Find a Lawyer

Constitutional Petition No. 967 of 1978, decided on 6th May, 1987.

---S.54---Co-operative Societies and. Co-operative Banks (Repayment of Loans) Ordinance (XIV of 1966), S.6--Loan--Reopening of award- Award given in terms of S.54 of Act VII of 1925 against borrower attaining finality--Co-operative Bank, which extended loan facility, proceeding to execute award against borrower without invoking provisions of Ordinance XIV of 1966 and Registrar Co-operative Societies reopening award on question of liability on application filed under S.6 of Ordinance--Held, borrower's application under S.6 of Ordinance was not competent and Registrar Co-operative Societies had no jurisdiction to undo the award, which had attained finality, by adjudicating upon question of liability under S.6 of Ordinance XIV of 1966.

Abdul Salam v. Assistant Registrar, Co-operative Societies, Hyderabad And 2 others P L D 1Q81 S C 602 rel.

Naseem Farooqui for Petitioner.

Mirza Abdul Rashid and K.B. Bhutto for Respondents.

Date of hearing: 6th May, 1987.

- This petition is directed against the orders, dated 24-3-1971 and 9-5-1978 passed by respondent No.2 and respondent No.1 respectively.

2. The brief facts leading to the filing of the above petition are that respondent No.3 applied for loan for a sum of Rs. 4 lacs from respondent No.4 for improvement of the agricultural land. The security offered was mortgage of Mukhadami rights Jagir, situated in Deh Nagoshah, Talpur Jagir, Torki and Baharki of Taluka Guni (T.M. Khan), District Hyderabad. The above loan was granted against the above mortgage and inter alia on the execution of a demand promissory note and letter of confirmation executed by respondent No.3. Certified copy of the extract of the property mortgaged from the revenue record was also delivered alongwith certificate of Taluka Mukhtiarkar.

It seems that in terms of the loan the payment was to be made in three instalments payable on 10-3-1955, 10-3-1956 and 10-3-1977. It was provided that in case of default in payment of any instalment the entire amount would become due and payable. It appears that respondent No.3 did not make payment of the first instalment. Consequently, the respondent No.4 initiated arbitration proceedings under section 54 of the Co-operative Societies Act, 1925 (hereinafter referred to as the Act) for the recovery of the above loan amount under case No. 9/55. The above arbitration proceedings culminated in passing of an award in the sum of Rs. 4,26,827 and Anna 6 on 19-5-1955. It seems that no appeal or revision against the award was filed by respondent No.3.

3. The Registrar of the Co-operative Societies Office by an endorsement dated 2-11-1958 forwarded the award to the City Deputy Collector Karachi for the recovery of the amount as arrears of land revenue. It appears that respondent No.3 filed an application dated 27-2-1968 before the Deputy Registrar Co-operative Societies, Karachi, requesting that execution of the award be adjourned for three months time in order to enable him to approach the Government. It was also requested that Rs. 30,000 being the arrears of rent of respondent No.3's attached bungalow be collected from Labour Directorate and be kept in trust and future rent should also be collected. After that an application under section 64-A of the Act was also filed praying therein, that respondent No.3's name may be deleted from the list of defaulter which was rejected by the Registrar's Office by letter dated May, 1970. It also appears that while the question of execution of the above award was still in issue respondent No.3 filed an application under section 6 of the Sind Co-operative Societies and Co-operative Banks (Repayment of Loans) Ordinance, 1966 (hereinafter called the Ordinance) on 27-7-1970 alleging therein, that factually the petitioner's father late Mir Ghulam Ali Talpur was the beneficiary of the loan and not respondent No.3. The above application was resisted by the petitioner as one of the legal heirs of late Mir Ghulam Ali Talpur. However, respondent No.2 by his above order dated 24-3-1971 held that Mir Ghulam Ali Talpur was the beneficiary of the loan in question and that after his death his eldest son was the real beneficiary of the land improvement loan of Rs. 4 lacs. Against the above order petitioner had filed C.P. No. 249/71, which was withdrawn on 9-5-1972 on the ground an appeal was filed by the respondent No.4 before the Registrar. The above revision (though mentioned as appeal) was dismissed on 9-5-1978 by the respondent No.1 on the ground that it was not maintainable. After that the petitioner filed the present petition against the aforesaid order dated 24-3-1971.

4. In support of the above petition Mr. Nasim Farooqi, learned counsel for the petitioner, has urged as follows:-

(1) That since the aforesaid award dated 9-5-1955 had acquired the finality, it could not have been reopened by an application under section 6 of the Ordinance.

(2) That respondent No.3's application under section 6 of the Ordinance was not competent.

5. Mr. K.B. Bhutto, learned counsel for the respondent No.4 has supported the submissions made by Mr. Nasim Farooqi and has contended that at no point of time respondent No.4 has acknowledged late Mir Ghulam Ali Talpur as the borrower and factually the respondent No.3 was the borrower and was dealing with the above respondent inasmuch as he gave two cheques of Rs. 25,000 each after the above award towards the satisfaction of the decretal amount.

6. On the other hand, Mr. Mirza Abdur Rashid, learned counsel for the respondent No.3, has contended as follows:-

(1) That since the Ordinance is a subsequent statute the above respondent No.3 was entitled to invoke section 6 of the same.

(2) That the petition suffers from laches.

7. It may be pertinent to take up the question of laches first. We have called upon the learned counsel for the petitioner to explain the reason, as to why this petition was filed after the expiry of nearly 7 years and 3 months from the date of impugned order of respondent No.2. His explanation was that factually the petitioner had filed C.P. No. 249/71, which was withdrawn on 9-5-1972 subject to the right of the petitioner to file fresh petition as respondent No-4 had already filed a revision before the Registrar mentioned in the withdrawal order. It has also been submitted by him that the question of laches is to be determined with reference to the facts of each case as there is no restriction on the exercise of the power of this Court on that account.

As stated hereinabove the Registrar had dismissed the respondent No.4's revision on 9-5-1978 whereas the present petition was filed on 6-7-1978. If we count the time from the above date of the Registrar's order, the petition was filed within 2 months but if we reckon the period from the date of the Deputy Registrar's order, the lapse of period was of 7 years and 3 months. In this regard, a reference may be made to the order, dated 9-5-1972 passed by a Division Bench of this Court allowing the petitioner to withdraw his aforesaid petition No. 249/71, which read as follows:-

"9-5-1972.

Mr. Abdul Fatah Memon, Advocate.

Learned counsel states that respondent No.3 has filed an appeal against the impugned order and till such time as it is not decided the petition will be premature. In the circumstances it is prayed that he may be permitted to withdraw the petition at this stage with permission to file another petition if need be consequent upon the decision of the appeal.

Permission is given and subject to the above it is dismissed as withdrawn."

From the above quoted order, it seems that the petitioner was permitted to withdraw the aforesaid petition subject to his right to file fresh petition consequent upon the decision of the appeal. Since the above revision not appeal was decided on 23rd May, 1978 the petitioner had filed the present petition on 6-7-1978 within a period of less than two months. Keeping in view the above withdrawal order passed by this 'Court, in our view it will not be just and proper to non-suit the petitioner on the ground of laches.

8. Adverting to the merits of the case, it is an admitted position that the award was given in terms of section 54 of the Act against respondent No.3, which attained the finality in the absence of any modification either in appeal or revision. The respondent No.4 at no point of time invoked the provisions of the Ordinance but were executing the above award as the arrears of land revenue. The question, therefore, arises whether respondent No.3 could have filed the aforesaid application under section 6 of the Ordinance. In this regard it may be pertinent to refer to sections 4, 5 and 6 of the Ordinance which read as follows:-

"4. Supply of information to the Registrar: Every co-operative society an co-operative an c, 'through its Manager or Secretary, shall (a) when a loan obtained from it is not repaid by the date on which it is due for repayment, bring such fact, together with full details of the case and the particulars of the borrower (including, in the case of benami loan, the real beneficiary or recipient of the loan and the surety), to the notice of the Assistant Registrar, when the amount of the loan exceeds thirty thousand rupees; and (b) when so directed by the Registrar or the Assistant Registrar, as the case may be, within thirty days of receipt of such direction furnish to the Registrar, or the Assistant Registrar as the case may be, full information in respect of all cases of loans falling under section 3 required to be repaid or secured under section 7.

5. Service of notice to the borrowers:--(l) On receipt of information under section in respect-7-any loan, the Registrar or the Assistant Registrar as the case may be, shall issue or cause to be issued a notice to the borrower and his surety requiring them to repay and secure the loan in accordance with the provisions of section 7.

(2) A notice under subsection (1) may be served:-

(a) by giving or tendering it to the person named in the notice; or

(b) by enclosing it in a cover and sending such cover by registered post, acknowledgment due, to the last known address of the person named in the notice; or

(c) by affixing such notice on a conspicuous part of the last known residence of the person named in the notice; or

(d) by the publication of the notice in a newspaper.

6. Determination of liability when loan is not admitted.--Where any borrower or is surety, to whom notice under section 5 is issued, does riot admit the loan or any liability arising therefrom, such borrower or surety, as the case may be, shall, within thirty days of the receipt of the notice, submit, either personally or by registered post (acknowledgement due), a written statement to that effect to the Registrar or the Assistant Registrar, by whom such notice was issued or caused to be issued, and such Registrar or Assistant Registrar, as the case may be, thereupon shall cause notice to be issued to the co-operative society, or the co-operative bank, as the case may be, and in the case of a benami loan, to the alleged beneficiary and shall, after making such inquiry as he may consider necessary, the parties a reasonable opportunity of being heard, decide the matter."

9. A plain reading of the above-quoted sections indicates that under section 4 of the Ordinance information was to be furnished to the Registrar or Assistant Registrar in respect of non-payment of loan by the co-operative bank concerned. Upon receipt of such information a notice was to be issued under the above-quoted section 5 to the borrower. In response to such a notice the borrower could file an application under section 6 for the purpose of determining the question of liability. We are inclined to hold that in the absence of any notice under section 5 a borrower cannot file an application under section 6. In this regard, it may also be painted that even under section 6 the borrower remains liable in addition to the liability of the beneficiary or the recipient of the loan, he is not absolved from the liability. In this regard reference may be made to the case of Abdul Salam v. Assistant Registrar, Co-operative Societies Hyderabad and two others reported in P L D 1981 S C 602, in which the Hon'ble Supreme Court while dilating upon the question of liability of the borrower has observed as follows:-

"Learned counsel also relied on para. 6 of the Ordinance to contend that once after due inquiry a matter is decided amongst various parties to whom notice had been sent, it could not be reopened under the said Ordinance. When applying this argument in the present case, learned counsel argued that notices having been sent to the appellant, his brother Haji Abdul Rehman and the authorities of the Co-operative Department, the Deputy Registrar had decided that in case of the loan concerned in this case, Abdur Rehman alone was to be proceeded against if the said recovery is not effectuated from Abdur Rehman during his lifetime from his property or heirs after his death, the Department cannot now turn round to recover the amount from the appellant. As observed with regard to the interpretation of the order passed by the Deputy Registrar, we are not satisfied that the appellant was exonerated and/or that there was any 'decision' against Abdur Rehman alone. We agree with the position taken from the respondents' side that it was on the offer of Abdur Rehman who under the definition of the 'borrower' could be treated as a 'borrower' and/or in any case a surety, notwithstanding the fact that the appellant would also be treated as a 'borrower' regarding the same loan. The proceedings were first conducted against Abdur Rehman for satisfaction of the claim by sale of his property. This did not preclude the authorities functioning even under the Ordinance alone to make recovery from the appellant as a 'borrower' of the 'loan'."

10. We are inclined to hold that the respondent No.3's aforesaid application under section 6 of the Ordinance was not competent and respondent No.2 had no jurisdiction to undo the award which had acquired the finality indirectly by adjudicating upon the question of liability under section 6 particularly when it was not the case of respondent No.4 bank that late Mir Ghulam Ali Talpur was the real beneficiary of the loan. The impugned order, therefore, is patently without jurisdiction.

11. We, therefore, allow the petition and declare the impugned order as being without lawful authority and of no legal effect. The order passed by the Registrar in revision on the ground that the same was not competent is also of no consequence. However, there will be no order as to costs.

M. Y. H./A-131/K Petition allowed.

Find a Lawyer Near You

Dealing with a matter like this? Connect with a verified advocate in your city — free on SJP Lawyers Directory.