1. ' S. ALI ASLAM JAFFERI, J.---By a common short order dated 21-9-2001 reproduced below we had allowed these petitions and now we propose to record the reasons for the same:-- "For reasons to be recorded in detail the petition is allowed to the extent that the impugned order of the respondent No,3 to the extent of disaffiliating the petitioners trade group is set aside and the respondent No,1 is directed to decide the question of their membership in accordance with the requirements of the order dated 2-6-2001 within two months from today after providing adequate opportunity of being heard to the petitioners, The seat in the Managing Committee of the respondent No,1 reserved for trade groups will be left vacant and will be filled after the question of petitioners' membership is decided. The parties will bear their'. Own costs."
2. ' The petitioners in C.P. No,D-2026 of 2001 are office bearers and duly authorised representatives of the respective trade groups mentioned after their names in the title of the petition whereas the petitioners in C.P. No,D-2050 of 2001 are the groups organized to represent specific traders or industries as defined in subsection (2) of section 3 of Trade Organizations Ordinance, 1961. The Karachi Chamber of Commerce and Industry (hereinafter referred as the KCCI) during the years 1961 to 1997 admitted to its membership, as many as 73 trade groups including the petitioners on their compliance with the rules framed by KCCI. Some of these trade groups are licensed and most of the remaining are unlicensed but all of them met with the criterion laid down in .Article 4(c)(i) and (ii) of the Articles of Association of the KCCI. It appears that on 28th June 1976 Deputy Secretary, Commerce Division, Government of Pakistan, issued a circular to all recognized trade organizations in Pakistan inviting their attention to the policy directive contained in paragraph 3(iii) of the Commerce Division's Press Note dated 2-3,1959. On 2nd June, 2001, the Director Trade Organizations, Ministry of Commerce, Government of Pakistan, Islamabad, wrote a letter to Federation of Pakistan, Chambers of Commerce and Industry, a copy whereof was endorsed to all other Chambers of Commerce and Industry in the country directing them to review by 30th June, 2001, the membership of trade groups affiliated with them to ensure the affiliation of such groups after compliance of the orders of the Federal Government contained in the letter dated 28th June, 1976 failing which the unlicensed trade groups shall be deemed to be not a member of a chamber and shall not be eligible to participate in the election of the Chambers, In compliance of the said directives the Vice-Chairman Membership Subject Committee of KCCI wrote identical letters on 20-6-2001 to all trade groups including the petitioners soliciting information mentioned in those letteRs, Such information was furnished accordingly by all the trade groups. The Federation of Pakistan, Chambers of Commerce and Industry, was provided such information by KCCI and the former on its part addressed a letter dated 28-7-2001 to the Director, Trade Organizations forwarding the list of the trade groups affiliated with KCCI. It is the case of the petitioners that they were neither called upon by the KCCI or the Federation of Pakistan Chambers of Commerce and Industry nor the KCCI to participate in the exercise carried out by them pursuant to the directives of the Director, Trade Organizations and on the basis of an ex parte and unilateral decision they were deprived of their membership.. According to the petitioners it was done due to sundry and haughty, overbearing and totalitarian attitude of the President of KCCI who at the behest of some other interested persons intended to keep the petitioners away from the elections which had to take place. Such illegal act was also committed by trying to disenfranchise three other associations of trade and industry, namely Pipri, Dhabeji and Gharo. All the petitioners and other trade groups claimed to have duly paid the annual renewal fee to KCCI and to have complied with all other legal requirements which would have entitled them to participate in the electoral process including casting of votes and offering candidates for various offices.
3. ' On 8-8-2001 some of the trade groups of the petitioners served a legal notice on the President and Secretary of KCCI but the same was not responded by them despite having been served.
4. However, on 22-8-2001 Section Officer of Ministry of Commerce, Government of Pakistan, directed the KCCI for clarifying the position of the membership of trade groups. It appears that on 3rd September, 2001 the Director Trade Organizations held a meeting at Karachi with the Management of KCCI. None of the petitioners or representatives of any other trade group were asked to attend this meeting and by an order dated 5th September, 2001 the Director, Trade Organizations de- affiliated all 73 trade groups from the membership of KCCI. The petitioners have challenged the said order and raised a number of grounds in the petitions, inter alia, that they have been condemned unheard and the order in question is against the principles of audi alterm partem hence liable to be struck down on this point as well.
5. ' Counter-affidavits/objections have been filed on behalf of the respondents. It has been contended on behalf of KCCI that the petition is barred under Article 12 of the Trade Organizations Ordinance, 1961. The petitioners have alternate remedy provided under the Ordinance and to which, they have failed to exhaust. The renewal of the membership of the petitioners has not been made on various legal grounds. The petition is not maintainable as it has been filed against a company incorporated under the Companies Act for the purpose of carrying on commerce or industrial activity for the benefit of its shareholders and, as such, it cannot be considered to be a "person" performing State functions. It was further contended that list of trade groups was prepared and circulated. It was denied that opportunity of hearing was not provided to the petitioneRs, It has also been stated that in compliance of the directions contained in DTO's letter dated 2nd June, 2001, KCCI issued letters to all the trade groups requesting them to furnish relevant information for such purpose. Notices were responded approximately by 50% of the trade groups which too have not furnished the complete information as required and various notices returned unserved. As such, after considering all relevant fact DTO has finally passed the order dated 5th September, 2001 after hearing the representatives of trade groups at Karachi on 3rd September, 2001. It is worth to note that the above-referred objections filed on behalf of KCCI are not in the form of a counter-affidavit and no affidavit in support of these objections has been filed. In the counter-affidavit filed by Dr. Anwar-ul-Haq, Secretary-General of the Federation of Pakistan, Chamber of Commerce and Industry, after referring to the directives issues to various Chambers it has been categorically stated in para-XXI as under:-- "Without prejudice it is submitted that de-affiliating all seventy-three (73) Trade Groups from the Membership of the respondent No,1 can be given legal effect to only in case the Memorandum and Articles of Association of the respondent No,1 are amended strictly in accordance with the procedure laid down in Articles 28(b) and 38(1). The respondent No,2 has set forth all the material and relevant facts with regard to the dispute and the respondent No,2 undertakes to abide any order passed by this Honourable Court in the above-noted petition."
6. ' In the parawise comments filed by Director Trade Organizations justification for passing the order dated 5-9-2001 has been given and it has been stated that the trade groups did not fulfil the formalities as prescribed by the Government in their letter dated 28th June, 1976 and that they were heard before passing the order of their de-affiliation. Finally, it has been stated that the order of the DTO was issued under lawful authority and as such, the petition is liable to be dismissed in limine. However, the comments are not supported by any affidavit.
7. ' After hearing the learned counsel for the parties and after going through the record placed before us, we find that the impugned action of the Director, Trade Organizations de-affiliating the petitioners from the membership of KCCI behind their back and without giving them an opportunity of showing cause against the action proposed to be taken is violative of the well- settled principles of natural justice. The objections filed on behalf of KCCI the Director, Trade Organizations are not supported by any counter-affidavit and there is nothing on record to establish that petitioners were issued any show-cause notices or they were heard before passing the impugned order by the Director, Trade Organizations. Indeed, section 12 of the Trade Organizations Ordinance, 1961 provides for arbitration under the given circumstances but in these petitions the legality and validity of the order of Director, Trade Organizations passed on 5-9-2001 de-affiliating all the trade groups including those of the petitioners from the membership of KCCI has been questioned. We are, therefore, of the considered view that such type of order cannot be deemed to attract the provisions of section 12 of the Ordinance so as to be settled through arbitration. Moreover, we find much force in the counter-affidavit of Dr. Anwar-ul-Haq, Secretary- General of Federation of Pakistan, Chambers of Commerce and Industry, wherein he has said that the de-affiliating of the membership of the trade groups can be given legal effect only in case the Memorandum and Articles of Association of KCCI are amended strictly in accordance with the procedure laid down in Articles 28(b) and 38(1).
8. ' In this view of the matter we had set aside the order of the Director, Trade Organization dated 5-9- 2001 de-affiliating the petitioners trade groups and had directed the KCCI to decide the question of their membership in accordance With the requirements of order of the Government dated 2-6- 2001 within two months from passing the said order viz. 21-9-2001, after providing adequate opportunity of being heard to the petitioneRs, and to keep vacant the seat in the Managing Committee of the KCCI, reserved for trade groups till after decision of the question of the membership of the petitioneRs, ' The petitions were allowed to the extent as C mentioned above however with no order as to costs.