigned the meaning of an artificial person established for preserving in perpetual succession certain rights, which being conferred on natural persons only would fail in process of time. It has been given the attributes of an intangible person which enjoys a legal entity, sues and is sued by its corporate name and holds and enjoys property by such name. In the same treatise the expression 'incorporation' has been defined as the formation of legal body with the quality of perpetual existence and succession except as limited by the royal charter or act of Parliament affecting the incorporation. In the Companies Ordinance, 1984 an inclusive definition of body corporate or corporation has been given according to which a company incorporated outside Pakistan is included in the two expressions. A corporation sole, a cooperative society registered under any law relating to the registration of cooperative societies or any other body corporate other than a company defined in the Companies Ordinance which the Federal Government may by notification in the official Gazette specify, have been excluded from the purview of expression 'body corporate'. A Modaraba floated under the authority of Modaraba Ordinance has not been excluded by the Federal Government by notification in the official Gazette and, therefore, it can be shown that Modaraba is a body corporate "then it will come within the purview of body corporate or corporation for the purpose of Companies Ordinance as well. In view of the definitions contained in various dictionaries and legal treatises it can be said that a body corporate is the association of number of persons uniting together for some special purpose or business or uniting together in an organization for a certain or common object by or under authority of a law having a separate and distinct legal status and having its own name other than its members and shareholders which can sue and be sued in its own name having perpetual succession or. for a certain time as controlled by the Charter or Act creating the same."

25. From the perusal of above discussion we are of the considered opinion that a society registered under the Societies Registration Act fulfils all the attributes of a corporate body and with the registration under the Societies Registration Act it stands incorporated as well. We are not persuaded to accept the contention of Mr. Anwar Mansoor that the society registered under the Societies Registration Act has no perpetual succession Band cannot enter into any contract in its own name and cannot hold the property because everything is to be done either in the name of governing body or President, Chairman, Principal Secretary or Trustee. In this behalf we have already referred to various judgments produced before us in which reference has been made to various sections contained in the Societies Registration Act, 1860. We would like to make specific reference to the provisions contained in section 7 which provides that no suit yr proceeding in any Civil Court shall abate or discontinued by reason of the person or by against whom such suit or proceedings shall have been brought or continued, dying or ceasing to fill the character in the name whereof he shall have sued or being sued, but the same suit or proceedings shall be continued in the name of or against the successor of such person. Section 8 of the said Act provides that if there is any judgment against a person or officer named on behalf of the society such judgment shall not be put in force against the property movable or immovable or against the body of such person or officer, but against the property of the society. It is further clarified in section 16 that the governing body of the society shall be the governors, counsel directors, committee, trustees or other body to whom by the rules and regulations of the society the management of its affairs is entrusted.

26. On perusal of above provisions we are of the considered opinion that the provisions for performance of acts on behalf of President, Chairman, Principal Secretary, etc. and management of the affairs of society through governing body has been made, keeping in view that the society which is a corporate body, is not a physical person and with the incorporation on registration of society it acquires the status of a judicial and legal person by fiction of law and its affairs are to be managed through the persons who are physical persons in blood and flesh. It does not mean that the governing body are the persons acting on behalf of society hold the properties or possess right or obligations in their personal capacity. On the contrary it is very clearly provided in section 2 of the Societies Registration Act that the memorandum of association shall contain the names, addresses and occupations of the governors, counsel, directors, committee or other governing body to whom by the rules of the society the management of its affairs is entrusted (emphasis provided by us). Thus, it is very clear that whatever is done by any person on behalf of society it is in fact done for the society, in the name of the society and for the purposes of the society and not for his/herself.

27. We are persuaded to agree with the submission of learned D.R. that the above intention of the Legislature is reflected in the Memorandum and Articles of Association of the appellant itself. In this behalf the learned D.R. has pointed out section 1 of Article IV of the bye-laws of appellant according to which, "the Government of the society shall be vested in the governing board who shall act in the position of trustees and not as beneficial owners".

28. It is further provided in sections 1, 2, 3 and 4 of Article VI of the Memorandum and Articles of Association as follows:-- "Section

1. The Governing Board as above constituted shall be authorised to perform all such acts or things as it may seem necessary or desirable to carry out objects of the Society and for the management of the affairs, or which in its opinion, advance the works of the Society not inconsistent with any law or with these bye-laws. Section

2. All property of the Society shall vest with the Governing Board, and all documents relating to and effecting the said society shall be taken and stand in the name of the society. All such documents relating to and effecting the properties of the society shall be executed for and on behalf of the society, by the President and one other of its Executive Officers acting jointly, or by their duly authorised agent or agents, and when so authorised at any meeting of the society. Section

3. In particular, the Governing Board is authorised to handle all financial transactions whatsoever, and it may through the President and other Executive Officer acting jointly or through their duly appointed agent or agents, sell, exchange, hire, give away, mortgage, or otherwise alienate the property of the society or part thereof (unless otherwise prevented by the terms of a specific grant, will, legacy, etc.) and apply the proceeds in any manner and for such purpose as thought best for promoting of the objects of the society and when so authorised to do so at a meeting of the society. Section

4. The Governing Board shall likewise be authorised through the President and one other officer, acting jointly, to borrow, raise money in such a manner as it shall think best, and secure the repayment of the moneys borrowed by or owning the society by mortgage, charge, or lieu upon the whole or part of the Society's property or assets, and give to lenders or creditors power of sale and all other usual necessary powers when so authorised to do so at a meeting of the society. It may also have the power to purchase, sell, endorse, transfer, and negotiate in every way, securities, stocks and shares of every description on the money market for and on behalf of the society."

29. A perusal of the above sections shows that all the properties of the society shall vest with the governing board but all the documents shall be executed in the name of the society. In section 3 the expression used is, "property of the society" and similar expression have been used in section 4 also. Sections 1, 1-A and 2 of Article XIII of the Memorandum and Articles of Association reads as under:-- "Article XIII. General provision. Section 1.

No part of the net earnings of the Registered Society shall enure to the benefit of any member, trustee, or officer of the registered society, Governing Board or other private individual (except that reasonable compensation may be paid for services rendered to or for the Registered Society, affecting one or more of its purposes) and no member, Trustee, Officer or private individual shall be entitled to share in the distribution of any of the corporate assets upon dissolution of the Registered society. Section 1-A.

No money, property or income or part thereof shall be paid or transferred directly or indirectly by way of dividend bonus or profit to any of its members or his relative or relatives. Section 2.

To invest and deal with any of the monies of the Society.

(a) Out of all the funds acquired by the Society either through income as donation when not immediately required for expenditure and set apart unutilised shall be invested in Government Securities or NIT Units. However at the option of the Governing Board a sum of Rs.10,000 or 25 % of the amount so set apart (whichever is less) may be deposited in the name of the Society in a scheduled Bank selected by the Governing Board from time to time. The Commissioner of Income-tax will duly be intimated certifying that the amount in excess of the limits has been invested in Government Securities or in NIT Units. (b) The Bank accounts of the Society shall be operated jointly under the signatures of any two of the officers or members authorised as signatories for such accounts at the Annual Meeting of the Society.

30. A perusal of above articles shows that all the moneys, properties and income are held by the Society.

31. Section 4 of Article XIII itself provides that the appellant is a corporate body. Section 4 of the Article XIII reads as under: "Section 4.

Membership on the Governing Board does not make the individual liable for torts, debts, contracts, or crimes of the Registered Societies, unless culpably negligent in allowing the commission. Members may be held liable for corporate acts done personally or under his/her direction, or his/her approval. Officers or members are liable for acts arising from failure to feasance, misfeasance, or malfeasance in managing and conducting the corporate affairs. An Officer may be liable for breach of his fiduciary duty to the Society but liability is limited to fraudulent or dishonest acts resulting in loss to the Society. Liability cannot be enforced for error in judgment or inefficiency."

32. A perusal of above section clearly shows that the expression "members may be held liable for corporate acts done personally or under his/her direction, or his/her approval". In the above section and the use of expressions, "corporate acts" and "corporate affairs" are indicative of the fact that the founding fathers of the society have themselves treated the appellant society as a corporate body and, therefore, now it does not lie with the appellant to allege that it is not a corporate body. Article XIV of the memorandum and articles of association provides that, there shall be a common seal of the registered society which shall be affixed at the discretion of the governing board to such deeds, documents or official papers of whatever nature as may require the official sanction of the board. The society shall hold property in its own name is further evident from the provisions contained in section 2 of Article XVII which provides that, "the intimation to the transfer of the assets of the society shall be given to the C.B.R. within three months from the date of dissolution. The learned D.R. has produced a sale-deed also whereby a building known as "Asma Terrace, 386, Garden East, Karachi was purchased in the name of Holy Family Cooperative Society Ltd., a society registered under the Societies Act, 1860 with further clarification that the society shall be referred as the purchaser.

33. From the above discussion we find that all the attributes of a corporate body as contended by Mr. Anwar Mansoor are available in the case of appellant a society registered under the Societies Registration Act. According to Mr. Anwar Mansoor, learned counsel for the appellant in order to constitute body corporate it must have be following attributes:-- (i) It should be distinct from its members. (ii) It must have a perpetual succession. (iii) It should be capable of holding the property (iv) It can sue and be sued. (v) It should have a name of its own. (vi) It must be able to enter into contracts (vii) It must have a common seal

34. We have found that all the above conditions are satisfied in the case of appellant and, therefore, with the registration of society under the Societies Registration Act, 1860 it becomes body corporate.

35. In view of detailed discussion above we are not persuaded to follow the view held by Supreme Court of India that a society registered under the Societies Registration Act, 1860 is an unincorporated society and that it may have some of the characteristic of a corporation. We are of the considered opinion that a society registered under the Societies Registration Act, 1860 is a body corporate for all intents and purposes and is incorporated as .understood in the legal parlance.

36. Mr. Anwar Mansoor has further argued that the department is wrongly placing reliance on the judgment of Sindh High. Court in the case of S.M. Zakir v. C.I.T. PLD 1976 Kar. 1022 wherein it has been held that by virtue of the provisions contained in section 23 of the Sindh Cooperative Societies Act, 1925 the cooperative society becomes a body corporate. He has submitted that the finding that, "as in the case of a company incorporated under the Companies Act, 1913, the cooperative society registered with the Registrar of Cooperative Societies under the Sindh Cooperative Societies Act, 1925 becomes a jurisdic person distinct from its members" is because section 23 of the Act makes a society a corporate body. In order to appreciate the contention of Mr. Anwar Mansoor section 23 of the Sindh Cooperative Societies Act, 1925 is reproduced below: "The registration of a society shall render it a body corporate by the name under which it is registered, with perpetual succession and a common seal and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its constitution."

37. A perusal of the above section shows that a cooperative society registered under the Sindh Cooperative Societies Act, 1925 has not been treated as a body corporate by any deeming provision or fiction of law. Section 23 itself contains the reasons for rendering a cooperative society registered under the Sindh Cooperative Societies Act, 1925 as a body corporate as it shall have its name under which it is registered, it shall have perpetual succession and a common seal, it shall have power to hold property; to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its Constitution. Thus, there being no deeming provision and no fiction of law we are of the opinion that due to time lag in-between the promulgation of Societies Registration Act, 1860 and the Sindh Cooperative Societies Act, 1925 and due to development of law in-between and particularly the enactment of Companies Act, 1913 the Legislature deemed it fit to declare for the purpose of clarification that because of fulfilling the attributes of a body corporate the cooperative society registered under the Sindh Cooperative Societies Act, 1925 shall be rendered a body corporate. While applying the principles of purposive. interpretation if we examine the provisions contained in Societies Registration Act, 1860, we find that all the attributes of a body corporate were required to be satisfied by a society seeking registration under the Societies Registration Act, 1860 but the law relating to corporate bodies was not fully developed, therefore, it was not specifically stated in the Act that the society on its registration shall be rendered to be a body corporate. However, it does not make any difference because while interpreting any Act of Legislature or any other document the substance, contents, spirit and intention is to be seen. For this purpose the provisions contained in the statute are to be examined notwithstanding the omission of any particular expression. It has been held by House of Lords in the case of Pepper v. Hart (1992) 3 WLR 1032: 1993 SCMR 1019 as follows: "I have long thought that the time had come to change the self -imposed judicial rule that forbade any reference to the legislative history of an enactment as an aid to its interpretation. The ever increasing volume of legislation must inevitably result in ambiguities of statutory language which are not perceived at the time the legislation is enacted. The object of the Court in interpreting legislation is to give effect so far as the language permits to the intention of the Legislature. If the language proves to be ambiguous I can see no sound reason not to consult Hansard to see if there is a clear statement of the meaning that the words were intended to carry. Days have long passed when the Courts adopted a strict constructionist view of interpretation which required them to adopt the literal meaning of language. Courts now adopt a purposive approach which seeks to give effect to the true purpose of legislation and are prepared to look at much extraneous material that bears upon the background against which the legislation was enacted."

38. Applying the above principles we find that the intention of Legislature while enacting Societies Registration Act of 1860 was that the legal condition of the societies established for the promotion of literature, science, fine arts or for charitable purposes may be improved and such societies may be made bodies corporate and we hold accordingly.

39. Having held that the appellant a society registered under the Societies Registration Act, 1860 is a body corporate the question for consideration is whether this finding alone is sufficient to hold that it is a company as defined in section 2(16)(b) of the Income Tax Ordinance, 1979 which reads as follows: "Company means: a body corporate formed by or under any law for the time being in force."

40. Although Mr. Anwar Mansoor in support of his contention that the appellant a society registered under the Societies Act, 1860 is not a company as defined in section 2(16)(b) of the Income Tax Ordinance, 1979 confined his arguments to the point that it is not a company because it is not a body corporate and has not addressed any other argument but we feel ourselves morally, judicially and legally bound to consider another aspect also which was raised by some other advocate in another appeal at the instance of an educational institution being run by a society. It was contended in that case that although the society was a body corporate but it was not a company as defined in section 2(16)(b) of the Income Tax Ordinance, 1979 because it came into existence or in other words owes its creation under an instrument other than the law enacted by the Legislature and, therefore, it was not formed by or under any law for the time being in force. To make it more expired it was contended that only that body corporate shall be treated as a company under section 2(16)(b) which is formed/created by or under any law and if a body corporate is formed/created under an instrument registered with the Registrar Joint Stock Companies or Registrar Societies or any other State functionary then such body corporate whose origin is traced in same instrument other than the law enacted by the Legislature shall not be treated as a company. In the said contention the expressions "formed" and "by or under any law" were sought to be interpreted. The contention was not considered in the case in which is was raised because relief was effectively allowed on some other grounds. The contention was left open to be considered in some other appropriate case. Although in the present case we were not able to get necessary assistance from the Bar, but we think that it is a proper case in which the contention should be considered therefore, we venture to examine the contention more particularly for the reason that the issue involves a large number of cases and is of public importance. First we would like to examine the meaning of expression "form". In the Chamber's Dictionary, 1993 Edition the word "form" has been assigned various meanings including to give shape; to bring into being; to make; to contrive; to conceive in the mind; to go to make up; to constitute; to mould and to establish. In the Shorter Oxford Dictionary, 1964 Edition, the word "form" has been assigned the following meanings: "To establish; to mould; to construct; to frame; to bring into existence and to produce. "

41. Thus, the word "form" indicates creation, establishment or bringing of something into existence.

42. A more important point for consideration is as to what is the connotation of expression "by or under any law". A similar issue came for consideration in Indian jurisdiction before High Court of Punjab at Delhi. In the case of Padamprashad Ratan Chand v. C.I.T. (1954) 25 ITR 335 the expression "constitute by an instrument" used in section 26-A of the Income-tax Act, 1922 came for consideration. It was held by Punjab High Court that the words "constitute under an instrument" mean "created or formed by a formal deed". In this case the judgment of Indian Income Tax Appellate Tribunal was made a part of the order of High Court wherein the issue was considered in detail. In that case reliance was placed on a judgment from English jurisdiction namely the Queen v. Registrar of Joint Stock Companies (1891) 2 QB

594. In the said case the relevant facts were that a company formed by agreement between seven persons sought registration under section 180 of the Companies Act, 1862 (England) according to which a company duly "constituted by law" was entitled to be registered. It was held by the judgment of the Queen Bench that a company formed by a written agreement was a company constituted according to law and was, therefore, entitled to registration. But on appeal all the three Lord Justices of the Court of appeal were unanimous in reversing this judgment. Fry, L.J., said that the words "company duly constituted by law" referred to cases in which the constitution of the company did not arise merely from the consensual agreement of the parties, but in which that Constitution was either determined or modified, or affect any same way by something other than mere consent by something which the law imposes

something his Lordship said, like Act of Parliament or Letters Patent. Lopes, L. J., agreed and said, that he was inclined to think that the true meaning of those words was this that they are referred to companies constituted by the intervention of the Legislature or other Tribunal competent to constitute companies, end did not refer to consensual contracts such as the present. The argument that "constituted by law" meant the same thing as "constituted according to law" was repelled. The construction of words, "company incorporated by Act of Parliament" came for consideration before Chancery Division in the case of Elve v. Boyin (1891) 1 Ch.

501. It was observed that, "joint stock companies registered under the Companies Act, 1862 and 1867, could not properly be described as incorporated by Act of Parliament, although their incorporation is under the authority of those Acts. Lindley, L.J. while considering the meaning of words "incorporated by Act of Parliament" observed that the corporation under consideration owed its birth and creation to the joint effect of the charter and of the Act of Parliament and, therefore, it was a corporation incorporated by Act of Parliament. Lopes L.J. agreed with the finding of Lindley L.J. The issue again came for consideration before Chancery Division in the case of Re Smith Davidson v. Myrtle (1896) 2 Ch.

590. The relevant facts were that John Smith by his will bequeath his personal estate to his trustees and declared that they should stand possessed thereof in trust to invest the same in their names in or upon any of the public stocks, funds, or securities of the United Kingdom, or any rule or lease-hold securities, or in or upon the bonds, debentures, or debentures stock of any company incorporated by Act of Parliament. A question was raised before the Court, whether under the power of investment contained in the will the trustees had power to invest in or upon the bonds, debentures, or debenture stock of any company incorporated by registration under the Companies Act, 1862, or whether they were restricted to investing upon such securities or companies incorporated by private or special Acts of Parliament only. A contention was raised that a company incorporated by registration under the Companies Act, 1862 was equally with a company incorporated by a Special Act, within the words "company incorporated by Act of Parliament" as used in the investment clause. It was further contended that companies registered under the Companies Act, 1862 are constituted by a memorandum of association which is equivalent to a charter which derives its force from the Act of Parliament. On the other hand, it was argued that, "it has never been decided that a company incorporated by registration under the Companies Act, 1862 is a "company incorporated by Act of Parliament". It was further submitted that the expression has generally been understood amongst lawyers as referring to a company incorporated by Special Act of Parliament. Reliance was placed on the provisions contained in section 2 of the Faryad Transfers Act, 1891 wherein it was enacted that "the expression ' company' shall means any company incorporated by or in pursuance of any Act of Parliament or by Royal Charter". It was argued that it was done for drawing a distinction between a company incorporated by an Act of Parliament and company merely incorporated in pursuance of an Act of Parliament. It was further contended that there is a wide difference between a company formed by private adventurers at their own will and pleasure by registration under the general provisions of the Companies Act, 1862 and there was nothing in law to show that the companies registered under the Companies Act, 1862 were to be deemed to be companies incorporated by it. It was held by Kekewhichy that "it seems to me that there is a great distinction between a corporation and cooperated by the Crown or by the department of executive under powers delegated by the Legislature and a company incorporated by seven persons complying with certain statutory rules, and thereby creating a corporation which after all may be very little more than a sham. I canvass of a strong inclination of opinion that amongst conveyancers the expression "company incorporated by Act of Parliament" has for many years been generally accepted as meaning a company incorporated by Act of Parliament directed to that particular end. No doubt in many of the forms the words "by Special Act of Parliament" are inserted and sometimes the words "are or a royal charter" are added; but that is by no means always so; and I think that if you had asked one of the old conveyancers what was meant by a company incorporated by Act of Parliament, he would have said, "a corporation which owes its origin to a Special Act of Parliament". It was ultimately held that the expression "company incorporated by Act of Parliament", as used in the power of investment in the will of testator, is not equivalent to "company incorporated by registration under the Companies Act, 1862."

43. The expression "under this Act" again came for consideration before Queen's Bench Division in the case of United Dairies London Ltd. v. Beckenham Corporation (1963) 1 QB

434. Lord Parker, C.J. observed as follows: "Section 113(1) of the Food and Drugs Act, 1955 sets out what is after referred to as the third party procedure. Subsection begins in this way, "person against whom proceedings are brought under this Act shall upon information duly laid by him and on giving to the prosecution not less than three days' clear notice of his intention, be entitled to have any person to whose act or default he alleges that the contravention of the provision in question was due brought before the Court in the proceedings. The narrow point here is whether words "a person against whom proceedings are brought under this Act" cover proceedings brought charging offences under the regulations made under this Act, because Regulation 27 of the Milk and Dairies (General) Regulations, 1959 is clearly made under section 29 of the Food and Drugs Act, 1955. I should have thought, of reading those words alone, that they are really dealing with the proceedings brought in regard to offences under the Act, whereas a reference to the regulations in question shows that there is a provision, regulation of making contravention of the regulations and offence, and laying down the penalty. There is a clear difference between proceedings brought for offences under the Act and the proceedings brought for offences under the regulations. It however, appears from certain other sections, in particular sections 114 and 115 that the draftsman had this distinction in mind, yet he did not draw any distinction in section

113. Nevertheless I still feel that section 113 is only dealing with proceedings brought charging offences under the Act, and it is to be observed that by section 123 provision is made for the regulations themselves applying provisions of the Act. Section 123(1), so far as its material provides, "regulations made under Part 1 of this Act, Milk and Dairies regulation and Milk (Special Designation) Regulation, without prejudice to the generality of the provisions under which they are made, may .(b) apply, as respects matters to be dealt with by the regulations, any provision in any Act (including this Act) dealing with the like matter with the necessary modifications and adoptations. We have been referred to a number of regulations which have been made and which are referred to in Bell's Sale of Food and Drugs, (13th Edition) where section 113 or procedures similar to that laid down in section 113 have been specifically applied and incorporated in the regulations. In these circumstances I am confirmed in the view I take that section 113, unless specifically incorporated in, the regulations in question does not apply to proceedings brought charging offences against these regulations."

44. While referring to various provision of the relevant Act Lord Parker, C.J. pointed out that the draftsman had distinction in mind, we revert to the provision contained in the Income Tax Ordinance, 1979 and its predecessor Income-tax Act, 1922. A perusal of the repealed Income-tax Act, 1922 shows that while defining company in section 2(5-A), was enacted that, "company means a company as defined in the Companies Act, 1913 or a body corporate formed by or under any law for the time being in force ...." In section 26-A while dealing with the procedure in the registration of firms it was provided that "application may be made to the I.T.O. on behalf of any firm, constituted by an instrument of partnership executed in writing ". It was further provided in subsection (3) of section 26-A that "where the I.T.O. is satisfied that the application is complete, and there is, or was, as the case may be, in existence genuine firm registered under the Partnership Act, 1932 and constituted as shown in the instrument, or instruments of partnership executed in writing and in force in the relevant previous year, he may by an order in writing pass within three months on the date on which the return of total income was filed or six months of the end of the previous year whichever is the earlier registered the firm for the purposes of this Act". Almost similar expressions have been used for the purpose of defining company in section 2(16) of the Income Tax Ordinance, 1979 and for registration of firms in section 68 thereof. A perusal of provisions contained in section 2(16) and section 68 of the Income Tax Ordinance, 1979 shows that the draftsman had a clear distinction in mind. Under section 2(16)(b) only such body corporate would mean a company which is formed by or under any law for the time being in force while under section 68 conditions have been prescribed that for the purpose of registration of firms for the purpose of Income Tax Ordinance the firm had to be constituted by an instrument of partnership and the said firm has to be registered under the Partnership Act, 1932 or an application for registration under the said Act has been made. While dealing with the firm the draftsman has not used expression firm constituted or formed by or under the law for the time being in force. The reason being that no firm is constituted by or under any law but it is always constituted by two or more partners in pursuance of their consent to do so by drawing an instrument of partnership and a registered firm is thereafter registered under the Partnership Act, 1932 which reads as follows:-- "

59. Registration.

When the Registrar is satisfied that the provisions of section 58 have been duly complied with, he shall record an entry of the statement in a register called the Register of Firms, and shall file the statement."

45. On the other hand corporate bodies are created, formed, constituted or established either by an instrument at the instance of private parties and the instrument forming or creating the corporate body is registered under the law for the time being in force as in the case of societies registered under the Societies Registration Act, 1860 or Cooperative Societies registered under the Sindh Cooperative Societies Act, 1925 and other laws, or corporate bodies are created, formed, constituted or established directly by or under the law, at the intervention of Legislature and without being constituted under any instrument on the violation of private parties and without registration in pursuance of any law for the time being in force. As we are dealing with the Society registered under the Societies Act, 1860, therefore, it would be appropriate to reproduce section 3 of the said Act which is similar to section 59 of the Partnership Act, 1932 and reads as follows: "

3. Upon such memorandum and certified copy being filed, the Registrar shall certify under his hand that the society is registered under this Act. There shall be paid to the Registrar for every such registration a fee of fifty rupees, or such smaller fee as the Provincial Government may, from time to time, direct; and all fees so paid shall be accounted for to the Provincial Government.

46. Section 10 of the Sindh Cooperative Societies Act, 1925 is also reproduced below: "If the Registrar is satisfied that a society has complied with the provisions of this Act and the rules and that its proposed by-laws are not contrary to this Act or to the Rules, he may register the society and its bye-laws."

47. The above discussion clearly establishes a distinction between the corporate bodies formed and constituted at the behest of private persons and then registered under the law for the time being in force. At this juncture we would like to refer to the provisions contained in section 23 of the Sindh Cooperative Societies Act, 1925 which provides that, "the registration of ,a society shall render it a body corporate by the name under which it is registered". There is second category of the body corporate which are formed, incorporated, constituted, created or established by or under the law itself, meaning thereby directly by the Legislature and not at the instance of private persons in pursuance of provisions of any law for the time being in force and contingent upon the drawing of an instrument and the registration thereof by the authority empowered by the Legislature. The societies registered under the Societies Registration Act, 1860, the Cooperative Societies registered under the Sindh Cooperative Societies Act, 1925 and the firms constituted by an instrument and registered under the Partnership Act do not owe their birth and existence to an Act of Parliament but they are merely formed in pursuance of an Act of Parliament. Similar is the position of societies registered under the Cooperative Societies Act, 1912, section 18 whereof reads as follows: "

18. The registration of a society shall render it a body corporate by the name under which it is registered with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its constitution. "

48. We would like to give instances of the corporations formed, constituted or established by or under the Act of Parliament. Pakistan Insurance Corporation was established by Act No. XXXVIII of 1952 and in section 2(b) thereof it is provided that corporation means the Pakistan Insurance Corporation established by this Act". Similarly House Building Finance Corporation was established by Act No. XVIII of 1952. It is provided in section 3 thereof as follows: "3.

(1) A corporation to be called the House Building Finance Corporation shall be established as soon as may be to carry out the purposes of this Act. (2) The Corporation shall be a body corporate by the name of the House Building Finance Corporation having perpetual succession and a common seal, with power, subject to the provisions of this Act, to acquire and hold property, both movable and immovable, and shall by the said name sue and be sued. "

49. A perusal of section 3(2) above shows that there is a stricking distinction in the provision relating to the bodies corporate established under the Societies Registration Act, 1860, Cooperative Societies Ac:, 1912 and Sindh Cooperative Societies Act, 1925. In all these three enactments it is provided that the societies shall come into existence on registration while in the House Building Finance Corporation there is no provision for registration, for the simple reason that the corporation has been established under the Act of Parliament and owes its existence, creation end birth to the Act of Parliament itself. The National Bank of Pakistan was constituted by Ordinance namely, the National Bank of Pakistan Ordinance, 1949 and in section 2(a) thereof it is stated that "the bank means the National Bank of Pakistan constituted by this Ordinance. Pakistan International Airlines Corporation was established under Act XIX of 1956 and it is provided in .section 2(b) thereof, that, "corporation means the Pakistan International Airlines Corporation established under this Act". The Investment Corporation of Pakistan was established under Ordinance No.4 of 1966. In this Ordinance company is defined, to mean a company as defined on section 2(2) of the Companies Act, 1913 and includes a body corporate established or incorporated under any other law for the time being in force in Pakistan. Under section 2(g) corporation has been defined to mean the Investment Corporation of Pakistan established under this Ordinance and in section 2(t) share has been defined to mean share of any joint stock company registered in Pakistan. Thus, in this Ordinance the Legislature has distinctly dealt with the corporation which has been established, under the said Ordinance, the company as defined in the Companies Act, 1913 and any other body corporate established or incorporated under any other law for the time being in force and a joint stock company registered in Pakistan. The use of different expressions are not meaningless and they indicate that whenever Legislature has intended to refer to the body Corporates established by or under the law such expression has been used and when a body corporate coming into existence on its registration has been referred such expression has been specifically used. There are several other body Corporates formed or established by or under the law itself such as Industrial Development Bank of Pakistan, Oil and Gas Development Corporation, Industrial Development Corporation and National Shipping Corporation.

50. From the above discussion we are of the considered opinion that whenever the Legislature has used the words, formed, established, or created by or under the law it refers to the body corporate formed, established or created directly by the Legislature under the law enacted by it and, therefore, such expression shall not include a body corporate owing its existence to any instrument such as memorandum and articles of association and the registration thereof. In the case of societies registered under the Societies Registration Act they are formed under section 1, of the said Act with a memorandum of association and filing the same with the Registrar of Joint Stock Companies and the registration thereof under section 3 of the said Act. It is, therefore, held that although a society registered under the Societies Registration Act is body corporate but it is not a company as defined under section 2 (16)(b) because such society is not formed by or under any law for the time being in force but is a body corporate which is constituted under an instrument and is registered in pursuance of the provisions contained in the Societies Registration Act, 1860.

51. Before concluding our finding on the issue relating to status of appellant we would like to observe that in the title of assessment order the status of "society/body corporate" has been assigned to the appellant which is hereby maintained. However, while working out the tax liability the tax has been calculated at the rate of 52% which is applicable to companies. This treatment is not upheld and is hereby vacated. The tax liability if any, is to be calculated in accordance with Para A in Part 1 of the First Schedule which prescribes rate of income-tax in the case of every individual, unregistered firm, association of persons, Hindu Undivided Family and artificial juridical person referred to in cause (32) of section 2 of the Income Tax Ordinance. 1979.

50. The next objection raised on behalf of appellant is to the refusal of exemption claimed on the income derived from Federal Investment Bonds. A perusal of the assessment order shows that the assessing officer disallowed the claim for the reason that exemption under clause (93-A) of the Second Schedule is available to a charitable trust only but the appellant is a society to whom provision of clause (93-A) of the Second Schedule is not applicable. The Learned CIT(A) confirmed the treatment. Mr. Anwar Mansoor has submitted that clause (93) is the relevant provision and the exemption was also claimed under the said clause but the learned two officers below did not consider the relevant clause and declined the exemption with reference to clause (93-A). Mr. Anwar Mansoor has produced copy of the return of total income the assessment year 1993-94 as well as assessment year 1994-95 in which exemption was claimed under clause (93) of the Second Schedule to the Income Tax Ordinance, 1979 and not under clause (93-A). With the consent of learned representatives for the parties the findings on this issue are hereby set aside with the direction to decide the issue afresh after providing reasonable opportunity of being heard to the appellant. No other objection is pressed by Mr. Anwar Mansoor, learned counsel for the appellant.

51. The appeal-is allowed as above. M.B.A./526/Trib. Order accordingly.