1983 PLP 744 (CLC)

Shahzad Jehangir for Respondent No. .4. Date of hearing : 17th January, 1983. The facts in brief are that on 31‑I‑1958, each of the petitioners borrowed a sum of Rs. 12,000 from the Central Co‑operative Bank, now known as the Punjab Provincial Co‑operative Bank Ltd., on the security of the house in dispute which was mortgaged in favour of the Bank. As despite demand, the loan remained unpaid, the Bank moved the Assistant Registrar of the Co‑operative Societies for commencement of arbitration proceedings, in pursuance of Rule 18 of the Rules framed under the Co‑operative Societies Act, 1912. The latter nominated an arbitrator who commenced the pro ceedings, but as the petitioners were then in England they could not be served and were proceeded against ex parte. As a result of these proceedings, on 18‑3‑1964, the Arbitrator made two awards, one for Rs. 16,472.47 'end the other for Rs. 16,475.47, against petitioners Nos. 1 and 2, respectively.

2. In the meanwhile, by means of the Sind Co‑operative societies (West Pakistan Amendment) Ordinance, 1965, the Co‑operative Societies Act, 1912 was repealed and the Co‑operative Societies Act, 1925 extended to the whole of erstwhile Province of West Pakistan. In pursuance of section 59 of the latter Act, the Bank moved the Civil Court, for execution of the awards as a decree of such Court. Consequently, the house aforesaid was attached, put to auction, and as against the then outstanding loan of Rs. 24,000 exclave of interest, it was disposed of for Rs., 16,400 only.

3. In the course of these proceedings, the Cooperative Societies and Co‑operative Banks (Repayment of Loans) Ordinance, 1966, was promulgated. The petitioners then raised objection before the executing Court, that under the provisions of the Ordinance, its jurisdiction was ousted and the execution proceedings could not be continued. The learned executing Court upheld the objection, and by its order dated 19‑9‑1967 filed the execution petition; declined to confirm the auction, and released the property from attachment. In doing so the learned executing Court also took the view, that the auction price was lord.

4. During the pendency of the execution petition, the Assistant Registrar, Co‑operative Societies, chose to enforce the recovery under the Ordinance and issued notices dated 19‑7‑1966 (Annzxures 'A' and 'A/1') under section 5 thereof, to the Petitioners, requiring them to pay at least 15 % of the loan within six 0onths and get the remaining amount secured in terms of section 7 of the Ordinance. The petitioners failed to respond to these notices within the stipulated period. However, on 3‑5‑1967 they moved applications Anuexures 'Band B/ 1' before the Assistant Registrar, wherein they pleaded that they were out of the country and offered to pay 15 % of the loan in pursuance of the notices. By his orders dated 3‑5‑1967, Annexures 'C and C/1', he allowed the applications, directed each of the petitioners to deposit in the Bank, Rs. 1,800 being 15 % of the loan and to repay the balance, in accordance with the provisions of the Ordinance. There is a controversy between the parties, as to the deposit of Rs. 1,

800. The petitioners assert that the amount was offered for payment, but the Bank refused to accept the same, whereas the latter contends that no such offer was made.

5. However, aggrieved by these orders, the Bank went in revision before the Registrar, under section 64‑A of the 1925 Act. This revision was accepted on 15‑12‑1967. He took the view that the notices sent to the petitioners, were not complied with by them, within the stipulated period and thus they were guilty of contravention of the provisions of the Ordinance. In his opinion the applications Annexures 'B and B/1' were filed by the petitioners merely to frustrate the recovery through the execution of the decree. He maintained that action under the Ordinance could not be taken in a case in which an award had been made by the Arbitrator and further directed that the case would be dropped from the list of the cases pending before the Assistant Registrar under 1966 Ordinance.

6. In compliance with these orders, the Assistant Registrar, on the Bank's move, presumably acting under section 59 (2) of the 1925 Act, proceeded to make the recovery as arrears of land revenue and on 18‑1‑1968 issued warrants for sale of the house by auction. It was auctioned on 28‑1‑1968, for a sum of Rs. 24,000 in favour of respondent No.

4. Tite auction was confirmed by the Assistant Registrar on 28‑2‑1968.

7. The validity of the Registrar's orders dated 15‑12‑1967 and all actions taken thereafter, in pursuance thereof, have been called in question by the petitioners, through this writ petition.

8. I have heard the learned counsel for the parties and examined the record. It was argued on behalf of the petitioners that under section 3 of the Ordinance, notwithstanding anything contained in any other law, for the time being in force, the loan outstanding against the petitioners, had to be repaid and secured in the manner provided in section

7. In the sub mission of their learned counsel, the recovery could be made only under the Ordinance and not under any other law and that therefore, the entire proceedings conducted by the Assistant Registrar under section 59 of the Act were illegal. The learned counsel then referred to sub‑clause (ii) of clause (e) of section 2 of the Ordinance to contend that the amount of the award given by the Arbitrator, is included within the definition of the term 'loan'. The view of the Registrar that in the case of award, no action could be taken under the Ordinance, was thus a sailed.

9. In reply to these submissions, the learned counsel for the respondents canvassed the sustenance of the impugned order. He submitted that since the loan advanced to the petitioners, on their own showing was secured, it could not be treated as a loan within the meaning of clause (f ) of section 2 of the Ordinance. The said Ordinance, therefore, did not apply to the petitioners' cafe and thus, according to the learned counsel, the recovery was rightly made under the Act. He urged that the Assistant Registrar, in issuing notices Annexures 'B and B/1' to the petitioners, acted without jurisdiction and that the case also fell beyond his pecuniary jurisdiction.

10. It is correct that under clause (f ) of section 2 of the Ordinance 4 the definition of the expression 'loan' includes the loan which is not secured or is insufficiently secured and thus the secured‑loan is not covered by the interpretation clause, so as to attract other provisions of the Ordinance. It is, however, to be noticed that the house was mortgaged to secure the loan of Rs. 20,000 advanced on 31‑8‑1958. It was, auctioned in the yea 1966 or so for Rs. 16,

400. It requires consideration, as to whether or not it is a case of insufficiently secured‑loan. This issue was raised before the learned executing Court, but relying on section 13 of the Ordinance, which ousts the jurisdiction of the Civil Court, it did not determine this point, and left it to the decision of the departmental authorities. The Registrar did not at all advent to this aspect of the case and passed the impugned order under the impression that the Ordinance was not applicable when an award had been made. The reason which influenced his decision is palpable incorrect. The impugned order is also silent on the question of pecuniary jurisdiction of the Assistant Registrar. The order, therefore, has got to be set aside.

11. Both under section 8(1) of the Ordinance and section 59(2) of the Act, recovery can be made as arrears of land revenue. Even if section 59 applies, it remains to be decided whether the recovery limed to have been made there under, does not suffer from any illegality. A reference to section 94 of the Land Revenue Act provides, that the proclamation of the intended auction, has got to be served on the defaulter and affixed in the office of the Collector and so also of the Tehsildar of the Tehsil, in which the property to be sold is situate. Under section 95 the sale should not take place on a Sunday or within 30 days from the date on which the copy of the proclamation was posted in the office of the Collector. The petitioners contention is that none of the requirements of section 94 and 95, which are mandatory, were adhered to. On the other hand, according to the learned counsel for the respondents, these provisions were substantially complied with and no prejudice was caused t6 the petitioners.

12. In accordance with the rule, governing the judicial review o the order passed by a public authority, that before striking down such order, every explanation for its validity should be explored and the entire record of the proceedings taken in this behalf examined, the learned counsel for the respondents was asked to place before the Court, the relevant record to meet the objection of the petitioners, anchored on sections 94 and 95 of the Land Revenue Act. In this respect the only document produced before me is the warrant for auction. The departmental record produced before the Court, does not embody any proclamation. Willy‑nilly the learned counsel for the respondents bad to concede that no proclamation, preceding the auction was made. The warrant does not satisfy the requirement of the proclamation. Even if for the sake of argument, it is treated as proclamation, the auction took place within 10 days of its issue and that too, on a Sunday. Looked from any angle the Assistant Registrar, in auctioning the property completely disregarded the provisions of law and acted in an illegal manner. The entire auction proceedings are, therefore, liable to be quashed.

13. For the foregoing reasons this writ petition is accepted, the Registrar's order dated 15‑12‑1967 is declared to have been passed without lawful authority. All subsequent orders and the proceedings resting thereon including the auction of the property are also set aside. The case is sent back to the Registrar with the direction that the revision petition filed the Bank shall be treated as pending and disposed of afresh in accordance with law. The parties are left to bear their own costs. M' Y' H' Petition accepted.