The petitioner was one of the Directors of Pasban Cooperative Finance Ltd., Lahore, a Society registered under the Cooperative Societies Act, 1925. According to his case, he resigned from that office on 4-6-1991 which was duly accepted and acknowledged by respondent No.3. It is stated in this petition that during the period, the petitioner remained Director, he never obtained any loan or any other facility from respondent No.3 (Society). His grievance in the present petition is that not withstanding the above position, the Registrar, Cooperative Societies, respondent No.1 herein, on 21- 10-1991 has passed an order purportedly under section 44-E of the Cooperative Societies Act, 1925 which has the effect of freezing all the accounts of the petitioner; restraining him from alienating any of the properties or drawing any benefit like rent or income therefrom. This order has been impugned by the petitioner by riling this petition on various grounds stated therein.
2. This petition was admitted to regular hearing on 11-12-1991 and was twice adjourned at the request of the Advocate-General but no written statement has been filed by the respondents.
3. In support of this petition, the learned counsel for the petitioner has raised the following contentions:-- (i)that the provisions of section 44-E are attracted only if it appears to the Registrar that the properties held by the Director belonged in fact to the Society. It is pointed out by the learned counsel that no such finding has been recorded by the Registrar nor any material has been placed before this Court by the respondents so as to justify such an inference.
(ii)that the impugned order has been passed without granting any opportunity to the petitioner of being heard and is as such violative of the principle of natural justice; (iii)that the order has been passed in a mechanical and perfunctory manner and shows no application of mind by the Registrar to the facts of each case. It is pointed out by the learned counsel that the order is on a cyclostyled pro forma which is being issued by the Registrar generally in all cases by filling in the particulars of the Directors.
4 The learned Advocate-General has on the other hand argued that the case will be examined in the background and perspective of the crisis created by the Cooperative Societies and their office holders who had been indulging in large malpractice and misappropriation of the deposits made by the depositors of which this Court should take judicial notice and it was maintained that it was necessary to have issued the orders against all the Directors of all the Societies with a view to preserve all the assets and with a view to emergent nature of the situation, it was neither necessary to grant any hearing to the persons affected nor had the Registrar any time to examine the facts of each case and pass an order in each individual case after examining it on merits. According to the learned Advocate-General, the Registrar therefore decided to issue order under section 44-E of the Cooperative Societies Act, 1925 to all the Directors of all the Societies registered as Cooperative Societies in Punjab.
5. The impugned order purports to have been passed under section 44-E of the Cooperative Societies Act which was added to the Cooperative Societies Act, 1925 on 15-9-1991 by Punjab Cooperative Societies (Amendment) Ordinance, 1991. It reads as under:-- "44-E--(1) If it appears to the Registrar that in the interest of the members of a Society or its depositors, it is necessary that the moneys received and other assets of the Society, whether held in the name of that Society or any. Other person, are protected and preserved, the Registrar or any other person, authorised by him may, without prejudice to any other action or proceedings which may be taken against the Society under any law for the time being in force.-- (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 persons 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 subsection (1) may at any time be withdrawn and shall not remain in force for more than six months."
The impugned order passed by the Registrar may also be reproduced which is as under:-- "Whereas, it has become necessary to protect and preserve the interest of the members/depositors of Pasban Cooperative Finance Corporation Ltd. Mail View Plaza, The Mall, Lahore.
Now, therefore, in exercise of the powers conferred upon me under Section 44-E of the Cooperative Societies Act, 1925 (VII of 1925) 1, Sibtain Fazal Halim, Registrar, Cooperative Societies, Punjab, Lahore hereby:-- (a)direct all banks, financial institutions and persons to freeze all moneys or assets deposited with them by or on behalf of Mr. Iftikhar-ul--Hassan Shah, Director, 2-Hearn Road, Lahore;
(b) restrain Mr. Lftikhar-ul-Hassan Shah from alienating, transferring, selling, assigning, disposing of or parting with the possession of any property or drawing any benefit, rent or income therefrom; (c)direct all the District Registrars/District Collectors, officers of the Excise & Taxation Department and all other authorities concerned not to permit any transfer, disposal or parting with the possession of any property movable or immovable held by or -on behalf of Mr. Iftikhar ul Hassan Shah."
6. From a perusal of section 44-E which has been reproduced above, it is to be seen that the Registrar, has been authorised to take various measures enumerated in clauses (i) to (vi) of subsection (1) but the exercise of powers is circumscribed by the condition that it should appear to the Registrar that taking of the measures enumerated in the subsection is necessary with a view to protect and preserve the moneys received and other assets of the Society whether held in the name of the Society or any other person in' the interest of the members of the Society or its depositors. It may be appreciated that the power granted to the Registrar is neither unbridled, nor unguided but is circumscribed by the conditions mentioned therein, which must exist before any order can be passed by him. On the plain wording of section 44-E, the argument of the learned Advocate-General that the Registrar can exercise the powers irrespective of the facts is untenable and there is no warrant for the assumption that the Legislature intended to vest the Registrar with such vast and unstructured powers so as to freeze the assets of any person connected with the Society irrespective of whether he is in any way to blame or not.
7. The use of the expression "if it appears" is significant and must be given full effect to. This expression has been judicially interpreted and must be taken to have been used in that sense by the Legislature. Although the learned Advocate-General is to some extent correct in submitting that this expression cannot be equated with "proof" but, with due respect to him, the difference in the two expressions is one of quantum of evidence and it cannot be contended with any success that the Registrar can proceed on the basis of no evidence or material on the record and in a subjective manner. The words "if it appears" cast a duty upon the Registrar to form an opinion objectively on the basis of the facts obtaining on the record in a just and fair and equitable manner.
8. Similar words which appear in defence of Pakistan, 1971 came up for consideration before a Division Bcnch of Sindh High Court in Moosa Hassan Amlani v. Government of Pakistan and 4 others PLD 1978 Kar. 883:-- "The word "appears" occurring in rule 177 clearly imports the requirements (if objective determination by the Central Government on the basis of materials available with it whether a particular contract was injurious to the public interest. The statute does not seem to vest unbridled, arbitrary and subjective power to declare a contract to be injurious to the public interest."
Reference may also be made to the definition of "if it appears" in Words and Phrases Permanent Edition Volume 20 at page 51:-- "The phrase "if it appears" as used in Code of Civ. Proc., 2623 providing that if it appears to the surrogate that the will was duly executed, and that the testator at the time of executing it was in all respects competent and not under restraint, it must be admitted to probate, is equivalence to a requirement that the fact of competency must be established by sufficient evidence. In re: Goodwin's Will 88 N.Y.S.734,95 App. Div.183.
"Section 2623 of the Code of Civil Procedure expressly provides that 'if it appears to the surrogate' that the will was duly executed and that the testator at the time of executing it was, in all respects, competent to make a will and not under restraint", then it must be admitted to probate." The phrase 'if it appears to the surrogate' as used in this section implies that there must be some evidence given tending to show that the person who made the will was competent to make it and at the time of its execution not under restraint. Evidence is the only way by which a fact can be made 'to appear' to one acting in a judicial capacity." In re: Schreiber's Will, 98 N.Y.S. 843, 484, 112 App. Div.495.
Similarly in Prem's Judicial Dictionary, 1964 Edition, Volume II at page 806, the expression "if it appears" has been explained as follows:-- "If it appears-- The word 'appears' or appearing is one of frequent use in judicial proceeding and is sometimes used in statutes referring to them as meaning clear to the comprehension when applied to matters of opinion or reasoning and satisfactory or legally known or made known when used in reference to facts or evidence; In one sense the word 'appear' may refer to that which is seen by the eye, but it is also used in its broader sense as signifying that which is made clear by evidence or is clear to the comprehension when applied to matters of reasoning or opinion."
From the above it is quite apparent that the power under section 44-E cannot be exercised by the Registrar on mere conjectures and surmises or without regard to facts and circumstances of each case. The position taken up by the learned Advocate-General himself is that each and every individual was never examined on merits but it was decided as a matter of policy that the orders under section 44-E be issued to all the Directors of all 121 Cooperative Societies registered under the Cooperative Societies Act, 1925 in Punjab. The impugned order is therefore clearly not sustainable.
9. It is also to be noticed that the impugned order is on cyclostyled pro forma and shows no application of mind to the facts and circumstances of each case. It is not necessary to dilate any further on this aspect of the matter for according to the own showing of the respondent, such an exercise cannot be undertaken. The object behind or purpose for which the order has been passed may be bona fide but the fact remains that there is no power granted to the Registrar to pass an order in general terms applicable to all cases irrespective of the facts and circumstances of each case.
10. The other contention of the learned counsel for the petitioner that the impugned order has been passed without granting an opportunity to the petitioner of being heard is equally well founded. It is settled law that no action detrimental to any person or his property can be passed by a functionary except after complying with the principles of natural 'justice, the minimum requirement of which is that a person concerned must be granted a hearing. Although it is correct that the order remains in force for six months and can be withdrawn by the Registrar but the consequences flowing from the order are so drastic that on no reasonable hypothesis can it be contended that it was not necessary to hear the effected person before passing the order. It may be appreciated that the order is to the effect of freezing even the personal bank account of the petitioner from which he is prohibited to withdraw any money whatsoever. All pervasive embargo has been placed on the rights of the petitioner to deal with movable and immovable properties so much so that he cannot even receive rent from his tenants.
11. The learned Advocate-General relying upon. Certain judgments to show that in cases of emergent nature, the necessity of hearing can be waived but even in these cases, law insists that post facto hearing must be afforded to the effected persons. In the present case although the impugned order has been passed as far back as on 21-10-1991 but even upto now neither any show_ cause notice has been issued to the petitioner nor has he been granted any opportunity of being heard. It is also to be noted that the requirement of notice and hearing is one of the essential principles of Islamic Jurisprudence' intent as has been noticed in various judgments. Allah Almighty did not proceed even against Satin without hearing his explanation. The following observations, appearing at page 331 of Muhammad Afzal Zullah, J. As his Lordship then was in Pakistan and others v. Public-at-Large and others PLD 1987 SC 304 are instructive:-- "Right to property and honour, in addition to life, were also declared sacred which means not only that their violation is to be punished and/or compensated but also that it is to be prevented. In this behalf while the victim needs to be protected against the violation, the one who violates is made accountable. All this cannot be possible without a notice and opportunity of hearing. The denial of these safeguards for doing justice would amount to Zulm and Ziaditi against oneself as also the victim."
12. There is another equally good reason as to why the impugned order cannot be upheld, which is that power under section 44-E can only be exercised in respect of the property of the Society whether had in its own name 6r in the D name of any of its Director or member. The impugned order does not even recite that some property of the Society is held by the petitioner in his name.
13. Last but not the least, it is to be mentioned that the' petitioner has sworn affidavit that at the time when the order was passed or even before that he had ceased to be a Director of the Society.
In support of this assertion, the petitioner has placed on record a copy of his resignation dated 4- 6-1991 as also the letter of acceptance of 5-6-1991. This fact was duly communicated to the Registrar of the Cooperative Societies vide letter dated 17-6-1991 of respondent No.3, copy of which has been filed as Annexure 'C'. No written statement has been filed by the respondents controverting; these facts which are therefore deemed to have been admitted under the law. Even otherwise, these facts have not been controverted by the respondents even at the time of hearing of this petition. It is thus obvious that the petitioner had ceased to be a Director of respondent No.3 at the time when the impugned order was passed but this aspect of the matter was not attended to by respondent No.3. The impugned order which proceeds on mistaken assumption of fact treating the petitioner to be a Director of the Company is therefore not sustainable.
14. In the end, it may also he mentioned that it is difficult to accept the contention of the learned Advocate-General that there was grave emergency of such a nature that it could justify departure from the established rule of law and natural justice. In this respect it may be pointed out that although section 44-E was added to the Cooperative Societies Act, 1925 on 15-9-1991, the impugned order has been passed after about one month thereafter on 21-10-199i. During this period of time if respondents were minded to take action under section 44-E, there was sufficient time available with the respondents for issuing a notice to the petitioner and granting him an opportunity of being heard. Article 4 of the Constitution of Islamic Republic of Pakistan, 1973 ensures that no action can be taken against any person except in accordance with law and he has a right to be treated in accordance with law. The power under section 44-E is discretionary and it is by now well established that the discretion must be exercised judiciously, objectively, honestly and not arbitrarily or in capricious or fanciful manner. Reference may be made to the case of Federation of Pakistan and others v. Haji Muhammad Saifullah Khan and others PLD 1989 SC 106 wherein the following observations of this Court in M. Abdul Majid v. The West Pakistan Province and two' others PLD 1956 Lahore 615 were cited with approval:-- "According to the rules of reason and justice not private opinion according to law and not humour, it is to be not arbitrary, vague and fanciful, but legal And regular, to be and for substantial reasons and it must be exercised within the limits to which an honest man competent in the discharge of his office ought to confine himself i.e. Within the limits and for I he objects intended by the Legislature."
Similarly, the rule laid down in Abu] A'la Maudoodi v. Government West Pakistan (PLD 1964 SC 673) was reiterated in the following terms:-- --- it is a duty of Provincial Government to take into consideration all relevant facts and circumstances. That imports the exercise of an honest judgment as to the existence of conditions in which alone the opinion may be formed, consequent upon which the opinion must be formed honestly that the restriction is necessary."
A reference may also be made to the Full Bench judgment of this Court in Kh. Muhammad Sharif v.
Federation of Pakistan through Secretary, Cabinet Division, Government of Pakistan, Islamabad and 18 others PLD 1988 Lah. 725 wherein while construing Article 58(2) of the Constitution, it was observed:-- "Whether it is 'subjective' or 'objective' satisfaction of the President or it is his 'discretion' or 'opinion', this much is quite clear that the President cannot exercise his powers under the Constitution on wish or whim. He has to have facts, circumstances which can lead a person of his status to form an intelligent opinion requiring exercise of discretion of such a grave nature that the representatives of the people who are primarily entrusted with the duty of running the affairs of the State are removed with a stroke of the pen. His action must appear to be called for and justifiable under the Constitution if challenged in a Court of law. No doubt, the Courts will be chary to interfere in his 'discretion' or formation of the 'opinion' about the 'situation' but if there be no basis or justification for the order under the Constitution, the Courts will have to perform their duty cast on them under the Constitution."
15. For the reasons aforesaid, this petition is accepted and the impugned order is declared to have been passed without lawful authority and is of no legal effect.
A.A./I -20/L