This writ petition assails Reference No. RCS/H/ACE/ 2023/1601, dated 06.11.2024, sent by office of the Registrar, Cooperative Societies, Punjab, Lahore (respondent No.2) to the Director General, Anti- Corruption Establishment, Punjab, Lahore (respondent No.3), whereby a NAB reference transferred by the NAB Court to the Registrar, Cooperative Societies, Punjab for further proceedings, was directed to be tried by the Senior Special Judge, Anti-Corruption Court.
2. Learned counsel for the petitioner contends that pursuant to National Accountability (Amendment) Act, 2022 and 2nd Amendment Act, 2022 read with National Accountability (Amendment) Act 2023, after the pronouncement of judgment of Hon'ble Supreme Court of Pakistan in Petition No.2/23, dated 06.09.2024, NAB Court passed an order, dated 09.10.2024, whereby trial pending before such Court was referred to the Registrar, Cooperative Societies, Punjab, Lahore for further proceddings. Learned counsel for the petitioner contends that as per amended law it was the prerogative of the NAB Court to decide as to where the matter should be referred and in this respect the text of law uses words "refer it to the appropriate Court/Tribunal/ Forum/Agency/ Authority" and in this case NAB Court has not deemed it proper to send the case to Special Judge, Anti-Corruption Court rather opted to refer the same to the Registrar, Cooperative Societies, Punjab, Lahore, therefore, the Registrar was bound to obey such order for trial of accused/petitioner but against the spirit of order, dated 09.10.2024, the Registrar, Cooperative Societies, Punjab Lahore has referred the case to Anti-Corruption Establishment through the impugned Reference.
3. Para-wise comments were sought from the Director General, Anti-Corruption Establishment, Punjab, Lahore, who stated that office is inquiring into the matter which is within their domain because members of cooperative society are public servants as per section 65B of the Co- operative Societies Act 1925 but he could not submit plausible justification that when the matter was already in trial before NAB Court and after its valid transfer to Registrar Cooperative Societies by NAB Court, how Registrar Cooperative Societies without first challenging the order of NAB Court can send the reference to Anti-Corruption Establishment, and how the Establishment can accept such reference while assuming jurisdiction and that too from the stage of inquiry.
4. Learned Assistant Advocate General, however, prayed for dismissal of this writ petition on the ground that matter pending before D.G. Anti-Corruption is yet to reach out any decision on his behalf, therefore, writ petition is pre-mature, and in this respect referred the order of another Bench of this Court passed in Writ Petition No. 79528/2024 on 19.12.2024 to the following effect; "2. Analysis of reasons extended and review of findings recorded, at this stage, would prejudice the proceedings before respondent No. 2. Whether cognizance could be taken or not? And whether case is proceedable or not; such questions can be raised for consideration of Establishment, when circumstances so warrant. I find no reason to interfere in the matter, mid-way."
Stance of learned Assistant Advocate General (AAG) is outrightly rejected on the ground that in that case matter was directly referred by NAB Court to the Anti-Corruption Establishment, which situation is not similar to the present case.
5. After hearing the proponents' stances in the light of relevant law, this Court gets the attention towards such an important issue which needs some clarification.
6. On receiving a complaint, Registrar Cooperative Societies can inquire the matter for appropriate actions under the law or for prosecution of offences. The course of complaint is mentioned in section 43 of the Cooperative Societies Act 1925 (herein after be referred as CSA 1925) relevant part of which is reproduced for reference;
43. Inquiry by Registrar. - (1) The Registrar may of his own motion by himself or by a person duly authorised 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 a society, duly authorised 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.
During such inquiry, Registrar while exercising powers under section 44, 44A, 44B can inspect books and properties of the society and recommend other actions including removal of officers of society under section 44C, appropriate directions to Society under section 44D or taking of special measures under section 44E like the followings;
(i) enter and search any premises and seize books of account or other documents or records;
(ii) take in his custody all moneys, cash, securities, title deeds, properties, whether movable or immovable, belonging to such society including those being held on behalf of or in the name of any officer, employee or agent of the society, beneficiary or transferee of such society or other person or their dependents.
(iii) direct any bank, financial institution or person to freeze all moneys deposited with it or him on behalf of the society or of any officer, employee, agent, beneficiary or transferee of such society;
(iv) take all necessary steps and measures for identifying assets and property of the society and for realization, protection and preservation thereof;
(v) restrain any society or officer, employee, agent, beneficiary or transferee of such society or any person deriving or claiming title through any of them from alienating, transferring, selling, assigning, disposing of or parting with possession of any property, movable or immovable, or deriving any benefit, rent or income therefrom;
(vi) make such order for realization, protection and preservation of deposits of money and other assets and property of the society as he may deem fit.
(2) The order passed under sub-section (1) may at any time be withdrawn and shall not remain in force for more than one year.
7. Such an exhaustive mechanism, which authorizes the Registrar to take down the entire society and protect and preserve the rights of claimants, is enough to achieve the necessary objectives, the Grievance Redressal provision in section 44F acts as a safeguard against the Registrar's powers that can be used arbitrarily. Even the Registrar has the power to order society to wind up, and then appointment of liquidator as authorized under section 47 to 53 of CSA 1925. A solution through arbitration pursuant to section 54 and onward is also in place in the CSA 1925. However, to appreciate the question involved in this case let's see what offences are listed under CSA 1925, which are as under;
60. Offences. - It shall be an offence under this Act if-
(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) Wilful neglect or default by a society, etc.- a society or an officer or a member thereof wilfully 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 authorised by him in writing in this behalf; or
(c) Wilful furnishing of false information- a society or an officer or member thereof wilfully makes a false return or furnishes false information; or
(d) Disobedience of summons, requisition, or order- any person wilfully 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 lawfully required from him by a person authorized to do so under the provisions of this Act or rules made thereunder; or
(e) Indulgence in fraudulent activities- a member of a society indulges in fraudulent or corrupt activities concerning the management or business of the society, or indulges in any illegal or corrupt practices, as defined in the Punjab Local Government Act, 2019 (XIII of 2019), in the conduct of elections of the managing committee of the society; or
(f) Performing acts without approval- an officer, an employee of a society or a member of the managing committee of the society performs any act without prior approval of the Registrar or of the general body of the society where such prior approval is required by law; or
(g) Making a false report or refusing to do an act- an officer or a member of the internal audit committee of a society refuses or neglects to do an act which he is required by law to do or makes a false report; or
(h) Violation of the master plan- a member of the managing committee of a cooperative housing society commits any violation or breach of an approved master plan; or
(i) Failure to provide information- a member, employee, director, officer or secretary of the society does not furnish information under clauses (viii), (ix), (x) and (xi) of section 5, section 20-A, 21-A, or does not comply with subsection (1) of section 49-A or section 34-A of this Act.
61. Penalty for offences not otherwise provided for. - (1) Every officer or member of a society or other person guilty of an offence under this Act for which no penalty is expressly provided in this Act shall be liable to a penalty not exceeding rupees one million.
(1a) Every society guilty of an offence under this Act for which no penalty is expressly provided shall be liable to a penalty not exceeding rupees ten million.
(2) The Registrar or a person duly authorized by him shall be empowered to impose such penalty after affording an opportunity of hearing to the concerned.
61-A Penalty for offences under clause (i) of section 60. Any member, employee, director, officer or secretary of the society found guilty under clause (i) of section 60 shall be punishable with imprisonment for a term which may extend to five years or with fine up to rupees two million or with both, and if any society is found guilty under clause (i) of section 60, it shall be liable to a fine up to a maximum of one fourth of its working capital.
62. Prohibition of the use of the word "co-operative". - (1) No person other than a registered society shall without the sanction of the Government, trade or carry on business under any name or title of which the word "co-operative" or its vernacular equivalent forms part: Provided that nothing in this section shall apply to the use by any person or his successor in interest of any name or title under which he traded or carried on business at the date on which this Act comes into operation.
(2) Whoever contravenes the provisions of this section shall be punishable with fine which may extend to fifty thousand rupees and in the case of a continuing offence with further fine of five hundred rupees for each day on which the offence is continued after conviction therefor.
62.A. Penalty. - (1) Whoever contravenes the provisions of subsection (3) of section 44-C or any direction given by the Registrar under section 44-D shall be guilty of an offence punishable with imprisonment of either description for a term which may extend to six months or with fine or with both.
(2) Whoever contravenes an order passed under section 44-E shall be guilty of an offence which shall be punished with imprisonment for a term which may extend to three years but which shall not be less than six months and shall also be liable to be punished with fine].
8. Above penal provisions reflect that maximum punishment is prescribed as five years' imprisonment with fine for offence under clause (i) of section 60, as ordained under section 61A of CSA 1925 which is reproduced as under;
(i) Failure to provide information- a member, employee, director, officer or secretary of the society does not furnish information under clauses (viii), (ix), (x) and (xi) of section 5, section 20-A, 21-A, or does not comply with subsection (1) of section 49-A or section 34-A of this Act.
As per section 62A, penalty to imprisonment of six months with fine for contravening the provisions of sub-section 3 of section 44C or violation of any direction given by the Registrar under section 44-D; imprisonment to three years (not less than six months) with fine on contravention of order passed under section 44E, have been prescribed in CSA 1925.
9. No punishment or penalty has been prescribed for offences under Clauses (a) to (h) of section 60 of CSA 1925, and it is mentioned in section 61 above that every officer or member of a society or other person guilty of an offence under this Act for which no penalty is expressly provided in this Act shall be liable to a penalty not exceeding rupees one million. Similarly, every society guilty of an offence under this Act for which no penalty is expressly provided shall be liable to a penalty not exceeding rupees ten million. Section 61, sub-section (2) says that the Registrar or a person duly authorized by him shall be empowered to impose such penalty after affording an opportunity of hearing to the concerned. As per section 62, sub-section (2), whoever contravenes the provisions of such section, shall be punishable with fine which may extend to fifty thousand rupees and in the case of a continuing offence with further fine of five hundred rupees for each day on which the offence is continued after conviction therefor.
10. Analysis of above penal provisions reflects that the offences under above Act are either liable to 'penalty' or 'punishable'; the two terms differ to each other in the sense that power of imposing penalty has been given to the Registrar or person authorized by him under the Act, whereas power to punish lies with the Court. Offences under section 60, clauses (a) to (h) are liable to 'penalty' only, whereas offences under sections 60, Clause (i), as well as under sections 62 & 62A are 'punishable'. As per section 63 of CSA 1925, cognizance of all offences punishable under the Act is subject to the complaint in writing to be made by the Registrar or by a person duly authorized by him for the purpose. However, for offences under section 62A, sub-section (2), cognizance was also kept open otherwise than on complaint by Registrar. Section 63 is as under;
63. Cognizance of offences. - No court shall take cognizance of any offence punishable under this Act except on a complaint in writing made by the Registrar or by a person duly authorised, for the purpose, by him: Provided that cognizance of an offence under sub-section (2) of section 62-A may be taken even otherwise than on such complaint.
Offences under section 62A, sub-section (2) relate to contravention of order passed under section 44E, as referred above. From the above discussion, it is clear that offences under section 60, Clauses (a) to (h) of CSA 1925 cannot be sent for prosecution before the Court, rather Registrar or the person authorized by him is empowered to impose such penalty after affording an opportunity of hearing to the concerned, whereas for rest of the offences, Registrar or any person on his behalf shall file a direct complaint before the Court.
11. Present case was of corrupt practices; petitioner Khalid Waseem being president of Model Town House Building Cooperative Housing Society, Sialkot and others were under the allegation for allotting plots to his relatives under his stamp and signature illegally, unlawfully and without approval of Management Committee, it was being tried under NAB Ordinance 1999 but was sent back to the Registrar for action under the Cooperative Societies Act 1925; such offence apparently falls under section 60 clause (e); i.e., which is as under; "Indulgence in fraudulent activities- a member of a society indulges in fraudulent or corrupt activities concerning the management or business of the society, or indulges in any illegal or corrupt practices, as defined in the Punjab Local Government Act, 2019 (XIII of 2019), in the conduct of elections of the managing committee of the society."
Such clause was inserted by the Cooperative Societies (Amendment) Act 2006 (VI of 2006), and is liable to fine only as mentioned in section 61 of the CSA 1925. Thus, in such offence no complaint is required to be filed before the Court. However, Registrar can hold inquiry under section 43 of said Act on the complaint mentioned therein, and in such situation special measures under section 44E of CSA 1925 can also be taken against the society, which include taking in to custody all moneys, cash, securities, title deeds, properties, whether movable or immovable, belonging to such society; direct any bank, financial institution or person to freeze all moneys deposited with it or him on behalf of the society; take measures for identifying assets and property of the society and for realization, protection and preservation thereof.
12. Now the most crucial question that which Court would have jurisdiction in the matters where Registrar shall file the complaint. Section 65B of CSA 1925 says that officers of society are public servants as defined under section 21 of Pakistan Penal Code 1860. Officers include Chairman, Secretary, Treasurer, member of committee or other person empowered under the rules or under the by-laws of a society to give directions in regard to the business of such society, as defined under section 3(d) of the Act. It was contended by Director General Anti-Corruption Establishment that members and officers of society are public servants, therefore, for trial of offences punishable under CSA 1925, matter may be sent to Special Judge appointed under Pakistan Criminal Law (Amendment) Act, 1958 through Anti-Corruption Establishment. In order to appreciate such contention, I have focused on the definition of public servant defined in section 21 of Pakistan Penal Code 1860 which counts eleven broad categories including numerous other categories such as "every officer in the service or pay of the Government or remunerated by fees or commission for the performance of any public duty". Explanation 1 of such section says persons falling under any of the above descriptions are public servants, whether appointed by the Government or not. This section clearly creates two broad categories of public servants; one who are on pay role of the Government means government servant or government employee, and others who have simply been assigned a public duty. Since application of Pakistan Penal Code 1860, both categories of public servants were evenly prosecuted for offences under the said Act before the ordinary Courts.
However, for official delinquency, public servants who were in pay of the government were also held responsible through departmental inquiries on disciplinary matters and in this respect Punjab Civil Services (Punishment & Appeal) Rules, 1935 were framed under Section 241 of the Government of India Act, 1935 for imposing penalties like i) Censure ii) Withholding of increments or promotion including stoppage at the Efficiency bar. iii) Reduction to a lower post or time scale or to a lower stage in a time scale. iv) Recovery from pay of the whole or part of any pecuniary loss caused to Government by negligence or breach of orders. v) Suspension. vi) Removal from Services. vii)
Dismissal from Services. Likewise, before that Police Rule 1934 (Chapter-XVI) were also to the same effect for police officers. In disciplinary rules 'misconduct' was introduced as a major delinquency.
Later for graver charges, 'criminal misconduct' was introduced through the Prevention of Corruption Act 1947 which also regulated the offences under sections 161 to 165A of Pakistan Penal Code 1860 while declaring them as cognizable. Section-2 of said Act says that it extends to the whole of Pakistan and applies to all citizens of Pakistan and persons in the service of Government wherever they may be, and in rest of the sections, the Act uses the word "Public Servant" the connotation in the service of Government indicates only that category who are on the pay role of the government and subject to transfer anywhere because the word "wherever" has also been used. Despite this special enactment public servants of both categories were being tried in the ordinary Courts.
13. In year 1958, a special forum for the trial of all types of public servants was created through Pakistan Criminal Law (Amendment) Act 1958 and Special Judge was appointed for the purpose and the scheduled offences for the trial were as under;
(a) Offences punishable under sections 161 to 166, 168, 217 and 218 of the Pakistan Penal Code (Act XLV of 1860), and as attempts, abetments and conspiracies in relation thereto or connected therewith.
(b) Offences punishable under sections 403 to 409, 417 to 420, 465 to 468, 471 and 477A of the Pakistan Penal Code (Act XLV of 1860), and as attempts, abetments and conspiracies in relation thereto or connected therewith, when committed by any public servant as such or by any person acting jointly with or abetting or attempting to abet or acting in conspiracy with any public servant as such.
(c) Offences punishable under the Prevention of Corruption Act, 1947 (II of 1947), and as attempts, abetments and conspiracies in relation thereto or connected therewith.
The investigating Agency till then was the police department who used to investigate the offences against both types of public servants as reflected from the Police Rules 1934, it is referred below; 25.16. Cases against Government servants. - When a Government servant is accused or is suspected of the commission of an offence in the course of his official duties his immediate departmental superior shall, as far as may be wise and practicable, be kept informed regarding the course of the police investigation.
26.13. Arrest of public servants. - Information of the intended arrest of a public servant shall, if possible, be given to such public servant's immediate superior officer before the arrest is made; otherwise, information shall be given immediately after arrest.
Similarly, when on filing direct complaint before the Special Judge appointed under Pakistan Criminal Law (Amendment) Act 1958 if he deems necessary could direct investigation by a police officer in whose jurisdiction such offence was found committed as ordained under section 5, sub- section (6) of said Act.
14. Later Anti-Corruption Establishment was constituted under West Pakistan Anti-Corruption Establishment Ordinance 1961 as an investigating agency for public servants who are on the pay role of the Government because its section-3 says that constitution of Anti-Corruption Establishment is for the investigation of offences set forth in the Schedule, and for holding preliminary inquiries for determining whether such offences shall be investigated or departmental inquiries into the conduct of any public servant concerned in such offences shall be held. Schedule of offences under this Ordinance was the same as highlighted above under Pakistan Criminal Law (Amendment) 1958. This two-measures power vested in Anti-Corruption Establishment, either to inquire, investigate & prosecute the public servants or drop the inquiry and recommend departmental inquiry, because by the time Government had also framed Efficiency & Discipline (E & D) Rules, 1960 for imposing the penalties as were in erstwhile Rules of 1935 referred above.
15. The officers of Cooperative Societies were not in the bracket of public servants rather were being directly prosecuted on a complaint before the ordinary Courts. It was year 1966 when Section 65B was inserted by the Co-operative Societies (Second Amendment) Ordinance, 1966 (XVII of 1966), neither the schedule of West Pakistan Anti-Corruption Ordinance 1961 nor the Pakistan Criminal Law (Amendment) Act 1958 was amended so as to encompass offences under CSA 1925, because it was a special Act dealing with those public servants who were not on the pay role of the government. In the same year however, for regulating the official conduct of government servants, the Punjab Civil Servants (Conduct) Rules 1966 were also framed. Members of a society are not the servant or employees of Government or the Registrar Cooperative nor they are dependent upon him for their pay or other emoluments, so as to expose them for departmental inquiries, because it is the duty of Anti-Corruption Establishment either to prosecute or recommend for departmental inquiries against the public servants with framed charge sheet as mentioned in the respective Disciplinary Rules and ancillary instructions, but no such indication is mentioned in CSA 1925, and inquiry under such Act can only be initiated by the Registrar at his own pursuant to section 43 on the complaint through the persons mentioned therein.
16. In other government departments, on violation of Conduct Rules, disciplinary laws like Government Servants Efficiency and Discipline (E & D) Rules 1973, 1999 or PEEDA Act 2006 are in place, but for criminal acts, no penal provision is mentioned in their service laws, therefore, they are proceeded under Prevention of Corruption Act 1947 or offences under Pakistan Penal Code relating to Public servants through Anti-Corruption Establishment and are prosecuted before the Court of Special Judge appointed under Pakistan Criminal Law (Amendment) Act 1958, but for members of a society, special penal provisions have been introduced through CSA 1925, and simultaneously a power of inquiry into the affairs of society also vests in the Registrar therefore, neither matters of cooperative societies can be inquired into nor prosecuted by the Anti-Corruption Establishment before the Special Judge supra because schedule attached to West Pakistan Anti-Corruption Establishment Ordinance 1961 & Pakistan Criminal Law (Amendment) Act 1958 does not contain offences under CSA 1925. In section 63 of CSA 1925, no Court is mentioned for trial of offence under such Act. Thus, to settle the anomaly that when no Court is mentioned in the respective special law, what Court should have jurisdiction, I have found section 29 of Code of Criminal Procedure 1898 which is as under;
29. Offences under other laws. (1) Subject to the other provisions of this Code, any offence under any other law shall, when any Court is mentioned in this behalf in such law, be tried by such Court.
(2) When no Court is so mentioned, it may be tried by the High Court or subject as aforesaid by any Court constituted under this Code by which such offence is shown in the eighth column of the second schedule to be triable.
(Emphasis supplied)
Thus, offences under CSA 1925 can either be tried by the High Court or by any Court mentioned in the second schedule of Cr.P.C. The maximum sentence for offences under CSA 1925 is five years which according to second schedule of Cr.P.C. under the head, "Offences Against Other Laws" is triable by Magistrate first Class. Thus, for offences under CSA 1925 Registrar shall file complaint before the Court of Magistrate concerned.
17. In the attending circumstance and the discussion made above, Anti-Corruption Establishment would have no authority to inquire or investigate the offences under CSA 1925. However, if any person is aggrieved of any act of members of Management Committee or Officers of society which is an offence under Pakistan Penal Code 1860 or under any other law relating to public servants provided such offences shall also be included in the Schedule attached to Pakistan Criminal Law (Amendment) Act, 1958, he can file a direct complaint before Special Judge appointed under said Act and the Special Judge if considers it appropriate can direct for investigation by any police officer in whose jurisdiction the offence was wholly or partly committed, as mentioned in section 5, sub-section (6) of Pakistan Criminal Law (Amendment) Act 1958. Power of police officers are also being enjoyed by the officers of Anti-Corruption Establishment as mentioned in section 3, sub- section 5 of the West Pakistan Anti-Corruption Establishment Ordinance 1961 as under;
(5) Subject to any orders of Government in this behalf any officer of the Establishment of or above the rank of a Sub-Inspector may, in relation to the offences mentioned in the Schedule, exercise any of the powers of the officer in charge of a police station within the meaning of clause (p) of sub-section (1) of section 4 of the Code of Criminal Procedure, 1898, in the area in which he is for the time being posted, and charge of a police station discharging the functions of such an officer within the Limits of this station.
As per Rule 14 of Punjab Anti-Corruption Rules 2014, the Establishment shall, as far as may be, follow the provisions of the Punjab Police Rules for the time being in force for the purposes of inquiry and investigation of offences specified in the Schedule. If during investigation it surfaces that besides scheduled offences, some offences under CSA 1925 have also been committed, the Special Judge can also try such offences as authorized by section 5, sub-section 7 of Pakistan Criminal Law (Amendment) Act 1958 but not without the sanction of Registrar Cooperative societies as held in a case reported as "MIAN KHAN Verus GHULAM MUSTAFA AND 6 OTHERS" (1996 SCMR 654). However, for taking cognizance of offences punishable under Section 62A, subsection (2) of CSA 1925, no sanction is required from the Registrar Cooperative Societies.
18. In the light of above discussion, Registrar had no authority to send the case to Anti-Corruption Establishment for indirect transmission to the Court of Special Judge, rather pursuant to direction of NAB Court shall initiate the process for imposing penalty upon the petitioners or trial of offences punishable under the CSA 1925. Likewise in such situation Anti-Corruption Establishment was also not authorized to initiate the inquiry into the matter on the impugned reference of Registrar. Thus, instant writ petition is partly allowed and impugned Reference sent by the Registrar, Cooperative Societies, Punjab, Lahore to Anti-Corruption Establishment is set aside and the Registrar is directed to comply with order of NAB Court for initiation of proceedings under the law, somewhat like highlighted above.