Rana Muhammad Iqbal vs Rao Khalil Ur Rehman

Stereo. H C J D A 38.

JUDGMENT SHEET

LAHORE HIGH COURT

BAHAWALPUR BENCH BAHAWALPUR

JUDICIAL DEPARTMENT

C.R No.178/2018

Rana Muhammad Iqbal vs. Rao Khalil-ur-Rehman etc.

JUDGMENT

Date of Hearing: 10.12.2025.

Petitioner by: Mr. Saeed Sami Khan, Advocate. Respondents No.1 to 6 Mr. Ahmad Mansoor Chishti, by: Advocate.

Respondents No.7 and Rai Mazhar Hussain Kharal, 8 by: Assistant Advocate General.

Anwaar Hussain, J. This civil revision is directed against the judgments dated 07.06.2016 and 17.01.2018. Through the judgment dated 07.06.2016, the Trial Court decreed the suit of respondents No.1 to 6 (―the respondents‖), who are the legal heirs of one Muhammad Irshad Ali. Dispute pertains to plot bearing No.386, Block-E, Government Employees Cooperative Housing Society Limited, Bahawalpur/respondent No.8 (―the Housing Society‖), which was allotted to the deceased Muhammad Irshad Ali. The respondents claimed that being legal heirs of the deceased allottee, they are entitled to transfer of the property. The Appellate Court below, vide judgment dated 17.01.2018, maintained the findings of the Trial Court.

2.Learned counsel for the petitioner contends that the deceased allottee, who was also brother-in-law ( )ونہبیئof the petitioner, sold the suit property to the petitioner and executed General Power of Attorney dated 06.02.1995, brought on record as Exh.D-1 (―GPA‖), together with an agreement to sell dated 29.03.1995 (Mark ―A‖), and in pursuant thereof also nominated the petitioner in accordance with the bye-laws of the Housing

Society. It is contended that the petitioner sought transfer of the plot, on the basis of his nomination, under Section 27 of the Co- operative Societies Act, 1925 (―the Act‖), by filing an application under Section 54 of the Act, and that respondent No.7 (District Officer Cooperatives/Deputy Registrar) decided the matter in favour of the petitioner through order dated 06.05.2009 (Exh.D-5). It is argued that order dated 06.05.2009 was appealable, under the Act, but was not challenged by the respondents and this aspect has been ignored by the Courts below.

3.Conversely, learned counsel for the respondents asserts that through the GPA, the petitioner was entrusted only with management of the plot and the agreement to sell as well as the nomination dated 17.09.1995, was result of fraud. Adds that the respondents were asked, through letter dated 08.03.2009 (Exh.P- 3), written by the Housing Society to obtain a succession certificate before the Society could affect transfer of the disputed plot in their favour and, hence, the declaratory suit was instituted.

4.Arguments heard, record perused.

5.It is salient feature of the case that the disputed plot was originally allotted to the predecessor of the respondents; that a registered GPA in favour of the petitioner exists on the record; and that the record maintained by the Housing Society pertaining to the disputed plot also includes a nomination dated 17.09.1995 in the petitioner’s name and on strength of the same respondent No.7 passed the order dated 06.05.2009, which order was not challenged by the respondents. The Courts below have also not dealt with the binding value of order dated 06.05.2009. Hence, the following legal questions arise for determination by this Court:

i. Whether an order passed under Section 54 of the Act, by the Registrar, Co-operative Societies, Punjab, or his delegate (such as respondent No.7), which has not been challenged in appeal, under the Act, operates so as to bind the Civil Courts and preclude them from examining the validity of an alleged agreement to sell?

ii. What is the scope of Section 54 of the Act, particularly in light of the proviso thereto where disputes between the parties involve complicated questions of law and fact?

iii. What is the legal effect of nomination under Section 27 of the Act—whether it confers proprietary rights against legal heirs or merely facilitates administrative transfer by the co-operative society?

6.Before addressing the core legal question at serial No.(i) hereinabove, it will be appropriate to answer the remaining two questions pertaining to scope of Sections 54 and 27 of the Act as the answer to the question No.(i) is based thereon. For this purpose, it will be useful to reproduce the said provisions. Section 54 of the Act reads as under:

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

(b)....

(c)....

(d)....

(e)....

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.

A dispute shall include the question whether a person is or was a member of a society and also claims by a society for debts or demands due to it from a member, past member or non-member or the heirs or assets of a past member or non-member whether such debts or demands be admitted or not:

Provided that if the question at issue between a Society and a claimant, or between different claimants, is one involving complicated questions of law and fact, the Registrar may, if he thinks fit, suspend proceedings, in the matter until the question has been tried by a regular suit instituted by one of the parties or by the society. If no such suit is instituted within six months of the Registrar’s order suspending proceedings the Registrar shall take action as laid down in paragraph 1 of this section.‖ (Emphasis supplied) Section 27 reads as under:

―27. Transfer of interest on death of member.–

(1)On the death of a member of a society such society may within a period of one year from the death of such member transfer the share or interest of the deceased member to a person or persons nominated in accordance with the by-laws of the society, if duly admitted a member of the Society, in accordance with the rules or the by-laws of the society, or, if there is no person so nominated, to such person as may appear to the Committee to be the heir or legal representative of the deceased member if duly elected a member of the society, or may pay to such nominee, heir, or legal representative, as the case may be, a sum representing the value of such member’s share or interest as ascertained in accordance with the rules or by-laws:

Provided that such nominee, heir or legal representative, as the case may be, may require that payment shall be made by the society within one year from the death of the member of the value of the share or interest of such member ascertained as aforesaid.

[Provided further that the nominee, heir, or legal representative shall distribute the amount received by him among the heirs of the deceased.]

(2)A society shall subject to the provisions of section 25 and unless prevented by an order of a competent court pay to such nominee, heir or legal representative, as the case may be, all other moneys due to the deceased member from the society.

(3)All transfers and payments made by a society in accordance with the provisions of this section shall be valid and effectual against any demand made upon the society by any other person.‖

(Emphasis supplied)

7.A close textual reading of the proviso to Section 54 leads to three interrelated observations. First, the threshold phrase ―if the question at issue between the society and the claimant or between different claimants, is one involving complicated questions of law and fact‖ envisages an objective inquiry into whether the dispute raises intricate factual questions (for example, identity of the parties, validity of contract of sale, proof of payment), which cannot be fairly resolved without recording of evidence. Second, the phrase ―the Registrar may, if he thinks fit, suspend proceeding‖ makes clear that the power to suspend is discretionary; it is not mandatory, however, it is imperative to hold that it must be exercised judicially. Where the material before the Registrar or his nominee (like respondent No.7 in present case) plainly demonstrate complexity of issues that only a Court of plenary jurisdiction can resolve, the exercise of discretion would ordinarily dictate suspension of the proceedings under Section 54 of the Act rather than a truncated disposition. Third, the proviso contemplates the legislative intent to strike a balance between the administrative finality in the affairs of a co- operative society under the Act and protection of substantive rights of the stakeholder(s): suspension preserves the parties’

right to full adjudication while preventing indefinite stalling of the proceedings and functioning of the society.

8.Similarly, textual analysis of Section 27 of the Act shows two essential consequences. First, the said provision authorizes a co-operative society to transfer the share of a deceased member to a nominee or, alternatively, to such person as the Committee of Management regards as heir. Scope of Section 27 is primarily administrative, enabling the co-operative society to effect transfer for purpose of its internal administration. Second, the proviso that the nominee shall distribute the amount received by him among the heirs imposes a statutory duty on the nominee, who thus stands as a conduit or trustee in relation to the legal heirs of the allottee/member of the co-operative society rather than as an absolute owner overriding the succession/inheritance rights. Section 27, therefore, secures the co-operative society (the Housing Society in present case) against subsequent claims when it acts pursuant to Section 27, but it does not confer substantive title on a nominee to the prejudice of the legal heirs. In addition, this Court is of the view that Section 27 of the Act, through nominee, ensures continuity in the inter-se functioning of the society and its deceased members till the lawful successors/legal heirs find their place in the affairs of the society. This legislative intent is emphatically palpable from the fact that the nominee is sought from the member at the time the membership is offered as the actual successors/legal heirs are to be declared and determined by the Court of competent jurisdiction after the death of the member of a co-operative society.

9.Having above analysis of Sections 27 and 54 of the Act in sight, this Court is of the opinion that the two provisions operate in complementary fashion: Section 27 governs internal transfers of a co-operative society after the death of a member, and Section 54 prescribes the procedure for resolving disputes,

inter alia, between the members, claimants, or the society itself. The proviso to Section 54 functions as a check on the Registrar’s power (purportedly delegated to respondent No.7 in the present case): where complicated questions of law and fact are involved, the Registrar is to consider suspension and allow a Civil Court to determine those issues. The nomination under Section 27 facilitates administrative transfer or payment but does not vest ownership in the nominee to the prejudice of heirs. The statutory scheme, therefore, ensures that an officer of the Punjab Co- operatives Department—whether Registrar or his delegatee like respondent No.7 should not adjudicate contested title that requires plenary evidentiary probe by a Civil Court.

10.Having dealt with the scope of Sections 54 and 27 of the Act, it will be appropriate to reproduce order passed by respondent No. 7 on the application filed by the petitioner under Section 54, who was claiming sale of the plot in his favour as well as nomination under Section 27 of the Act, which reads as under:

―The plaintiff emphasized on their version on the basis of letter of nomination, sale deed and General Power of attorney. They contended that under the provisions of section 27 of Cooperative Societies Act 1925 and Rule 21 of Cooperative Societies Rules 1927, and as per byelaws 18 & 19, the plot could only be transferred to nominee. The plaintiff further argued that the defence also strengthened their version. Further, all the original record was with the plaintiff as the entire payment against the plot was made by the Plaintiff. The plaintiff further contended that the society management got the power of attorney and sale deed verified from the Revenue Authorities.

The defence did not rebut the version of the plaintiff.

Mr. Rao Khalil-UR-Rehman, applicant for the necessary party, argued that whole proceeding from allotment of plot to change of nomination was carried out fraudulently keeping his father in dark.

All the documents were bogus and fictitious. The plot could be transferred to legal heirs. They further contended that they had applied for succession Certificate.

The record was called for, perused and it was found that all the payments were made by the plaintiffs. The sale deed and General power of attorney in favour of Plaintiff were genuine as verified by the Revenue Authorities vide No.HRC- 165 dated 17.09.2008. Meanwhile Rao Khalil-UR- Rehman and others asked for an oath as to withdraw from the plot if submitted by the Plaintiff that had paid denomination to their deceased father.

On 06.05.2009, the parities (sic) present and on question of oath, the applicants Rao Khalil-UR- Rehman and others avoided the oath. On enquiry Rao Khalil and others admitted that they did not make any payment against the alleged plot. They even did not know anything about allotment of plot.‖ (Emphasis supplied)

This Court is of the opinion that respondent No.7 erred in non-suiting the respondents on the ground that they avoided oath as Section 9 of the Oaths Act, 1873 contemplates that no party shall be compelled to make a special oath or solemn affirmation that is offered by other party. Suffice to observe that refusal to take such oath cannot be made basis of an adverse finding. More importantly, respondent No.7 erred in treating the agreement to sell (Mark ―A‖), whose marginal witnesses were not produced, before respondent No.7 as well as the Trial Court as a valid sale deed. Respondent No.7 also wrongly relied upon GPA that does not, by itself, operate as a transfer of title. These features squarely trigger the proviso to Section 54 of the Act—a dispute involving complicated questions of law and fact. The record, therefore, called for consideration of suspension and referral of matter to filing of suit for detailed evidence, which respondent No.7 failed to comply with and instead proceeded to decide the matter on the basis of the documents on record. Respondent

No.7’s failure to adopt the safeguards under the proviso, or at least to record a reasoned conclusion that the matter did not involve complicated questions of law and fact, renders his order vulnerable in any proceedings, including those initiated by the respondents through their suit, even if no appeal was preferred against the order of respondent No.7 under the Act. Order dated 06.05.2009 (Exh.D-5), made without adequate evidentiary testing of the agreement to sell through examining marginal witnesses thereof and proof of payment of sale consideration by the petitioner, cannot be given conclusive effect to displace the rights of legal heirs—the respondents. Hence, this Court is of the opinion that an order passed under Section 54 of the Act, by the Registrar, Co-operative Societies, Punjab, or his delegate (such as respondent No.7), which has not been challenged in appeal, under the Act, may bind the co-operative society insofar as the said society acted under Section 27(3) in good faith; but it cannot, on the material before the Courts below as also this Court, be treated as an unimpeachable determination of the title of the petitioner. Therefore, in present case, both the Courts were justified in evaluating the evidence on record and not persuaded by order dated 06.05.2009 (Exh.D-5) passed by respondent No.7. The Appellate Court below, in particular aptly encapsulated the controversy in the following manner:

―13. The appellant/defendant No.4 made three different claims over the plot. His claim was that he was appointed nominee of the plot. His second stance was that he was appointed general attorney on behalf of deceased Irshad Ahmad. The general power of attorney is available in file as Ex.D.1. It is no where mentioned in Ex. D.1 that defendant No.4/appellant would be treated as allottee of the suit property/plot. This document was written to deal with the matter of the suit property. This document entitles the appellant to sale out the suit property. It is no where written in Ex.P.1 that the appellant/ defendant No.4 would be nominee or owner of the suit property. The next stance of the

appellant/defendant No.4 was that he purchased suit property/plot from Irshad Ali through agreement to sell mark A. The defendant No.4 remained fail to produce marginal witnesses of mark A. Further during cross examination he admitted that he did not produce witnesses of agreement to sell namely Sadar ud Din Shah and Maqbool Ahmad Chisthi.

15.Bare perusal of mark A shows that the same was executed on 29.3.1995. In its writing general power of attorney in favour of appellant is also mentioned and it is mentioned that the above mentioned general power of attorney would be irrevocable. The witnesses of general power of attorney and mark A agreement to sell are same. The general power of attorney was registered on 6.7.1991 (sic). But the above mentioned agreement to sell execution on 29.3.1995 is not mentioned in general power of attorney. The appellant remained fail to prove mark A by producing its witnesses. In this way the appellant remained fail to prove the payment of consideration amount mentioned in the mark A that is Rs.1,00,000/-. Further the version of the defendant is that he was appointed nominee of the suit property and all the dues were paid by him as he mentioned in his examination in chief while as appearing as DW-1. If his version regarding payment of all dues was correct then there was no need of execution of agreement to sell mark A between the parties and payment of consideration amount Rs.1,00,000/- In these circumstances the version of the appellant/defendant is self contradictory.‖ (Emphasis supplied)

11.The matter can also be examined from another angle, for which certain dates assume critical significance. The GPA executed by the predecessor-in-interest of the respondents is dated 06.02.1995, whereas the alleged agreement to sell is dated 29.03.1995, and the nomination purportedly made under Section 27 of the Act is dated 17.09.1995. If the GPA was executed along with, or for the purpose of, sale of the property in favour of the petitioner, it remains unexplained as to why these documents were not executed contemporaneously. Likewise, if the

nomination was in pursuance of the agreement to sell, the unexplained time gap between these documents assumes significance and casts serious doubt on the petitioner’s version. Furthermore, the record reflects that the nomination, brought on record by the petitioner as Exh.D-6, was issued pursuant to a letter dated 03.08.1995; however, the said letter has not been produced or exhibited. Even otherwise, the nomination dated 17.09.1995, on its plain reading, does not disclose or indicate that it was made in pursuance of, or for effectuating, any agreement to sell. The non-production of the foundational document, coupled with the absence of any recital in the nomination linking it with a sale transaction, further weakens the petitioner’s assertion that the nomination was a consequence of a concluded sale between the petitioner and predecessor of the respondents. This lack of continuity between the documents, together with the absence of marginal or attesting witnesses to the alleged agreement to sell, fails to establish that any sale transaction actually took place between the predecessor-in- interest of the respondents and the petitioner. Viewed in this perspective, the order passed by respondent No.7 suffers from patent misreading of the record and cannot be made the basis of disinheriting the respondents while upsetting the concurrent findings of the Courts below.

12.For the foregoing reasons, this civil revision is without merit and is dismissed, with no order as to costs.

(ANWAAR HUSSAIN)

JUDGE

Approved for reporting

Judge

AB**