1991 PLP 1917 (CLC)

4. The order of the Registrar has been challenged on the ground, that it was wholly incompetent and without jurisdiction as the defendants Nos.2 to 10 were not members of the Society and also because it is perverse and based on no evidence. It is also alleged that the Registrar has ignored the earlier order of the Administrator rejection the claim of the 69 persons to membership of the Society.

5. It would, thus, appear that the present suit has been filed to question the status of defendants Nos.2 to 10 as members of the Society and the validity of the orders passed by the Nominee and the Registrar. In the .course of arguments, both the learned counsel for the parties agreed that the dispute m the suit relates to the status of defendants Nos.2 to 10 and the question for decision in the suit would be as to whether or not they are members of the Society.

6. Mr. Khalilur Rehman, the learned counsel for the defendants, submitted that the question relating to the status of defendants Nos.2 to 10, namely, whether they are members of the Society or not, is a question touching the business of the Society within the meaning of Section 54 of the Act. In support of his submission, he relied on the case of Sajjad Hussain Khan and others v. Muhammad Hanif Siddiqui and others, declined by a Division Bench of this Court, reported in 1990 M L D

25. Mr. Fazle Ghani Khan, the learned counsel for the plaintiff, contended, in reply, that a dispute as to whether or not a person was a member of a Society was not a dispute touching the business of the Society. He sought support from the cases of Mian Nur Hussain and others v. Khalifa Muhammad Sultan and others' (P. L D 1956 Lah. 893), Lyallpur Co‑operative Transport Society Ltd. v. Zamindara Transport Company Ltd. (P L D 1958 Lah. 1026) and Government of West Pakistan v. Wali Muhammad Habib (P L D 1961 SC 215).

7. In Mian Nur Hussain's case an election to the Managing Committee of the Society was challenged on the grounds that the meeting was presided over by a person who was not entitled to do so and that five of the defendants were not members of the Society at all and were, thus, not entitled to vote. The Division Bench consisting of Shabbir Ahmed and B.Z. Kaikaus, JJ. held that the question in the suit related to status of the defendants and was not covered by the word "business" in Rule 18 framed under the Cooperative Societies Act, 1912. The reason for the decision was expressed thus:‑

"While we do not intend to place any restricted interpretation on the word `business', we are unable to hold that the word includes questions relating to the status of a person. It may also be observed that in the present case the grounds of relief include that some of the defendants were not members at all and, therefore, not entitled to vote. Now, if a separate suit was brought for declaration as to whether these persons are members or not members and finding is given, then if we hold that in connection with the validity of the election this matter could be gone into by the arbitrator, there would be a clash of jurisdiction between the arbitrator and the Civil Court and we do not presume that this clash was intended."

8. In Mubarak Din v. Registrar, Cooperative Societies, which was decided by SA. Rahman, C.J. and Muhammad Yaqub Ali, J. similar question arose and their Lordships dissented from the view expressed in Mian Nur Hussain's case and observed that they were not inclined to "accede to the broad proposition that all questions of status as members or office‑bearers of a Cooperative Society would be taken out of the purview of Rule 18 on the ground that they related to question of status".

9. Kaikaus, J. who had delivered the judgment in Mian Nur Hussain's case was a member of Bench which decided the case of Lyallpur Co‑operative Transport Society v. Zamindara Transport Co. Ltd. In that case, the names of the defendants were removed from the register of members and the question was whether they were legally removed. The plaintiff claimed that the defendants were not members and, therefore, the reference by the Registrar was incompetent. It was held that the question whether legally a person could become a member at all was not a question relating to business of a Society. The decision is clearly distinguishable from the present case where the question is not whether defendants Nos.2 to 10 could legally be members of the Society but whether they were in fact such members. The same Bench decided another case, viz Lyallpur Cooperative Transport Society v. Ahmed Saeed (P L D 1958 Lah 1031) and Kaikaus, J. who delivered the judgment therein did not consider it necessary to refer the similar question, which had arisen therein, to Full Bench although there was a clear conflict in the decisions in Mian Nur Hussain's case and Mubarak Din's case. He observed, "Frankly, I have never felt strongly on this matter myself for it is just a question of taking a view of what is included in the word "business". Having explained the reasons for the decision in Mian Nur Hussain's case the learned Judge went on to add:‑-- "My real reason was only as stated above and if another Division Bench of this Court does not regard this clash of jurisdiction as in any way undesirable, I think I should waive my objection with them. I would, however, make it absolutely clear that whenever the question of the jurisdiction of the Registrar to make a reference depends upon whether a person is or is not a member, the question can always be decided by a Civil Court." In that case, the defendant was expelled from membership of a Society on the ground that he had ceased to hold twenty‑five shares and it was held that this question truly arose from the functioning of the Society and was, therefore, related to the business of the Society. 1.0. Similar question arose in yet another case at about the same time when the Lyallpur Cooperative Transport Society cases were decided. That was the case of Muhammad Aslam Siddiqui v. Hasina Begum, reported in 1986 M L D

736. That was a case under the Cooperative Societies Act, 1925 and Kaikaus, .J. was a member of the Bench which decided it. In that case a dispute as to title to a house was referred to the Registrar on the representation that both the parties were members of a Co‑operative Society. The award was that the appellant was entitled to the possession of the house. The respondent objected to execution of the award on the ground that she was not a member of the Society and, therefore, the reference and the award against her were void. It was contended on behalf of the appellant that there was a decision by the arbitrator as to the respondent being a member of the Society and that decision was binding on Civil Court. The contention was negatived on the ground that there was no clear finding on the subject in the award and that, in any case, the decision as to membership of the respondent was not on a question referred to the Registrar but was one on a preliminary question relating to procedure and jurisdiction and was not binding on Civil Court. It was observed, in the context of the provisions of Sections 54 and 57 of the Act that "a question as to whether a person is or is not a member of the Cooperative Society is also a dispute within the meaning of Section 54" and it was observed as follows:‑

"If on a reference to the arbitrator an objection is raised by a party as to jurisdiction because one of the parties is not a member, the arbitrator may properly refuse to decide this matter on the ground that that was not referred to him and that the reference assumes that parties are members. If it be intended that he should give a binding decision on this point, the party concerned should again approach the Registrar and get a reference from him to the arbitrator for deciding the question as to whether the person concerned is or is a member."

11. The case of Government of West Pakistan v. Wali Muhammad Habib (P L D 1961 SC 215) is not really in point. It was there held that a dispute between the Society and a Commission agent, as such Commission agent, was not covered by Section 54 even though he was a member of the Society.

12. The result of the cases discussed above is that the question whether a person is or is not a member of a Cooperative Society is a dispute touching the business of the Society and that if that question is referred to the Registrar and decided by him or his nominee or arbitrators, the decision is final and conclusive and cannot be called in question in a Civil Court; but if, on the other hand, that question is not referred to the Registrar but is decided merely as a preliminary question in some other dispute referred to him, the jurisdiction of Civil Courts in respect of that question is not barred. In the present case, the question whether the defendants Nos. 2 to 10 were not the members of the Society was admittedly referred to the Registrar and decided, first by his nominee and then by himself on appeal under Section 56 of the Act. The decision, therefore, is final and conclusive and cannot be called in question in this Court.

13. In the case of Sajjad Hussain Khan and others v. Muhammad Hanif Siddiqui and others (1990 M L D 25), the whole dispute between the parties was held to boil down to the determination of the status of the Plaintiffs vis‑a‑vis the Co‑operative Society, that is to say, to the determination of the question as to whether they were or were not members of the Society. The allegations regarding the right to participate in election were held to be irrelevant. It was held that the suit for declaration that the plaintiffs were entitled to contest, and take part in, elections was not maintainable and that the plaint was rightly rejected. The cases reported in P L D 1956 Lahore 893 and P L D 1958 Lahore 1026 were distinguished on the ground that those cases arose under Rule 18 of the Rules framed under the Act of 1912, which dealt with disputes "concerning" the business of the Society whereas Section 54 of the Act of 1925, provided for disputes "touching" such business, and that the word "touching" was more comprehensive than the word "concerning" and covered the dispute regarding status of a person as to his membership of a Cooperative Society.

14. In the circumstances, it is clear that the dispute set out in the plaint in this suit, which relates to the status of defendants Nos.2 to 10, i.e. whether or not they are members of the Society, is a dispute touching the business of the Society and is covered by Section 54 of the Act.

15. Mr. Khalilur Rehman contended that in this view of the matter the dispute should have been referred to the Registrar for decision by himself or his nominee. However, it is clear from the averments in the plaint that the dispute regarding the membership of the defendants Nos.2 to 10 had already been referred to the Registrar and decided by him. There would, therefore, be no question of referring the same dispute to the Registrar again. Be that as it may, by virtue of the provisions of Section 70‑A (1) read with Section 54 of the Act, the Court has no jurisdiction to entertain a dispute as to membership of a person. Further, as provided by Section 70‑A (b) of the Act, the validity of anything done or any order passed by the Registrar cannot be called in question before or by any Court or other authority whatsoever. It has been noticed that the relief claimed in the plaint is for a declaration that the awards of the Registrar and his nominee are without jurisdiction. Granting such a relief would amount to calling in question the awards made by the Registrar and his nominee under Sections 54 and 56 of the Act, which is not permitted by Section 70‑A (b) of the Act. The declaration that the acts of defendants Nos.2 to 10 are those of usurpers has been sought obviously on the basis, and would involve a finding, that the election of those defendants was illegal. Such a declaration cannot be granted because a dispute regarding elections is a dispute within the meaning of Section 54 of the Act (See Sindh Balochistan Provencal Co‑operative Bank Limited v. Dilawar Khan P L D 1970 Karachi 200).

16. It was also contended by Mr. Khalilur Rehman that the provisions of Section 70 of the Cooperative Societies Act regarding service of notice on a Society before filling a suit have not been complied with. This contention is borne out by the perusal of this plaint.

17. In the circumstances. The suit is barred by the provisions of section 70 and 70-A of the Cooperative Societies Act,1925, and the plaint is liable to be rejected. The plaint is, therefore, hereby rejected.

2. C.MA. No.2712 of 1990: In view of the above order this application by the plaintiff for temporary injunction to restrain the defendants Nos.2 to 10 from making alienations, transfers or allotment of the land, property and assets of the Rizwan Cooperative Housing Society Ltd., has become infructuous and is hereby dismissed. A.A/M‑1435/K Plaint rejected