1. ' SARDAR MUHAMMAD ASHRAF KHAN, J.-By this writ petition under section 44 of the Azad Jammu & Kashmir Interim Constitution Act, 1974, the proceeding initiated by respondent No, 2 (hereinafter referred to as respondent) in connection with recovery of loans from the petitioner under sections and 10 of the Azad Jammu & Kashmir Co-operative Banks (Repayment and Recovery of Loans)
2. Ordinance (hereinafter referred to, for the sake of brevity, as Ordinance) have been challenged.
3. ' The brief facts of the case as alleged in the writ petition, are that the petitioner was maintaining Accounts Nos. 52, 350, 271, 7 and 109 in Kalyal Industrial Co-operative Bank (Khambal Branch), Kalyal Industrial Cooperative Bank (Main Branch), Kashmir National Co-operative Bank (Main Branch), Premier Co-operative Bank (Main Branch) and United Co-operative Bank (Main Branch)
4. (hereinafter referred to as Banks) respectively when they stood dissolved under the Establishment of the Federal Bank for Cooperatives and Regulation of Co-operative Banking (Adaptation)
5. Ordinance, 1977. The petitioner used to supply the furniture to the Banks, for which payments were made to him in the form of cheques which were used to be credited to his accounts in the respective Banks. The money was being drawn by the petitioner from the said Banks from his Accounts out of the deposits made by him through cheque so received by him from the Banks towards payment of bills of furniture supplied by him. After dissolution of the Banks, the respondent served notice upon the petitioner to repay and secure the loans of the Banks alleged to be outstanding against him, in terms of section 5(2) of the Ordinance, in reply to which the petitioner denied his liability of loan to any of the Banks and requested the respondent for settlement of account after taking into consideration his deposits in and withdrawal from his accounts in the Banks. The respondent instead of holding an inquiry as required under section 5(3) of the Ordinance for determination of the loan payable by the borrower to the Banks in case of his non- admittance of the same, issued warrant of his arrest in execution of which he was detained in Civil Prison for his failure to secure the loans in terms of section 3(2) of the Ordinance, on 10-7-1978. The petitioner while in the said detention, paid a sum of Rs, 50,000 on 12-8-1978 and also mortgaged his factory with the respondent on 27-8-1978 by executing a mortgage-deed for the purpose, as a result of which his warrant of arrest was withdrawn and he was released. It is further alleged in the petition that the respondent has now again initiated proceedings against the petitioner under sections 8 and 10 of the Ordinance by issuing warrant of his arrest and moving for taking criminal proceedings against him.
6. ' The petitioner has challenged the proceedings being taken against him by the respondent under the aforesaid section of the Ordinance on the ground that in the event of his denial of liability of loan of any Bank, the respondent was bound to hold an inquiry under section 5(3) of the Ordinance to determine his such liability and he was only competent to initiate the impugned proceedings against him after determination of the. Amount of loan found payable by him to the Banks after due inquiry as envisaged by the aforesaid provision of the Ordinance.
7. ' Ex parte proceedings were ordered against respondent No, 3 as he failed to appear on the date fixed for proceeding of the case despite due service of summons upon it. The other respondents filed their written statements in which it was denied that the petitioner ever made any representation in response to the notices served upon him for repaying and securing the loans owed by him to the Banks, denying his liability to such loans and, as such, no inquiry for the determination of the amount of loan was called for under section 5(3) of the Ordinance. It is, thus, alleged that the proceedings so far taken by the respondent against the petitioner are quite in accordance with law and, therefore, unchallengeable by way of constitutional writ.
8. ' We have heard the learned counsel for the parties and also perused the material placed on the record. In the course of his arguments, the learned counsel for the petitioner has laid great emphasis on the point that since the petitioner had not admitted the loans alleged to be payable by him to the Banks, in his representation made to the respondent in reply to the notices served upon him for securing the said loans, it was incumbent upon the respondent to determine the loan or any liability of the petitioner arising therefrom after giving reasonable opportunity of being heard to the petitioner in an inquiry to be held for the purpose as envisaged by section 5(3) of the Ordinance. As against this argument, the learned counsel for the respondent has contended that the petitioner had never made any representation as alleged by his counsel, denying his liability of loan to the Banks with the result that the inquiry and determination of the amount of loan payable by the borrower to the Banks as contemplated by the provision of law referred to above, was not necessary before initiating proceedings against the petitioner impugned in this petition.
9. After giving our due consideration to the arguments addressed at the bar by the learned counsel for the parties and taking into consideration the material placed on the record, we are of the opinion that no illegality, whatsoever, has been found to have been committed by the respondent in taking the impugned proceedings against the petitioner. There is no dispute A about the fact, as has been admitted by the petitioner himself in this petition, that the petitioner before the dissolution of the Banks was maintaining his accounts in them and that notices in pursuance of section 5(2) of the Ordinance requiring him to repay and secure the loans alleged to be outstanding against him of the Banks were issued to him. His case is that after the receipt of the said notices he informed the respondent in writing that he did now owe any loan to any of the Banks and that he had been drawing money from them against his deposits he had been making in them in the form of cheques he had received from them towards the payment of bills of furniture supplied to them by him and that he is ready to repay any loan which might be found outstanding against him after rendition and settlement of accounts taking into consideration his deposits and withdrawals from his Accounts in the Banks. In view of his above plea, it is his further case that the impugned proceedings against him under the Ordinance could not be taken by the respondent without first holding inquiry for the determination of his liability of loan to the Banks, and thus, without such determination, the proceedings so Laken are not justified under law and need to be quashed by issuing an appropriate writ. In our view formed after looking into the material placed on the record and the circumstances of the case, the petitioner has failed to establish that he ever denied his liability of loans to the Banks by making any such representation to the respondent after the receipt of notices by him for repayment and furnishing security as required under section 5(2) of the Ordinance. To substantiate his plea that the petitioner did not admit any loan outstanding against him of the Banks, he filed with the petition documents marked as Annexures A/4 to A/7, out of which Annexures A/4 and A/5 are photostat copies of the applications alleged to have been sent by the petitioner to the Assistant Registrar and Registrar, Co-operative Societies respectively, while Annexures A/6 and A/7 are photostat copies of postal receipts dated 21-2-1978 issued in token of receipt of registered letters addressed to the abovenamed Officers. The above documents, in no way, go to prove that the letters, the copies of which are alleged to be Annexures A/4 and A/5, were sent to and received by the respondent in reply to the notices served by him upon the petitioner for repaying and securing the loans payable by him to the Banks. The petitioner has placed on .Record only photostat copies of three notices marked as Annexures A/1, A/2 and A/3, issued by the respondent requiring the petitioner to repay and secure the loans of the three Banks, namely, Kalyal Industrial Co-operative Bank (Khambal Branch), Mirpur, Kashmir National Cooperative Bank, Main Branch, Mirpur and Premier Co-operative Bank, Main Branch, Mirpur, respectively. Copies of the notices for repayment and securing of loan of other two Banks were not placed on the record although in para. 4 of the writ petition, the petitioner had undertaken to place the same on record during the proceedings in the case. The document marked as Annexure A/4 is dated 27-7-1977 in which it is written that Ch. Abdul Khaliq, Managing Director, Premier Co- operative Finance Corporation had been paying the bills of the furniture supplied to the said Corporation by the petitioner in cheques which used to be credited to his account in the said Corporation and it is further prayed that after checking these bills and withdrawals the amount of loan be ascertained. From this document it is not established that the original, of which it is alleged to be a copy, was sent, to and received by the respondent in reply to any notice issued to the petitioner by him. No notice of a date prior to the date of this document has been placed on the record to show that it was in response to the said notice. It is addressed to the Assistant Registrar and not to the respondent. No postal receipt of Acknowledgment Due receipt has been placed on the record which may go to prove that the original of this document was delivered to the respondent. As regards the document marked as Annexure A/5, it, also does not prove that the original of it was sent to and received by the respondent. The original of this letter if alleged to have been sent in reply to the notice dated 14-2-1978 of the respondent pertaining to the loan outstanding against the petitioner in respect of Account No, 52 of Kalyal Industrial Co-operative Bank, Khambal Branch, Mirpur, in order to prove its delivery to the respondent and documents marked as Annex ures A/6 and A/7 have been. Filed with the petition which are postal receipts issued by the Post Office showing that on 21-2-1978, certain letters were sent to the respondent through registered post. The above postal receipts are itself not a proof of the fact that the document, the copy of which is marked as Annexure A/5, was sent to the respondent by the petitioner as it may be any other document sent by anybody to the respondent. These receipts do not show that the registered letters under them were sent by the petitioner to the respondent. The petitioner, under section 5(3) of the Ordinance, was required to send a written statement denying his liability to the respondent by registered post (acknowledgment due). No acknowledgment due receipts showing that the original documents of which Annexures A/4 and A/5 are alleged to be copies, were received by the respondent, have been placed on the record and in the absence of which it is not possible to hold that the same were sent to and received by the respondent. The respondent has categorically denied that he has received any representation from the petitioner denying his liability of loan of the Banks in response to the notices served upon him for securing the loans. Thus, in the presence of this refutation and in absence of any legal proof in support of the plea of the petitioner regarding his not admitting the loans shown payable by him to the Banks by the respondent, it cannot be held that the petitioner had made any representation to the respondent wherein he had not admitted the loans owned by him to the Banks. Even if for the sake of argument, it is assumed that the petitioner did send the applications to the Registrar, the copies of which are Annexures A/4 and A/5, still the action of the respondent to initiate the impugned proceedings against the petitioner cannot be questioned as unlawful because the said applications pertain to only notices issues for repaying and securing the loans of only two Banks while the petitioner was called upon to make repayment of and secure the loans of five Banks to which he owed loans. The provision of subsection (3) of section 5 of the Ordinance makes it obligatory for the Registrar, Co-operative Societies to hold an inquiry and determine the amount of loan of a borrower or liability arising therefrom of a Bank after giving reasonable opportunity of being heard to the borrower and the Bank only in case where the borrower, within 30 days of the receipt of the notice requiring him to repay and secure the loan, has submitted, either personally or by registered post (acknowledgment due), a written statement to the Registrar to the effect that he does not admit such loan or the liability. In this case, as observed earlier, when the petitioner has failed to make any representation denying that he owed any loan to the Banks, to the respondent within specified period mentioned in section '5(3) of the Ordinance, the respondent was under no obligation to hold inquiry for the purpose to determine the amount of loan and the liability arising therefrom, as enjoined upon him under section 5(3) of the Ordinance. If the respondent had chosen to take proceedings against the petitioner including his detention in Civil Prison and commencement of criminal proceedings against him, without holding any inquiry for the determination of the loan payable by the petitioner, he has committed no illegality to be taken cognizance of by way of quashing the proceedings so taken by him in exercise of extraordinary constitutional jurisdiction of this Court.
10. ' As regards the contention of the learned counsel for the petitioner that the petitioner was detained in Civil Prison on the authority of order of the respondent and he was released only after payment of Rs, 50,000 and mortgaging his factory in the name of respondent and thus, the present proceedings against the petitioner for his detention and making of criminal proceedings against him are unlawful, it may be observed that from the perusal of the documents, Annexures A/9 and A/10, it appears that the payment of the above amount was made and the mortgage-deed of the factory was executed in respect of the loans outstanding against the petitioner in Account No, 350 of the Kalyal Industrial Co-operative Bank and thus, any proceedings being taken against the petitioner for the recovery of amount of other Banks from the petitioner cannot be said to be illegal as the petitioner had not secured the loan payable to other said Banks. A photostat copy of notice marked as Annexure `A/3' would show that the petitioner was required to make repayment of the loan owed by him to the Premier Co-operative Bank, Main Branch (dissolved), failing which action against him under sections 8 and 10 of the Ordinance would be resorted to.
11. The nut-shell of the above discussion is that the petitioner was served with the notice by the respondent under section 5(2) of the Ordinance to repay and secure the loan of the Banks as envisaged by section 3(2) of the Ordinance but he neither made any representation denying his liability of the loans of the Banks to the respondent nor be repaid or secured the loans in terms of section 3(2) of the Ordinance and, as such, the respondent perfectly acted within his authority to take proceedings against the petitioner wader ' sections 8 and 10 of the Ordinance, without resorting to an inquiry for the determination of the loan, as contemplated in section 5(3) of the Ordinance. This being the legal position, the proceedings impugned in this petition are perfectly warranted and justified in law requiring no interference by this Court for setting aside the same in exercise of its writ jurisdiction. The writ petition is accordingly dismissed.
12. Before parting with the case, however, we would like to make the observation that the object of promulgating the Ordinance is to safeguard the interest of the depositors of the Banks so that they may not suffer any loss and be able to receive their deposits made in the Banks. To achieve the above objective, it is, of course, necessary that the loan of the Banks be realised from the borrowers to make payments to their depositors but at the same time, the principle of natural justice and the canon of fairplay also require that the amount of loan due to such borrowers be also determined in accordance with law after giving them reasonable opportunity of being heard. Therefore, to safeguard the interests of both the parties i,e, the borrowers and the depositors, it is the requirement of equity and justice that before resorting to measures including the coercive one permitted by law for realising the loans of the Banks from the borrowers, they should be given fair and adequate opportunity of contesting their liability, if the like to do so. The Registrar has been given discretion in the matter under section 53) of the Ordinance to admit the representation of the borrower denying his liability to repayment of loan even after the expiry of specified period of 30 days mentioned therein and make necessary inquiry to decide about his liability after giving the parties reasonable opportunity of being heard and this enabling provision of law should be pressed into service as, generously as possible to meet the ends of justice.