MUZAFFAR HUSSAIN Versus YUSUF

This is a suit for specific performance, cancellation of documents and damages. The plaintiffs' case is that the defendants Nos. 1 and 2 are the owners of agricultural land bearing Survey Nos. 16 to 20 and 30 (each having 50 paisas undivided share) and measuring approximately 49.20 ghuntas situated at Deh Taiser, Tappo Songal, Taluka Karachi 1 that by an agreement of sale dated 12-11-1970 defendants Nos. 1 and 2 agreed to sell their undivided share in the aforesaid land to the plaintiffs for a consideration of Rs. 2,97,000.00 and received Rs. 25,000.00 as earnest money. A further sum of Rs. 35,000.00 was paid on or before 1-3-1971 ; that the said agreement was substituted by another agreement dated 9-6-1973 by which the earlier agreement dated 12-11-1970 was renewed, validated and extended up to 31-12-1973, but the price was increased from 2,97,000.00 to Rs. 3,96,000.00 and a further sum of Rs. 40,000.00 paid to the defendants Nos. 1 and 2. On 8-8-1973 yet another further sum of Rs. 30,000.00 was paid to the defendants Nos. 1 and 2. The plaintiffs also paid the broker, a sum of Rs. 25,000.00 and thus they allege that they have paid a total sum of Rs. 1,55,000.00 in pursuance of the aforesaid agreement. The plaint alleges that the defendants 1 and 2 instead of completing the sale arbitrarily cancelled the agreement dated 26-1-1974 and in reply, the plaintiffs called upon the defendants 1 and 2 to complete the sale. Thereafter, the plaintiffs came to know that the defendant No. 5, which is a registered co-operative Housing Society, bad entered into some soft of deal in respect of the said land with the defendants Nos. 1 and 2. with full knowledge of the aforesaid two agreements between the plaintiffs and the defendants Nos. 1 and 2 and the plaintiffs accordingly served upon defendant No. 5 legal notice, dated 22-11-1974, appraising them of the full facts and called upon them to disclose whether they had entered into any deal with defendants Nos. 1 and 2 and if so, on what date and the nature of the deal. The Society replied on 27-11-1974, which was allegedly vague and evasive. The plaintiffs then notified through publication in press that the land earlier advertised by defendant No. 5 for sale formed part of the land in respect of which there were subsisting agreements between the plaintiffs and the defendants Nos. 1 and 2 and any person dealing with defendants No. 5 will do so at his own risk and costs. In reply the defendant No. 5 got published notice in the newspapers stating that they had nothing to do with defendants Nos. 1 and 2 but claimed to be the owners of the land and in possession thereof under a registered sale deed. After this publication the plaintiffs made enquiries and learnt from the record-of-rights that the defendants Nos. 1 and 2 had illegally sold the said land to defendants Nos. 3 and 4 through a registered sale deed dated 11-7-1974 for a consideration of Rs. 7,13,900.00 and the mutation in respect thereof had been effected in the revenue record on E-8-1974 and that the defendants Nos. 3 and 4 had thereafter disposed of part of the land, namely, Survey Nos. 17, 18, 19 and 20 measuring 24 acres 17 ghuntas through registered sale deed dated 17-9-1974 for a consideration of Rs. 4,72,868.00 in favour of the Society. The plaint alleges that the transaction between the defendants Nos. 1 and 2 and defendants No. 3 and 4 in respect of the said land measuring 49.20 acres on the one hand, and the transaction between defendants Nos. 3 and 4 and defendant No. 5 in respect of Survey Nos. 17 to 20 measuring 24.17 acres on the other, are in fact one and the same transaction and it has been purposely split up into two by the defendants under a well calculated conspiracy to defraud the plaintiffs of their lawful rights in the said land. Accordingly, the prayer is not only for specific performance of the agreement of sale between the plaintiffs and the defendants Nos. 1 and 2 dated 9-6-1973 against all the defendants jointly and severally but also for the cancellation of the two-registered sale deeds in favour of defendants Nos. 3 and 4 and defendant No. 5.

2. The plaintiffs obtained an ad interim injunction restraining the defendants Nos. 3 to 5 from disposing of the suit land or otherwise adversely dealing with the same. The plaintiffs' injunction application came up for hear ing on 11-2-1975 when it was confirmed against defendant No. 5 as the bailiff's report was that the defendant No. 5 was intentionally avoiding service. On 3-9-1975 defendant No. 5 made an application under Order XXXIX, rule 4, C. P. C. for vacating the interim order made. This application came up for hearing before my learned brother Zafar Hussain Mirza, J., who after hearing the parties came to the conclusion that a preliminary issue arises as to the maintainability of the suit against defendant No. 5 in view of the bar contained in section 70 of the Co-operative Societies Act, 1925 and he was accordingly pleased to frame the following issue which has come up for hearing before him : -

"Whether the suit is barred under section 70 of the Co-operative Societies Act for want of statutory notice ?"

3. The case of the defendant No. 5 is that it is a registered Co-operative Housing Society and the disputed land has been purchased for allotment to its members, after dividing it into small portions for the purpose of constructing residential houses thereon and since this purchase of the land by the Society forms part of its primary business, notice under section 70 of the Co-operative Societies Act was mandatory and since this notice has admittedly not been served upon defendant No. 5, this suit against them must fail,

4. Mr. Sami Ahmad, the learned counsel for the plaintiff contended that section 70 of the Co-operative Societies Act, 1925 has to be read with its section 54, and the argument if I have understood correctly, was that since the plaintiffs were not members of defendant No. 5 society, it would not attract section 54, which will in turn make section 70 inapplicable. The argument is misconceived for sections 54 and 70 operate in altogether different fields for while the former makes provision for compulsory arbitration if the dispute relates to the business of the Society as between certain persons only, the latter only contains a bar against filing of a suit against a co-operative society registered under the Act without the prescribed notice. The only common factor between the two sections i3 that the dispute giving rise to the proceedings must be one "touching the business of the Society." The learned counsel invited my attention to certain decisions which to my mind have no application to the present case. In Uttamhand Shivandas v. Alumal Manghanmal and others (A I R 1944 Sind 107), the, dispute was between a seller who was a member of a cooperative housing society and a non-member purchaser as regards the terms of the Qabala agreement between them for sale of certain property of which the seller was an allottee from the Society. The Court came to the conclusion that section 54 of the Bombay Co-operative Societies Act had no application unless both the seller and the purchaser were the members of the Society and that even otherwise the dispute between the parties relating to the terms of the Qabala agreement between the two, was not a matter which can be said to touch the business of the Society. In Government of West Pakistan and another v. Wali Muhammad Habib and others (P L D 1961 S C 215), the Supreme Court confirmed the view taken by the High Court that though the transaction in dispute arose out of the legitimate business of a cooperative Bank and, therefore, there did exist a dispute touching the business of the Bank, but section 54 had no application as that business was not entrusted to the respondent in his capacity as member of the Bank. In Azizuddin Ahmad v. Aziz Ahmad and others (P L D 1959 Kar. 497), section 54 was held to be in applicable as the dispute was not exclusively confined to the members of a Co-operative Society inasmuch as the non-member, Government of Pakistan, was also party to the dispute.

5. Mr. Hamid Hussain, the learned counsel for defendant No. 5, invited my attention to a decision reported in Muhammad Ali Memorial Co-operative Housing Society Ltd., Karachi v. Seed Sibtey Hasan Kazmi (P L D 1975 Kar. 428). In this case the dispute was between a registered cooperative housing society and a firm, which arose out of a claim of the society that they were entitled to the sale price of certain pipes which had been purchased by the firm from the society. The Court held that since the Society's main business was that of constructing houses for its members, it was obvious in the course of this, it would have to purchase material for such buildings and where such material became surplus, it would obviously sell such surplus in order that the proceeds might be available to the Society, and the suit by the firm for setting aside an award made in respect of the above dispute was, therefore, clearly in respect of an act touching the business of the society requiring a notice under section 70 of the said Act. Pi the present case it was not even disputed that purchase of land by the defendant No. 5 was part and parcel of its main business.

6. Faced with this situation Mr. Sami Ahmad tile learned counsel foe the plaintiffs contended that the relief claimed against defendant No. 5 would in the present case automatically follow if the suit is decreed against defendants Nos. 3 and 4, since the defendant No. 5, cannot claim better title than that possessed by its predecessors, the defendants Nos. 3 and 4 and accordingly section 70 is not attracted. The argument has some attraction but is not available, as the plaintiffs have not only alleged that the transaction between the defendants Nos. 1 and 2 defendants Nos. 3 and 4 on the one hand and defendants Nos. 3, 4 and 5 on the other, is the one and the same transaction but they have additionally claimed against .defendant No. 5, the relief for cancellation of the sale deed in their favor.

It would also appear from the plain reading of section 70 that once the Suit is in respect of an act touching the business of a registered co-operative society, then irrespective of other considerations, such as a decree automatically following against a defendant society, the prescribed notice being mandatory, the suit in its absence would not be maintainable against a registered Co-operative Society.

7. The result, therefore, is that the issue is answered in the affirmative, and the suit is dismissed against defendant No. 5 but in the circumstances there will be no order as to costs. The interim order against the defendant No. 5, will as a consequence stand vacated.

S. Q. Suit dismissed.