'SALMAN HAMID, J.--- On 18-5-2011, by assent of the parties it was settled that the matter be decided on the root of documents already existing on record and it be treated as a short listed matter. Among other dates this case came up for final arguments/disposal on 16-9-2011 when the arguments were heard and was reserved for judgment.
2. It was mentioned in the plaint that PIDC Employees Multipurposes Cooperative Housing Society Ltd., (the Society) was incorporated in or about July, 1971 and its purpose was to make efforts to provide low cost housing to its employees. To accomplish such purpose the Government of Sindh allotted 40 acres of land in Sector 26-A, KDA Scheme No,33, Gulzar-e-Hijri, Karachi and was mutated in favour of the Society through transfer deed by KDA on 30-4-1995. It was also mentioned that since incorporation of the Society it was running smoothly and that all its accounts were duly audited by the government/cooperative auditors and chartered accountants on.a yearly basis and this process of auditing was on for last more than three decades. It was also mentioned that the last audit of the Society as per bye-laws had been conducted on 16-11-2009.
3. The plaintiffs were elected as office-bearers of the Society on 20-10-2009. Suddenly the Registrar, Cooperative Society Sindh (Defendant No,2), without any justification or jurisdiction and in grave violation of Rule 48(6) of the Cooperative Society Rules, 1927, (Rules, 1927), on 15-1-2010 appointed an Administrator (Defendant No,3) thereof. It was alleged that such a step had been taken by the defendant No,2 to usurp the valuable amenity, residential and commercial plots of the Society and also its funds, investments and other cash to divest the rights of the plaintiffs and other members of the Society. It was also assorted that the plaintiffs having been elected as the office-bearers of the Society, were entitled to complete their tenure as per the bye-laws of the Society and that before passing order dated 15-1-2010, (Impugned Order), the requirements of Rule 48 of 1927 Rules were not adhered to inasmuch as the precondition mentioned in Sub-Rule (1) and (6) of Rule 48 had been betrayed. The impugned order was also not published in the official Gazette with reasons thereof and therefore, the entire exercise of ordering supersessions of the Society and appointment of defendant No,3 as its Administrator was without jurisdiction, unlawful authority. Thus it was prayed that the Impugned Order, passed by the defendant No,2, whereby the plaintiffs were removed from the office of the managing committee of the Society be declared illegal, without jurisdiction, unconstitutional, ab initio void and of no legal effect. A declaration to the effect that the plaintiffs on relation of the election on 20-12-2009 have the right to be the officer-bearers of the Society for the term they had been elected; and that all actions taken or passed by the defendant No,3 as Administrator of the Society were illegal and without jurisdiction and of no legal effect. In support of his contentions, learned counsel for the plaintiff relied upon the case of Haji Khuda Bukhsh and 9 others v. Deputy Registrar Cooperative Society Punjab Lahore and 2 others (PLD 2007 Lahore 341).
4. Written statement was filed on behalf of the 'defendants. The defendants Nos.1 and 2 stated that the Society was taken over by defendant No,2 after fully complying with the requirements of Rule 48 of 1927 Rules and that the defendant No,3 was duly appointed. After taking of charge by the defendant No,3 of the Society, the plaintiffs were no more officer-bearers thereof and after its supersession had no locus standi to prefer the present suit. It was also mentioned that the reasons for appointment of defendant No,3 as Administrator of Society was that the audit report issued for the year 2007-08 depicted various irregularities, illegalities and violation of bye-laws by the management of the Society. It was categorically mentioned that Deputy District Officer, Cooperative-I, CDGK, Karachi reported vide letter dated 11-1-2010 that the affairs of the Society were not being managed properly and it was recommended that the Society may be taken over under Rule 48 of the Rules, 1927 which was so done for the larger interest of the Society and its members.
The allegation of usurping of funds and the plots of the Society by the defendants was specifically and vehemently denied. It was also urged that the report/letter dated 11-1-2010 of the DDO revealed gross irregularities and illegalities in running affairs of the Society which were intolerable.
5. Learned counsel at for defendant No,3 at the very outset hit on the very maintainability of the suit. It was asserted that it, (suit) was barred for want of notice under section 54 and was also barred under sections 70 and 70A of the Cooperative Societies Act 1925, (1925 Act). Next it was implored that the suit was also barred by sections 42 and 56 of the Specific Relief Act as no negative declaration can be granted by this court to the plaintiffs and that the plaintiffs have no legal character to file the present suit. It was also argued that the suit was bad under the law of estoppel inasmuch as from total fifteen members, who were allegedly elected as the office- bearers of the Society, only seven came forward with the present suit. Remaining eight chose not to contest and challenge the Impugned Order, its validity and legality. The very election. Of the Society whereby plaintiffs were elected as its office-bearers in October, 2010 was hit at by raising that such elections were not transparent and lawful and had been conducted in deviation and violation of the bye-laws of the Society; thus were in breach of section 12 of Act, 1925. It was asserted that the election in terms of the bye-laws had to be conducted at the registered office; whereas the same were carried out at the site office on a barren peace of land at Sector 26-A, Scheme 33, which was a place at least 30 kilo meters away from Karachi. No public transport was available to easily reach at that particular site. It was also mentioned that even the registered office, Karachi, (if it may be called as such), did not have the provisions of telephone, fax and computer and that there was no electricity and it was impossible that elections of the Society of which there were about 500 members could be held. It was also argued that out of 500 members only 75 members were shown to have cast their votes.
6. It was vehemently argued that the plaintiffs were busy in looting and plundering the funds of the Society by purchasing NIT Units, Defence Saving Certificates and Terms Deposit Certificates from the funds thereof. The accounts of the Society had not been maintained properly and such purchase was not reflected in the accounts of the Society which illustrated that the plaintiffs themselves were involved in larceny and the income and dividends arising from the certificates were being used for their personal enrichment without crediting the same in the account of the Society. It was specifically mentioned by defendant No,3 that the plaintiff No,2 converted his house into a sub-office of the Society which was in grave violation of the bye-laws. It was also alleged that previous Secretary and current Secretary (at the time of supersession of the Society) also converted their houses into sub-office of the Society which again was against bye-laws of the Society and was illegal. It was also argued that the entire record of the Society had been moved into the house of the plaintiff No,2 and that the registered office at Room No,208, Panorama Centre-1, Fatima Jinnah Road, Saddar, Karachi was made redundant. It was also asserted that time and again defendants Nos.1 and 2 pointed out illegalities but to no avail.
7. It was specifically mentioned that audit for the year 2007-08 (report dated 5-2-2009) was concealed which report upon scrutiny revealed that the plaintiffs had committed huge embezzlement of funds of the Society. The report was brought on record. Because of these reasons and also upon complaints of the members of the Society, Impugned Order was passed which was in the larger interest of the members of the Society. It was clearly mentioned that audit report dated 5-2-2009 was itself a show-cause notice whereby the plaintiffs were put on notice who chose not to pay any heed to it. It was mentioned that the Anti-Corruption Establishment also made inquiries into the affairs of the Society. It was pointed out that objections were raised by the auditors during conduct of audit of 2007-08 and a show-cause notice to be replied with detailed justification and documentary evidences within seven days after receipt of this notice was required. This was not done.
8. Minutely arguing on the audit report, it was asserted that it (audit report 2007-08) revealed that cash payment was not entered in the cash book, which was in violation of the accounting principles as each transaction of cash receipt and payment had to be entered in the cash book which was found to be a serious financial irregularity leading to leakages of finances of the members. General ledger/petty cash ledger had not been maintained, prescribed under accounting principles. It was asserted that despite audit team's pointing out the objection for last many years, the management had not complied with the instruction, which exposed plaintiffs' misappropriation of funds. It was argued that the management failed to maintain share register in the prescribed form and despite advice it was not complied with. Similarly, the management failed to maintain allotment register as prescribed under the rules for last several years. The membership register was not maintained as per prescribed pro forma which again was in violation of 1925 Act and the 1927 Rules. It was also noted that essential record of members to protect their rights was jeopardised. It was also argued that annual general meeting was held on 25-11-2009 for 2007- 08 through invitation in daily Jang on 18-11-2009 and merely seven days' notice was specified which again was in violation of 1925 Act and 1927 Rules. It was also argued that twelve meetings were held of the managing committee during 20072008, but surprisingly expenditures were not tabled for approval as required under the bye-laws of the Society. This, it was argued was a serious financial flaw which led to misappropriation of members' fund. During 2007-2008 an amount of Rs,4,523,648.00 was withdrawn without any authority and approval which was a typical example of misutilization of funds of the Society. It was urged that despite sufficient funds managing committee failed to carry out essential development works, despite forty years, of coming into being of the Society, thereby the members suffered dual blow i,e,. Deprivation of the enjoyment of the plot and burden of increased cost of works as compared to the profits earned, which put extra financial lumber on the members. It was also implored that the managing committee was enjoying with the funds in keeping fixed deposits at their own sweet will, without inviting profit rate proposals from different financial institutions.
9. Urging on the financial loss, it was mentioned by the learned counsel that an amount of Rs,10.00 million was invested in fixed deposit in NBP through Letter. No,NB/PIDCHS/FD/ dated nil by the Secretary without inviting offers from different financial institutions which shows personal financial interest of the Secretary and financial loss to the Society. This was a serious financial indiscretion which led to loss to the Society. During 2007-08 merely an amount of Rs,48,741.00 had been collected against huge outstanding dues which was manifestation of poor performance of the management. In absence of entries of receipts and payment in the cash book, it was asserted that misappropriation of revenue collection as per the audit report were patent. Against an investment of Rs,23.762 million, only an amount of Rs,901,304 had been credited in the bank which was not in proportion to the sum of the investment, it was implored. Next it was contended that this amount had to be investigated and a detailed report was to be submitted. This did not happen. It was mentioned, on the basis of the audit report, that if investment was placed at the rate of 10% annually, (which was on low side) it came to Rs,2,376,2001 hence a loss of Rs,1,474,896 had been caused to the Society.
10. In view of the above dismal perhaps corrupt attitude and behaviour of the plaintiffs towards the Society, it was strenuously argued led to the appointment of an Administrator, which under the circumstance was just, proper and inevitable.
11. The learned counsel for the defendant No,3 in addition to the above exposition of the affairs of the Society at the hands of the plaintiff very powerfully argued on the maintainability of the suit and asserted that it be nipped in the, bud. Learned counsel in contending that the present suit was not maintainable in view of sections 70 and 70A of Act 1925, firstly relied upon the case of Muhammad Ali. Memorial Cooperative Housing Society Karachi v. Syed Sibt-e-Hassan Kazmi (PLD 1975 Karachi 428) wherein it was held by a single Judge of this court that the provisions of section 70 of Act, 1925 are mandatory and in failure to give notice as required by such section renders the suit not maintainable even though the plaintiff have had a good or an unanswerable case and even if the award (which was the subject-matter of that suit) was void, still requirement of notice under section 10 persisted and keeping in view such mandatory provision in sight, the appeal was dismissed wherein order passed by the court below, dismissing the suit on the touchstone of section 70 of Act, 1925 had been dismissed. Second case that was relied upon by the learned counsel was Farida v. Prince Apartment Cooperative Housing Society and 2 others (1984 CLC 2914) where again a Single Judge of this court rejected the plaint by observing that mandatory provisions of section. 70 of the Act having not been complied with, the suit was not maintainable by holding that sections 70 and 70A provide protection to a society registered under the 1925 Act for being sued in a court of law in respect of matter, determinable by the provincial government or its functionaries. The main reason for rejection of the plaint in the precedent cited that prevailed on the court was that since suit in respect of an act touching business of registered cooperative society without service of prescribed mandatory notice under section 70 of 1925 Act has not been served, the suit was not Maintainable. In the case of Zia-ur-Rehman Alvi v. Allahabad Cooperative Society Limited and 2 others (PLD 1995 Karachi 391), the third case that was relied upon by the learned counsel, yet again a Single Judge of this court rejected the plaint in the suit filed by Zia-ur- Rehman Alvi when it was brought to the notice of the court that the suit was filed without first serving notice under section 70 of 1925 Act though in such suit it was raised that a notice was sent to the Society but the same was non-suited inasmuch as that it was observed by the learned Single Judge that no specific, notice as required under section 70 of the Act of 1925 was specifically sent and/or served on the defendant-society. It was further held in the cited precedent that since the dispute that was brought before the court touching the business of the society and therefore the bar contained under section 70A became applicable and therefore the court had no jurisdiction to entertain or adjudicate Upon the dispute and that no saving has been provided expressly under the 1925 Act with reference to the disputes to be agitated before the court. In the fourth case of Mst. Atia Khanum v. 'Messrs Saadabad Cooperative Housing Society Ltd. And others (2002 MLD 209), relied upon by the learned counsel, it was held by a Single Judge of this court and quite exhaustedly that: "if the jurisdiction of Court is totally barred, whether the provisions contained in section 70 shall become redundant, nugatory and otiose. My answer is in negative.
As already observed while discussion the principles of interpretation of statutes, all the provisions in an enactment are to be considered in its totality so as to discern the intention of the legislature, without making any provision in the enactment as nugatory or redundant. Thus, when all the three sections 54, 70 and 70A are read together, the scheme of the legislation which emerges, is as follows:---
(a) By virtue of the provisions contained in section 70-A, the jurisdiction of Court is absolutely barred in respect of the matters mentioned in clauses (a), (b) and (c) of subsection (1) of section 70-A read with the provisions Contained in section 54.
(b) Notwithstanding, the bar contained in section 70-A, the suit can be filed under the provisions expressly provided in the Cooperative Societies Act, 1925.
(c) One of the provisions expressly provided in the Act pertaining to the filing of suit by any party is contained in proviso to section 54. It envisages that any dispute touching the business of Society shall be referred first to the Registrar and then if the Registrar is of the view that there is any question or issue involving complicated questions of law and fact, the Registrar may if he thinks fit suspend the proceedings in the matter, until the question has been tried by a regular suit instituted by one of the parties or by the Society. Thus, if any suit is filed under this provision neither any notice under section 70, shall be required to be served on the Registrar nor the jurisdiction of the Court shall be barred.
(d) The second express provision in the Act, is contained in section 70. Section 54 and section 70 are to be read together. As already observed, any dispute touching the business of a Society is to be referred to the Arbitration envisaged under section 54. However, the legislature has not left an aggrieved person completely at the mercy of Registrar, by enacting the provisions contained in section 70. Section 70 is couched in negative language which prima facie excludes the filing of suit against the Society or any of its officers in respect of any act touching the business of the Society and it is in consonance with the provisions contained in section 54 and section 70-A. But thereafter an exception is provided which is to the effect that if after expiry of two months next after notice in writing has been delivered to the Registrar stating therein specifically the relief which a person claims and the Registrar does not initiate any arbitration proceedings then such inaction on the part of Registrar shall confer a right on aggrieved person to file a suit in the Court and the bar on the jurisdiction of the Court shall be lifted. Here it will be seen that when sections 54, 70 and 70-A are read together the wisdom of the legislature crystallises and we find that the intention of the legislature that the matter pertaining to the dispute touching the business of Society should normally and initially be referred to the Registrar and once the matter is referred and the Registrar initiates proceedings the jurisdiction of Courts is barred. However, if the Registrar fails, neglects or avoids to initiate proceedings, an aggrieved person shall serve a notice under section 70 and if Registrar initiates proceedings within a period of two months, the jurisdiction of the Court shall be barred and an aggrieved person shall have no right to institute a suit in the Court. Suit initiated if any shall be barred under section 70-A. Likewise if no notice under section 70 is delivered to the Registrar specifically stating the relief sought, the suit shall not be.Maintainable."
12. Above enunciation on all fours applicable in the present suit whereby the suit is liable to be dismissed. However to further assert and elaborate, the learned counsel further relied upon. Mst.
Aqila Begum and another v. Pakistan Employees Cooperative Housing Society Ltd. And others (PLD 2004 Karachi 1) where a Division Bench of this court held that section 54 read with section 70A of the 1925 Act abdicates jurisdiction of the court in respect of the matter in which jurisdiction to decide and dispose of the controversy rests either with provincial government, registrar or his nominee or any other person empowered under the 1925 Act or the rules or bye-laws framed thereunder and that all acts, deeds, orders and actions taken by any functionary under the Act, 1925 which may touch or relate to the business of the Society and have direct bearing on any member or a person claiming through a member of society, if both such conditions are fulfilled, then effective remedy is provided under 1925 Act and that such bar of jurisdiction can effectively be invoked in a dispute, which relates or touches the business of the Society, such dispute may be by and between the members, past members or any person claiming through or under such member or by such person against the past or present officer of the society or inter se between Society and/or its committee and looking at such circumstances of the case the petition that was brought before the Division Bench was dismissed. In the case of Dhunjishah B. Ghadialy and others v. Karachi Parsi Cooperative Housing Society Ltd. And others (2004 CLC 587) it was held by a Single Judge of this court the election of the Society would constitute within the meaning touching business of the Society dismissed the suit by holding that jurisdiction of civil court are specifically barred to entertain or adjudicate upon matters which statutory functionaries were empowered to dispose of or determine and therefore the plaintiff having not complied with the mandatory requirement of section 70 of 1925 Act, dismissed the suit. In the case of Lahore Cantt. Cooperative Housing Society Limited v. Messrs Builders and Developers (Pvt.) Ltd. And others (PLD 2002 SC 660) the apex court observed that suit against the Society or its officer in respect of any act touching the business of the Society was not competent under section 70 of 1925 Act without issuing two months notice prior to its institution and with, regarding to the word business as appearing in section 70 of 1925 Act, it was observed that it be interpreted comparatively in a brother sense because ordinarily the word business includes all those activities which are carried out by a particular party to achieve its objects which it has been incorporated.
13. The learned counsel for defendant No,3 having relied upon the above precedents and having exposed the affairs of the management/ plaintiff, which were detrimental to the members, argued that it is an admitted position that the present case has been brought against the defendants which relates to the business of the Society and that such suit has been filed without first adhering to the mandatory requirements of sections 70 and 70A of 1925 Act and that it has also come on record that the plaintiffs were found involved in illegal activities in running the affairs of the Society and therefore its Administrator was appointed to safeguard the interests of the members of the Society. It was also urged that the plaintiff instead of running to the court in shape of present suit could have very conveniently agitated their grievances as required under section 70 of 1975 Act and could have had redressal thereof which admittedly had not been done. Therefore, it was implored that the mischief of section 70, 1925 must go against the plaintiffs and to the advantage of the defendants.
14. In view of the above settled principle of -law, the case of Haji 'Khuda Bux and 9 others, authored by a learned Single Judge of the Lahore High Court, relied upon by the learned counsel for the plaintiff need not be looked into which seem to be per incuriam, given the above facts and circumstances of the present suit and the plethora of precedents cited by the learned counsel for the defendant No,3. However, it may be noted that in the present case, requirements of Rule 48 of 1927 Rules had been fulfilled when the plaintiff and/or the Society was required to explain their position as to the allegation of irregularities and embezzlement of funds of the Society as reflected in the audit report/balance sheet and despite passage of considerable long time (almost a year) no explanation plausible or otherwise, came forth, the Administrator was appointed.
15. From the above analysis it has become abundantly clear that the mandatory requirements of section 70 of 1925 Act having not been complied with and because of such non-compliance, the plaint in the present suit could have been rejected by exercising power under Order VII, Rule 11, C.P.C. Inasmuch as Rule 11, C.P.C. Empowers this court to reject the plaint even without any application being made by the Defendant such conduit is not taken. However, since in addition to .Rejection of plaint, the suit is also liable to be dismissed inasmuch as that section 70 provides that no suit shall be instituted against the Society or any of its officers in respect of any act touching the business of the society until expiration of two months next after notice in writing has been delivered to the Registrar or left at his office, stating the cause of action, the name, the description and place of residence of the plaintiff and the relief claimed and the plaint shall contain a statement that such notice has been so delivered or left. It is an admitted position that none of the sort as mandated in section 70 of 1925 Act was available in the plaint. This being the position, the suit is also liable to be dismissed as | such. The suit is dismissed accordingly along with all listed applications.