2014 PLP 962 (CLC)

UMAR ATA BANDIAL, C.J.

The order passed by the SCS dated 25-2-2014 ("Impugned Order") considers the following material to disqualify the petitioner from contesting election for the post of General Secretary of the respondent No.3, Iqbal Avenue Cooperative Housing Society Ltd., Lahore: "

5. I have heard the parties and perused the record. A number of documents including visiting card, PTCL bill, FBR Taxpayer Online Verification details, listing of Directory of Lahore Chamber of Commerce and Industry of the appellant and his business concerns along with affidavit of Ch. Muhammad Afzal/appellant have been placed on record to establish that Malik Shahbaz Ali/respondent No.3 is engaged in the business of Real Estate/Property Development. During the course of hearing, no evidence was produced in rebuttal by the respondents.

6. Rule 3(m) of the Election Rules adopted in 2006 by the Society prescribed that "Subject to the provisions of the Cooperative Societies Act, 1925 and Cooperative Societies Rules, 1927, no person shall be eligible to contest the election of the Managing Committee of the Society, if he/she has interest in business which creates a conflict of interest with his/her proposed duties." Byelaw No.32(6) stipulates that "A member of a Managing Committee shall cease to hold office if he personally does any such business directly or indirectly as is stated in the objects of society or is involved in it in any way e.g. professional Property Dealer, Contractor etc." A joint reading of Model Election Rules No.3(m) and Byelaw No.32(vi) clearly establishes that respondent No.3 was not eligible to contest the elections."

2. Learned counsel for the petitioner who was respondent No.3 before the respondent SCS submits that important point that has been ignored in the impugned order is the election of the petitioner as General Secretary of the respondent-Society in the year 2010. At the time of election of members of the management of the respondent-Society same objection by the respondent No.2 was raised against the petitioner which was dismissed by the order dated 30-12-2010. Thereafter, the petitioner served as General Secretary of the respondent-Society for a term of three years. According to the provisions of Byelaw No.32(6) of the Society, the petitioner may have been challenged to hold the said office if he was engaged in any professional property dealing as is now alleged. No complaint whatsoever against the petitioner was filed by any member including the respondent No.2. He submits that the petitioner sold his property dealership business in the year 2010 for which documents have been attached on record. The buyer still retains the petitioner's name in his business but the petitioner has no connection or nexus with the same.

3. Learned counsel for the respondent No.2 submits that the fact that petitioner's name admittedly continues in the business of property dealership being transacted by the alleged buyer means that the petitioner has interest therein. It is unusual that seller allows his personal name to be used by the buyer.

4. The relevant rule creating disqualification which has already been referred above is rule 3(m) of the Election Rules adopted in 2006 by the Society. The essential feature of the said Rule is that any person who has interest in business which creates a conflict of interest with his proposed duties is disqualified from contesting election. It is in the context of business of property dealership or civil work contracting that its owner or controller, who is an office-bearer of the Society, will have conflict in the discharge of fiduciary duties owed to the Society. The material requirement therefore is the existence of interest of an office-bearer in business which conflicts with the discharge of his duties.

5. The impugned order fails to take account of the petitioner's un-objected and unblemished service of three years as General Secretary of the respondent-Society. This establishes the fact that the petitioner did not promote his personal business interest in a way that conflicted with his authority as office-bearer of the Society. Although, the Court is inclined to interpret the rule of conflict of interest and duties very strictly against the petitioner, however, the lack of any objection whatsoever against the petitioner during his three years tenure as office-bearer of the Society is a persuasive ground to believe his statement that he has sold his share in the property dealership business.

6. This plea is further substantiated by the fact that the petitioner has a viable connection with the business of Shahab Hotel in PIA Society. This has been demonstrated through bank account statements, NTN certificate, registration documents of the business by the petitioner as its sponsor. Also tax payments made by the petitioner in respect of his personal income from that source is credible evidence.

7. The election process is meant to bring public spirited representatives into the management of Societies. That spirit is partly reflected by the petitioner's track record of unblemished service. He has faced competition and been elected again. His disqualification on material about his previous business that is superseded would not promote interest of the Society.

8. However, in case any business connection of the petitioner with the alleged property dealership is established, then any member may approach the RCS for action against the petitioner in accordance with law since Bye-Law 32(6) remains applicable even during incumbency of the petitioner.

9. Petition allowed in the above terms. KMZ/S-30/L Petition allowed.