MUHAMMAD ALI MEMORIAL CO-OPERATIVE HOUSING SOCIETY LTD. Versus SIBTEY HASAN KAZMI

The appellant is a Co‑operative Society and had business dealings with a firm which, according to the appellant, consisted of two partners namely one S. M. Kazmi who died on 4th September 1958 and the respondent Syed Sibtey Hassan Kazmi though, according to the respondent, the business was owned by the deceased as a sole proprietor while he himself was only a manager. It so happened that the deceased was a member of the appellant Society. On the 9th March 1960 an award was made at the instance of the appellant ex parte and later. that is to say on the 17th April 1962, respondent, hereinafter referred to "as the plaintiff," filed a suit for declaration and injunction praying substantially that the award be declared void.

2. The learned Civil Judge, who heard the suit held that the suit was not maintainable for want of notice under section 70 of the Co‑operative Societies Act, 1925 and, therefore, dismissed the suit. The plaintiff appealed and the learned Additional District Judge, Karachi allowed the appeal and remanded the suit to further hearing. This appeal has been filed by the defendant against the appellate judgment ; the suit is still pending but, by reason of an interim order of this Court, evidence in the suit has been allowed to be recorded but the trial Court prevented from delivering a final judgment pending the disposal of this appeal. The' substantial question involved in this appeal is whether, by reason of section 70 of the Co‑operative Societies Act, 1925, the suit is not maintainable. That section reads thus :‑

"70. Notice necessary fin suit.‑No suit shall be instituted against a society or any of its officers in respect of any act touching the business of the society until the expiration of two months next after notice in writing has been delivered to the Registrar, or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims ; and the plaint shall contain a statement that such notice has been so delivered or left."

The defendant undoubtedly, is a Society within the meaning of section 7 and admittedly no notice was given. It would seem, therefore, that the suit was not maintainable. In my view the provisions of section 70 are mandatory and a failure to comply with the requirement of that section that A notice be given would, I think. render the suit not maintainable. That view was taken by a Division Bench of the Bombay High Court in Dharwar Urban Co‑operative Bank v. Ramchandra Govindram Alnavar and others (A I R 1937 Bom. 231) and it was pointed out in that case, quite rightly if I may say so with respect that the section corresponds closely to section 80 of the Civil Procedure Code, non compliance with which has already been held to be fatal to the maintainability of a suit.

3. This view was followed by the Chief Court of Sind, a predecessor Court of this Court, in Fakir Mohammad v. Mercantile Co‑operative Bank (A I R 1940 Sind 143).

4. It is argued on behalf of the defendant, however, that the award given against the plaintiff was itself void since the plaintiff was not a member of the Society. Reference was made to section 54 of the Co‑operative Societies Act which reads thus

"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 part members of the society or persons claiming through a member or past member, or

(b) between members or past members or persons so claiming and any past or present officer, agent or servant of the society, or

(c) between the society or its committee, and any past or present member of the society, or

(d) between the society or its committee and any past or present officer. agent of the society or a surety or such officer, agent or servant, whether such surety is or is not a member of the society, or

(e) between a financing bank authorised under subsection (1) of section 34 and a p:rson who is not a member of Society.

It shall be referred to the Registrar for decision by himself or his nominee, or if either of the parties so desires, to arbitration of three arbitrators who shall be the Registrar or his nominee and two persons of whom one shall be nominated by each of the parties concerned."

5. Reliance was placed upon a number of cases for the purpose of ‑showing that such an award is void and that, where the award is void, the ouster of jurisdiction of a civil Court, by reason of the fact that the matter is referable to arbitration, is ineffective. Counsel cited first the case of Karavhidaya v. Shree Gayanan Urban Co‑operative Bank (A I R 1943 Bom. 288) in which it was held that an award against a person who is not a member of the society is a nullity.

6. In the case of Siraj Farooqui v. Elahi Bux Co‑operative Housing Society (P L D 1956 Sind 95) again an application under section 34 of the Arbitration Act was dismissed because the Court held that section 54 will not apply in a case in which some of the defendants are not members of the Society.

7. Reference was finally made to Azizuddin Ahmed v. Aziz Ahmed (P L D 1959 Kar. 497) where, although the dispute was between two members of a Society, it was held that the question really affected the lease deed and that, therefore, the Government of Pakistan was a necessary party. Consequently it was held that the dispute was not covered by section 54 of the Act and was not referable to Arbitration.

8. I find myself in respectful agreement with the decision in all these :three cases but am unable to see how that affects the question. The award may, in proper proceedings, have to be found void and not enforceable but it does not follow that a suit for a declaration that the award is void is, ‑therefore, maintainable without notice. The requirement of the section that a notice shall be given before a suit can be entertained is not possibly affected by the consideration that the plaintiff has in truth a good and even an unanswerable case. Even on the assumption that the award was void, I am clearly of the opinion that the requirement of notice under section 70 still remain.

9. It was then argued for the plaintiff that one of the essential requirement of section 70 is not present in the instant case and that, therefore, section 70 has no application. It will have been noticed that it is not all suits instituted against a society which require the services of a notice but only such as are "in respect of any act touching the business of the society" and it was claimed that in the present case there was nothing which touched the business of the Society. Admittedly the dispute between the Society and the firm of which the deceased and the plaintiff were partners (or the deceased the sole proprietor) arose out of the claim of the Society that it was entitled to the sale price of certain pipes which had been purchased by the firm from the Society. The Society's main business is that of constructing houses for its members and it is obvious that in the course of this it would have to purchase material for such buildings and, where such material becomes surplus, it would obviously sell such surplus in order that the proceeds might be available to the Society. The phrase "touching the business of the Society" cannot, I think, be given so restricted a meaning as to exclude such sales. It should be given a reasonable meaning and upon a reasonable construction, it would include all those acts which are necessary in. the court of building of such houses and are consequent upon such building. I my opinion, therefore, the suit was clearly "in respect of any act touching the business of the Society".

10. Upon this view of the matter the suit was not maintainable. It is not necessary,' I think, for me, therefore, to consider several other contentions advanced on behalf of the defendant/appellant since this really disposes of the matter.

11. I accordingly allow this appeal and, reversing the appellate judgment, restore that of the first Court dismissing the suit. The result will: be that the suit which is now pending will terminate at once. The appellant will have his costs throughout.

S. A. H. Appeal allowed.