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P L D 1985 Karachi 348
Before Ajmal Mian and Haider Ali Prizada, JJ
HAJI GUL AND ANOTHER-PETITIONER
versus
REGISTRAR, CO-OPERATIVE SOCIETIES AND 4 OTHERS-
Respondents
Constitutional of Petition No. D-543 of 1981, decided on 6th February, 1985.
-- Art. 199-Question of construction of Rules being purely a legal question, held, could be allowed to be raised in writ petition.
-- S. 54-Co-operative Societies Rules, 1927, r. 32-Reference of matter to arbitration-Where there are more persons than one on each side, principal party on each side will have right to nominate arbitrator and in such case Registrar will decide who is principal party and his decision shall be final-Party failing to make nomination within period-Registrar is competent to nominate arbitrator on behalf of such party- Registrar or his nominee will act as Chairman of Committee of three Arbitrators who are required to decide case within two months.
-- S. 54-Co-operative Societies Rules, 1927, r. 32-Reference of matter to arbitration-Principal party-Whether decision of Registrar on question of principal party should precede nomination of arbitrator or subsequent to nomination of an arbitrator-Procedure discussed.
The appointment of an arbitrator is to be made within 15 days in case there is no tie on the question who is the principal party but if the question who is the principal party, is in issue, the Registrar is first to decide this question before the principal party can be expected to nominate his arbitrator. The question who is the principal party is to be adjudicated upon by the Registrar and not by his nominee which is evident from the fact that at several places in the rule 32 the words used are "Registrar of nominee" but at the relevant portion of the said rule dealing with the question of deciding who is the principal party the power is given only to the Registrar as the word "nominee" has been omitted. , Where there was no decision by the Registrar on the question who was the principal defendant in a case the petitioners were not required to nominate their arbitrator. Under rule 32 the Arbitration Board is to comprise of three members namely the Registrar's nominee who is to act as the Chairman and two arbitrators to be appointed by each of the parties and, therefore, there could not be two arbitrators on the side of the defendants, one on behalf of the Society and the other on behalf of petitioners and the third on behalf of the respondent.
Hussain Adil Khatri for Petitioners.
Mauroof Ali Khan for Respondents.
Date of hearing : 6th February, 1985.
(b) The respondent No. 1 filed counter‑affidavit, in which the aver ments of the petition contrary to what has been sated therein have been denied. It has been averred that factually respondent No. 3 was present in his office at the relevant time on the above date. It has also been pleaded that since the petitioners had not opted for arbitration and had not appointed an arbitrator the question of declaring them principal party did not arise.
2. (a) In support of the above petition Mr. Hussain Adil Khatri, learned counsel for the petitioners, has urged that in terms of rule 34 of the Co‑operative Societies Rules, 1927 (hereinafter referred to as the Rules) it was incumbent upon the Registrar to have declared the principal defendant before the petitioners could have been called upon to appoint their arbitrator.
(b) On the other hand Mr. Maroof Ali Khan, learned counsel for the respondent No. 5. has contended that this point was not raised by the petitioners before either respondent No. 2 or respondent No. 1 and there fore, they cannot be permitted to raise the above point and, secondly, in any case, in terms of the above Rule the petitioners were first to appoint their arbitrator and having failed to do so the Registrar was not obliged to decide the question who was the principal party.
3. It may be appropriate to take up first contention of Mr. Maroof Ali Khan, learned counsel for respondent No. 5. In this regard it may be appropriate to reproduce the first para. of the aforesaid order dated 24‑2‑1981 passed by respondent No. 2 which reads as follows :‑
"This is an Appeal under section 56 of the Co‑operative Societies Act, 1925 preferred against the interim order dated 18‑1‑981 passed by the Registrar's Nominee in the Arbitration Case No. 193 of 1980 whereby the Registrar's Nominee hat declared the Overseas Co operative Housing Society Limited,. Karachi as Principal Defen dants."
A perusal of the above‑quoted para. indicates that the appeal was directed against interim order dated 12‑1‑1981 (probably by mistake 18‑1‑1981 has been mentioned in the order) whereby respondent No. 3 had declared respondent No. 4 Society as the Principal Defendant. Since this question was in issue befote respondent No. 1, in our view it was not necessary to have pressed into service rule 32 expressly in the memo of appeal. Even otherwise we are inclined to take the view that since it is a question of construction of the above Rule which is purely a legal question, can be allowed to be raised in writ petition.
4. As regards the main contention on merits of the learned counsel for the parties, it may be advantageous to reproduce the above rule 32 which reads as follows :‑‑
"Arbitration.‑When a dispute has been referred to the Registrar under section 54, the Registrar or his nominee shall issue a notice to all parties, and, unless either of the parties desires within 15 days of the issue of such a notice that the matter be referred to arbitra tion, shall proceed to decide the dispute himself.
When either of the parties desires that the matter be referred to arbitration, the Registrar (or his nominee) shall call on each party to nominate his arbitrator within 15 days, and to send a statement signed by the proposed arbitrator about his willingness to serve as an arbitrator. When there are more persons than one on each side, the principal party on each side, will have the right to nominate the arbitrator. In such cases the Registrar will decide who is principal party and his decision shall be final.
When either of the parties fails to make a nomination within the period aforesaid, the Registrar may nominate an arbitrator on behalf of such party.
The Registrar or his nominee will act as Chairman of the Committee of three Arbitrators. He H ill fix the date and place of hearing the dispute and carry on the necessary correspondence in connection with the disposal of the case.
When any dispute is referred to the Registrar's nominee or to three arbitrators for decision and is not decided by them within two months or such further period as the Registrar may allow the Registrar may decide the dispute himself or refer it again to his nominee for decision."
(b) The controversy in issue is as to whether the appointment of the arbitrator should proceed before the decision of the Registrar on the ques ion who is the principal party or the nomination is to be made subsequent to decision of the Registrar on the above point. It has been urged by Mr. Adil Khatri that in the absence of a decision that who is the principal party on the side of the defendant, it was not necessary to appoint an arbitrator. On the other hand it was convassed by Mr. Maroof Ali Khan, learned counsel for the respondent No. 5, that in order to assert the right being a principal party, the party concerned is required to nominate the arbitrator and then the question of deciding who is the principal party by the Registrar would arise. It may be pointed out that in the present case the main contest is between the petitioners and respondent No. 5 who are claiming adverse interests in the plot in dispute and, therefore, it cannot be denied that the petitioners as compared to respondent No. 4 Society prima facie are the principal party.
< [if supportLists]>(c) In this regard reference may be made to the relevant observation contained in the case of Shaikh Haider v. Government of Sind and 4 others (P.L D 1982 Kar. 336) given in the judgment (delivered by Ajmal Mian, J) at pages 350 and 351 which reads as follows :
"The parties are at issue on the question, as to who were the principal parties. It was contended by Mr. Iqbal Kazi that Mr. Shaikh Haider was one of the principal parties as allotment in his favour was to be cancelled whereas it was urged by Mr. Usman Ghani Rashid that the principal party were the Society and Mr. Haqqani. In my view the above controversy is redundant, as none of the parties exercised the option within 15 days under rule 32 for getting the matte referred to arbitration tribunal in terms of section 54(e) of the Act, If any of the parties would have exercised the option, in that evens question would have arisen as to who were the principal parties and Registrar was to decide the above question in terms of rule 32, However, I am unable to agree with the contention of Mr. Usman Ghani Rashid that Mr. Shaikh Haider was not one of the principal parties. Admittedly the plot was allotted in favour of Mr. Shaikh Haider, and in pursuance thereof a sublicence was executed in hi: favour, and, therefore, he was to be affected adversely if the award was to be given for the cancellation of the allotment. In my view in terms of rule 32 the principal parties are those, who are to gain or to lose as a result of proceedings under section 54 of the Act. In the instant case respondent No. 3 Society was not to lose anything as a result of the above proceeding, as it did not matter for it, whether the plot was to go to Mr. Shaikh Haider or to Mr. Haqqani. Respondent No. 3, Society even did not contest arbitration proceedings or even the above petition. To say that the Society was a principal party as compared to Mr. Shaikh Haider is not warranted by law."
(d) In the present case, according to the averments in the petition, as pointed out hereinabove, the petitioners alongwith their representative appeared before respondent No. 3 on 12-1-1981 at 2.30 p. m. but found that respondent No. 3 was not present. The factum of appearance of the representative of petitioner No. 1 is even reflected in the impugned order dated 12-1-1981 wherein it has been stated that "Mr. Abdul Ghafoor Jakhio representative of defendant No. 1 Haji Gul appeared and left making an application". Be that as it may, the question pertains whether the decision of the Registrar on the question of the principal party should precede the nomination of an arbitrator or should it be subsequent to the nomination of an arbitrator. In our view, the appointment of an arbitrator is to be made within 15 days in case there is no tie on the question who is the principal party but if the question who is the principal party, is in issue, the Registrar is first to decide this question before the principal party can be expected to nominate his arbitrator. It may be pointed out -hat the question who is the principal party is to be adjudicated upon by the Registrar and not by his nominee which is evident from the fact that at several places in the above-quoted rule the words used are "Registrar or nominee" but at the relevant portion of the above rule dealing with the question of deciding who is the principal party the power is given only to the Registrar as the word "nominee" has been omitted. Since there was no decision by the Registrar on the question who was the principal defendant in the present case, in our view the petitioners were not required to nominate their arbitrator. It may also be pointed out that under the above rule the Arbitration Board is to comprise of three members namely the Registrar's nominee who is to act as the Chairman and two arbitrators to be appointed by each of the parties and, therefore, there could not have been two arbitrators on the side of the defendants, one on behalf of the Society and the other on behalf of petitioners and the third on behalf of the respondent No. 5.
(e) It was then contended by Mr. Maroof Ali Khan that the Registrar had delegated the power of deciding the question as to who is the principal party to his nominee. However, he was unable to point out any notification or the rule. Be that as it may, even if it is to be assumed that respondent No. 3 being nominee had a requisite power to decide this question, the decision, that respondent No. 4 Society is the principal party as compared to the petitioners, cannot be sustained. The main dispute is between the petitioners and respondent No. 5.
6. For the aforesaid reasons we allow the petition and declare that the impugned order dated 12-1-198 i and the subsequent orders passed by the respondents are without lawful authority and of no legal effect. The Registrar shall decide the question as to the principal party between
respondent No. 4 Society and the petitioners and thereafter in case it is decided that the petitioners are the principal party as compared to the
Society, they will be given opportunity to nominate the arbitrator in terms of rule 32. However, status quo order passed by the respondent No. 3 Shall continue. Both the parties shall maintain status quo till the decision
or award is given. There will be no order as to costs.
Appeal dismissed.
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