Petitioners Nos, 1 to 4 are office bearers of Islamabad Co-operative Housing Society, Respondent No,
5. They have invoked the Constitutional jurisdiction of this Court for quashment of FIR No, 4 dated 26.3.2004 registered under Sections 420/409/109 PPC read with Section 5 (2) of the Prevention of Corruption At, 1947, at Police Station FIA/SIU, Islamabad.
2. Briefly stated the persecution story as per contents of the FIR is that during the course of an inquiry, it came to the knowledge of the FIA that Islamabad Co-operative Housing Society, Respondent No, 5 has been originally registered in the year 1988 vide Registration Certificate No, 313 and this Society could not launch any project and in October, 1997, the whole record was collected by the officials of Circle Registrar Co-operative Department, Islamabad, and the said Society was treated as dormant/dead since then. In August, 2003, M/s Muhammad Arshad son of Taj Din, Zohaib Najeeb son of Aamir Najeeb, Muhammad Rafique son of Mansab Dar, Khalid Waseem Khan son of Khan Muhammad, Mehdi Khan Shakir son of Muhammad Khan, Raja Muhammad Rafiq Khan son of Mir Zaman Khan Mahmood Akhtar son of Haji Karim Bux, Mahmood Ahmad son of Ch. Mir Muhammad and Liaquat Ali Butt son of Ghulam Ali Butt were interested in establishing a new Cooperative Housing Society but since a ban was imposed by the Department for registration of the new Cooperative Housing Society, they could not get registered a new Cooperative Housing Society. They with the help of Riaz Hussain Inspector Cooperative Societies Department, ICT, Islamabad, got control of the then dormant Islamabad Cooperative Housing Society unlawfully by holding its general body meeting on 28.8.2003 without the participation of previous office bearers or lawful members of the Society. During its unlawful meeting, the said persons were shown elected as President, Vice President, Secretary General, Finance Secretary, Joint Secretary and Executive members and Riaz Hussain Inspector submitted a false and fabricated report in their favour that the meeting had been attended by the lawful members. This new Society after its revival opened Bank Account No, 0110-5 with A.B.L. Stock Exchange Branch, Islamabad, on 8.9.2003 and started its membership while allowing registration to the genuine/original Islamabad Co-operative Housing Society in the year 1988. The terms and conditions of the Registration included that the area of operation was restricted to the Federal Territory of Islamabad. However, these persons unlawfully using the cover/registration of Islamabad Cooperative Housing Society deceitfully and fraudulently entered into an agreement on 16.9.2003 with M/s Leo International Islamabad for purchase of 3000-Kanals of land beyond the territory of ICT, Islamabad in Villages Qutbal and Hattar, Tehsil Fateh Jang, District Attock at excessive rates of Rs, 1,00,000/- per Kanal without the prior approval of the Registrar Cooperative Societies ICT. In the advertisement published in the newspaper, the site was deceitfully shown as Sectors E-20 and E-21, which Sectors do not exist in the CDA Master- plan. As a matter of fact, as per revenue record, the average sale/purchase rates of the land in the same locality during the last one-year were between Rs, 18,805/- to Rs, 30,479/- per Kanal. It further transpired during the enquiry that for purchase of the same land, the present Management Committee had earlier contacted the concerned landowners directly who demanded the rate of Rs, 70,000/- per Kanal while the Society was willing to pay Rs, 60,000/- per Kanal to them. However, these negotiations were dropped mysteriously and on 19th of September, Malik Din, Assistant Registrar Cooperative Societies, ICT, Islamabad, contacted the said landlords and succeeded in arranging an agreement for sale of the said land at the rate of Rs, 65,000/- in favour of M/s Leo International Islamabad, which is a registered partnership concern owned by Mrs. Nusrat Sharif and Muddasar Ali, wife and brother-in-law respectively of the aforesaid Assistant Registrar Cooperative Societies ICT, Islamabad. Thus, in this deal M/s Leo International with the active connivance of the Managing Committee of the Society and without any investment of their own gained unlawful financial benefit to the extent of Rs, 105-Millions (3000 Kanals, Rs, 35,000/-) at the expense of the general public. The Society has already paid Rs, 170-Millions to M/s Leo International without obtaining any Bank-guarantee. Mutation for 639 Kanals and 14-Marlas of land has been proposed in the revenue record in the name of the Society on 23.9.2003, which has, however, yet to be approved by the Tehsildar.
3. Notices to the respondents were issued for 27.4.2005 and arguments of the learned counsel for the parties have been heard. The allegation against the petitioner/Islamabad Co-operative Housing Society is that with the connivance of Riaz Hussain Inspector Cooperative Societies Department, the present office-bearers of the Society got revived the then dormant Islamabad Cooperative Housing Society by holding its general body's meeting and that through M/s Leo International got purchased land for the Society from the landowners at the rate of Rs, 65,000/- per Kanal. So far as the allegation regarding revival of the old/dead Society, the Government is empowered under Section 4 of the Co-operative Societies Act, 1925, to appoint a person to be Registrar of Co-operative Societies for the Province or any portion of it, and may appoint a person or persons to assist such Registrar) and may, by general or special order, confer on any such person or persosn all or any of the powers of a Registrar under this Act. Under sub-section (4) of Section 3 of the Cooperative Societies Act, Housing Society is defined as under: "Housing Society" means a Society formed with the 'objection of providing its members with dwelling houses on conditions to be determined by its bye-laws."
4. A list of such Societies so classified under Section 3 shall be published annually in the official Gazette and a Housing Society may be registered. Subject to provisions hereinafter contained in Section 5 of the Act, a Society which has as its object the promotion of the economic interest of its members in accordance with cooperative principles or a Society established with the object of facilitating the operation of such a society, may be registered under this Act with or without limited liability and no Society other than the Society of which a member is a Society, shall be registered under this Act, which does not consist of at least ten persons above the age of eighteen years and, where the object of the Society is the creation of funds to be lent to its members and for registration of the Society at least ten persons qualified in accordance with the requirements of Section 7 sub-section (b) may apply through an application accompanied by a copy of the proposed bye-laws of the Society and the persons by whom or on whose behalf such application is made shall furnish such information in regard to the Society, as the Registrar may require and a certificate of registration signed by the Registrar shall be conclusive evidence that the Society therein mentioned is duly registered unless it is proved that the registration of the Society has been cancelled. A special general meeting may be called at any time by a majority of the Committee and shall be called within one month on the requisition in writing of one-fifth of the members of the Society or at the instance of the Registrar and a Society may, by a resolution of a general meeting and with the approval of the Registrar, change its name but such change shall not affect any right or obligation of the Society or of any of its members, or past members and any legal proceedings pending may be continued by or against the Society under its new name. It has further been provided in the ibid. Act that any two or more Societies may, with the approval of the Registrar by a resolution passed by a three-fourth's majority of the members present a special general meeting of each such Society held for the purpose, amalgamate as a single Society, provided that each member has had clear fifteen day's written notice of the resolution and the date of the meeting.
Such an amalgamation may be effected without a dissolution, or a division of the funds, of the amalgamating Societies and any Society may by a resolution passed in accordance with the procedure laid down in subsection (1) transfer its assets and liabilities to any other Society which is prepared to accept them but subject to three months notice to the creditors of both or all such societies.
5. The petitioner/Islamabad Cooperative Housing Society was already registered with the Registrar Cooperative Societies an it was revived by its members by passing a resolution in its general meeting and electing the new office bearers, who have taken the responsibility in the interest of the members of the Society to reactivate the funds of the Society and to establish a housing colony for the benefit of its members.
6. As alleged by the complainant/FIA, the allegation against the Society is that without convening the general meeting of the previous members of the society, the election has been conducted and the persons nominated in the FIR have been elected as office bearers and the previous office bearers or lawful members of the Society have not been heard. It is not the function and duty of the FIA Authorities to enquire into the matters of the Societies. This power has been invested exclusively on the Registrar as provided in Section 43 of the Cooperative Societies Act. The provisions of Section 43 are reproduced below for ready reference: - "S. 43. Inquiry by Registrar.---(1) The Registrar may of his own motion by himself or by a person duly authorized by him in writing in this behalf hold an inquiry into the constitution, working and financial condition of a Society.
(2) The Registrar shall hold such an inquiry as is contemplated in sub-section (1) of this section:--
(a) on the requisition of Society duly authorized by rules made in this behalf to make such requisition in respect of one of its members, such member being itself a Society,
(b) on the application of a majority of the Committee of the Society,
(c) on the application of 1/3rd of the members of the Society.
(3) All officers and members of the Society whose affairs are investigated shall furnish such information in their possession in regard to the affairs of the Society as the Registrar or the person authorized by the Registrar may require.
(4)The result of any inquiry under this, section shall be communicated to the Society Whose affairs have been investigated."
7. Under Section 44-C of the aforesaid Act, an officer of a Society, by whatever, name called, may be removed by the Registrar if on an inquiry, he is satisfied that the said officer:--
(i) acts in a manner prejudicial to the interest of the Society or its members; or
(ii) has incurred any of the disqualifications or has ceased to possess any of the qualification for being an officer provided by the Act, rules or bye-laws; or
(iii) has, committed an act in respect of which the Registrar is empowered to take an action under Section 50-A.
(2) An order under sub-section (1) shall not be passed without giving to the concerned officer a reasonable opportunity to being heard."
8. Section 44-D has further provided that where the Registrar is satisfied that the public interest or to prevent the affairs of any Society from being conducted in a manner detrimental to the interest of its members or depositors or the Society or to secure the proper management of an Society generally, it is necessary to issue directions to the Societies generally or to any Society in particular, it may issue necessary directions and the Societies or as the case may be the Society shall be bound to comply with such directions. Section 50-A of the Act authorized the Registrar to assess damage against the delinquent promoters, etc, which reads as under: - (1)Where, in the course of the winding up of a Society it appears that any person who has taken part in the organization or management of the Society or any past or present chairman, secretary, member of the managing committee or officer of the Society has misapplied or retained or become liable to accountable for any money or property of the Society or has been guilty of misfeasance or breach of trust in relation to the Society [or, where the Society is acting under sub- section (4) of Section 34 as -agent of the financing bank, has made any payment contrary to the instructions of the financing bank] the Registrar may, on the application of the liquidator of any creditor or contributory, examine into conduct of such person and make an order requiring him to repay or restore the money or property or any part thereof respective with linters at such rate as the Registrar thinks just or to contribute such sum to assets of the Society [or of the financing bank] by way of compensation in regard to the misapplication, retainer, misfeasance or breach of trust as the Registrar thinks just.
(2) This section shall apply notwithstanding that the act is one for which the offender may be criminally responsible."
9. Section 60 of the Act deals with the offences, which are as under:-
(a) Default by a Society officer or member. --- A Society with a working capital of Rs, 50,000/- or more or an officer or member thereof, fails without any reasonable excuse to give any notice, send any return or document, do or allow to be done anything which the Society, officer or member is by this Act, [or rules made thereunder] required to give, send, do or allow to be, done; or
(b) Willful neglect or default by a Society, etc. --- A Society or an officer or a member thereof willfully neglects or refuses to do any. act or to furnish any information required for the purposes of this Act [or rules made thereunder] by the Registrar or other person duly authorized by him in writing in this behalf; or
(c) Willfull furnishing of false information. --- A Society or an officer or member thereof, willfully makes a false return or furnishes false information; or
(d) Disobedience of summons, requisition or order. --- Any person willfully or without any reasonable excuse disobeys any summons, requisition or lawful written order issued under the provisions of this Act [or rules made thereunder] or does not furnish any information lawfull" required from him by a person authorized to do so under the provisions of this Act [or rules made thereunder]."
10. Section 70-A of the Act has imposed bar of jurisdiction as under:--
(1) Notwithstanding anything provided in any other law for the time being in force, but save as expressly provided in this Act:--
(a) no Court or other authority whatsoever shall have jurisdiction to entertain, or to adjudicate upon, any matter which the Provincial Government, the Registrar or his nominee, any arbitrator or liquidator, a Society, a financing Bank, a Cooperative Bank or any other person as empowered by or under this Act, or the rules or bye-laws framed thereunder, to dispose of or to determine."
11. The allegation against the Society is that without convening the general meeting of the previous members of the Society, the election has been conducted and the persons nominated in the FIR have been elected as office bearers. If it is so without permission and information supplied to the Registrar Cooperative Societies, the election has been conducted by the members of the Society or that no election has been conducted and the said persons have claimed to be the officer bearers on the basis of fake resolution of the Society, it can be termed as contravention of the provisions of the Act. The power in this regard has been conferred on the Registrar Cooperative Societies to take any action against the members or the officer bearers of the Society as provided in clause (a) of sub-section (1) of Section 70-A of the Act, which provides that no other Court or other Authority shall have jurisdiction to entertain, or to adjudicate upon any matter which the Provincial Government or the Registrar or his nominee etc is empowered by or under this Act or the rules or bye-laws framed thereunder. It means that the FIA Authorities have no concern with the procedure or contravention or violation of any provisions of the Cooperative Societies Act. It is within the exclusive competence of the Government or the Registrar or any other Authority empowers in this behalf to proceed or initiate any legal action against the members or office bearers of the Society.
12.The other allegation against the members of the petitioner/Islamabad Cooperative Housing Society that they have misappropriated or made embezzlement of the funds of the Society by purchasing the land on higher rates than the rates prevailing in the market is concerned, the answer is provided in Section 409 of the PPC and this Court has to determine, as to whether the provisions of the said section are attracted to the present case or not. This section reads as under:- "S. 409. Criminal breach of trust of public servant, or by banker, merchant or-agent-Whoever, being in any manner entrusted with property, or with any dominion over property in his capacity of a public servant or in the way of his business as a banker, merchant, factor, broker, attorney or agent, commits criminal breach of trust in respect of that property shall be punished with imprisonment for life or with imprisonment of either description for a term which may extend to ten years, and shall also be liable to fine."
13.Criminal breach of trust has been defined in Section 405 of the PPC, which reads as under: "Criminal b:-each of trust.--Whoever, being in any manner entrustei with property, or with any dominion over property dishonestly, misapproprates or convicts to his own use that property, dishonestly uses or disposes of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged. or of any legal contract, express or implied, which he has made touching the discharge of such trust or willfully suffers any other person so to do, commits "criminal breach of trust."
14.According to the prosecution, the petitioner/Islamabad Cooperative Housing Society through M/s Leo International purchased the land for establishint a Cooperative Housing Society for benefiting the members of the Society and the land purchased has been transferred in the name of the Society as a whole and not in the name of any individual or collectively in the name of any person or members of the Society. No property was previously entrusted with the members of the Society and according to the petitions;, no dishonest misappropriation or conversion to the use of any property by the persons name in the FIR has been made in violation of any direction law.
15. The following are the essential ingredients of criminal breach of
(a) Entrustment;
(b) Dishonest misappropriation or conversion to his own use in whom confidence reposed;
(c) Dishonest use or disposal of the property in violation of the direction of law;
(d) Dishonest use or disposal of property in violation of any legal contract.
Reference in this context can be placed to the case of 1994 PSC (Cr) 768 and Muhammad Yaqoob Vs. Senior Superintendent of Police, 'Gz4jranwala and 2 others (PLD 2000 Lahore 421).
16. To establish the charge of criminal breach of trust, the prosecution must prove not only entrustment of the property but also that the accused dishonestly misappropriated the property.
Even absence of money is not sufficient to establish the said offence, as laid down in the cases of Shakir Hussain Vs. The State (PLD 1956 Supreme Court' (Pk.) 417), Nadir Shah Vs. The State (1980 S. C.M.R. 402) and Mir Ahmad Vs. The State (PLD 1962) Supreme Court 489). When no such evidence is available on record, the proceedings against the accused are liable to be quashed as laid down in the case of Muhammad Naeem Vs. The State (1990 ALD 291 (2). To establish and substantiate the charge under Sections 406 and 409 PPC mensren is the requirement of the offence under the said section. In the present prosecution case , this important ingredient is missing.
17. The fault of the petitioners is that they have given a new life to a dead or dormant Society, they did not use the property for their own benefits but for the benefits of their members, who have acquired the membership of the Society since the year 1988 and since then have been waiting for any benefit or establishing of a Housing Society for them.
18. The other offence added in the FIR is that Section 420 PPC which enshrines as under: - "S. 420. Cheating and dishonestly inducing delivery of property. Whoever cheats and thereby dishonestly induces the person deceived to deliver any property to any person, or to make, alter or destroy the whole or any part of a valuable security, or anything which is signed or sealed, and which is capable or being converted into a valuable security, shall be punished with imprisonment of either description for a term which may extend to seven years, and shall also be liable to fine."
19. "Cheating' has been defined in Section 415 PPC, which reads as under: "Cheating. Whoever, by deceiving any person, fraudulently or dishonestly induces the person so deceived to deliver any property to any person, or to consent that any person shall retain any property or intentionally induce the person so deceived to do or omit to do anything which he would not do or omit if he were not so deceived, and which act or omission caused or is likely to cause damage or harm to that person [or any other person] in body, mind, reputation or property, is said to "cheat'.
20. From the perusal of the FIR, it is crystal clear that the office bearers of the petitioners, Islamabad Cooperative Housing Society, have not cheated any person intentionally nor they have caused any wrongly loss to its members, rather they have made efforts to give benefits to its members and up- till now no member of the Society, whether new or old, have made any complaint to the Registrar Cooperative Societies or any competent Authority against the petitioner/Islamabad Cooperative Housing Society for dishonestly inducing them to deliver any property to any person or to make, alter or destroy the whole or any part of a valuable security. In the present case, the prosecution in order to attract Section 420 PPC was bound to prove that the accused has cheated the complainant and that he, by such cheating has induced the member to deliver any property to any person.
21. Another astonishing feature of the case is that the case has been registered on the basis of an inquiry conducted by Safir Hussain Shah, Inspector/SHO, FIA/SIU, Islamabad. Learned Standing counsel for the Federation, representing the F.I.A., Mr. Safir Hussain Shah, Inspector, and Liaquat Ali, Inspector when confronted to establish the provisions of Sections 409 and 420 PPC for its application to the case of the petitioners could not respond.
22. If any irregularity or illegality in reactivating/making the Society to function has been committed by the present office bearers of the Society, it is the duty and powers of the Provincial Government or the Registrar Cooperative Societies or any other Authority empowered under the Cooperative Societies Act and the F.I.A. Authorities have no jurisdiction or right to interfere with the affairs of the Cooperative Housing Societies. On the basis of the present prosecution story, a case FIR No, 1/2004 dated 14.2.2004 had also been registered against the partner M/s Leo International, a third party who played an active role in purchasing the land for the aforesaid Society. This FIR was challenged through Writ Petition No, 1983 of 2004 seeking quashment of the said FIR, wherein report and parawise comments were called for and Mr. Kishwar Kiani, Assistant Director FIA appeared in Court in response to the notice issued by the High Court who stated to the effect that the aforesaid FIR against Mst. Murat Sharif and Mudassar Ali has been cancelled. It would mean that the FIA/respondents failed to establish the offence of embezzlement and delivery of property by the members of Society on inducement of the writ petitioners and on the same story, the instant FIR has been registered against the office bearers of Islamabad Cooperative Housing Society.
23.As alleged by the prosecution, Malik Din Assistant Registrar Cooperative Societies intervened in the bargain and was successful in obtaining the property from the land owners in the name of M/s Leo International, which was a partnership concern of the petitioners society. Whoever, being a public servant, and being legally bound as such public servant not to engage in trade, engages in trade, shall be punished with simple imprisonment for a term which may extend to one year, or with fine, or with both as provided in Section 168 PPC. In the subsequent Section 169, it envisages that whoever, being a public servant, and being legally bound as such public servant not to purchase or bid for certain property, purchases or bids for that property either in his own name or in the name of another, or jointly, or in shares, with others shall be punished with simple imprisonment for a term which may extent to two years, or with fine or with both; and the property, if purchased shall be confiscated. The main ingredient of Section 169 is that a public servant if he purchases or bids some property either in his own or in the name of another, or jointly, or in shares which would mean that he acted for his own benefit.. This argument is further clarified by the words used in Section 168 PPC. The said public servant Malik Din Assistant Registrar Cooperative Societies has neither engaged in any trade or business, nor has used the property for his own use in his name or in the name of another person. Had he intervened in the bargain with the owners of the properties of the village land holders and the Leo International? The Leo International has purchased the land through Malik Din for its supply to the petitioner Islamabad Cooperative Housing Society, which is sufficient proof of the factum that the said public servant did not avail of any benefit out of the said transaction made between the land owners and the Leo International.
24. From the contents of the F.I.R. no other allegation against the said public servant has been made out. The provisions of Sections 420/409/ 109 PPC are also not attracted to him.
25. So far as the case of Riaz Hussain Inspector Cooperative Spciety is concerned, the only allegation against him is that he made a false report to the effect that the meeting of the Members of the Islamabad Co-operative Housing Society, the petitioner was held while it was actually not held and in the meeting the Office bearers were elected. It is not covered within any section, provisions of Pakistan Penal Code. At the most, it would be violation of the provision of Co- operative Societies Act and if it is so, the Registrar Cooperative Society or any other Autherity empowered under the Act are competent to proceed against him departmentally.
26. From the above discussion, no offence against Malik Din Assistant Registrar Cooperative Societies and Riaz Hussain, Inspector under Section 420/409/109 PPC read with Section 5 (2) of the Prevention of Corruption Act, 1947 is constituted.
27. The High Court in its Constitutional jurisdiction is very much competent to interfere with the matters of public functionaries, Police, F.I.A. and other agencies and their actions are not immune from judicial scrutiny of the High Court. The High Court in its Constitutional jurisdictional can quash the FIR, if it is based on malafide or is a case of no evidence. Reliance in this context can be praised to the cases of Miraj Khan Vs. Gul Ahmad and 3 others (2000 S.C.M.R. 122) and Sikandar Hameed v.
Deputy Commissioner Vehari and others (2000 P.Crl.L.J. 888).
28. For what has been stated above, it is established that the case against the petitioners and said two public servants has been registered by the F.I.A. malafidely and there is no material on the file of this Court to constitute the offences mentioned in the F.I.R. against them.
29. For the foregoing reasons, this writ petition is accepted and F.I.R. No, 4/2004 dated 26.3.2004 registered under Section 420/409/109 read with Section 5 (2) of the Prevention of Corruption Act, 1947 at Police Station FIA/SIU, Islamabad, is declared to have been registered with malafidely, illegally and of no legal effect, therefore, it is quashed.