MUSHIR ALAM, J. -- This appeal calls in dated 25th August, 1998 passed by learned Single Judge on an application under Order VII, Rule 11, CPC whereby the plaint was rejected.
Facts relevant for the purpose of disposal of this appeal are that the appellant brought a suit for declaration of title, injunction and cancellation of the lease. It was asserted in the plaint- that plaintiff (since deceased) had a partnership business with father of respondent No. 1, under a deed of partnership dated 1.3.1949. During the course of business, partnership firm acquired various properties either in the name of firm or in the name of partners. Said firm, later on was dissolved and parties exchanged various properties in satisfaction of their respective claims against each other. It is averred that Quarter bearing No. 944 situated at PIB Colony, Karachi, which is the subject-matter of the suit, in terms of the alleged settlement was given to the plaintiff/appellant as his share and he incurred expenses in raising construction thereon. It is further averred that since 1962, i.e., the date of such settlement, appellant/plaintiff is in possession of all the title documents as well as suit property. It is the case of the appellant that later on it transpired that defendant No. 2 despite having knowledge of appellants/plaintiff claim collusively transferred and leased the property in favour of defendant/respondent No. 1. In the foregoing background, the appellant/plaintiff has sought declaration as of his title in respect of the said Quarter, cancellation of the Sub-lease and consequential injunction against the transfer of said property. Said suit was contested and the objections were raised as to maintainability of the suit by respondent No. 2. An application under Order VII, Rule 11, CPC "led the respondent/defendant No. 1, for rejection of the plaint. learned Single Judge in consideration of the law laid down in PLD 1970 Karachi 200, 1984 CLC 2914 and PLD 1995 Karachi 399 wherein it was held that the provision of Section 70 of the Cooperative Societies Act, 1925 (hereinafter referred to as "the Act") is mandatory rejected the plaint. Admittedly, no notice under Section 70 of the said Act was served.
2. Learned counsel for the appellant attempted. To justify the maintainability of the suit on the ground that the properties that were acquired out of the fund of the partnership were a matter which did not involve any controversy under the Cooperative Societies Act. It was contended that it is a dispute between the partners of a firm same does not touch the business of Society therefore, no notice under Section 70 was necessary. According to him, respondent/defendant No. 2 is merely a Proforma Party. He placed reliance on unreported judgment in HCA No. 140/1997. Hussain J.
Merchant v. The Ismailia Garden Cooperative Housing Society and another.
3. Mr. Azizul Hassan, learned counsel for the respondent, however, contended that, the dispute was between the Members of Society, therefore, remedy was available udder Section 54 of the Act besides being barred under Section 70 thereof.
4. We have heard the arguments of learned of the parties and perused the record.
5. Facts as apparent from the perusal of the record show that the subject property is claimed to be part of the partnership firm which since stood dissolved and the claim of the appellant/plaintiff is outcome of a dispute between the partners of the firm inter se. Learned counsels for respondents places heavy reliance on Sections 54 and 70-A of the Act, to oust the appellant from Court, in order to appreciate their contentions, it will be advantageous to reproduce Sections 54 and 70-A(i).(a) of the Act, which runs as follows.
54. Arbitration. -- If any dispute touching the business of a society other than a dispute regarding disciplinary action taken by the society or its committee against a paid servant of the society arises--
(a) between members or past members of the society or persons claiming through a member or past member, Or
(b) (c) From the scheme of Section 54 and the Act, it is clear that it is not that each any every nature of dispute between the persons specified under Section 54 of the Act which is referable to the statutory arbitration. The dispute must be a dispute touching the business of the society the business which a particular society does, is to be ascertained with reference to the object of society, as may be specified in its bye-laws. The word "touching" used as a prefix to "the business" is also of were import and would include any matter which relates to concerns or affects the business of the society; it therefore follows that the controversy must have nexus with the business of the society and be one relatable to the object of the society. In this case respondent No. 2 is P.I.B.
Cooperative Housing Society Ltd., under Section 2(4) of the Act, "Housing Society" means a society formed with the object of providing its members with dwelling houses on conditions to be determined by its bye-laws.
70-A. Bar of jurisdiction. -- (1) Notwithstanding anything provided in any other law for the time being in force , but save as expressly provided in the Act-
(a) no Court or other authority whatsoever shall have jurisdiction to entertain, or to adjudicate upon, any matter which the Provincial Government, the Registrar, or his nominee, any arbitrator or liquidator, a society, a financing bank, a co-operative. Bank or any other person is empowered by or under this Act, or the rules or bye-laws framed thereunder, to dispose of or to determine.
From bare reading of Section 70-A, above, it is clear that the jurisdiction of Civil Court and other authority is ousted only in cases where such' statutory functionaries have jurisdiction to entertain, adjudicate, dispose of or to determine any matter, under the Act, rules or bye-laws framed thereunder; secondly if a dispute is between the parties as enumerated under Section 54 thereof i.e. Between the members or past members or persons so claiming and the committee or any officer of the society inter se; and lastly, the dispute must be relating or concerning the business of the society.
6. Now adverting to the controversy in the suit, admittedly plaintiff claims title of the suit property pursuant to settlement between the partners of a dissolved firm. Such dispute between partners inter se who were members of the society cannot be said to be a, dispute touching the business of the society, therefore such controversy cannot be referred to statutory arbitration under Section 54 of the Act. Matters arising out of contractual obligation between members inter se like for instance claim of benami transaction, agreement to sell or any other contractual dispute between the members, past members or persons claiming through, such members, inter se seeking performance of legal and contractual obligation thereunder against the other and such dispute having no nexus with business of the Society, then such disputes and controversies cannot be referred to Arbitration u/S. 54 of the Act nor can be adjudicated by the statutory functionaries set out in Section 70-A of the Act for reference see Muhammad Azim v. P.E.C.H. Society Ltd. (PLD 1985 Kar. 481 at page 527) Lahore Cantt. Co-operative Society v. Muhammad Asif (1998 MLD 1850).
As far as reliance on the cases, it may be observed that in the case of Sindh Baluchistan Provincial Co-operative Bank Ltd. v. Dilawer Khan (PLD 1970 Karachi 200) the dispute related to election dispute. In the case of Farida v. Prince Apartment Co-. Operative Housing Society (1984 CLC 2914) dispute was between a member and promoters of Co-operative Society relating to allotment of a flat, and in the case of Zia-ur-Rehman's Alvi v. Allahabad Co-operative Society (PLD 1995 Karachi 399) the dispute between member and the Society was referable to Registrar or his nominee. As such it can be seen that in all the three cases relied upon the respondents disputes urged were referable to the Registrar or his nominee and bar contained under Section 70-A of the Act was attracted. As stated above the controversy urged in the suit, that consequent upon dissolution of partnership firm, subject property came into hands of the appellant/plaintiff in terms of alleged settlement between partners, is a controversy that cannot either be referred to arbitration under Section 54 of the Act as it does not touch the business of the Society and secondly such controversy cannot be decided and adjudicated by the authorities mentioned in Section 70-A of the Act.
"It is true that the transfer of the shares and the plot by the Society would normally form part of its business, but in the present case there is no dispute that initially the appellant had himself transferred the shares in the name of the respondent No. 2 and therefore acting on such direction the Society perhaps affected the transfer in its records. If, however, now the appellant is claiming the earlier transfer by him as being by way of a benami transaction and without consideration or is accusing the second respondent of tempering with the documents, all these would form part of dispute between the appellant and the second respondent and could by no means be considered as touching the business of the respondent Society. Basically the dispute involved in the suit is between the appellant and the respondent No. 2 and pertains to the determination of their respective title, in the said property and is therefore quite independent of the Society's business..
Transfer of the shares and the property in the records of the Society are merely incidental to the acts of the appellant and the respondent No. 1, the Society itself having no particular interest in such transfer. In these circumstances, we are of the view that the provision of Section 70 of the said Act would not be attracted in the case. But even if the said section were to apply, then too, at best, the plaint could be rejected to the extent of the respondent No. 1.
Society alone and not in so far as the respondent No. 2 was concerned, against whom the suit could continue. However, having already held that the said Section 70 is not applicable to the present case, we allow this appeal, set aside the impugned order and direct the restoration of the plaint."
As discussed above the nature of dispute inter se between the parties as urged in the instant matter is neither the one touching the business of the Society nor is the one referable to the statutory functionaries mentioned in Section 70-A, of the Act therefore, the bar of jurisdiction is not attracted in the instant case.
Accordingly the appeal is allowed and the impugned order is set aside. The suit is to be decided on merits.