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Petition No. 614 of 1963, decided on 22nd May 1967.
, Ss. 2(2) & 254‑Company means company formed and registered under Companies Act-- Every company is not joint stock company‑Joint stock company must have permanent or fixed capital‑Co‑operative society registered under Bombay Co‑operative Societies Act (VII of 1925)‑ Not a company, but a corporation.
, S. 68 Relevant for purposes of considering applicability of Companies Act (VII of 1913) to Co‑operative Societies, but not relevant for including applicability of Companies Act (VII of 191,3) to Pakistan (Administration of Evacuees Property) Act (XII of 1957).
S. 22‑Order of Custodian on reference by Registrar of Co‑operative Societies in respect of status of Co‑operative Society, whose members migrated to India, being of general or abstract nature cannot be described decision as to evacuee status of society.
S. 2(2) (d), (e)‑Corporation becomes evacuee, if its business ceases, on account of partition, wholly or partially, or is carried on by persons whose authority to do so has not been accepted or approved by custodian.
, S. 22‑Application not filed within limitation‑Liable to be dismissed.
Faiz Muhammad Soomro for Petitioner.
Sayeed A. Shaikh for Respondents Nos. 1 and 2.
Zaheeruddin for Respondents Nos. 3 and 4. .
Date of hearing : 5th May 1967.
This petition under Article 98 of the Constitution is .directed against the order of the Custodian of Evacuee Property, West Pakistan, dated the 15th of June 1963 and the order of the Settlement and Rehabilitation Commissioner, Karachi, Hyderabad and Khairpur Divisions, dated the 3rd of December 1960.
2. The facts which form the backgrounds of this petition, briefly stated, are that Khudabadi Amil Agricultural Co‑operative Bank and Association Ltd., Hyderabad, was a co‑operative Society registered under the Bombay Co‑operative Societies Act, 1925. It had 2 to 3 thousand members, all of whom migrated to India after partition. It owned some land which is situated in Deb Almani, Taluka Hyderabad; and a house bearing No. B‑31‑1749 which is situated in Hyderabad town. In consequence of the migration of its members, it went in liquidation, and the Registrar of Co‑operative Societies appointed Khan Saheb Kamaluddin R. Abbasi to be its Liquidator. It is not clear whether this happened after the evacuee laws were enforced or before it, but after the evacuee laws were enforced in Pakistan, a question arose as to what was the status of corporations, joint stock companies and co‑operative Societies. Some of the Deputy Custodians treated co‑operative Societies as evacuee institutions and their property as evacuee property. This created a problem for the Registrars of Co‑operative Societies, because they had to make up their minds as to whether those co‑operative societies whose members had migrated to India were to be liquidated under their super vision or were to be allowed to be talon into custody under the evacuee laws and utilised "for the restoration of and maintenance of social and economic life of Pakistan and orderly settlement of persons who have taken refuge therein." This involved interpretation of the evacuee laws.
3. The land of the petitioner was allotted to evacuees in 1949. In 1950, the Pakistan (Protection of Evacuee Property) Ordi nance XV of 1949 and Pakistan Rehabilitation Ordinance XIX of 1948 were in force, and in these proceedings .we are concerned with section 2 of Pakistan (Administration of Evacuee Property) Ordinance XV of 1949 by which evacuee property' was defined because the question of defining the status of 'co‑operative societies arose in 1950. The section did not contain any provision with regard to corporations, joint stock companies or co‑operative societies. In such a state of the law a reference was made by the Registrar of Co‑operative Societies, Sind, by a confidential letter dated the 10th of August 1950, to the Custodian of Evacuee Property, Karachi and Sind Administration. The Registrar stated that the members of some of the co‑operative societies having migrated to India, some of the Deputy Custodians were treating co‑operative Societies as evacuee institutions and were treating their assets as evacuee property. He took the stand that co operative societies could not be treated as evacuee institutions because their registered offices were in Pakistan, and that their members, who migrated from Pakistan bad a limited interest in such institutions because their interest was limited to their shares in the capital of the societies. He suggested that those societies which were not able to manage their affairs, owing to the migration of their members, should be ordered to be wound up by the Registrars under section 48 of the Co‑operative Societies Act, 1925. He explained that in this event the assets of the societies would vest in the Registrar who would realise them, pay their liabilities and deposit with the Custodian the dues of Hindu migrants. He requested the Custodian:
"to give a ruling on the subject as to whether co‑operative institutions registered under the Co‑operative Societies Act with their registered offices to Pakistan could be considered as evacuee institutions."
There was no mention of any particular society in the letter. It was received by Mr. Akbar Hussain who was the Custodian of Evacuee Property at that time. He disposed of it as follows:‑--
"I confirm the above statement in your above letter as to the legal position of co‑operative societies registered in Pakistan."
In pursuance of the above order‑which was obviously intended to be a general exposition of the legal position of all co‑operative societies, an order was issued with reference to the land of the petitioner society by the Deputy Custodian, Evacuee Property, Hyderabad vide his letter dated the 1st of September 1950, as follows:
"In continuation of my letter No. DCH/EP/N/2067 dated 1st July 1950 and with reference to your letter No. DRC/6309, dated 22nd July 1930, h am to inform you that the Custodian E. P. S. and F. C., Karachi had decided that properties belonging to Co‑operative Societies registered in Pakistan cannot be treated as evacuee properties. Under the circum stances the allotment of lands belonging to Khudabad Amil Co‑operative Agricultural Association and Bank Ltd., Hydera bad (S) which had been leased to Haji Ahmed Khan Darya Khan upto Rabi 1956‑57 is not regular. Please takr steps to restore possession thereof to lessee as soon as possible."
4. It appears, however, that in spite of it the petitioner's property was dealt with as evacuee by the Rehabilitation Depart ment with the result that a tussle went on between the Rehabilitation Department and the Registrar of Co‑operative Societies. According to counsel for the petitioner, no property of the petitioner has been released by the Rehabilitation Depart ment as yet. The Rehabilitation Commissioner Sind pressed his point of view by making an application in 1954 for review of the order of Mr. Akbar Hussain to Mr. Mansoor Alam who was the Custodian at that time. Mr. Mansoor Alam dismissed that application,, vide his order dated the 17th of May 1956, as follows: ‑
"It "It is stated by counsel for the (Khudabadi Amil Agricultural) Bank (as the respondent in the proceedings) that the Bank is in liquidation and the Liquidator is taking necessary steps to wind up the affairs with a view to collect its assets and discharge its liabilities. In the circumstances, I see no reason to review the order of my predecessor and the notice is discharged, subject however to the condition that any moneys found due to an evacuee shall be paid by the Liquidator to the Custodian."
5. The above order is important because it has been, inter preted before us by counsel for the petitioner to be a confirmation of the Liquidator's management of the petitioner society.
6. The property of the petitioner society continued to be dealt with as evacuee property. According to counsel for the petitioner, the house of the petitioner society was transferred in 1960 to Mst. Masoomun Nisa, the mother and predecessor‑in -interest of respondents Nos. 3 and 4. Counsel for the petitioner has informed us that the Liquidator preferred an appeal to the Additional Rehabilitation Commissioner, which was dismissed, with the reservation only that the Final Transfer Deed may ‑not be issued until the objection of the Liquidator was disposed of by the Custodian. A copy of that order has not been placed on this record; but it appears that the point which the Additional Settlement Commissioner made was that the order of Mr. Akbar Hussain was merely an enunciation of a general proposition, and did not deal with the property which was in dispute or with the status of its owner. The Liquidator went in revision to the Settlement Commissioner, Karachi, Hyderabad and Khairpur Divisions, but his application was dismissed on the 3rd of December 1960, as follows:
"There is no categorical (specific ) order or declaration of the Custodian on the basis of which the disputed property under a P. T. O. should be treated as non‑evacuee property. The Additional Settlement Commissioner has already directed in his impugned order that pending a final decision of the Custodian, the P. T. O. shall not be converted into a final transfer deed. That is an enough guarantee that the applicant can "agitate the matter before the Custodian for a specific declaration regarding the status of the property. That (specific declaration) will surely prevail against the provisional order of transfer. Hence this revision is dismissed summarily."
7. Counsel for the petitioner has further informed us that, in view of the above‑mentioned legal stand of the Rehabilitation Department, the Liquidator made an application under section 22 of the Pakistan (Administration of Evacuee Property) Act XII of 1957 for a declaration that the property of the petitioner society was not evacuee property and that the application was rejected on the 17th of December 1962, mainly because it was barred by time. A copy of that order has not been placed on this record. A revision was preferred against it to the Custodian of Evacuee Property, West Pakistan.' It was heard by Mr. A. R. Changez who was the Custodian at that time and was dismissed on the 15th of June 1963.
8. The order dismissing the revision is now : in question before us under Article 98 of the Constitution. It appears that the following four arguments were advanced before the Custodian in support of the revision application:
Firstly, that the petitioner society was not a joint stock company; therefore, it did not fall within the scope of clause (e) of subsection (2) of section 2 of the Pakistan (Administration of Evacuee Property) Act XII of 1957, with the result that migration of the members of the petitioner society did not have any effect on its status.
Secondly, that, in any case, the order of Mr. Akbar Hussain was final and conclusive, with the consequence that the peti tioner society could not thereafter "be treated as an evacuee institution.
Thirdly, that clause (d) of subsection (2) of section 2 of the Pakistan (Administration of Evacuee Property) Act XII of 1957 was applicable to the petitioner society, with the consequence that it was not an evacuee institution and its property was not evacuee property.
Fourthly, that the revision application was not barred by time.
9. The learned Custodian has held that clause (e) of sub section (2) of section 2 of the‑Pakistan (Administration of Evacuee Property) Act 'XII of 1957. was "applicable to the petitioner society; therefore, the migration of all of its members to India had made it an evacuee institution. He has, further held that the order of Mr. Akbar Hussain was of executive nature and not a judicial determination of the status of the petitioner society. Moreover, the distinction between a corporation and a joint stock company was not before Mr. Akbar Hussain, and was not considered by him. The petitioner society is, according to Mr. A. R. Changez, a joint stock company in terms of clause (e) of subsection (2) of section 2 of the Act XII of 1957; therefore, it has become an evacuee institution by reason of the migration of all of its members. As to the contention that clause (d) of sub section (2) of section 2 of the Pakistan (Administration of Evacuee Property) Act XII of 1957 was applicable to the petitioner society, he has held that it was not so, but if that clause was applicable, then it could be‑--
"argued that permission for management of the properties had been given by the Custodian to the Registrar, and hence the applicant was not an evacuee concern."
Lastly, Mr. A. R. Changez has observed that the 'application of the Liquidator under section 22 of the Pakistan (Administration of Evacuee Property) Act XII of 1957 for a declaration that the petitioner society was not an evacuee institution was made in 1961 ; therefore, the Additional Custodian had "rightly pointed out:-‑‑
"that the application was hopelessly barred by time. I agree with this view."
10. Let it be noted that the evacuee Laws contained no provision dealing with Corporations and Joint Stock Companies till 1951. In that year, clauses (d) and (e) were inserted in sub section (2) of s6ction 2 of the Pakistan (Administration of Evacuee Property) Act .XII .of 1957. The provisions are as follows:‑---
"'evacuee' means any person‑
(a)------------------------------------------------------------------------------
(b)------------------------------------------------------------------------------.
(c)------------------------------------------------------------------------------ .
(d) whose business or undertaking in Pakistan, in the case of a corporation, has on account of the setting up of the Dominions of Pakistan and India, or on account of civil disturbances, or the fear of such disturbances, ceased to function, wholly or partly, or is being carried on by persons (whether duty empowered in this behalf by the corporation or its management or otherwise) whose authority to do so on or after the first day of March 1947, has not been accepted or approved by the Custodian; or
(e) being a joint stock company, more than fifty per cent. of the shares of which are held by persons who are evacuees;"
The expression "joint stock company", which occurs in clause (e) is not defined in the Act, but it is defined in the Companies Act, 1913.
11. Counsel for the petitioner has argued that, contrary to the view taken by the learned Custodian, the petitioner society is not a Joint Stock Company, but is a Corporation. He has criticised the following observations of the learned Custodian:‑
"The first question which arises is whether the applicant is a Joint Stock Company within the meaning of section 2(2)(e) of the Pakistan (Administration of Evacuee Property) Act XII of 1257. The expression Joint Stock Company is not defined in this Act. Its dictionary meaning, however, is‑‑
stock of capital held by a number of persons jointly or capital divided into shares.'
In view of this definition of the Joint Stock Company, there can be no doubt that the applicant is a Joint Stock Company within the meaning of clause (e), referred to above. Learned counsel for the applicant has drawn my attention to section 254 of the Companies Act; which also gives the definition of Joint Stock Company. A perusal of that section, however, clearly shows that the definition of Joint Stock Company is given for the purposes of that Act only and is not a general definition of Joint Stock Company. It has, therefore, no bearing on the question whether the applicant is a joint stock company or not. Learned counsel for the applicant has also urged that the provisions of the Companies Act are not applicable to the applicant. In my opinion, this does not make any difference."
Counsel has pointed out that no reasons have been set out by the Custodian for coming to the conclusion that the petitioner society is not a Corporation.
12. With utmost respect to other learned Custodian I am unable to see how the petitioner society can be held to be a Joint Stock Company. It is a Co‑operative Society registered under the Bombay Co‑operative Societies Act, 1925, and not a "Company". A "Company" is defined in clause (2) of section 2 of the Companies Act, 1913 as one that is registered under that Act. Every company is not a Joint Stock Company. A Joint Stork Company must have a permanent or fixed capital which a Co‑operative Society does not have. A Joint Stock Company is defined in section 254 of the Companies Act, 1913 as follows:‑--
"For the purposes of this Part as far as relates to registration of companies as companies limited by shares, a joint‑stock company means a company having a permanent paid up or nominal share capital of fixed amount divided into shares, also of fixed amount, or held and transferable as stock, or divided and held partly in one way and partly in the other, and formed on the principle of having for its members the holders of those shares or that stock, and no other persons; and such a company, when registered with limited liability under this Act, shall be deemed to be a company limited by shares."
The learned Custodian has not examined the definitions of a Company' and a Joint stock company', and has excluded the application of the Companies Act, 1913 by implicitly relying on section 68 of the Cooperative Societies Act, 1925, which makes the provisions of the Companies Act, 1913 inapplicable to Co operative Societies. It was apparently not brought to his notice that the section is relevant for purposes of considering the applicability of the Companies Act, 1913 to co‑operative, societies registered under the Co‑operative Societies Act, 1923, but is not relevant for excluding the applicability of the Companies Act, 1913 to the Pakistan (Administration of Evacuee Property) Act XII of 1957. There is no provision corresponding to section 68 in the Pakistan (Administration of Evacuee Property Act, 1957; therefore, section 68 cannot be a bar to the applica tion of the definition of a "Joint Stock Company" as given in the Companies Act, 1913, to the same expression appearing in the Pakistan (Administration of Evacuee Property) Act, 1957. Theo retically it may be possible to have joint stock companies which are not governed by the Companies Act, 1913, because the possibility of forming such companies with less than ten or twenty members, as the case may be, exists under section 4 of the Companies Act, 1913. In America, unincorporated joint stock companies are recognised as a legacy of Common Law‑See 4 at page 993 of Volume 30 of American Jurisprudence, 1958 ; but in England itself, as a matter of practice, "the unincorporated Joint Stock Company no longer exists"‑See page 411 of Volume VIII of the Encyclopedia of Social Sciences, 1953. The latter statement is true of our country also. This fact, and the fact that the petitioner society did not have less than ten or twenty but two to three thousand members, make the definition of a joint stock company given in the Companies Act, 1913, of decisive importance in these proceedings. The definition does not depart from the essence of the common concept of a joint stock company which has been ably set out in 1 at page 991 of Volume 30 of the American Jurisprudence, 1958, as follows:‑-----
"In the absence of a statutory definition, a Joint Stock Company may be defined, generally (according to the Common law concept) as an unincorporated association of individuals for the purpose of carrying on business and making profits, have a capital stock contributed by members, which is Commonly divided into shares of which each member possesses one or more and which are transferable by the owner, and governed by articles of association which, subject to statutory and other limitations, prescribe its objects, organisation to the rights and liabilities of its members, and usually provide that its business shall be under the control of selected individual, called managers' or directors'."
At page 883 of Volume 48 of Corpus Juris Secundem, it is pointed out that:
"A joint stock company has, apart from its assets, a fixed capital stock, which is divided into transferable shares and is similar in nature to the stock of a Corporation."
The above definitions, including the statutory definition con tained in our Companies Act, 1913, taken together, bring it out that the distinguishing feature of a joint stock company, as compared to a co‑operative society, is the existence of a permanent or fixed common capital or stock which capital or stock is divided into, and is represented by, shares or stock certificates. This essential feature is missing in a co‑operative society, therefore, such a society is not a joint stock company.
13. But a co‑operative society is a corporation because section 23 of the Bombay Co‑operative Societies Act, 1925, which the place of the Bombay Act, contains the following has take provisions :‑--
"The registration of a society shall render it a body cor porate by the name under which it is registered, with perpetual succession and a common seal, and with power to hold property, to enter into contracts, to institute and defend suits and other legal proceedings and to do all things necessary for the purposes of its constitution."
14. The conclusion of the above discussion is that, since clauses (d) and (e) of subsection (2) of section 2 of the Pakistan (Administration of Evacuee Property) Act, 1957 did not exist in 1950, when Mr. Akbar Hussain made his order, he did not, and could not, examine the question as to which of the two clauses was applicable to the petitioner society. His order on the reference of the Registrar of Co‑operative Societies was of a general of abstract nature; therefore, it was not, and could not be a decision as to the evacuee status of the petitioner society. Moreover, the enunciation of a principle that is found in his order is not justified by the existence of any such consultative jurisdiction. Clauses (d) and (e) were introduced in evacuee law in 1951, and clause (d) is applicable to the petitioner society by virtue of section 23 of the Co‑operative Societies Act, 1925. It is, thus, a Corporation. The view taken by the learned Custodian in 1963 that clause (e) is applicable to it, and that, therefore, migration of its members has made it an evacuee institution, is, with great respect to him, unsupported by the law as understood and explained above.
14. The above conclusion is not unfavourable to the petitioner society, but it does not conclude the matter because it contains no answer to the bar of limitation found by Mr. A. R. Changez in 1963 and contains no conclusion as to the evacuee status of the petitioner society as a Corporation. It is necessary to examine these two aspects.
15. No argument was advanced before us by counsel for the petitioner to remove. the objection of limitation, but it has been dealt with in grounds Nos. 5 and 6 of this petition. It is stated in ground No. 5 that the authority of the liquidator was "confirmed by the Custodian vide his letter No. 5141 dated the 12th of August 1950, vide section 2(b) of the Act of 1957." (The correct reference is section 2(2)(c)(d) of Act XII of 1957). This is an erroneous contention because, as explained above, the so‑called confirmation (reproduced above in paragraph 3) of management was merely the affirmation of a general proposition of law contained in the letter of the Registrar of Co‑operative Societies and adopted by Mr. Akbar Hussain. There was no mention of the petitioner society or of its management in either of them. Excepting for the letter dated the 1st of September 1950 of a Deputy Custodian by which he issued directions that the land of the petitioner society be released in pursuance of the order of Mr. Akbar Hussain, the Custodian's Department as well as the Rehabilitation Department has consistently. interpreted the order of Mr. Akbar Hussain as ineffective; and the petitioner's own case before us was that its land has never been released by the Departments in these circumstances, the alleged confirmation of management presumed by the petitioner should have been more critically examined and steps taken by it at an early date to obtain a declaration that it is not an evacuee institution. The petitioner's omission to do so is evidence of its negligence.
16. In ground No. 6 the petitioner has again relied on the same order of Mr. Akbar Hussain and used it as a justification for moving "the Settlement authorities stage by stage right from the Deputy Settlement Commissioner upto the Settlement Commis sioner when he (the petitioner) was finally refused (relief)". But this approach was clearly wrong and merely a display of obstinacy, to by‑pass the relevant law. Mr. A. R. Changez has rightly pointed out in 1963 as follows:
"It is conceded before me by the learned counsel for the applicant that the 'lands had already been allotted to the refugees in the year 1949. The applicant, therefore, should have filed a proper application under the relevant Evacuee Law for getting the necessary declaration that the properties in dispute were not evacuee properties, but instead of following this course, the Registrar made a reference (in 1950) to the Custodian asking for his ruling."
An application for getting the necessary declaration should have been made when the land of the petitioner was treated as evacuee property, or at least when the Rehabilitation and Settlement Departments declined to release it in spite of the order of the Custodian, but the petitioner did not adapt its attitude to the existing legal situation, and on the contrary, treated the conduct of the Settlement Department as objectionable. In ground No. 6 of this petition, the petitioner has described that conduct by saying :
"'The Settlement Authorities dishonoured the previous decision of the Custodian."
As to its own negligence it has said :‑---
"The petitioner, without further delay, filed application under section 22 before the Additional Custodian within the statutory period of limitation. However, the petitioner's application under section 5 of Limitation Act along with affidavit is also pending before the Custodian."
The period of Limitation was sixty days in 1950, and later thirty days, from the date of the cause of action. The application under section 22 was made by the petitioner in 1961.
"for a declaration that the properties"
of the petitioner
"were non‑evacuee properties."
It was barred by time, and contrary to the allegation of the petitioner not "within the statutory period of limitation". It is true, the Settlement Commissioner, Hyderabad had ordered on the 1st of November 1960, that the petitioner could obtain a declaration from the Custodian, but that order was not the cause of action for the petitioner because, as pointed out by the learned Custodian in his order of the 15th of June 1963:
"the land of the petitioner had been allotted to the refugees in the year 1949 and since then it is in possession of the allottees."
17. Learned counsel for the petitioner has said nothing about the alleged pendency of an application under section 5 of the Limitation Act and, in the petition itself, there is nothing to indicate that any such application was made to the Additional Custodian. If it was made to the Custodian only and has not been expressly rejected, then it was by necessary implication dismissed because the Custodian has emphasised the great delay which made the application under section 22 "hopelessly barred by time."
18. Lastly, I have to examine the effect, on the evacuee character of the petitioner's property, of my finding that the petitioner society is a Corporation. A Corporation becomes an evacuee institution if, in terms of clause (d) of subsection (2) of section 2 of the Pakistan (Administration of Evacuee Property) Act, 1957, its business ceases, on account of partition, wholly or partially, or is carried on by persons whose authority to do so has not been "accepted or approved by the Custodian". The Custodian has not held the petitioner society to be an evacuee corporation because he has held it to be an evacuee joint stock company ; but he has found, and it is admitted, that all members of the petitioner society, who were two‑three thousand in number, had migrated to India. It was then liquidated under section 48 of the Bombay Co operative Societies Act, 1925 because, in terms of that section, if the condition of the registration of a co‑operative society is that it shall consist of at least ten members and the membership ‑is reduced to less than ten, then the Registrar may order it to be wound up. Thus the situation which resulted in liquidation is logically incompatible with the continuance of the business of the petitioner by the petitioner itself. Even if, after the migration of all members, its business was carried on by others than the petitioner itself, then the petitioner society could not be saved from becoming an evacuee corporation unless the authority of the interveners to manage the business was accepted or approved by the Custodian. Counsel for the petitioner contended that the, order of Mr. Mansoor Alam dated the 17th of May 1956, constituted such acceptance or approval. The order has been reproduced in paragraph 4 above. By that order an application of the Rehabilitation Commissioner to get the order of Mr. Akbar Hussain revised was dismissed. That order of Mr. Akbar Hussain was the basis of the petitioner's contention that it was a non-evacuee institution; therefore, the Rehabilitation Commissioner desired to remove it from his way. That order has remained in the field unaltered. If it had made the petitioner a "non‑evacuee" institution, then no question of the additional acceptance or approval of its management could arise. But, if on the contrary, the authority to manage it was accepted or approved by Mr.. Mansoor Alam to make it non‑evacuee, then it was inconsistent with the stand of the petitioner who asserted that Mr. Akbar Hussain's order had made the petitioner's property non‑evacuee as well as the stand of the Rehabilitation Commissioner who wanted to get that order removed from his way.
19. The irresistible conclusion of the foregoing discussion, therefore, is that the business of the petitioner society could possibly not have been carried on after the migration of all it members, and that, in any event, the authority to manage its business was never accepted or approved, in terms of clause (d) of subsection (2) of section 2 of the Pakistan (Administration of Evacuee Property) Act, 1957 by the Custodian.
20. The above., to my mind, is an additional ground for dismissing this petition because the objection of limitation to the application which was made under section 22 of the Pakistan (Administration of Evacuee Property) Act, 1957, is by itself adequate for dismissing it.
21. Accordingly, I dismiss the petition.
K. M. A. Petition dismissed.
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