' Through this order, I intend to dispose of two applications: one filed under section 34 of the Arbitration Act, 1940 (CMA-11197/93) filed by defendant No,5 and the other filed under Order VII, Rule 11, C.P.C. (CMA-57 of 1994) filed by defendant No,3 alongwith the preliminary legal objections, framed by this Court on 13-8-1996.
2. Firstly, I would like to proceed with Civil Miscellaneous Application 57 of 1994, which is an application under Order VII, Rule 11, C.P.C. And the three preliminary legal objections to the maintainability of this suit, which are reproduced as hereinafter:--
(i) Whether the suit is barred by sections 70 and 70-A of the Cooperative Societies Act, 1925?
(ii) Whether the suit is barred by section 54 of Sindh Cooperative Societies Act, 1925?
(iii) Whether the suit is liable to be stayed under section 34 read with section 45 of the Arbitration Act, 1940?
3. This is a suit for declaration, possession, cancellation of documents and injunction, filed by widow of (late Masood Ali Khan alongwith her two minor children who are co-plaintiffs. The case of the plaintiffs is that deceased Masood Ali Khan who was husband of the plaintiff No,1 and father of plaintiffs Nos.2 and 3 was allotted a residential Plot bearing No,B-84, Block 18, measuring 355 square yards, situated in K.D.A. Scheme No,24, Gulshan-e-Iqbal, Karachi, (hereinafter referred to as the "suit property") by the defendant No,3, namely Works Cooperative Housing Society Limited; that on 5th November, 1978, the physical possession of the suit property was delivered by the defendant No,3 that deceased Masood Ali Khan expired on 3rd October, 1977 in an accident at Colombo,, Sri Lanka; that after a lapse of nearly 15 years, i,e, in the month of February, 1993 the widow (plaintiff No,1) of the said deceased applied for mutation/transfer of the suit property; that despite completion of the formalities the suit property was not transferred; that or 29th May, 1993 plaintiff No,1 served a legal notice on the defendant No,3 calling upon them to immediately transfer the suit property; that on 13th June, 1993 defendant No,3 through a communication informed the plaintiff that the allotment of the suit property was cancelled and the same was allotted to the defendant No,4, on the instructions received from the then Chief Minister of Sindh. It is pleaded by the plaintiffs that the said cancellation was mala fide, without issuing any prior show-cause notice and in violation of the Rules and Regulations of the Cooperative Society.
' Following reliefs are being sought in the suit: "..(a) Grant the Declaration that the plaintiffs abovenamed, as legal heirs of the deceased Masood Ali Khan have succeeded to all the rights, beneficial interests, titles and entitlements etc. Of the Deceased in the aforesaid Plot and as such they are entitled to have their names mutated, transferred and recorded in the books and records of Defendant No,3 Society as the owners/allottees/transferees of the aforesaid Plot bearing No,B-84, Block 18, K.D.A. Scheme No,24, Gulshan-e-Iqbal Karachi admeasuring 355 square yards or thereabout and situated in the Defendant No,3's Housing Society within Police Station.
(b) Declare that the Defendant No,3 (in view of declared policy as per letter Annexure N hereto) is acting arbitrarily and illegally and against the declared policies of the Government to create transparency in the allotment and cancellation of Plots.
(c) Direct the Defendant No,3 to hand over and deliver to the plaintiffs such mutation/transfer/allotment letters and documents in favour of the plaintiffs in respect of aforesaid Plot family described hereinabove without any further delay or loses of time.
(d) Cancel the allotment/transfer of the aforesaid plot in favour of Defendants Nos.4 and 5 or any other persons deriving title from the said Defendants as the case may be.
(e) Restrain the Defendants, their agents, attorneys or any one working for or on their behalf, either jointly and/or severally, from transferring, assigning, alienating, disposing and selling the aforesaid Plot or in any way whatsoever creating any charge, lien, mortgage, transfer or interest thereon of whatsoever nature pending the final adjudication of the Suit.
(f) Direct the Defendants, severally and/or jointly, their agents, servants, officers workmen or others for and on behalf of the Defendants to . Deliver to the Plaintiffs the peaceful and vacant possession of the aforesaid Plot more particularly described in para. 3 hereinabove, without any let or hindrance.
(g) ...
(h) ...
4. I have heard Mr. Zahid Burhani, for the plaintiffs and Mirza Adil Baig, for the defendants. On the previous dates of hearing, I have also heard Mr. Muhammad Maqsood, Advocate. In so far as the first objection of non-serving a legal notice prior to filing of the suit is concerned, Mr. Zahid Burhani has invited my attention to Annexure ' I', filed with the plaint, which is a legal notice dated 29-5- 1993, issued on behalf of plaintiffs to the defendant No,3 wherein all the relevant grievances of the plaintiffs have been incorporated as well as the cause of action has also been disclosed. Issuance of this notice has not been denied by the defendant No,3 in its written statement. Annexure 'J' of the plaint is the reply of defendant No,3. It is pertinent to note that in this reply, defendant No,3 has admitted that the suit property was transferred as no timely action was taken by the legal heirs of deceased Masood Ali Khan. It was further admitted by the defendant No,3 that they are ready to accommodate the plaintiffs and to allot a plot available in the Society, for which widow of (late)
Masood Ali Khan, namely Mrs. Naila Masood (now plaintiff No, l) was advised to make a request in writing. I have gone through both these notices and in my view it fulfils the requirements as provided in section 70 of the Cooperative Societies Act, 1925. Therefore, the plaint is not liable to be rejected on this ground.
5. The next question which requires determination is in respect of sections 54 and 70-A of the Cooperative Societies Act, 1925, (hereinafter referred to as the Act, 1925) which provide a separate forum for determination of dispute touching the business of a cooperative society. Several classification of such parties have been disclosed in sub-clauses (A) to (E) of section 54 who are competent to refer a dispute to an arbitrator vide section 54. It was contended by Mirza Adil Baig that the category as classified in subsection (c) to section 54 covers the plaintiffs case which envisages reference of dispute between the Society or its Committee and any present or past member of the society to an arbitrator. According to Mr. Baig, since the plaintiffs are claiming their right through a past member,. The matter should have been referred to the arbitration as provided under section 54 of Act, 1925. It is not disputed by any of the defendants that the predecessor-in- interest of the plaintiff died on 3-10-1977 which was after issuance of letter of allotment and delivery of physical possession. Mr. Zahid Burnani, has argued that the term 'past member' used in section 54 of the Act, 1925 does not include legal heirs of a deceased member. He has placed reliance on the cases Anjuman Imadad Kafait Shuari v. (Captain) Naiz Ahmad and others (PLD 1952 Lahore 478) and Anjoman Imdad Qarza v. Abdul Haq and others (PLD 1960 (W.P.) Lahore, 273). In the former case the question before a learned Division Bench of Lahore High Court was whether all disputes between a Cooperative Society and past member could be referred to arbitration for decision in view of an arbitration clause which requires that any dispute touching the business of a society between members or past members of a society or a person claiming through a member or past member or persons so claiming and the committee or any officers can be referred to arbitration. Reference was made to the cases Narinjan v. Cooperative Society (AIR 1933 Lahore 376), Bharmakka v. Mallappa (AIR 1926 Bom. 352), Mahabir v. Basudeo (AIR 1925 Pat. 575). Sheosaran Singh v. Gaya Amla Cooperative Society (AIR 1939 Pat. 500). It was held by a Division Bench of Lahore High Court comprising of Cornelius and Shabir Ahmad, JJ., (as their Lordships then were) that the definition contained in clause (c) to section 2 of the Cooperative Societies Act, 1912 does not extent to a dead person. The view of a learned Single Judge that a cooperative society has a right to claim its debts against the successors of a deceased member through suit for recovery, filed in a Civil Court was upheld by the Lahore High Court. More or less, same question came up before another Division Bench of Lahore High Court in the case of Anjuman Imdad Qarza (supra). It was argued that the term, "past member" occurring in Rule 18(a) of the Cooperative Societies Rules framed by the Punjab Government includes a person, who, though dead, has been a member of the society and could be termed as past member. This Arugument was not upheld with the following observations: "...There cannot be a dispute between persons, be the persons juristic persons or natural persons unless they are in existence. It follows that the expression 'past member' used in section 43(2) (1) of the Cooperative Societies Act used in relation to disputes of such member with the society would apply only to person who though no longer members of the society are still in existence. By the same clause the Provincial Government was authorised to make rules for settlement of disputes between a Cooperative Society and persons claiming under ' members' or past-members' and if one were to hold that when the legislature used the expression 'persons claiming under past members' it intended to include person claiming under 'deceased members' one would be holding that the legislature which enacted the Cooperative Societies Act, 1912, was indulging in inconsistencies and as an interpretation which would lead to the legislature being held to be inconsistent is to be avoided, it cannot but be held that a dispute between a Cooperative Society and the legal representatives of a deceased member was not intended by the legislature to be a matter about which the Provincial Government had been authorised to make rules. Consequently, I would hold that rule 18(a), the relevant part of which has been reproduced in paragraph (3) above cannot be invoked in disputes between a Cooperative Society and the legal representatives of a deceased member of that society."
6. The above view of a learned Division Bench of Lahore High Court was followed by this Court in the case of Mst. Laila Bai and others v. Mst. Gul Bano and others (1992 CLC 1643). In that case, section 54 of the Act, 1925 was under consideration when it was held that the term "past member" does not include a deceased member. Mr. Zahid Burhani has also relied upon the case of Cooperative Society, Patur, No,7 v. Vasant Balkrishna and others (AIR (33) 1946 Nagpur 317) and the case of Bihta Cooperative Development and Cane Marketing Union Ltd., and another v. Bank of Bihar and others (AIR 1967 SC 389 (V 54 C 75)). In my view, the rule laid down in both these cases does not lend any support to Mr. Zahid Burhani as section 48 of the Indian Cooperative Societies Act, 1912 has been amended where the classification of the person to invoke arbitration includes such as past member and "deceased member". In the Sindh Cooperative Societies Act, 1925 the term "deceased member"was not included in the scheme of section 54. The term "member" has been defined in the Act, 1925 vide section 3(c) which includes a person joined in an application for the registration of a society or a person admitted to membership after registration of the Society in accordance with the rules and by-laws applicable to such society. However, the term "past member" has not been defined anywhere in the entire Act 1925. But, at the same time, the term "deceased member" has been used in the Act 1925 which suggests that the intention of legislapure was not to include deceased member in the category of past member. Section 27 prescribes methods for the transfer of interest on the death of a member. Section 28 deals with the liability of a past member while section 29 deals with the liability of the estate of a deceased member. If the intention was to include deceased member into the term "past member", there was no need for enacting separate provisions for deceased member in the scheme of Act, 1925. This is further clarified by section 54 where the term "dispute" is defined as inclusive of a claim by a society for debts or demands due to it from heirs of past member. It reads as follows: "A dispute shall include the question whether a person is or was member of a society and also claims by a society for debts or demands due to it from a member, past member or non-member or the heirs or assets of a past member or non-member whether such debts or demands be admitted or not:"
It is, therefore, clear that the term "past member" does not include a deceased member or his legal heirs. In these circumstances, the plaintiffs are not entitled in Law to invoke arbitration under section 54 of the Act, 1925. Therefore, the bar as contained in section 70-A is not attracted.
7. On 10-12-1997 upon conclusion of hearing, order was dictated in the open Court through which both these applications as well as preliminary legal objections were disposed of. However, while going through the said order and before signing the same it transpired that none of the Advocates have made submissions to the effect of insertion of section17-B in the Sindh Cooperative Societies Act, 1925, made through Act VIII of 1989 (PLD 1990 Sindh Statute 14) as well as on the definition of "dispute" as given in subsection (2) to section 54 of the Act, 1925. Accordingly, rehearing was ordered and notices were issued to the parties. In pursuance of the same re-hearing was done. In the year 1989 an amendment was made in the Act, 1925 through which section 17-B was enacted, which reads as follows: "17-B. Transfer of interest in a Housing Society.---A member of a cooperative housing society or a society dealing in housing development shall cease to be member of the society in case all his interests in the immovable property in the society are transferred in favour of any other person by sale, inheritance, gift or otherwise, and the person acquiring such interests shall subject to rules be admitted as a member: ' Provided that where more than one person acquire the interests, one of such person with mutual consent, failing which the person older in age shall be admitted as a member having right to vote while other persons will be members without such right: ' Provided further that where a minor or a mentally disabled person, acquires the interests, the natural or legal guardian of the minor or, as the case may be, the person bound to maintain the disabled person shall be admitted as a member and such membership shall stand transferred to the minor as soon as he acquires majority or to the disabled person as soon as his disability is removed."
8. It was contended by Mr. Zahid Burhani that this amendment has no effect on the case of plaintiff since the predecessor-in-interest of the plaintiff died on 3-10-1977, some 12 years earlier to the introduction of this amendment and that section 17-B does not cover section 54 of the Act, 1925.
According to Mirza Adil Baig who vigorously argued that by virtue of this amendment, plaintiffs became members of the Society and, therefore, remedy, if any, available to them is through the process prescribed under section 54 of the Act, 1925. It was jointly stated by all the Advocates present that there is no judicial pronouncement of any Superior Court on section 17-B of the Act, 1925.
9. Prior to introduction of section 17-B there was no provision in the Act, 1925 dealing with the status of a member in case of transfer of his interest in the immovable property by way of sale, inheritance, gift or otherwise. Section 17-B provides that in the case of transfer through any mode as mentioned earlier, a member of a Cooperative Society shall cease to be a member and that a person acquiring such interest shall subject to rule, be admitted as a member. It is clarified in this section that where the transferee is more than one person than by consent of such transferees one would be admitted as a member having right to vote while other persons will be simple member without such right. In case of minor, it is provided that his or her legal guardian shall be admitted as a member and in case of a mentally disabled person the same provision is provided. It would require examination whether transfer of a property of a mentally disabled person, as provided in Second proviso to section 17-B comes in conflicts with any of the provisions of The Lunacy Act, 1912, where it is provided that the properties of a mentally disabled person will be managed and controlled through a Manager, to be appointed by the District Judge of such District where the said lunatic resides. Adverting to the question involved in the instant case, the moot point is whether this provision of section 17-B has any retrospective effect. The admitted postion is that despite expiry of deceased member on (sic)-10-1977 the property remained in his name till January, 1993 when it was transferred to defendant No,3 this fact haq been admitted by defendant No,4. Cooperative Society, in its written statement as well as in Annexure 'J' to the plaint through which following admissions were made by the Cooperative Society:.
"(i) I do not want to go into detail and it is also not denied that the plot in question was not allotted to your client's husband but I must say that your client has, though, died long ago, no timely action was taken by the legal heirs to watch and protect their interest and no application was filed for mutation of the same in the name of the legal heirs and no letter of Administration was obtained in this regard.
(ii) As per the record of the society, one Attaullah Unnar son of Hameedullahh was allotted a Plot bearing No,B-33, Block No,10, Ghlshan-i-Iqbal, in the year 1981 and he made an application for another plot in exchange of his allotted plot and accordingly on 21-1-1993 another plot B-34 in Block 18 Scheme No,24 was allotted to him vide allotment order dated: 21-1-1993 and you applied for mutation after that so your case cannot be considred for mutation of the Plot No,B-34, Block No,18, Scheme No,24, Gulshan-i-lqbal, Karachi in favour of your client since it has been transferred to Mr. Attaullah in exchange of his Plot. I hope you will appreciate the difficulty of my client in not conceding to the request of your client in view of the above factual position:"
9. On 26-11-1995 the Secretary of the defendant No,3 was directed to appear in Court for examination, who appeared and was examined by this Court on 8-4-1996, when the following order was passed: "The Secretary of defendant No,3, namely, Muhammad Mujtaba Khurshidi was examined by this Court under Order X, Rule 2, C.P.C. It is stated by him that the defendant No,3 had received an application in the month of Suptember, 1992 from defendant No,4 that his plot was encroached and that an alternate plot be issued to him. That the then Administrator, namely, Nasimul Haq Malik without issuing notice to the original allottee ordered allotment of B-84 to the defendant No,4. It is further stated by the Secretarty that at the relevant time there was no managing committee in existence and the full powers were with the Administrator. He has admitted taht the suit plot was cancelled without issuing any show-cause notice to the original allottee and that it was an illegal and unauthorised act on behalf of the Secretary. He has filed photo copies of the letter dated 21-9- 1992 and allotment letter dated 21-9-1992 and allotment letter dated 20-1-1993. Copies of these documents were supplied to the learned counsel for the plaintiffs as well as for defendant No,4 Mr. Mirza Adil Baig, learned counsel appearing for the defendant No,5 has requested to cross-examine this witness. The Secretary was examined under Order X, Rule 2, C.P.C. By the Court and since he is not under oath or in the witness-box, as such, no question arises for cross-examination by the other side. However, parties are entitled to suggest questions but none of the parties have suggested any question.By consent, further hearing is adjourned to 22-4-1996."
10. It appears that one of the intentions of enacting section 17-B may be to curb any mischief which may arise on the part of cooperative society in dealing with the transferee of an immovable property. It will be seen that while dealing with the case of transferor, the word, 'shall' has been used in regard to the termination/seizure of a membership of a transferor on transfer of all his interest in the immovable property. In the same provision, a transferee has been extended a right, after acquiring interest in an immovable property, to obtain a membership in a cooperatiive housing society but subjct to its rules. A persual of section 17-B reveals that the termination of membership on transferring rights in an immovable property becomes effective ipso facto in respect of a transferor. But to obtain a membership as a result of acquiring interest in an immovable property it is extended subject to rules of such cooperative housing society which may include completion of some formalities, like the submission of application forms for membership, managing or working committee's resolution or membership, fee etc. It is observed that a cooperative housing society could not frame any rule denying a right to a transferee to obtain membership on the eventualities as mentioned in section 17-B which, as it appears, was enacted in reference to a cooperative housing society since there is a provision in the Sindh Building Control Ordinance, 1979 whereby it is prescribed that the allottees of different flats/units in a building shall form a cooperative housing society. Perhaps, it may be for the reason that section 13(3-A) of the Sindh Building Control Ordinance, 1979, was introduced in the year 1982 through which allottees of a building were permitted to form cooperative society.
11. Keeping in view the facts of the present case, it could be safely said that on the introduction of section 17-B in the year 1989, the plaintiffs were entitled to become a member of the Cooperative Housing Society/defendant No,3 on acquiring interest in the suit property by means of inheritance but at present their status is doubtful. Subsequently, in the year 1993 But prior to filing of the suit this property was cancelled and allotted to another person. Therefore, the rights of plaintiffs to apply for membership of the defendant No,3 by virtue of section 17-B stands expired. The plaintiffs at present, therefore, could not be said to be the members of the defendant No,3 nor theycould be termed to be person claiming through a past member. This takes them out of the purview of section 54 of the Cooperative Societies Act, 1925. Thus, the suit, in view of its peculiar circumstances, does not appear to be barred by the provisions of sections 54 and 70 of the Cooperative Societies Act, 1925, Accordingly both the applications under Order VII, Rule 11, C.P.C. Stand dismissed and it is held that in view of the facts disclosed in the plaint, it is not liable to be rejected.
12. Since minors' interest is also involved in this suit, it is directed that the suit be fixed for early hearing on an early date, preferably within one year.