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First Appeal No. 122 of 1957, etc. decided on 13th October 1958, from the decree of Senior Civil Judge, Lyallpur, dated the 8th October 1957.

------r. 18 (a)-----Business of a Co‑operative Society"‑Jurisdiction of Civil Court to entertain dispute' ‑Question whether a person could at all become a member of Society ‑‑Cognisable by Civil Court.

The effect of Rule 18 (a), Co‑operative Societies Rules considered along with the scope of the Co‑operative Societies Act, is to exclude the jurisdiction of the Civil Court in a matter which under this rule is to be referred to arbitration. If, there fore, the matter were one on which a reference could be made under this rule, the jurisdiction of the Civil Courts to determine that matter would be barred. However, there are two conditions for reference to arbitration under this rule. The first is that the dispute should be between members or past, members or between the society and a member or past members. The second is that the dispute should be about the business of the society. These two are essential conditions of a reference and the absence of either of them would vitiate the reference.

But the question as to whether a reference was legally competent at all is a matter to be decided by the Civil Court and a reference can always be attacked on the ground that an essential condition of the reference did not exist.

The question as to whether legally a person could become a member at all is not a question relating to the business of a society. It does not relate to business in accordance with the criterion that one ought to look to the particular point of dispute. Here the point of dispute is not the factum or irregularity of some resolution of the society. It is just the intepretation of a bye‑law of the society.

Where the contention was that according to a certain bye law of the society, only natural persons could become members of the Committee:

Held, that the question whether a limited company could remain a member of Society was cognisable by Civil Courts.

Nur Husain v. Muhammad Sultan P L D 1956 Lah. 893 ; Mubarak Din v. Registrar, Co‑operative Societies, West Pakistan P L D 1957 Lah. 1013 and The Lyallpur Co‑operative Transport Society Ltd. v. Ahmad Saeed etc. P L D 1958 Lah. 1031 ref.

Mahmud Ali, Alta Ullah Sajjad, M. A. Zaidi and M. Ehsan ul‑Haq for Appellant.

A. R. Sheikh for Respondent No. 1.

Sh. Khurshid Ahmad for Respondent 2.

Dates of hearing : 16 and 17‑9‑58.

The appellant before us in this regular first appeal is a .society registered under the Co‑operative Societies Act which was constituted on the 23rd of March 1946. Some time later and before the Partition of India, the two respondents, the Zamindara Transport Company Ltd. and the Lyallpur Doaba Transport Co. Ltd., purchased shares of the value of Rs. 5,000 and Rs. 12,500 respectively. Some time after the Partition, there was an objection by the Co‑operative Department as to the admission of these two companies as shareholders based on bye law 8 of the Bye‑laws of the appellant. On the 28th of June 1948, the names of the two respondents were removed from the register of members on account of this objection. About eight years later, that is, on the 20th of April 1956, Mian Muhammad Qasim claiming to be a director of the Zamindara Transport Co. and Mian Ahmad Saeed claiming to be a shareholder of the Lyallpur Doaba Transport Co. made an application to the Registrar saying that the names of the two respondents had been illegally removed from the register of members and praying that the question as to whether their expulsion was in accordance with law be referred to an arbitrator. The Registrar appointed Mian Manzur Husain, Deputy Registrar, as the sole arbitrator for the decision of this question. The arbitrator made an award on the 11th of June 1956 in favour of the respondents holding that they were members of the appellant society. An appeal to the Registrar against this decision by the appellant society was dismissed on the 22nd of November 1956. On the 2nd of January 1957, the appellant society filed the suit out of which this appeal arises. It was alleged in the plaint that the respondents were not members of the company and, therefore, the reference by the Registrar was incompetent. It was alleged further that even if there was a proper reference, the arbitrator had been guilty of misconduct and, therefore, the award was invalid. The relief claimed was that the order of the Registrar, Co‑operative Societies, in appeal, be set aside on the ground that the award was without jurisdiction, void and illegal, and it be declared that the defendants were not the members of the society. A perpetual injunction that the defendants be restrained from interfering with the management of the society was also prayed for as a consequential relief.

2. The learned Civil Judge who heard the suit framed a number of issues, but ultimately decided the suit against the plaintiff only on the following two preliminary issues :‑

(1) Has the Civil Court jurisdiction to entertain and try this suit

(2) Can this Court go into the question of the arbitrator having mis-conducted himself during the course of proceedings before him.

3. The decision on issue No. 1 is based on rule 18 (a) of the rules framed by the Provincial Government under section 43 of the Co‑operative Societies Act. I reproduce the rule below :‑

"18 (a) Any dispute concerning the business of a co operative society between members or past members of the society or persons claiming through them or between a member or past member or persons so claiming and the committee or any officer, shall be referred to the Registrar. Reference may be made by the committee or by the society by resolution in general meeting or by any party to the dispute or if the dispute concerns a sum due from a member of the committee to the society, by any member of the society."

As I have myself held sitting with Shabir Ahmad, J. in Nur Husain v. Muhammad Sultan (P L D 1956 Lah. 893), the effect of this rule, considered along with the scope of the Co‑operative Societies Act, is to exclude the jurisdiction of the Civil Court in a matter which under this rule is to be referred to arbitration. If, therefore, the matter were one on which a reference could be made under this rule, the jurisdiction of the Civil Courts to determine that matter would be barred. However, there are two conditions for' reference to arbitration under this rule. The first is that the dispute should be between members or past members or between the society and a member or past member. The second is that the dispute should be about the business of the society. These two are essential conditions of a reference and the absence of either of them would vitiate the reference. The appellant contends that the respondents are not members and tile dispute did not relate to the business of the society and neither of these grounds being there, the reference by the Registrar to the arbitrator was illegal. The respondents contend that they were, in any case, past members, and the dispute, therefore, was between members and past members. They contend too that the question as to whether they have been properly expelled is one which relates to the business of the society. If a reference by the Registrar or an award which is made on the basis of that reference be attacked on the ground of lack of jurisdiction because either or both of the conditions of reference were not satisfied, who is to decide that matter Obviously, not the Registrar or the arbitrator. If a person was not a member an j the Registrar made a reference in respect of a dispute between him and any member, that person would not be debarred from challenging the reference as incompetent. The opinion of the Registrar (an opinion which he does not even hold as an arbitrator and after notice to the parties) at the time he makes the reference, that the person in respect of whom he was making a reference was a member or past member cannot possibly be said to be binding on that person. It is not for the Registrar to create jurisdiction if there is none. Neither he nor the arbitrator whom he names, can bring within their jurisdiction a person who is, in fact, not within such jurisdiction. Same is the case with the second condition. The Registrar can refer to arbitration only disputes about the business of a society and if the dispute does not in fact relate to such business, the reference would be incompe tent even though in the opinion of the Registrar it was so. The Registrar and the arbitrator named by him are not Judges of their own jurisdiction. It is for the Civil Court to determine whether they act within their powers or not. It is for the Civil Court to determine whether a tribunal of special jurisdiction has acted within its jurisdiction, even though in some cases the determination of a particular fact on which depends that jurisdiction may have been entrusted to that tribunal and that determination may not be liable to be questioned. It is the Civil Court however that will decide whether that fact is to be determined by the special tribunal. In the present case it is not for the arbitrator or the Registrar to determine, for the purpose of giving themselves jurisdiction whether a person is a member or a dispute relates to the business of the society.

4. Learned counsel for the respondents has, referred to Mubarak Din v. Registrar, Co‑operative Societies, West Pakistan (P L D 1957 Lah, 1013), wherein a question relating to the validity of the elections of the office bearers of a Co‑operative Society was regarded as one relating to the business of the society, and wherein the learned Judges refused to accept the proposition as laid down in Nur Husain v. Muhammad Sultan that questions of status were to be decided by a Civil Court. In Nur Husain v. Muhammad Sultan also there was a question relating to the election of some office bearers of the society and I and Shabir Ahmad, J., held, having regard to the reasons for the invalidity of the elections urged before us, that the matter did not relate to the business of the society. We were of the opinion that the matter related to the status of a person. In Mubarak Din v. Registrar, Co‑operative Societies, the learned Judges did not agree with the broad proposition‑that a decision as to the status is not a decision as to the business of the society. Learned counsel for the respondents says we should refer the question as to whether a question of status is one within the exclusive jurisdiction of the Civil Court to a Full Bench because there is a clash between the two judgments. While I concede that there is a clash between the two judgments, I do not see how the necessity of a reference to the Full Bench arises in this case. The learned Judges have not said that a question relating to status must always relate to the business of the society. They are of the view that we should look to the particular point of dispute in a case and should determine whether that point relates to the business of a society, a proposition with which there could be little quarrel. In The Lyallpur Co‑operative Transport Society Ltd. v. Ahmad Saeed etc. (P L D 1958 Lah. 1031) in which case too we are delivering judgment today I will say something more on this divergence of views. In the present case it is sufficient to say that the question as to whether a reference was legally competent at all is a matter to be decided by the Civil Court and a reference can always be attacked on the B ground that an essential condition of the reference did not exist. To put it in a different way, a person who has never been a member is not subject to the jurisdiction of the Registrar and whenever the Registrar assumes jurisdiction over him, he can challenge it. Also if a dispute between a member and a non- member is referred to arbitration, the member can always challenge the reference (even though the non‑member accepts it) on the ground that it is only when his dispute is with a member that the Registrar can refer it.

5. It was contended on behalf of the respondents that they were admittedly past members because they had been entered in the register of members and their names remained on that register for a long time and the question was whether they had been properly expelled. If that really was the case, the first condition of the reference would be satisfied, but that is not the contention of the appellant. The appellant contends that bye law 8 debars the respondents from becoming members. Learned counsel for the respondents is unable to cite any authority for the proposition that just by being entered on the register of members a person becomes a member. If that were so, the dispute would be one between the society and a past member and the question for decision would be whether some resolution of expulsion was properly passed which may be a question relating to the‑ business of the society. The question in the present case only turns upon the interpretation of bye‑law 8 of the rules framed under the Co‑operative Societies Act which runs :‑

"Members of the committee shall be appointed, suspended and removed in a general meeting by the majority of members present:

The contention of the appellant is that this bye‑law envisages the membership of natural persons only. This will be the main question to be decided by the Court in the present case on remand.

6. Even as regards the second condition the contention of the respondents fails. The question as to whether legally a. person could become a member at all is not a question relating to the business of a society. It does not relate to business in accordance with the criterion laid in Mubarak Din v. Registrar, Co‑operative Societies, that we should look to the particular point of dispute. Here the point of dispute is not the factum or irregularity of some resolution of the society. It is just the interpretation of bye‑law. The question is only whether a particular class of persons are not legally capable of becoming member. The question as to whether they are members does not depend on any action taken by the Society. If they are not members, they would not become so even if the Society accepted them.

7. I would accept this appeal and remand the case to the trial Court for decision in accordance with law. Costs of the appeal to the costs in the cause. The two Miscellaneous Applications Nos. 379‑C/58 and 23‑C/58 are dismissed as having become infructuous.

‑I agree.

A. H. Appeal accepted.

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