1. ' TUFAIL H. EBRAHIM, J.--- Brief facts of the case as per available record are that petitioner is a registered society under the Cooperative Societies Act, 1925 and is entitled to land situated in Schemes Nos.33 and 45 of the City District Government Karachi (CDGK). The said land could not be developed due to lack of infrastructure facilities and amenities for various reasons and to secure certain amenities and facilities for its members the petitioner has entered into an Agreement with another society namely Gulshan-e-Mehran Society.
2. ' It has been contended by the learned counsel for the petitioner that respondent No,2 through its Cooperative Inspector has already conducted regular audits of the accounts of the petitioner's society for the years commencing from 1-7-2004 to 30-6-2007, but no report was furnished and also no reply was made to the various request of the petitioner vide their letters dated 13-11-2007, 1- 12-2007. 7-2-2008 and 10-6-2008. Per learned counsel the respondents at no point of time sought any documents from the petitioner for finalization of the reports for the said yeaRs, However for mala fides and ulterior reasons the Cooperative Inspector-II vide letter dated 19-6-2008 for the first time informed that due to non-availability of the balance sheet the said reports were not produced. The said contentions were denied by the petitioner and to show their bona fide, balance sheets for the year ending on 30-6-2005, 30-6-2006 and 30-6-2007 were provided. Per learned counsel an unanimous resolution was passed by the members in their General Body Meeting held on 30-11-2007 for de-registration/winding up of the petitioner's society and such request was conveyed to respondent No,2, but no action was taken by respondent No,2 and on the contrary respondent No,2 with mala fide intention and ulterior motive have made false allegations and issued order dated 25-6-2008 in terms of section 43(1) of the Co-operative Societies Act, 1925 whereby respondent No,3 was appointed as an Enquiry Officer to hold inquiry into the constitution, working and financial conditions of the petitioner's society with direction to submit his report within 30 days positively. The relevant portions of Order dated 25-6-2008 are reproduced as under:--- "Whereas the management of the society has failed to hold the General Body Meeting of the society as required under section 12 of the Co-operative Societies Act 1925 and Bye-Law No,37 of the society.
3. ' Whereas the Financial Statement of the society have not been furnished by the society as required under Rule 19 of the Cooperative Societies Rules, 1927.
4. ' Whereas the record of the society has not been produced before the Government Auditor as required under section 22 of the Cooperative Societies Act, 1925 Sindh the date of inception of the society, which tantamounts to criminal misconduct.
5. ' Whereas it has been reported that irregularities of serious, in nature have been committed by the present management in purchase of land for the society.
6. ' Whereas it has been alleged that some persons have taken over the affairs of the society illegally and are engaged in illegal sale of plot which is against the law and interest of the membeRs, ' And whereas the management of the society is not making compliance of the correspondence issued by the Department.
7. ' Therefore in exercise of the powers vest in me under section 43(1) of the Cooperative Societies Act, 1925. I, Saqib Ahmed Soomro, Registrar, Cooperative Societies Sindh, appoint Mr. Muhammad Younus Baloch, Deputy District Officer Cooperative-I, Karachi, as Inquiry Officer to hold inquiry into the Constitution, Working and Financial Condition of Shahbaz Qalandar Cooperative Housing Society Ltd.
8. ' From the record it also appears that the Inquiry Officer vide its letter dated 26-8-2008 directed the petitioner to provide various papers and documents. Initially the society requested time to comply and thereafter society wrote detailed reply to the Inquiry Officer along with the documents mentioned therein vide its letter dated 1-7-2008. However before the inquiry could be commenced, the petitioner preferred this petition and obtained restraining orders from this Court against the operation of the impugned orders dated 25-6-2008 and 26-6-2008.
9. ' The learned counsel of the petitioner has argued that inquiry as contemplated in subsection (1) of section 43 could be commenced only in terms of subsection (2) of section 43, which subsection is reproduced as under:-- "(a) on the requisition of the 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 the majority of the Committee of. The Society.
(c) on the application of 1/3rd of the members of the society".
10. ' Per learned counsel no such requisition of the society or any application was made by the committee or the members of the society or an application by the majority of the committee of the petitioner or 1/3rd of the members of the petitioner have been communicated to the respondents for conducting inspection of affairs of the society. The learned counsel for the petitioner has argued that the impugned orders are without jurisdiction and unlawful since no sou motu inquiry could be initiated by the Registrar without proper and ample material. Per learned counsel the grounds disclosed in the order dated 25-6-2008 are fictitious, imaginary and beyond the record.
11. Per learned counsel (a) Annual General Body meetings of the petitioner have been duly held, (b)
12. Financial Statement have been provided to the respondents, (c) The Record of the society was produced before the Government Auditors, (d) All the documents have been duly provided by the petitioner to the Department, and (e) Allegation of illegal sale of plots is mala fide and in the nature of fishing and roving expedition to commence unlawful inquiry against the petitioner. In support of his contention learned counsel relied upon on unreported case C.P.No,D-323 of. 2000, C.P.No,D-1036 of 2007 and one reported case-law being 2004 YLR 1070.
13. ' In C.P. No,D-323 of 2000, it was reaffirmed and impugned order dated 25-1-2000 was set aside.
14. However, the respondent was free to take appropriate action against the petitioner in accordance with law. The order placed before in C.P.No,D-1036 of 2007 before us was preadmission notice, whereby it was held prima facie that no reasons were given by the Registrar for initiating the inquiry into the constitution working and financial condition of the petitioner society. Merely, the word "expedient" has been used justifying such in inquiry. In our view this appears to be colourful exercise of power given to the Registrar under section 43(1) of the Act.
15. ' In the case of The Karachi Administration Employee Cooperative Housing Society Ltd .v.
16. Government of Sindh and others as reported in 2004 YLR 1070 another bench of this court was pleased to hold that:--- "No doubt, the Registrar of is own is empowered to hold inquiry under the provisions of subsection
(1) of section 43 (ibid) but such power is exercisable on the basis of complaint alleging the mismanagement or running of the society against its constitution or utilization of its finances other than the purpose of society on subjective assessment of such allegation. An order for holding an inquiry under suo motu power by Registrar bereft of reasons or material warranting the exercise of such power in terms of section 43(1) would be a colourable exercise of the power against the mandate and in excess of jurisdiction. The case of P.I.B. Cooperative Society is distinguishable with the present case. In the said case, the inquiry was initiated by Registrar on his own motion on the basis of various complaints and representations from the members of the society against the Managing Committee, whereas, in the present case, the impugned orders for holding the inquiries in the affairs of the petitioners societies are lacking with such ground. Therefore, we are of the view that the exercise of powers in terms of section 43 in absence of any material would be an action in excess of authority and liable to be struck down."
17. ' Mr. Zubair Hashmi, learned counsel for respondent .3 has argued that power vested in and exeroised by RegistraNor under section 43(1) is independent of subsection (2) of section 43 and Registrar was not required to act 'only in the events stated in subsection (2) of section 43. Learned counsel emphasized that the Registrar had enough material available with him to issue impugned order dated 25-6-2008 and even reasons had been specifically stated in the said order and there is no illegality or mala fide of any nature whatsoever in the issuance of the said order. Per learned counsel the petitioner had not complied with directions given in terms of audit report for the year ending oh 30-6-2003 and 30-6-2004. It was pointed out that in the said audit report that 30 days period was given and that it was specifically directed that compliance of last audit report was not submitted by the society. It was further advised that compliance report as well as current audit observation should be furnished according to the proforma available at Serial No,13 of Page No,4 of audit memo. Within a month positively after receipt of this report of this memo. The learned counsel also stated that petitioner had not provided list showing number of plots, categories of plots and General Body Meeting/election were not held in accordance with section 12 of the Cooperative Societies Act, 1925 and bye-laws of the Society. It was also pointed out that land of the society was not transferred in the record of rights and explanation was not provided as to allotments of various types of plots to the allottees along with various irregularities committed by the society. In support of his contention the learned counsel has referred to the case of Saddar Cooperative Market v. Province of Sindh and others, reported in 2009 CLC 143, wherein the full bench of this Court was pleased to hold that:-- "In such a situation we find that the power vested in and exercised by the Registrar under section 43(1) is independent of subsequent of subsection (2), hence it is not necessary that the Registrar even after. Receipt of information in respect of allegations against a society, should wait for receipt of said information in a particular way. In the circumstance, we hold that the notice under section 43(1) of the Cooperative Societies Act has been issued validly with further observation that the rule of natural justice demands that a person, proceeded against, should be provided material at the time when he has been heard, so he may be in a position to rebut the allegations. It is not necessary for the Registrar to issue a proper show-cause notice or give details of allegations but after receipt of the complaint or information, he may give gist of the allegations to the Society at the time of hearing and thereafter may decide the issue involved".
18. We have heard the learned counsel and perused the record. From the case-laws cited at bar by both the learned counsel we have come to the opinion that the action of the Registrar under subsection (1) of section 43 is independent of subsection (2) unless mala fide or illegality is shown.
19. The Registrar on available information or on failure of compliance of directions submitted in annual reports by its inspectors could suo motu issue notice within the meaning, of subsection (1) of section 43 as detailed information could only be collected through proper inquiry and hence it is not necessary that the Registrar even after receipt of information in respect of allegations against a society, should wait for receipt, of said information in a particular way. As pointed out by the learned counsel of the respondents from the available record that there were sufficient reasons for initiation of action within the meaning of subsection (1) of section 43. The Registrar had given detailed reasons in its order for conducting such inquiry. Even from the records it is clear that the President and Secretary have been unlawfully appointed for the life time, which is a clear violation of the bye-laws of the petitioner. It is our view that since request of the petitioner to deregister the society has been made therefore it has become more imperative to conduct proper inquiry. Even otherwise the main object and purpose of holding inquiry is to check whether mandatory requirements and the working affairs of the society are being conducted according to law and in he larger interest of the members of the society particularly when the audit of the petitioner was not conducted for the last several years or at least compliance of the directions were not made by the petitioner.
20. ' For the facts and reasons as stated above we hold that respondent No,3 has neither acted in any manner beyond its jurisdiction nor in violation of any law by issuance of order dated 26-5-2008. On the contrary this petition is motivated and based on apprehensions and surmises and the same is accordingly dismissed. However, we direct that the inquiry shall be conducted strictly' in accordance with law and the same will be preferably completed within a period of three months from the date hereof.