Principle of Trichotomy of Powers

PLJ 2000 SC 547 [Appellate Jurisdiction]

Present: nasir aslam zahid, munawar ahmad mirza and abdur rehman khan, JJ.

PROVINCE OF PUNJAB and others-Appellants versus

NATIONAL INDUSTRIAL COOP. CREDIT CORPORATION and others-Respondents

Civil Appeals Nos. 427, 428, 429, 430, 558. 559, 560, 561, 563, 564, 565, 566, 567, 568 and 569 of 1992, decided on 30.10.1999.

(On appeal from the judgment/order of the Lahore High Court, dated

25.7.1992, 19.4.1992 passed in W.Ps. Nos. 716-717,2514/92,

10424/91, 4607, 5272, 4653, 5353, 5419, 4858, 4608,

4699, 4933, 4759, and 5542/92).

(i) Constitution of Pakistan (1973)--

----Art 175-Principle of Trichotomy of powers-Legislation in the nature of legislative judgment impinging on judicial powers of judiciaiy—Effect-­ Scheme of distribution of powers in the constitution, specially Art. 175 of the Constitution reiterates that principle of trichotomy of powers Le., legislature, executive and judiciary, is enshrined in the constitution— Where it was found that impugned legislation was in the nature of legislative judgment impinging on judicial power of judiciary, same would prima facie be ultra vires of the constitution.                                                                             [P. 573] A

(ii) Constitution of Pakistan (1973)--

—-Arts. 18 & 24-Show-cause notice with or without inquiry before any adverse action was taken against any person-Exceptions-Subject to there being exceptional circumstances requiring urgent action in larger interest of community or public at large, law provides for show-cause notice with or without inquiry before any adverse action was taken against any person-Even under due process clause, before any action was taken law should invariably provide for opportunity to affected person to defend himself before any adverse action was taken-In exceptional situations or circumstances, however, wherein action has to be taken without prior notice in public interest or for larger good and benefit of community, law must provide for ex post facto hearing so that where it was later on found that in particular case, adverse action was not warranted, such adverse action be withdrawn-Principle of trichotomy of powers does not require that in every case without exception law should always provide for prior hearing before judicial or quasi-judicial forum-Any legislation which provides for no hearing or opportunity to affected party before or even after action was taken, might be subject to challenge-Wherein any legislation there was no provision for any prior hearing, it has to be ascertained whether such legislation grants any ex post facto hearing or opportunity to the affected person. [Pp. 574 & 575] B

(Hi) Punjab Undesirable Co-operative Societies (Dissolution) Ordinance, 1992 (XX of 1992)--

—-Ss. 11, 12, 13, 22 & 26-Constitution of Pakistan (1973), Aits. 18 & 24-- Constitutionality and legality of Sections 11, 12, 13, 22 and 26 of Punjab Undesirable Co-operative Societies (Dissolution) Ordinance 1992 on the touchstone of Arts. 18 and 24 of the Constitution-Proivsions of impugned legislation would indicate that the same provide ex-post facto hearing and that adequate safeguards are spelt out therefrom for co-operative societies against whora action had been taken to seek redress from judicial and quasi-judicial forums-Governments contention, that impugned legislation was enacted in exceptional circumstances and for very serious situation and compelling reasons, could not be controverted—
High Courts view that in presence of Co-operative Societies Act 1925 and Banking Companies Ordinance, present legislation viz. Punjab Undesirable Co-operative Societies (Dissolution) Ordinance 1992, could not be enacted was erroneous—Fact that required results, could be achieved by taking effective action under Co-operative Societies Act and
Banking Companies Ordinance, could not be a constitutional bar on competence of legislature to enact special legislation of the type in question--High Court also erred in holding that impugned legislation was in the nature of law of condemnation-No person has been declared to be guilty of committing of any offence by impugned legislation-Impugned legislation has adequate safeguards for affected parties who could approach co-operative judge and if aggrieved by orders of co-operative judge, writ petition would be available- mpugned legislation, therefore, does not come in conflict with scheme of trichotomy of powers envisaged in the constitution; impugned law is not law of condemnation nor in the
nature of legislative judgment nor encroachment by legislature on the powers of judiciary-Appellant's contention that impugned legislation was violative of Aits. 18 and 24 of the constitution is without substance-High Court thus, erred in declaring impugned legislation to be ultra vires of the constitution on the ground that impugned legislation violates Arts. 18 and 24 of the constitution-Impugned judgments of High Court were set aside except the view of High Court that S. 22 of impugned legislation was ultra vires of the constitution was confirmed and to that extent appeals were dismissed.         [Pp. 575, 579, 585, 593 & 594] C, D, F & L

(iv) Punjab Undesirable Co-operative Societies (Dissolution) Ordinance, 1992 (XX of 1992)-

Preamble-Constitution of Pakistan (1973), Art.  2-A-Constitutionality and legality of provisions of Punjab Undesirable Co-operative Societies •Dissolution) Ordinance XX of 1992 on the touchstone of Art. 2-A of the  constitution-On the basis of An 2-A of the constitution alone a law cannot be declared as ultra vires the constitution-Even otherwise, however, provisions of impugned legislation viz. Punjab Undesirable Co­ operative Societies (Dissolution) Ordinance 1992 are not violative of Art. 2-A of the Constitution.   [P. 582] E

(v) Punjab Undesirable Co-operative Societies (Dissolution) Ordinance, 1992 (XX of 1992)--

— -Preamble & S. 4-Constitution of Pakistan (1973) Aits. 18 & 24-Plea that Punjab Undesirable Co-operative Societies (Dissolution) Ordinance provided no guide lines for treating a Co-operative Society as undesirable was not warranted-High Court in supporting such view of respondents, had committed error in as much as in Preamble to impugned legislation
it is provided that "it is expedient to prohibit carrying on of business as financial institutions by Co-operative Societies"-In S. 4 of the ordinance in question, it is provided that no Co-operative Society formed with the object of accepting deposits from its members of public for the purpose of pending investment or allowing withdrawals in any manner would after
the commencement of legislation be registered under Co-operative Societies Act, 1925-Provision of S. 4 of the Ordinance in question, provides guidelines but the section is  rospective in nature—Petitioner is correct in his submission that it is the same criteria which applied for treating an existing Co-opera ive Society as undesirable-High Court's view that ordinance in question, having provided no guidelines for treating a co-operative society as undesirable and therefore, had to be struck down was not warranted in as much as if any co-operative society felt aggrieved by such declaration adequate safeguards/remedies were provided under the legislation by approaching Co-operative judge and thereafter writ jurisdiction was available.                            [P. 586] G

(vi) Punjab Undesirable Co-operative Societies (Dissolution) Ordinance, 1992 (XX of 1992)--

—- Preamble-Constitution of Pakistan (1973), Aits, 142, 175-Fourth Sched. (Entry No. 55 & 31 of Part I of Federal Legislative List)-Appointment of judge of Supreme Court as co-operative judge under impugned legislation whether un-constitutional and beyond the legislative competence of Provincial Governor-Competent legislature for enacting legislation in respect of Co-operative Societies is Provincial Legislature/Provincial Governor and not the Federal Legislature or the President-There is no entry in concurrent legislative list either, under which Federal Legislature could competently make a law relating to co-operative societies-Competent legislature for co-operative societies being Provincial Legislature, to the exclusion of Federal Legislature, Provincial Legislature could competently make a provision in law relating to co­operative societies, providing for appointment of co-operative judge (as ona designata) being a judge of Supreme Court nominated by Chief Justice of Pakistan.        [P. 587] H, I

(vii) Punjab Undesirable Co-operative Societies (Dissolution) Ordinance, 1992 (XX of 1992)-

....S. 22--Constitution of Pakistan (1973), Arts. 142, 175 & Fourth Sched. (Entry No. 55 of Part I of Federal Legislative List-Comeptent forum to make laws for enlargement of jurisdiction of Supreme Court or conferring on it supplementary powers-Entry No. 55 of Part I of Federal Legislative List (Fourth Sched) of the constitution read with Aits. 175(2) and 142(a) of the Constitution confers exclusive powers on parliament to make laws for enlargement of jurisdiction of Supreme Court or conferring on it supplementary powers-Powers and jurisdiction conferred on Supreme Court by the constitution can neither be interferred with or varied nor taken away by the legislature-Jurisdiction of Supreme Court, however, can be enlarged and supplementary powers can be enlarged and supplementary powers can be conferred on Supreme Court by "law" in view of Art. 175(2) of the constitution, and entiy No. 55 read with Art. 142(a) of the constitution leaves no doubt that such enlargement of jurisdiction and conferment of supplementary powers can only be done by Federal Legislature-S. 22, Punjab Undesirable Co-operative Societies (Dissolution) Ordinance 1992, providing for appeal before Supreme Court against orders passed by Co-operative judge was thus, ultra vires of the constitution-Provincial Governor and Provincial Assembly were, thus, not competent to enact any law whereby jurisdiction of Supreme Court could be enlarged by providing appeal to Supreme Court 'against' orders of co-operative, judge-Order of High Court to that extent was confirmed and appeal against that part of order was dismissed.

[P. 592, 593 & 594] J, K & L

(viii) Punjab Undesirable Co-operative Societies (Dissolution) Ordinance, 1992 (XX of 1992)--

—Preamble-Constitution of Pakistan (1973), Art. 185-Depositors, investors and Members of Co-operative Societies entitlement to refund of their funds/deposits together with profits, interests, dividends-Supreme Court noted that Provincial Co-operative Department and Co-operative Board for liquidation have not discharged their responsibilities and performed their functions expected from them-Punjab Government was directed to take up such matter on priority basis and deal with the same effectively without any delay-Co-operative judge being not able to give his full time and attention to work required to be done by him, Chief Justice of High Court concerned would ensure that co-operatives judge was not burdened with any High Court work, so that co-operatives judge can devote his full time and attention to his functions and responsibilities under legislation in question-Liquidation Board and Registrar Co­operative Department were directed to submit monthly reports to Registrar of Supreme Court from specified date, showing in sufficient detail the progress of work being done so that if necessary Court might give directions or pass further orders as might be required— [P. 594] M

PLD 1992 Lah. 462; AIR 1979 SC 478; PLD 1977 Kar. 524; PLD 1958 Lah.

887; PLD 1966 SC 1; PLD 1983 SC 457; PLD 1992 SC 595; PLD 1993 SC

910; PLD 1996 SC 324; PLD 1988 SC 202; PLD 1969 SC 14; PLD 1975 SC

66; PLD 1965 Dacca 165; PLD 1973 SC 49 ref.

Mr. Abid Hassan Minto, ASC and Ms. Yasmin Sehgal, A.A.G. for

Appellant No. 1.

Raja M. Anwar, S.A.SC for Respondents in C.As Nos. 430 & 566/92. Raja   M.    Akram,    SASC   with   Ch.    Akhtar   All,    AOR   for Respondents/NIC., C.C. in CA's Nos. 427 & 558/92.

Mr. Bashir Ahmad Ansari, ASC with Ch. Akhtar All, AOR for Respondents in C.A. No. 560/92.

Nawab Saeed Ullah Khan, ASC and Mr. Anwar H. Mir, AOR for Respondents Nos. 1 & 2 in C.A. No. 560/92.

Syed NqjafAli Shah, ASC for Respondents in C.A. No. 568/92. Date of hearing: 22, 23, 24, 25, 28 and 29.6.1999.

judgment

Nasir Aslam

CivU Appeals arising

Punjabi-Number of Appeal

1.  427/92

2.  428/92

3.  429/92

4.  430/92

5.  558/92

6.  559/92

7.  560/92

8.  561/92

9.  563/92

10. 564/92

11. 565/92

12. 566/92

13. 567/92

14. 568/92

Zahid, J.-This judgment will decide the following out of petitions filed by Province/Government of

Respondents

National Industrial Coop. Credit Corporation. Mercantile Cooperative Corporation.

-do-

-do-

National Industrial Cooperative Corporation. Tariq Mahmood & others. Hammad Riaz & others. Faisal Dilawar & others. Pasban Cooperative Society. Muhammad Ramzan & others. National Industrial Coop. Finance Corporation. Shaikh Manzoor Elahi Peracha & others. Muhammad Abdullah & others. Zulfiqar Ahmed Awan & another.

15.   569/92          Premier Industrial Development Corporation &

another.

2. In these appeals the main question which arises for consideration is about the constitutionality and legality of certain provisions of the Punjab Undesirable Cooperative Societies (Dissolution) Ordinance XX of 1992. The Ordinance was promulgated to prohibit the carrying on business by Cooperative Societies as banking/financial institutions and to provide for a mechanism to bring quick relief to hundreds of thousands of depositors whose deposits/investments running into billions of rupees were stuck with a large number of defaulting Cooperative Societies.

The main judgment of the Full Bench of Lahore High Court was rendered in Writ Petition No. 4607/92 and others (since reported in National Industrial Cooperative Credit Corporation Limited v. Province of Punjab (PLD 1992 Lah. 462). The background which led the Governor of Punjab to issue the Ordinance is described in some detail in the impugned judgment of the Lahore High Court as follows:

"The uproar with respect to the financial debacle of the finance companies in the country and in particular about Taj Company had not yet subsided when the clamour about the financial scandal in the co-operative Societies came to earth. Obviously, such news of scandals harassed the small depositors, and there was a run of the small depositors upon the Co-operative Societies to withdraw their money. The situation was so worsened that the Government had to intervene, and particularly, the factum of seeking loans by the industrialists tycoons of this countiy led the Federal Government to constitute a Commission headed by a Judge the Supreme Court and two Judges of the High Court to examine the management, and working etc. of the Co-operative Societies in Punjab.

The Commission was constituted under the Pakistan Commissions of Enquiry Act, 1956 (VI of 1956) and precisely following was the charter of the Commission:-

"(a) to identify and determine the extent of assets and liabilities of each cooperative finance society or corporation;

(b)             to ascertain and determine the extent of outstanding liabilities f the defaulters together with their full names and particulars as well as properties and assets of such defaulters;

(c)              to examine and determine the illegalities in the establishment of each defaulting society or corporation;

(d)             to ascertain and identify the irregularities, illegalities, if any, committed in respect of receipt, disbursement, return of funds by any such society or corporation or its officials including Directors, Managers or employees and to fix responsibility;

(e)     to enquire into,  identify and fix the responsibility of the regulating   agencies,   authorities,   or   bodies   required   or authorised by law to supervise and control the working of such societies and corporations and recommend measures to be taken against their officials or employees who neglected or avoided to perform their duties and functions diligently and honestly;

(f)                to identify the ultimate beneficiaries or persons, where funds and the assets of the society or corporations have been diverted and trace out particulars of any properties and assets acquired with such funds;

(g)             to suggest measures to be taken  or repayment of the amounts or dues of the depositors or compensation, as the case may be, or to the members of such societies or corporations and for these purposes-

(i) ascertain the properties and assets of such societies and corporations including their Directors, members and identify the assets to which the same have been illegally

converted.

<ii) ascertain and register all claims outstanding against the societies and corporations.

(iii) ascertain the mode and manner of repayment and satisfaction of the outstanding claims and also to recommend appropriate measures to be taken for recovering loans from the defaulters and for winding up the societies, and corporations where-ever need be.

(iv) recommend measures to meet short fall, if any, through recovery from the properties of the Directors, sponsors and other officials of such societies and corporations and to propose legislative measures if necessary; and

(vi   recommend and take such other measures as may be necessary to fix responsibility on all relevant quarters and • repay all genuine claims."

The Commission after making a thorough probe and after recording the statements of certain individuals made recommendations but while doing so being cognizant of their limits, the following observations were made by the Commissioner:

"The matter of ascertainment of the properties and assets of the Corporations as well as of their Directors, Officers and members cannot possibly be resolved by the Commission and it had neither the means, nor sufficient time, nor even perhaps the authority to give a binding determination after admitting evidence of the parties for and against the respective versions. The proceedings being inquisitorial rather than adversary and life span of the Commission being of a few weeks, any attempt to find the answer in the circumstances and the legal position obtaining in the matter, would have been impossible."

It is further pertinent to mention that the Commission examined the affairs of 20 big societies and hearing was afforded to at least 127 societies. The commission also went in depth to examine the nature of the business carried out by the Cooperative Societies/Corporations and observed illegalities in the establishment of the societies and also irregularities and illegalities in the receipt, disbursement and return of funds and also in the purchase and sale of real estates by the Corporations/Societies and also commented upon the role of the regulatory bodies such as Federal Cooperative Bank, State Bank of Pakistan, Federal and Provincial Governments and the Cooperative Department, Eventually, on page 209 to 212 of the report, the Commission also examined as to whether it was necessary to wind up these companies and thus proposed legislation in this behalf. It is not necessary at this stage to go into the details of the report, but suffice it would be to mention that the Commission made the observations with regard to the winding up of the corporations/societies. The relevant recommendations of the Commission are reproduced hereunder:-

Features of new Legislature.

The winding up as such is necessary and new law providing for winding up of these corporations will have to be made by the Parliament, which inter alia may provide for:-

(i) The winding up of the cooperative finance corporation registered under the Cooperative Societies Act, 1925 and were conducting banking business;

(ii)   determination of the liabilities;

(iii) prosecution of the office bearers of the societies and other persons accused of mis-appropriation, embezzlement of its funds and assets, violation of law of banking and other laws. The accused should be tried by a Special Court presided over by a Judge, in service not below the rank of Sessions Judge. An officer of the State Bank well versed in book keeping, should assist the prosecutor and be also associated with the Investigating Agency. In consequence of trial if the accused or any person on his behalf is found to be in possession of assets disproportionate to his known source and which he fails to account for (burden to prove that the properly is lawfully owned by him should be place on the accused) upon conviction be forfeited in favour of the society for the benefit of the depositors/members. Provisions may also be made in the law that while determining as to whether or not the assets in possession of the accused persons are disproportionate to his known sources, the Court shall take into consideration his income-tax assessment record including his wealth statement filed under the Income Tax Laws. The Court should have the power to summon income-tax record notwithstanding anything to the contrary contained in the Income-Tax Ordinance, 1979.

1.              The societies will be called "defaulting societies" which would mean a society registered under any of the Cooperative laws and has accepted or his accepting for the  urpose of lending or investment deposits of money from the public payable or demand or otherwise and withdrawable by cheque, draft, order or otherwise.

2.              The law should provide that every defaulting society existing immediately before the commencement of the proposed enactment on its commencement, shall cease to  unction  notwithstanding anything to the contrary in the Banking Companies Ordinance, 1962, the Cooperative Societies Act, 1925 or any other law for the time being in force and shall be wound up in the manner provided in the proposed enactment. List of defaulting societies should be added as a schedule to the Act



3.         Vesting in preservation of assets and deposits of cash etc., with the Board and also surrender of assets to it. For reference see Section 5 of Act X of 1958.

4.         Conferment of power to proceed against any concealed property or the properly which has been obtained or procured by using or diverting the funds of the defaulting  ociety.

5.         A provision regarding informer and payment of compensation to him  in  cash  upto  15%  of the value of the  hidden  assets,  if information is proved, to be correct be ncorporated in the new Act.

6.         A provision for settlement of objections against the rejection or non-verification of the claim. The verified claims be made assignable.

7.        The law should also provide for the settlement of objections of the  ird   parties   relating  to  the   property/assets   claimed   by  the society/Admn. Board.

8.        The law should further confer necessary powers on the Board to retrieve the loans due and make payments of the verified claims.

9.        Appropriate provision barring the taking of plea of limitation in the matter of recovery of assets and loans should also be provided.

Any person or office bearer of the society nominated on the Board who on being required to give any information or produce any document or render assistance fails to do so without reasonable cause, after giving him an opportunity of hearing may be detained in the civil prison by the Judge (Companies)/Cooperative Societies on the representation of the Board or on his own motion for such period as may be specified under the new dispensation. Constitution of Board of Liquidators of the Big Societies. For the purposes of achieving the objects of law, tackling the problems likely to arise in the winding up process and to deal with allied matters, a Board of Management/Liquidation for each corporation having liability of 15 crores or above and similar Boards for group of societies as considered appropriate may be constituted by the Government. The Boards should consist of the following: -

(1)             An officer in service not below Grade 19      Chairman

(2)             Registrar Cooperative Societies or his nominee        Member

(3)             A    Chartered    Accountant    in    service    in      Member DFIS/Bank

(4)     An   advocate   having   more   than   10   years      Member standing (to be nominated by the Company Judge)

(5)   A representative of the depositors to be elected      Member in the manner provided hereinafter.       (Working in honourary capacity)

(6)   An  office  bearer of the  society who  is not      Associated ccused of commission of an offence relating to      Member ts   business.    To   be    nominated   by   the
Government.

The officers nominated to the Board shall be on deputation and paid by their respective departments, while the Advocate shall receive such monthly remuneration as fixed by the Company Judge.

The Managing Director / Chairman / President/ Director/ Office bearer of the society including the office bearer nominated to the Board shall bf bound in law to attend to the work of the Board, provide necessary information and also to render such assistance as is necessaiy for reusing and safeguarding the assets and interest of the society.

Select)on_of the Mem bei•$_ fvom Depositors.

A list of depositors of each district shall be prepared on the basis of the verified claims. These depositors will elect among themselves a committee comprising three depositors for the purposes of rendering assistance to the Board for collecting necessary evidence, material, unearthing the concealed property of the society, identifying and locating its assets, which might have been purchased benami or through diversion of funds and any other illegalities or irregularities committed by its management and the staff. The election of three members of the Committee will be conducted under the supervision of the District Magistrate. The members of the District Committee of each corporation will elect one of them to represent them on the Board and for such election a meeting will be called by the Chairman of the Board.

Functions of the BoarcL

(i) The Board of liquidation shall determine the assets and liabilities of the corporation arid that of its office bearer.

(ii) Shall verify the claims, if need be, dispose of objections against the acceptance or rejection of claim filed by the depositor and may also entertain the claim, in case, reasonable cause  s shown for not filing the same earlier and also if directed by the Company Judge.

f'iii) Determine any complaint as to unauthorised adjustment of the deposit, SMR or any such deposit certificates or instrument.

(iv) Determination of assets and liabilities would include the power to unearth, hidden or concealed properties/property which actually and really belongs to the corporation due to use of its funds but appearing in the name of some other persons."

A careful consideration of the report of the Commission reveals that all the Cooperative Societies/Corporations were indulging into illegal banking business and that is why, the Commission lamented upon the conduct of the regulatory bodies referred to above."

Relevant   provisions   of   the   Punjab   Undesirable   Cooperative   Societies (Dissolution) Ordinance, 1992, (Ordinance XX of 1992) read as follows:

"ORDINANCE XX OF 1992 PUNJAB UNDESIRABLE COOPERATIVE SOCIETIES (DISSOLUTION) ORDINANCE, 1992 [Gazette of Punjab, Extraordinary, 16th May, 1992]1.     Short title, extent and commencement.--^) This Ordinance may be called the Punjab Undesirable Cooperative Societies (Dissolution) Ordinance 1992.

(2)        It shall extend to the whole of the Punjab.

(3)        It shall come into force at once.

2.     Definitions.-ln  this   Ordinance,   unless there  is  anything repugnant in the subject or context:-

(a)...............................................................................................

(b)     "Commission" means the Commission appointed by the Federal Government under Section 3 of the Pakistan Commission of Industries Act, 1956 by Notification No. F-21(l)/91-Pub. Dated 6th November, 1991.

(c)              "Cooperatives   Board"   means   a   Board   constituted   under Section 5.

(d)             "Cooperatives Judge" means a Judge of the Supreme Court of Pakistan nominated by the Chief Justice of Pakistan, or a Judge of the Lahore High Court, qualified for  ppointment as Judge of the Supreme Court, of Pakistan nominated by the Chief Justice of Pakistan after consultation with the Chief Justice of the High Court.

(e)

(f)    "Liquidator" means the "Cooperative Board" constituted under Section 5 of flu   Vt.

 (g)   ...........................................................................................

(h)

(1)   "Schedule" means schedule of this Ordinance.

(j) "Undesirable Cooperative Society" means a Cooperative Society registered under the Act by whatever name called-

(i)    to which Section 4 applies; or

(ii)   which is specified in the schedule; and

(k) all other words and expressions used in this Ordinance and not defined shall have the same meanings as assigned to them in the Act.

3.             Ordinance to override other laws, etc.-The provisions of this ordinance shall have effect notwithstanding anything contained in any other law for the time being in force, or in any judgment or decision of any Court or in any agreement, contract, or instrument.

4.             Registration of certain cooperative societies prohibited.~(l) No cooperative society formed with the object of accepting deposits from its members or public for the purposes of lending, investment or allowing withdrawals in any manner shall after the commencement of this Ordinance be registered under the Act.

(2)   Any registration made in contravention of sub-section (1) shall be void.

5.   Cooperative Boards.--(1) Government may establish as many Cooperatives Boards as it may deem necessary and assign names to  them.

(2)         A Cooperatives Board shall be a body corporate having perpetual succession and a common seal, with powers subject to the provisions of this Ordinance to enter into contracts and to acquire hold and dispose of property, both movable and immovable, and shall by the said name, sue and be sued.

(3)         A Cooperatives Board shall consist of a Chairman and at-least  two members.

 (4) The Chairman and other members whose qualifications and terms and conditions of the service shall be such as may be prescribed, shall be appointed by the Government.

7. Power of a Cooperatives Board.-A Cooperatives Board when appointed as a Liquidator under this Ordinance shall have all the powers exercisable by a Liquidator under the Act and in addition to that shall have the power to—

(a) verify the claims already filed with the Commission; entertain and dispose of objections against the acceptance or rejection thereof and also entertain claims, in case, reasonable cause is shown for not filing the same earlier;

.(b) unearth and proceed against any concealed or hidden property of an undesirable, cooperative society, whether in the name of any Director, Officer, agent or any of the members of their families or. in the name of any other pjerson, body, company or firm acquired or purchased by using or diverting the funds of such a society;

(c)      determine   the   assets   and   liabilities   of   an   undesirable cooperative society  and those  of its promoters,  Directors, Officers and agents and of the past members of its committees of managements;

(d)             fix   and  pay  to  any  person   on  whose  information  to  a Cooperatives Board any hidden assets of an undesirable Cooperative   Society   are   retrieved,   a   compensation   not exceeding fifteen per cent of the value of such assets; cancel   all   agreements   entered   into   by   an   undesirable
cooperative society or its previous management's or Directors, Officers or agents which in the opinion of the Cooperatives Board, are mala fide and against the interest of  uch a society or the members thereof;decide and settle objections and claims of third parties relating to assets and properties of an undesirable cooperative society; provided that the plea of limitation shall not be a defence against the  recovery  of an y assets and properties  of an undesirable society;

(e)      recall and recover loans advanced by an undesirable cooperative society; for the purpose of such recovery the provisions of all existing   laws    including   the    Cooperative    Societies    and Cooperative Banks (Repayment of Loans) Ordinance, 1966 with necessary adaptations shall apply to the Cooperative Boards; provided that nothing contained in this clause shall be a bar for a Cooperative Board to make reference in respect of any loan, in terms of Section 4 of the said Ordinance to the Assistant Registrar or Registrar as the case may be, who shall thereafter proceed against the borrowers under the provisions of the Ordinance;

(h) determine validity of adjustment of the deposits, loans, deposit certificates, securities or such other instruments;

(i) call for any information, document, record or evidence from any person, authority, agency, department;

(j) initiate inquiries through police and other agencies for unearthing hidden or concealed properties and assets of an undesirable cooperative society and its Directors, Officers agents, benamidars and the members of their families;

(k) initiate,'subjects to the approval of the Cooperatives Judges, criminal prosecution of Directors, Officers and agents of undesirable cooperative societies and such other persons connected with the properties and affairs of such societies;

(1) avail itself of financial assistance from Bait-ul-Mal and other agencies for payment to deserving destitutes, widows, orphans and infirm depositors;

(m) develop the properties of an undesirable society and for that purpose to formulate and execute development schemes with or without the collaboration of the official development agencies and dispose of assets and properties;

(n) assess market value or properties and assets of an undesirable cooperative society for their disposal;

(o) take loans, financial assistance and to all such acts, deeds and things necessary for implementation of requirements, of this Ordinance and directions, orders and decisions of the Cooperatives Judges;

(q) satisfy wholly or partly the verified claims with the approval of the Cooperatives Judge at any time pending winding up proceedings and final determination of assets and liabilities of an undesirable cooperative society;

(r) to incur all reasonable expenses for management of a society to be dealt with by it and for other purposes under this Ordinance;

(s) subject to the rules appoint such officers, advisers and servants as it considers necessary for the efficient performance of its functions on such terms and conditions as it may deem fit;

 (t) delegate- to the Chairman, or any member or committee or, officer or adviser, any of its powers under this Ordinance or the rules;

(u) apply to the Cooperatives Judges for guidance, in relation to any particular matter arising in winding up proceedings; and

(v)   maintain accounts in such manner as may he prescribed.

8.................................................................................................

9..

10..

11.        Application to the Cooperatives Judge.~A person if aggrieved by  an act or decision of a Cooperatives Board,  may apply to theCooperatives Judge, who may confirm, reverse, or modify the act or decision complained against, and make such order as he may think just in the circumstances of the case.

12.        Existing Undesirable Cooperative Societies to cease to function.-- An undesirable cooperative society specified in the schedule on the commencement of this  Ordinance  and  in  case  of subsequent inclusion in the schedule of an undesirable Cooperative Society on the date of such inclusion, shall cease to function and all its properties, assets, securities, deposits and bank accounts shall vest  in the Registrar and shall remain so vested till such time they standvested in the Liquidator.

13.        Winding up of an undesirable Cooperative Society.-(l) As soon as may be, after the commencement of this Ordinance, the Registrar shall make a petition to the Cooperative Judge for winding up of an undesirable cooperative society who shall thereupon make an order for its winding up and appointment of a Cooperative Board as Liquidator.

(2) Nothing contained herein shall bar the jurisdiction of the Cooperative Judge to pass an interim order appointing a Cooperatives Board as Liquidator, without pri or notice to such society.

14.  Claim against an undesirable Cooperative Society.~Any person having any claim against an undesirable cooperative society or any right over any property or assets of such society or against its  Directors, officers or agents, whether on the basis of any agreement, sale, transfer or otherwise may, within thirty days of appointment of a Liquidator or within a reasonable time allowed by the Cooperative Judge submit his claim before the Liquidator.

15. Dissolution of an undesirable Cooperative Society.--When an undesirable cooperative society is wound up, it shall be deemed to have been dissolved and its registration cancelled. 17.      Exclusive jurisdiction of Cooperatives Judge.—S&ve as otherwise provided in this Ordinance,  no Court shall have jurisdiction in respect   of any   matter   which   a   Cooperative   Board   and   the Cooperatives Judge are empowered by or under this Ordinance to determine and no injunction or process or order shall be granted by
any Court or authority in respect of any action taken or to be taken in exercise of any power conferred by or under this Ordinance.

18.       Confiscation of assets, etc.-(l) Where any Director, officer or agent of an undesirable cooperative society or any other person, body, company or firm is found to be in possession of any property or assets on behalf of such Director, officer, agent or such society for which such Director, officer, agent, person, body, company or firm cannot  satisfactorily  and   reasonably  account  for  its   pecuniary  resources or holds property disproportionate to his or its known sources of income, it shall be presumed, unless the contrary is proved, that such Director, officer or agent, person, body, company or firm has acquired such property and assets by misappropriating the funds of such a society.

(2) The Cooperatives Judge may, after holding an inquiry, order confiscation of all such properties and assets against which a presumption is raised under sub-section (1) which shall then vest in the Cooperatives Board as assets of such society for distribution among its depositors.

19.            Action of Federal Government not to be affected etc.-(l) Nothing in this Ordinance shall affect any action taken by the Federal Government against an  undesirable cooperative society or any of its Directors, officers agents or any other person in pursuance of any law for the time being in force or any other measure adopted for
providing relief to the depositors.



 (2) Action under this Ordinance against an undesirable cooperative society or against its Directors, officers, agents or any other person, shall be in addition to and not in derogation of any action taken under any law for the time being in force.

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22.          Appeal.-An appeal against the final order of the Cooperatives Judge shall lie before the Supreme Court within 30 days from the date of the order.

23.          Power to make rules.--(l) Government may by Notification in the official Gazette, make rules for carrying out the purposes of this Ordinance.

24.          Power to make Regulations.-Svb^ect to rules the Cooperatives Board may make Regulations for carrying out the purposes of the Ordinance.

25.          Powers to remove difficulties.--^ any difficulty arises in giving effect to any of the provisions of this Ordinance, the Government may make such order, as may appear to it to be necessaiy for the purpose of removing the difficulty.

26.    Power to amend the schedule.-The Government may by Notification amend the schedule so as to add any entry thereto ormodify or omit any entiy therein.

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In the Schedule to the Ordinance,  names of 102 Cooperative Societies were mentioned. It may be observed that Punjab Ordinance XX of

1992    was followed by promulgation of the following similar Ordinances:-

Number of Ordinance             Date of promulgation

(a)              XXXI of 1992                              13.8.1992

(b)             XXXXIIofl992                           11.11.1992

(c)              II of 1993                                     31.1.1993

Ultimately Punjab Undesirable Cooperative Societies (Dissolution) Act I of 1993      was passed by the Punjab Assembly and assented on 23.2.1993 by the Governor and published in the official Gazette on 27.2.1993.

Reference may be made to one other Ordinance. It is the Punjab Undesirable Cooperative Societies (Dissolution) (Amendment) Ordinance IX of 1997 which substituted clause (c) Section 2(1) of Act I of 1993 as follows:-"(c) 'Cooperative Judge' means a Judge of the Lahore High Court, Lahore, functioning as a Company Judge and nominated as Cooperative Judge by the Chief Justice of the said High Court."

3. After hearing at length the arguments of the learned counsel appearing for the Cooperative Societies and the Law Officers, the High Court first referred to the negligence and inefficiency on the part of the regulatory bodies i.e. Cooperative Department and the State Bank of Pakistan and

observed as follows:-

"The Cooperative Societies Act, 1925 exhaustively deals with the Registration, Rights and Liabilities of Members, Duties of the Societies, Privileges of Societies, Property and Funds of Societies including the Restrictions on loans, Restrictions on borrowing and also Restrictions on other transactions with non-members. It also deals with the investment of funds, Restrictions on dividend. The Act also provides for the Inspection of Affairs by the Registrar. Under Section 44-B, the Registrar can also exercise powers under Section 50-A in the course of an inquiry or inspection. Chapter VIII deals with the Liquidation and Arbitration.

We are not prepared to believe that these functionaries did not know what was happening under their nose. Similarly, under the Banking Companies Ordinance, provisions have been made enabling the Governor of the State Bank to take such action which is necessary to check the illegal banking business. The Banking Companies Ordinance is also an exhaustive Act and the illegal banking amounts to an offence and for that, a person could be prosecuted after affording an opportunity of hearing by a person no less than the Governor of the State bank of Pakistan. As it is usual, in our affairs, it is deplorable that no timely action was taken. The Commission, appointed by the Federal Government, to look into the affairs of the Cooperative Societies has also lamented upon this aspect of the case and we subscribe to the views expressed by the Commission on the subject."

It was then noted by the High Court in the impugned judgment whether on the enforcement of the Ordinance, power of judicial review had been assumed by the Legislature particularly by virtue of Section 4 read with the Schedule to the Ordinance whereby 102 Cooperative Societies with one stroke of pen were declared to be undesirable.

After noting Section 6 of the Pakistan Commissions of Inquiry Act 1956, wherein it is provided that no statement made by a person in the course of giving evidence before a Commission of Inquiry shall be used against him in any civil or criminal proceedings except a prosecution for giving false evidence by such statement, it was observed that any statement made before the Commission of Inquiry constituted earlier to conduct an inquiry into the affairs of the Cooperative Societies could not provide an adequate basis to promulgate the Ordinance and that any adverse finding by the such Commission did not absolve the Governor or Provincial Legislature to depart from the law and the Constitutional provisions. Before the High
Court, the stand of the Government was that the promulgation of the impugned Ordinance was necessitated by the report of the Commission of Inquiry. It was held by the High Court that finding arrived at by the Commission of Inquiry could not clothe any authority to make any law or to pass any order in derogation of the law and the constitution.

It was then observed by the High Court as follows:-

"It is now established and enshrined principle of our jurisprudence that even though, a piece of Legislation does not contain the provision for the compliance of natural justice, the same have to be read into in unless the statute itself, by implication or otherwise dispenses with such compliance. The report of the Commission cannot be considered as a legal or proper substitute for the strict compliance of the principles of natural justice and law and, therefore, the argument that in a way, indirectly, the societies have been heard by the Commission is fallacious. In this behalf, the salutary principle contained in Article 4 of the Constitution cannot be lost sight of."

Reference  was   also   made  to  Articles   18,   24  and  25  of the Constitution and then it was observed as under:-

"The precise question in the light of the Articles reproduced above is whether the impugned Ordinance is ex facie discriminatory and if not, what is the criterion or  ardstick on the basis of which 102 societies specified in the schedule have been held to be undesirable. Unfortunately, the Ordinance is silent on this issue. In this view of the matter, we can legitimately hold that the Provincial Governor while promulgating the Ordinance also assumed and exercised judicial powers which he could not have done under the scheme of the Constitution."       

"In nutshell, we hold that trichotomy of power into three organs of the State namely legislature, judiciary; & executive in our Constitution lays down the most splendid system on the basis of which, a country is to be run and with the introduction of Article 2-A, the Objectives Resolution having become enforceable, the ratio of the judgment in Fauji Foundation Case (PLD 1983 SC 457) would not held the opposite side and, therefore, we held that the judicial power cannot be exercised by the legislature and every adverse action must precede by a finding of a tribunal and any action in its derogation would amount to legislative judgment which is not permissible bylaw.'

"The declaration of these Cooperative Societies as "undesirable" without a criterion or yardstick in the Ordinance itself amounts to usurpation of the judicial power by the legislature and such adverse action must have preceded by a finding in exercise of the judicial power and the report of the Commission in the light of its own
observation cannot be equated with the judgment.".......................

Unfortunately, in the impugned Ordinance, no classification has been mentioned and as observed earlier, no yardstick or criterion has been laid down to hold a societyundesirable, therefore, we are of the view that arbitrary powers emerge from the Ordinance, particularly, by virtue of Sections 4 and 12 read with schedule to the Ordinance, whereby, 102 Cooperative Societies enumerated in the schedule stand dissolved. The framer of the Ordinance also did not visualize the agony of the depositors, although certain Cooperative Societies before us, by submitting a report of its funds, undertook to make repayments to its depositors as it was contended by them that their assets were more than their liabilities.

Adverting to the repugnancy of the Ordinance with Article 14 (should be 24) of the Constitution, we are of the view that acquiring the properties and assets of the Societies and then to vest the same in the Registrar is nothing but the exercise of despotic and arbitrary power. The provision ought to have been made to see as to whether such property could be made to vest without a proper inquiiy as to the, nature of its ownership."

In Section 2(d), "Cooperatives Judge" has been defined as a Judge of the Supreme Court of Pakistan nominated by the Chief Justice of Pakistan and under Section 22, right of appeal has been provided to the Supreme Court against the final order of the Cooperatives Judge. In the impugned judgment it has been held that appointment of a Judge of the Supreme Court under the Ordinance is unconstitutional and beyond the legislative competence of the Provincial Legislature. Similarly it has been held that Section 22 of the Ordinance providing an appeal before the Supreme Court against the final order of the Cooperatives Judge is also in violation of the Constitution as the matter pertains to the conferment of the jurisdiction of the Supreme Court or enlargement of such jurisdiction and that such jurisdiction could not be conferred or enlarged by Provincial Legislature. In this context, the High Court referred and relied upon Articles 177, 180, 181, 182, 70, 141, 142, 90, 97, 137 and 143 of the Constitution and Item 55 of the Federal Legislative List.

"The upshot of the above discussion is that the provisions of Sections 4, 12, and 13 of the Ordinance read with the schedule to the Ordinance amounts to legislative judgment by usurping the judicial power and, therefore, are violative of the fundamental rights and Article 2-A of the Constitution and thus cannot be saved being unconstitutional, illegal and violative of the principles of natural justice. Similarly, the appointment of a Judge of the Supreme Court as a Cooperative Judge and conferring appellate jurisdiction on the Supreme Court are also beyond the legislative competence of the Provincial governor or the Legislature. In this view of the matter, we allow these petitions and hold that the action taken under the Ordinance against 102 Cooperative Societies mentioned in the schedule are without lawful authority and jurisdiction."

4. The main arguments on behalf of the Government of Punjab were addressed by Mr. Abid Hassan Minto. It was pointed out by learned counsel that according to the judgment of the Lahore High Court, Sections 2(d) (i) and (j), 4, 11, 12, 13, 17 and 22 of the Ordinance have been held to be ultera-vires of the constitution. According to learned counsel, the High Court came to the conclusion that the legislation in question condemned 102 cooperative societies without hearing and, therefore, the Ordinance was in the nature of a law of condemnation and amounted to legislative judgment but the legislature was not competent to pass judgment as by exercising such powers it was impinging upon the powers of the judiciary which negated the principle of trichotomy of power on which our Constitution is based. According to the High Court, this was a case of judgment by legislation and such legislation even otherwise violated the principles of natural justice. It was further held by the High Court that by such legislation assets and property of the societies were taken away and, therefore, relevant provisions were violative of Article 24 of the Constitution. As earlier noticed, the High Court has also held that the Governor of Punjab and Punjab Assembly could not pass a law whereby a Judge of this Court could be appointed as Cooperatives Judge and providing an appeal to the Supreme Court against the orders passed by the Cooperatives Judge was also beyond the legislative powers of the Provincial Legislature.

Learned counsel for the Punjab Government referred to the havoc played by the Cooperative Societies whereby hundreds of thousands people/depositors were deprived of billions of rupees on account of illegal and mala fide actions of such Cooperative Societies. Mr. Minto referred to the Commission of Inquiry comprising three Judges, headed by a Supreme Court Judge and the other two members being Judges of the Lahore High Court, which was constituted to hold inquiry into the Cooperative scam. It was submitted that the appointment of the Commission was necessitated as a very large number of Cooperative Finance Societies and Corporations abused the Cooperative loans, obtained deposits to the tune of billions of %,„., n rnturn- thpro was a run on such societies; management of most of which societies went underground; hundreds of thousands of depositors from poor and lower middle class families, who had deposited their life long savings faced financial ruination. All this led to a crisis of great magnitude involving serious implications. According to learned counsel, the Commission called every one concerned, recorded statements and collected a lot of material and submitted its report 7.3.1992 recommending enactment of a special law with the main purpose of recovering at the earliest amounts deposited with such Cooperative Societies and satisfying the claims of the depositors.

According to learned counsel, legislation in question cannot be equated with a law of condemnation and it is not in the nature of legislative judgment. Learned counsel pointed out that specific reference has been made in the law to the said Commission of Inquiry. Learned counsel referred to Section 2(b) of the Ordinance, according to which "Commission" means a Commission appointed by the Federal Government under Section 3 of the Pakistan Commission of Inquiries Act 1956 by notification dated 6.11.1991; mention was also made to Section 7 where dealing with the powers of the Cooperatives Board, reference has been made to the claims already filed with the Commission. According to learned counsel, therefore, it can safely be presumed that the Ordinance had been promulgated primarily on account of the recommendation of the Commission for enacting a special law for safe guarding the interests of the depositors and providing a machinery for early reimbursement to the depositors of their funds through tracing the assets in which the Cooperative Societies had invested moneys of the depositors and liquidation of such assets for early payment of the claims of the depositors.

It was submitted by Mr. Minto that, by the impugned legislation, properties of the Cooperative Societies have not been confiscated or taken away. Learned counsel highlighted the distinction between liquidation/ winding up and submitted that there has been no violation of Article 24 of the Constitution. Additionally it was submitted that in effect the properties on which restraint had been placed by the impugned legislation belonged to the depositors/investors for whose benefit the impugned legislation was enacted.

It was submitted that Sections, 11, 13 and 26 of the Ordinance should be read together coupled with the background given in the report of the Commission. Referring to Section 12 of the Ordinance it was submitted that this provision had to be inserted in the legislation placing restraint upon the Cooperative Societies specified in the Schedule to stop further wasting away of the properties of the Cooperative Societies which, as observed earlier, according to learned counsel, belonged to the investors/depositors.

It was further submitted that the impugned legislation did not violative Article 18 of the Constitution in as much as action had been taken in the larger interest of thousands of depositors for protecting their deposits and investment and, in any case, any Cooperative Society which was _ aggrieved can approach the Cooperatives Judge so that no winding up order be passed and for a direction to the Government to delete its name from the list of undesirable Cooperative Societies.

As regards the provision for appointment of a Judge or this Court as the Cooperatives Judge, learned counsel submitted that Item No. 55 of Part-I of the Fourth Schedule to the Constitution (Federal Legislative List) should be read with Item No. 31 thereof which excluded Cooperative Societies. It was further pointed out that there was no Item in the Concurrent List regarding Cooperative Societies and accordingly legislation relating to Cooperative Societies could validly be made only by the Provincial Legislature. Learned counsel also referred to Item No. 46 in the Concurrent Legislative List in the Fourth Schedule.

As regards Article 175(2) of the Constitution, it was submitted that this was a general provision and in any case the Ordinance was not in the nature of legislative judgment and did not impinge upon the principle of trichotomy of powers on which the Constitution is based.

Learned counsel also highlighted the distinction between the provisions of Pakistan Constitution and the Indian Constitution; he referred to Articles 138, 139 and 140 of the Indian Constitution and Entry No. 95 in the Legislative List No. 1 (Federal List); Entry No. 65 in Legislative List No. II (State List) and Entry No. 46 in List No. Ill (Concurrent List). Learned counsel relied upon In re, Special Courts Bill 1978 (AIR 1979 SC 478) and specially on a judgment from the Sindh High Court in the case of Inamur Rehman v. Federation of Pakistan (PLD 1977 Kar 524 at pages 531-32) where the High Court dilated upon the provisions contained in Article 175(2) of the Constitution.

As regards the view of the High Court that the impugned legislation was bad inasmuch as no guidelines had been provided for declaring the Cooperative Societies named in the Schedule as undesirable companies, learned counsel referred to the Preamble of the Ordinance and also to Sections 2(a), 7(a) and the definition of Commission in Section 2(b) and to Section 4.

As regards the observation of the High Court that under Section 6 of the Commission of Inquiries Act 1956, statement of Abdul Majeed could not be used against the Societies, it was submitted that on the basis of such statement or other material before the Commission of Inquiry or on the basis of the report of the Commission a law could always be enacted and that the impugned Legislation did not charge any person with any offence on the basis of the Commission's report and that adequate provisions were available in the legislation for redress by approaching the Cooperatives Judge and then by appeal to the Supreme Court. Reliance was placed on Progress of Pakistan Co. Ltd. v. Registrar, Joint Stock Companies (PLD 1958 Lah. 887).

It was further argued that impugned legislation was neither a bill of attainder nor a bill of pains as no one was held guilty by any provision of the impugned legislation.

On Article 2-A of the Constitution, reliance was placed on the following judgments for the proposition that no legislation could be held to be ultra vires only on the basis of such Article:-

1.                Jama! Shah v. Election Commission (PLD 1966 SC 1)

2.                Fauji Foundation v. Shamim-ur-Rehman(PLD 1983 SC 457).

3.                Hakim Khan v. Gout, of Pakistan (PLD 1992 SC 595)

4.                Kamz Fatima v. Wali Muhammad (PLD 1993 SC 901 to 910)

It was submitted that Article 2-A refers to the general principle on which the Constitution was based but on such general principles sembodied in Article 2-A alone, without relying on any specific provision of the Constitution, no law can be declared as ultra vires the Constitution.

Ms. Yasmin Sehgal Asstt. Advocate General Punjab adopted the arguments advanced by Mr. Abid Hassan Minto.

5.    On behalf of the respondent Cooperative Societies, their ex  management and other private respondents, arguments were advanced by aja M. Anwar, SASC, Raja Muhammad Akram SASC; Mr. Muhammad Bashir Ansari, ASC and Nawab Saeedullah Khan, ASC. We have also heard the  arguments  of Mr.  Muhammad  Ilyas Khan,  learned ASC for the Cooperatives Board.

Raja M. Anwar, SASC supported the impugned judgment of the High Court. It was argued that Section 4 in the impugned legislation (initially Ordinances and later Act 1 of 1993) is totally unconstitutional as also Section 12. Learned counsel further argued that the provisions relating to appointment of a Judge of the Supreme Court as the Cooperatives Judge and providing an appeal to the Supreme Court were ultra vires the Constitution inasmuch as the Provincial Legislature had no authority or jurisdiction to confer any power or jurisdiction on the Supreme Court in view of Item No. 46 in the Concurrent Legislative List and Item No. 55 in the Federal Legislative List. According to learned counsel, the legislation in question had affected the rights of the Cooperative Societies and its members in an arbitrary manner which was ultra vires the Constitution. Reference was made to the case of Province of Sindh v. Public at large (PLD 1988 SC 138).

It was submitted by Raja Muhammad Akram SASC that the High Court judgment was based on fundamental rights conferred by the Constitution. Learned counsel also referred to Article 2-A of the Constitution submitting that, on the touchstone of this Article, impugned legislation could not be sustained. According to learned counsel, in Islam no adverse action could be taken against any one without notice and hearing and conducting an inquiry. According to learned counsel, impugned legislation trampled the principle of trichotomy powers and was in the nature of legislative judgment. Learned counsel relied upon the following judgments:-

(i)    Al-Jehad Trust v. Federation of Pakistan (PLD 1996 SC 324 at 374)

(ii)   Federation of Pakistan v. Public at Large (PLD 1988 SC 202)

Raja Muhammad Akram submitted that Pakistan is a Constitutional democracy where rule of law prevails and the rule of due process implanted in our jurisprudence. According to learned counsel, Article 4 of our Constitution is similar to the due process clause in the American Constitution. Reliance was placed on the following judgments:-

(a)             Govt. of West Pakistan v. Begum Agha Abdul Karim Shorish
Kashmiri (PLD 1969 SC 14)

(b)            Manzoor Ilahi v. Federation of Pakistan (PLD 1975 SC 66)

(c)   Ghulam Zamin v. A.B. Khondkar (PLD 1965 Dacca 165).
Nawab Saeedullah Khan, learned ASC appearing for the respondent

Cooperative Societies and their ex-management in Civil Appeals Nos. 560 and 563 of 1993, also supported the impugned judgment of the High Court. He referred to the judgment of this Court in the case of State v. Ziaur Rehman (PLD 1973 SC 49 at 69) for bringing out the distinction between jurisdiction and judicial power of Courts and on the scheme of trichotomy of powers under the Constitution.

According to learned counsel, the impugned legislation gave powers to the bureaucracy and no hearing was provided by the legislation to the Cooperative Societies whose properties were taken away by one stroke of pen. According to learned counsel, the impugned legislation is violative of Article 2-A.

It was pointed out by learned counsel that the Cooperatives Judge has no discretion under Section 13 but to order winding up of the Cooperative Societies on application being made by the Liquidation Board as the word "shall" has been used in the said provision and even ex post facto hearing to the affected societies has been provided.

6. Mr. Muhammad Hyas Khan, learned counsel for the Liquidation Board, reiterated the arguments of Mr. Minto, learned counsel for the Government of Punjab. He referred to the report of the Commission of Inquiry, specially pages 150 to 153, 166 to 169 and 183 of the report to show that there was sufficient evidence produced before the Commission of Inquiry that Cooperative Societies were involved in illegal business and had defrauded the general public of billions of rupees and it was recommended by the Commission that a special law be made to redress the grievance of thousands of depositors/investors. According to learned counsel if the impugned legislation had not come whatever property or assets had been left in the hands of the Cooperative Societies and the ex-management, which beneficially belonged to the depositors/investors, would have been wasted or misappropriated and, in the circumstances, immediate action was called for.

7.    The impugned judgment of the High Court has held the  provisions of the impugned legislation as ultra vires of the Constitution onthe following grounds:-

(a)              The impugned legislation strikes at the principle/scheme of trichotomy of powers enshrined in our Constitution inasmuch as it is in the nature of legislative judgment and, therefore, an  encroachment by the Punjab Legislature on the power of the judiciary which is not permissible under the Constitution. Impugned legislation is violative of Article 2-A. It violates the principles of natural justice and in this regards  rguments were advanced that even under the Islamic Law the impugned legislation is bad as action has been taken against the Cooperative Societies and their assets/properties confiscated  without prior hearing and inquiry.

(b)     Impugned legislation is violative of Articles 18 and 24 of the Constitution.

(e)              Appointment   of  a   Judge   of  the   Supreme   Court  as   a Cooperatives Judge by the Provincial Legislature is ultra vires  the Constitution.

(f)                 By a Provincial Law, an appeal c«uld not be provided to the Supreme Court as enlargement of the jurisdiction of the Supreme Court can only be done through Federal legislation under the Constitution.

8.  We propose first to take up the question of trichotomy of powers and whether the  impugned  legislation  is  in the  nature  of legislative judgment and, therefore, violates the scheme/principle of trichotomy of  powers in our polity.

From the scheme of distribution of powers and specially Article 175 of the Constitution it may be reiterated that the principle of trichtomoy of powers i.e. the Legislature, the executive and the judiciary, is enshrined in our Constitution. If, therefore, it is found that the impugned legislation is in the nature of legislative judgment impinging on judicial power of judiciary, it would prima facie be ultra vires the Constitution.

On behalf of the Cooperative Societies reference was made to the definition of "Undesirable Cooperative Society" in Section 2(i) of the legislation according to which such society means a cooperative society registered under the Cooperative Societies Act, 1925 to which Section 4 applies or which is specified in the Schedule to the legislation. No grievance was made against Section 4 which operatives prospectively. According to this section, certain restraints have been placed on formation in future of a cooperative society under the Cooperative Societies Act, 1925. The attack was in relation to the second part of the definition according to which an undesirable cooperative society means a society which is specified in the Schedule to the Act. As observed, 102 societies have been listed in the Schedule. Read with this definition, reference had been made to Section 12, according to which existing undesirable cooperative societies ceased to function and all their properties, assets, securities, deposits and bank accounts vested in the Registrar of Cooperative Societies till such time they vest in the Liquidator (Liquidation Board). Reference was then made to Section 12 of the impugned legislation, according to which, immediately after the commencement of the law, the Registrar shall make a petition to the Cooperatives Judge for winding up of an undesirable cooperative society who shall there upon make an order for its winding up and appointment of a Cooperatives Board as Liquidator. Before the High Court the argument that prevailed was that the Cooperatives Judge was only a figure-head who had no discretion but to pass an order of winding-up of an undesirable cooperative society as soon as the Registrar made a petition for its winding up. Emphasis was on the word "shall" employed in Section 13 of the legislation. According to the affected Cooperative Societies, by such legislative judgment their properties had been confiscated and they were also restrained from carrying on business which contravened Articles 24 and 18 of the Constitution.

Invariably, but subject to there being exceptional circumstances requiring urgent action in the larger interest of the community or the public at large, the law provides for show-cause notice with or without an inquiry before any adverse action is taken against any person. Even under the due process clause it is required that before any adverse action is taken the law should invariably provide for an opportunity to the affected person to defend himself before any adverse action is taken. However, there can be exceptional situations or circumstances in which action may have to be taken without prior notice in public interest or for the larger good and benefit of the community but in such cases also the law should provide for an ex post facto hearing so that in case it is later on found that in a particular case adverse action was not warranted, such adverse action be withdrawn. Principle of trichotomy of powers does not require that in every case without exception the law should always provide for a prior hearing before a judicial or quasi judicial forum. As observed, there can be exceptional cases requiring immediate legislation in which situations ex-post facto hearing can be provided to the party affected by such emergent legislation.

A legislation which provides for no hearing or opportunity to the affected party before or even after the action is taken, might be subject to challenge for various reasons, in the case of the impugned legislation, no doubt, there is no provision for any prior hearing. It is, however, to be ascertained whether the impugned legislation grants any ex post facto hearing or opportunity to the affected Cooperative Societies or their ex-management. After going through the provision of the impugned legislation we are of the view that provisions for ex post facto hearing are spelt out from the impugned legislation and that adequate safe guards are also available for the Cooperative Societies against whom action has been taken to seek redress from the judicial and quasi judicial forums.

As soon as the impugned legislation was enacted, the "undesirable Cooperative Societies" ceased to function and their assets and properties vested in the Registrar. Under Section 13, immediately on such vesting of the properties and assets, Registrar is required to make a petition for winding up of the undesirable cooperative society before the Cooperatives Judge for passing orders of winding up and appointment of a Cooperatives Board as the liquidator. Though the word "shall" has been used in Section 13 requiring the passing of a winding up order and for appointment of a Cooperatives Board as Liquidator, in our view this provision is not mandatory and the Cooperatives Judge still retains the power and discretion to refuse such application in which event no winding up order of the undesirable company shall be passed. Further under Section 26 of the impugned legislation, Government has the power to amend or modify or omit any entry in the schedule. If the Cooperatives Judge comes to the conclusion that there was no basis for including the name of any cooperative society in the Schedule to the legislation, the Cooperatives Judge can give a direction the Government to delete the name of such cooperative society from the Schedule.

If the order under Section 13 (read with Section 26) is passed in favour of a Cooperative Society, the Department can file an appeal before Supreme Court under Section 22 and on the other hand in case no relief is granted to the cooperative societies and winding up order is passed, the aggrieved management of the cooperative society can file an appeal to the Supreme Court. In case we reach the conclusion that Provincial Legislature is not competent to enlarge the jurisdiction of the Supreme Court by providing an appeal and, therefore, Section 22 of the impugned legislation is ultra vires the Constitution, writ or Constitutional jurisdiction remains available against the orders of the Cooperatives Judge.

After examining various provisions of the impugned legislation together specially Sections 11, 12, 13, 22 and 26, we are of the view that there are provisions in the impugned legislation for ex post facto hearing to the aggrieved cooperative society/ex-management and that the legislation provides adequate safe guards to them for protecting their interests, properties and assets.

Here we may refer to a judgment of the erstwhile High Court of West Pakistan in the case of Progress of Pakistan Co. Ltd. v. Registrar, Joint Stock Companies, Karachi (PLD 1958 (W.P.) Lahore 887) on which reliance had been placed by learned counsel for the Government of Punjab.

The judgment disposed of several writ petitions filed in the High Court by the companies against whom action had been taken under the Undesirable Companies Ordinance XIV of 1957 (superseded by the Undesirable Companies Act X of 1958). Validity of the said federal legislation had been challenged in the writ petitions. A large number of companies for several years had been running "Imdadi Schemes". According to such schemes, the companies constituted groups of persons for contributing a sum of money monthly and every month a prize out of the sum collected was paid to a member of the group whose name was determined by lot and this process was supposed to go on till all the members were paid. According to the promoters of such schemes, all the members of such groups received more than what they paid. The schemes lured lacs of people from the poor classes but, after some time there were complaints in the press that public was being robbed. In the circumstances, the Central Government instituted inquiries and found that the schemes were wholly unworkable and the same were conceived in fraud and the intention of the promoters of such schemes was to rob the people. This led to the promulgation of the Ordinance of 1957 and later on it was superseded by Act X of 1958. Some of the provisions of the said law are similar to the provisions of the impugned legislation. In the 1958 Act, undesirable company was defined and, under Section 4 of the such law, all undesirable companies existing immediately before the commencement of the law ceased to function and were to be wound up and dissolved in the manner provided in the law within three days of the commencement of the law or within such period as Registrar of Companies would allow Manager of an undesirable company was required to submit to the Registrar a statement showing assets and liabilities of the company. Section 7 of the said law reads as under:-

"Section 7. (1) As soon as may be after receipt of the statement submitted under sub-section (1) of Section 6, the Registrar shall make a petition to the Court for winding up the company, and thereupon the Court shall make an order for the winding up of the company and shall appoint the official liquidator for such winding up.

(2) After the official liquidator has been appointed under this section, the provisions of the Companies Act, 1913, relating to the winding up by Court of a registered company shall mutatis mutandis apply in relation to the winding up of the company in respect of which the petition has been made under sub-section (1)."

In the judgment authored by Kaikus, J., while considering whether the restrictions imposed on the undesirable companies were reasonable, it was observed as follows:-

"There is one objection, however, which need attention and that is the manner in which the restriction has been imposed. A perusal of the provisions of the Act will show that the Registrar has been givenauthority for determining whether a company is an undesirable company. If he is satisfied that it is such a company he is entitled to appoint a manager for it. The business of the company then comes to a standstill. The manager so appointed has in accordance with Section 6 to furnish the accounts of the company to him. On receipt of these accounts the Registrar has under Section 7, to put in a petition for the winding up of the company and on this petition an order for winding up as well as an order for the appointment of an official liquidator have to follow. It will be seen that once the Registrar makes up his mind that the company is an undesirable one all the results which I have stated above follow automatically. The Registrar is not bound to issue any notice to the company before deciding whether it is an undesirable company or not. There is no such notice provided under the Act nor is there any provision for the taking of evidence or for other procedure that might have to be observed if there is to be a proper inquire. No appeal too lies against the order of the Registrar. Considering the serious results that follow the determination of the Registrar it has been argued that it would not at all be proper to grant the Registrar such powers without any control by any Court.

24. If I were to reach the conclusion that the Registrar is uncontrolled in his acts I would be inclined to hold that the manner in which this restriction has been imposed is not reasonable. But I do not accept that the Court, before which the application of the Registrar under Section 7 is filed, may not at all go into the question whether the company is an undesirable company. In spite of the wording of this section, which says the Registrar shall put in a petition and the Court shall make order for the winding up of the company as well as for the appointment of the official liquidator, it will be open to the Court to go into the question as to whether the application made by the Registrar lies at all because the company is not in fact an undesirable company. I would say that in its inherent jurisdiction the Court would be entitled to go into this matter even though the Act makes no provision for it and even though the Act purports to give all authority in the matter to the Registrar. And once the Court decides that the company is not an undesirable company, the Registrar cannot keep his control over the company and will have to release its assets and to return its control to its manager. At the same time the High Court can always prevent the Registrar from acting illegally, in the exercise of its writ jurisdiction so that there is not much apprehension of any serious harm to any person. It is true that ordinarily the stopping of the business of a company and the appointment of an official liquidator should be left to the Liquidation Court. But the situation was serious and the legislature considered that immediate action may in certain cases be needed and, therefore, it was proper to arm the Registrar with powers to take speedy action. I cannot say that in doing so the legislature exercised its jurisdiction unreasonably. Considering that ultimate control is still with the High Court action in the exercise of its writ jurisdiction it cannot be said that the manner in which the restriction is placed is unreasonable."

The judgment supports the case of the appellant. We agree with the above view of the High Court. As observed, in the impugned legislation there are safeguards available for the Cooperative Societies and their ex-management for redress against any action which may be found to be unwarranted.

\9. The next question is whether there were exceptional circumstances or compelling reasons which required emergent action through legislative measures against the concerned Cooperative Societies without a provision for a prior hearing or notice and only providing for ex post facto hearing. As observed, by notification dated 6.11.1991, Government of Pakistan appointed a Commission of Inquiry comprising three Judges (headed by a Judge of the Supreme Court with two High Court Judges) to inquire into the working of the Cooperative Finance Societies and Corporations, their activities and operations, defaults and repayments to depositors, mal-practices and matters relating thereto. The appointment of the Commission was necessitated as a very large number of cooperative societies/corporations made abuse of the Cooperative Laws, got deposits to the tune of billions of rupees which they failed to return partly for the reason that huge loans were advanced by the societies to tycoons and politically influential persons from the funds available on account of deposits and investments made by individual depositors. In these circumstances there was a demand for refund of the deposits which could not be satisfied by the Cooperative Societies and management of most of such societies went underground. As observed, in the Punjab Province alone hundreds of thousands of depositors who came from the poor and lower middle class families faced ruination of their deposits which were stuck up with the societies. This factual background is also recited in the judgment of the High Court which may again be reproduced here:-

"The uproar with respect to the financial debacle of the finance companies in the country and in particular about Taj Company had not yet subsided when the clamour about the financial scandal in the Co-operative Societies came to earth. Obviously, such news of scandals harassed the small depositors, and there was a run of the small depositors upon the Co-operative Societies to withdraw their money. The situation was so worsened that the Government had to intervene, and particularly, the factum of seeking loans by the industrialists tycoons of this country led the Federal Government to constitute a Commission headed by a Judge of the Supreme Court and two Judges of the High Court to examine the management, and working etc. of the Co-operative Societies in Punjab,"

Submission on behalf of the Government of Punjab that in these exceptional circumstances and very serious situation and for compelling reasons, the impugned legislation was enacted cannot be controverted. The view taken by the High Court that in the presence of the Cooperative Societies Act, 1925 and the Banking Companies Ordinance, present legislation could not be enacted is erroneous. There is no provision in the Constitution by which such a bar or restraint can be placed upon the Legislature. E%ren in the presence of the Cooperative Societies Act and Banking Companies Ordinance, the Legislature could competently enact a law for the objectives mentioned herein before. The fact that perhaps the required results can be achieved by taking effective action under the Cooperative Societies Act and the Banking Companies Ordinance could not be a Constitutional bar on the competence of the Legislature to enact special legislation of the type of in question.

We also are unable to agree with the High Court that the impugned legislation is in the nature of a law of condemnation. No person has been declared to be guilty of committing of any offence by the impugned legislation. Consequences of the challenged provisions of the impugned legislation are also not final. The impugned legislation has adequate safe guards for the affected parties who could approach the Cooperatives Judge and, if aggrieved by the orders of the Cooperatives Judge, writ jurisdiction remains available.

10.       We are, therefore, of the view that the impugned legislation does ot come in conflict with the scheme of trichotomy of powers envisaged in our Constitution; it is not a law of condemnation; the challenged law is not in the nature of legislative judgment nor an encroachment by the Punjab Legislature on the power of the judiciary.

11.       We may now consider the next point and that is whether the impugned legislation is violative of Article 2-A and, therefore, ultra vires the Constitution. In this context we may refer to the following judgments:-

(i)   Fauji Foundation v. Shamiur Rehman (PLD 1983 SC 457)

(ii)  Hakim Khan v. Government of Pakistan (PLD 1992 SC 595)

(iii) Kaniz Fatima v. Wali Muhammad (PLD 1993 SC 901)

fiv) Al-Jehad Trust v. Govt. of Pakistan (PLD 1996 SC 366 at 374)

We may refer to the observations of this Court in paras 8 and 9 of the judgment in Kaniz Fatima v. Wali Muhammad (supra) which read as under:-

"8.    In this context it may be observed that while interpreting Constitution, enactments, rules and regulations having the force of aw and examining orders, acts and actions of Government functionaries/authorities the Court is competent to apply well-recognized principles of Islamic Common .Law and such interpretation which is in conformity with the Injunctions of Islam. In the fields not occupied by statutory dispensation, principles of Islamic Common Law or principles in conformity with Injunctions of Islam can he pressed into service.

9. Articles 2A is one of the provisions of the Constitution which strives at bringing the existing laws in conformity with the Injunctions of Islam and also see to it that no law in conflict with such Injunctions is legislated. The method for testing such legislation and enactments has been provided under the Constitution. One is provided in Article 227 in Part LX of the Constitution and the other and more effective method is provided by Chapter 3-A of Part VII of the Constitution, that is the Federal Shariat Court. Article 203-D vests powers and jurisdiction in the Federal Shariat Court to examine and decide the question whether or not any law or provision of law is repugnant to the Injunctions of Islam. On coming to an affirmative answer it shall give its decision with reasoning for holding such an opinion and shall specify the day on which the decision shall take effect. However, if any party files an appeal before the Supreme Court, effect shall not be given till such time the appeal is disposed of. Consequences of declaring any law or provision of law to be repugnant to the Injunctions of Islam are contained in Article 203-D(3). The President and the Governor in cases of law within their respective jurisdiction shall take steps to amend he law so as to bring such law or provision of law in conformity with the Injunctions of Islam and such law or provision of law shall cease to have effect on the day on which the decision of the Court takes effect. Therefore, a proper scrutiny of the provisions of law by the Federal Shariat Court and the Shariat Appellate Bench of the Supreme Court with an interregnum period has been provided to enable the President and the Governor, as the case may be, to more the Legislature to bring the law in conformity with the Injunctions of Islam. The intervening period has been provided to enable the Legislature to legislate proper laws and ther'e may not be a vacuum of lawlessness which may create complications and confusion. The process of Islamisation of the laws is an important and difficult subject. The lead given by Pakistan in this regard is being watched with interest by all the Muslim countries who are anxious to bring their laws in conformity with the injunctions of Islam and by the non-Muslim countries as well. Any hasty action without the process ofljma' at Ummah level may lead to difficulties and confusion which may prove irreversible. Furthermore, due to sudden change, complex problems in economic, commercial and financial fields may arise creating difficulties. However, it does not mean that in the fear of such new controversies and problems the process of Islamisation may be retarded or stopped. It is an on going process. It has to take effect with utmost dispatch, vision and regularity. The authorized agencies under the Constitution are not to wait for any case or reference to come to the Court or to the Council, but they can suo motu take up the laws or the provisions of laws and examine them on the test of Islamic Injunctions.

The situation which crystallizes is that for existing laws and proposed laws Constitutional dispensation has been provided to bring them in conformity with the Injunctions of Islam which is required to be followed. At this stage it is pertinent to point out that the Courts are not vested with the jurisdiction to declare a law void on the touchstone of Article 2-A as distinguished from Article 8. There seems to be marked difference in the phraseology of Article 8. There seems to be marked difference in the phraseology of Article 2-A and the fundamental rights conferred by Part II of the Constitution. Article 8 makes any law, which is inconsistent with the fundamental rights to the extent of such inconsistency void Article 2-A is not couched in similar language with similar effect. Article 8(2) imposes a restriction on the State which includes Federal Government, Majlis-i-Shoora (Parliament), a Provincial Government or Provincial Assembly or such local or other authorities in Pakistan as required by law empowered to impose any tax or cess, not to make any law which in any manner takes away or abridges the fundamental rights. Again, similar provisions are not provided in Article 2-A. It may be argued that Article 227 gives the same effect, but that would not be correct. The phraseology of both the provisions i.e. Article 8 and Article 227 is completely different and furthermore while imposing a restriction on the Legislature and commanding to bring all laws in conformity with the Injunctions of Islam it has simultaneously been provided in clause (2) that clause (1) shall be given effect to only in the manner provided in Part LX. Therefore, the manner in which clause (1) of the Article 227 that may be read in conjunction with Article 2A has been provided and limited. Further it may be observed that Article 199(2) provides that subject to the Constitution the right to move a High Court for the enforcement of any of the fundamental rights conferred by Chapter I of part II shall not be abridged. Therefore, the right to enforce fundamental rights through the High Court cannot be curtailed and this provision is subject to the Constitution alone. In a more wider manner under Article 184 Supreme Court has power to enforce fundamental rights. Again, such provisions have not been made to enforce Article 2A in the same manner as the fundamental rights can be enforced or the laws can be tested on the touchstone of fundamental rights. However, it may be considered that can law which is inconsistent with the Injunctions of Islam involves violation of fundamental rights and be struck down? As no arguments have been addressed on this aspect of the case, we will keep this question open for decision in an appropriate case. In any event in the present case this question may not arise as under Article 8(3)(b) the provisions of Article 8 will not apply to the Muslim Family Laws Ordinance, 1961 and cannot be declared void in so far as it is inconsistent with the fundamental rights."

We reiterate the view expressed in the case of Kaniz Fatima v. Wall Muhammad (PLD 1993 SC 901) that on the basis of Article 2-A alone a law cannot be declared as ultra vires the Constitution. However, it may be added that even otherwise we are of the view that the provisions of <±he impugned f- legislation are not violative of Article 2-A. In this context we may refer to the judgment of the Shariat Appellate Bench of this Court in the case of Province ofSind v. Public at large (PLD 1988 SC 138). It is a short judgment and we consider it appropriate to reproduce the same. The said judgment is reproduced here:

"The facts which form the background to this appeal, are that the Federal Shariat Court undertook the examination suo motu of inter alia the Sind Co-operative Housing Authority Ordinance, 1982 (Ordinance V of 1982) with a view to determining whether the provisions of the said statute were repugnant to the injunctions of Islam as contained in the Holy Qur'an and/or the Sunnah of the Holy Prophet. This Ordinance provides for the establishment of a Sind Co-operative Housing Authority and Section 6 therefore is couched in the following terms: -

"6. Assignment of function to the Authority.--(\) Government may, on being satisfied that a society has failed to perform its duties in accordance with laws, rules or bye-laws, or constitution, memorandum or articles of association of the society, or has indulged or is indulging in mismanagement of the affairs thereof, or has acted or is acting in any manner prejudicial to the interests of the members of the society, issue such directions to the society as it deems fit or order an enquiry to be made into the affairs of the society in the manner as may be prescribed.

\2) Where the society fails to comply with the directions or the order of enquiry is made under sub-section (1), Government may, by notification direct the Authority to take over the charge and control of the affairs of the society.

(3)..............................................................................................................

(4).............................................................................................................

(5)..................................................................................................... •......

 (6)

The learned Federal Shariat Court in its judgment passed on 21.6.1984 found sub-section (2) of the above 6 Section to be repugnant to the injunctions of Islam, observing as follows:-

"Section 6(2) provides for virtual supersession of co­operative housing societies. The Section provides that the Government of Sindh may direct the Sindh Co-operative Housing Authority to take over the charge and control of the affairs or the society. It shall be provided in that sub-section . that the Government may issue such direction only after giving an opportunity to the Society of being heard."

And directed that the above amendment be carried out by the Government of Sindh by 30th November, 1984.

The Government of Sindh has appealed against the above order and in support of this appeal it has submitted that no reasons' have been given, in the impugned judgment, to indicate as to how and in what manner the provisions of sub-section (2) of Section 6 were repugnant to the injunctions of the Holy Qur'an or of those of the Sunnah.

It is further submitted that sub-section (2) of Section 6 was enacted to suppress the mischief committed by unscrupulous members, officers of the Co-operative Societies and their committees; and to protect the funds and movable and immovable properties of the Co-operative Societies from being mismanaged/ embezzled/misappropriated and/or fraudulently disposed of and to set right things whereafter the management of a taken over Society was to be handed over to the elected representatives by holding elections in accordance with the Bye-laws of such Societies.

Explaining the necessity for the impugned provision it is submitted that the provision of Rule 48 of the Co-operative Societies Rules, 1927 did not prove effective inasmuch as the delinquent members of the Committee and officers of the Co-operative Societies, on whom show-cause notices were issued before superseding the Committee, used to cause further or total damage to the funds or properties of the Society and by the time the order of supersession was passed, it was very difficult, if not impossible, to take effective action for the protection of the interest of the Society. This situation necessitated the enactment of the impugned sub-section which permits the taking over as soon as an enquiry officer is appointed enquire into the affairs of the Society. Even now the persons from whom the management is taken over get full opportunity and a right of hearing to present their case before the enquiry officer. The only purpose of the provision is to deal effectively with situations where public money is being misappropriated, and the committees, elected to serve the members honestly in practice cause wrongful loss to the Society and wrongful gain for themselves by their acts and omissions.

We appreciate the background in which the impugned provision has been enacted but would observe that this Court has now made it quite clear that any provision of law whereunder some one can be harmed or condemned without affording such person an opportunity of defence against the said action, is against the Quranic Commands as supplemented and interpreted by the Sunnah of the Holy Prophet. This Court has held that when a public authority exercises a power to resolve a controversy involving rights and liabilities of some one, such a decision must not be given without affording the person affected an opportunity of hearing (Pakistan vs. Public at Large: PLD 1987 S.C. 304 at 330/331). Hence, we cannot agree with the learned counsel for the appellant that the absence of a provision requiring issuance of a notice before taking action, in the impugned sub-section (2) of Section 6, is not repugnant to the Injunctions of Islam.

However, we agree that provisions for preventing mischief which may be committed by unscrupulous members/officers of the Co-operative Societies are indeed necessary. This need, in our opinion, can be achieved not by setting aside the direction issued by the Federal Shariat Court but by modifying it in a manner whereby the injunctions of Islam are not violated and at the same time the object of the impugned legislation achieved. In this connection, if sub-section (2) of Section 6 is amended as follows, the twin purposes mentioned above can be satisfied. Accordingly the following provisions be added to sub-section (2) of Section 6:-

"The Government before taking action under the above sub­section (2) shall afford an opportunity of hearing to the Society: Provided that if, as an emergent measure, immediate taking of action is necessary such opportunity may be dispensed with, but such opportunity shall be afforded to the Society as soon, thereafter, as is possible.Provided further that in a case where such opportunity to the Society is duly afforded before the action is taken, the Government may pass such interim orders, for preventing the commission of mischief or abuse by the Society, as I may deem fit."

The amendments on the lines indicated above should be carried out by 30th June, 1988.

The upshot is that this appeal succeeds in part and is allowed in the above terms No, costs."

From the above decision it follows that in extra-ordinary situations requiring emergent legislative action, a law can be made affecting the rights of the people without any prior notice, but in such cases there should always be a provision of ex-post facto hearing so that an unwarranted action or unjust order could be set aside. This also answers the contention advanced on the basis of the principles of natural justice and that the impugned legislation is bad being against the principles of Islamic law.

12.   The contention that the impugned legislation is violative of Articles 18 and 24 of the Constitution is also without substance. Submissions that assets and properties of the Cooperative Societies were confiscated is not orrect. As observed, certain restraints were placed on the assets and properties of the affected Cooperative Societies but such action was not final and the ex-management could approach the Cooperatives Judge for redress and, if aggrieved by the orders of the Cooperatives Judge, writ jurisdiction
remains available. In the earlier part of this judgment,  extra-ordinary situation prevailing at the time the impugned legislation was enacted has been discussed in some detail. Such situation and compelling reasons, for urgent action in the form of the impugned legislation, are also available in the  detailed   report  of the  Commission  of Inquiry; and the impugned
judgment of the High Court also refers to such situation and circumstances. There is also substance in the argument of Mr. Abid Hassan Minto that, in the final analysis, impugned legislation was enacted to safeguard the rights and interest of the depositors/investors who in effect were the ultimate beneficial owners of the properties and assets of the affected Cooperative Societies.

In the circumstances, we are of the view that the High Court erred in declaring the impugned legislation to be ultra vires the Constitution on the ground that it violates Articles 18 and 24 of the Constitution.

13. The impugned legislation has also been held to be ultra vires by the High Court on the ground that no guidelines have been provided for including any  Cooperative  Society as an  undesirable  company  in  the schedule and absolute and uncontrolled discretion in this regard has been vested in the Provincial Government.

On this question, Mr. Abid Hassan Minto referred to the Preamble of the impugned legislation and also to Sections 2(a) and 7(a) where reference has been made to the Commission of Inquiry. According to learned counsel, Commission's report deals in great detail with the illegal activities of the Cooperatives Societies. He also referred to Section 4, according to which, registration of certain Cooperative Societies was prohibited in future on the basis of the criteria specified therein. According to learned counsel, the same criteria was applied to the existing Cooperative Societies and those found contravening such criteria were included in the Schedule as undesirable companies

On behalf of the ex-management, learned counsel supported the view of the High Court that the legislation is ultra vires as no guidelines have been provided for treating a cooperative society as undesirable.

After going through the provisions of the impugned legislation, we are of the view that the same is not ultra vires on this ground. In the Preamble to the legislation it is provided that "it is expedient to prohibit the carrying on of business as financial institutions by Cooperative Societies". Then in Section 4 it is provided that no cooperative society formed with the object of accepting deposits from its members or public for the purpose of pending, investment or allowing withdrawals in any manner shall after the commencement of the legislation be registered under the Cooperative Societies Act, 1925.

Section 4 provides the guidelines but said Section is prospective in nature. However, we are of the view that learned counsel for the Punjab Government is correct in his submission that it is the same criteria which applied for treating an existing cooperative society as undesirable. The legislation makes specific mention of the Commission of Inquiry appointed by Notification dated 6.11.1991 under the Pakistan Commissions of Inquiries Act, 1956 and, on the basis of the report of the said Commission and inquiries held by the Department 102 Cooperative Societies were included in the Schedule to the legislation and were declared as undesirable Cooperative Societies. As observed, this action had to be taken without providing for a prior notice to the 102 Cooperative Societies/Corporations as otherwise there was every likelihood of the properties and assets of such societies being wasted or alienated depriving the depositors/investors of their investment/deposits. The criteria specified in the Preamble and Section 4 of the legislation also applied to the Cooperative Societies declared as undesirable by including their names in the Schedule and ex-post facto hearing to the affected has been provided as held earlier in this judgment. If the ex-management of any such cooperative society was/is aggrieved by such declaration, adequate safeguards/remedies are provided under the legislation by approaching the Cooperatives Judge and thereafter writ jurisdiction is available.

14. It has been held by the High Court in the impugned judgment that the appointment of a Judge of the Supreme Court as Cooperatives Judge under the impugned legislation is unconstitutional and beyond the legislative competence of the Provincial Governor. In this context, Articles 70, 90, 97, 137, 141, 143, 180, 181, 185, 186 and 186-A of the Constitution were referred. Reliance was also placed on Entry No. 55 of Part I of the Federal Legislative List (Fourth Schedule to the Constitution).

While dealing with the question of competence of Legislature, pith and substance of the impugned legislation is to be considered. Entry 31 of Part I of the Federal Legislative List reads as under:

"31.  Corporations, that is to say, the incorporation, regulation and winding-up of trading corporations, including banking, insurance and financial corporations, but not including corporations owned or controlled by a Province and carrying on business only within that Province, or co-operative societies, and of corporations, whether trading or not, with objects not confined to a Province, but not including universities."

From the above entires it follows that the competent Legislature for enacting legislation in respect of cooperative societies is the Provincial Legislature/Provincial Governor and not the Federal Legislature or the President. There is no entry in the Concurrent Legislative List either under which the Federal Legislature could competently make a law relating to Cooperative Societies.

In the definition clause of the impugned Ordinance, Cooperatives Judge has been defined to mean a Judge of the Supreme Court of Pakistan nominated by the Chief Justice of Pakistan or a judge of the High Court qualified for appointment as a Judge of the Supreme Court of Pakistan nominated by the Chief Justice of Pakistan after consultation with the Chief Justice of the High Court. Cooperatives Judge is a persona designata and his appointment is also made by the Chief Justice of Pakistan. Competent Legislature for cooperative societies being the Provincial Legislature, to the exclusion of Federal Legislature, we are of the view that the Provincial Legislature could competently make a provision in law relating to cooperative societies providing for appointment of Cooperatives Judge (as persona designata) being a Judge of the Supreme Court of Pakistan nominated by the Chief Justice of Pakistan. None of the Articles referred by the High Court place any embargo or restriction on the competence of the Provincial Legislature to make such provision.

15. As regards Section 22 of the impugned legislation providing for an appeal before the Supreme Court of Pakistan against the orders passed by a Cooperatives Judge, it has been held in the impugned judgment of the High Court that in the light of the aforesaid provisions of the Constitution read with Entry No. 55 of the Federal Legislative List, enlargement of the jurisdiction of the Supreme Court and conferring thereon of any supplemental power falls within the exclusive domain of the Parliament and the Provincial Legislature has no power whatsoever to deal with or to legislate on any matter in the Federal Legislative List and, therefore, Section 22 providing for an appeal before the Supreme Court is violative of the Constitution.

While considering this question, reference may be made to the relevant provisions of our Constitution and it is also considered appropriate to refer to the provision in the Constitution of India.

Part VII of the Constitution of Pakistan relates to Judiciary. Article 175 in our Constitution reads as follows:

"175. Establishment and jurisdiction ofCourts.--(l) There shall be a Supreme Court of Pakistan, a High Court for each Province and such other Courts as may be established by law.

(2)    No Court shall have any jurisdiction save as is or may be conferred on it by the Constitution or by or under any law.

(3)     The judiciary  shall  be  separated  progressively  from  the Executive within 32 [fourteen] years from the commencing day."

Article 176 relates to Constitution of the Supreme Court and Article 177 makes provisions for appointment of the Supreme Court Judges. Article 184 refers to the original jurisdiction of the Supreme Court; Article 185 is about the appellate jurisdiction of the Supreme Court and Article 186 provides for advisory jurisdiction of the Supreme Court. Then Entry No. 55 in part I of the Federal Legislative List may be referred which is as under:

"55. Jurisdiction and powers of all Courts, except the Supreme Court, with respect to any of the matters in this List, and, to such extent as is expressly authorized by or under the Constitution, the enlargement of the jurisdiction of the Supreme Court, and the conferring thereon of supplemental powers."

In the Concurrent Legislative List, there is Entry No. 46 which reads as follows:

"46. Offences against laws with respect to any of the matters in this List; jurisdiction and powers of all Courts except the Supreme Court, with respect to any of the matters in this List."

Apart from the above two entries, there is no other entry in the legislative lists of our Constitution dealing with the Supreme Court.

In Pakistan Constitution, there are only two legislative lists i.e. Federal Legislative List and Concurrent Legislative List and Article 142 of the Constitution vests the power to make laws in respect of any matter not enumerated in either of the two lists in the Provincial Assembly. Article 142(c) reads as follows:

"(c) A Provincial Assembly shall, and Majlis-e-Shoora (Parliament) shall not, have power to make laws with respect to any matter not enumerated in either the Federal Legislative List or the Concurrent Legislative List;"

The position under the Indian Constitution is entirely different. There is no parallel provision there as Article 175(2) of our Constitution. Relevant Articles in the Indian Constitution are 246 and 248 which reads as under:

"246. (1) Notwithstanding anything in clauses (2), and (3), Parliament has exclusive power to make laws with respect to any of the matters enumerated in List I in the Seventh Schedule (in this Constitution referred to as the "Union List").

(2)               Notwithstanding anything in clause (3), Parliament, and subject o clause (1), the Legislature of any State also, have power to make laws with respect to any of the matters enumerated in List III in the Seventh   Schedule   (in   this   Constitution   referred   to   as   the "Concurrent List").

(3)           Subject to clauses (1) and (2) the Legislature of any State has exclusive power to make laws for such State or any part thereof with respect to any of the matters enumerated in List II in the Seventh Schedule (in this Constitution referred to as the "State List").

(4)    Parliament has power to make laws with respect to any matter for any  part of the territory of India not included in a State notwithstanding that such matter is a matter enumerated in he  State List.

248. (1) Parliament has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.

(2) Such power shall include the power of making any law imposing a tax not mentioned in either of those Lists."

Indian Constitution has, therefore, three Legislative Lists (in the Seventh Schedule to the Constitution), namely, List I (Union List); List II (State List) and List III (Concurrent List). As observed, according to Article 248, Parliament and not the State (Provincial) Assembly has exclusive power to make any law with respect to any matter not enumerated in the Concurrent List or State List.

In the Union List (List I), relevant Entries are 76, 77, 78 and 94

which are as follows:--

76. Constitution, organization, jurisdiction and powers of the Supreme Court (including contempt of such Court), and the fees taken therein; persons entitled to practice before the Supreme

Court.

77. Constitution and organization (including vacations) of the High Courts except provisions as to officers and servants of High Courts; persons entitled to practice before the High Courts.

78. Extension of the jurisdiction of a High Court to, and exclusion of the jurisdiction of a High Court from any Union territory.

94. Jurisdiction and powers of all Courts, except the Supreme Court, with respect to any of the matters in this List; admiralty jurisdiction."

In the State List (List II), the relevant entry is 64 which is as follows:

"64. Jurisdiction an powers of all Courts, except the Supreme Court, with respect to any of the matters in this List."

In the Concurrent List (List III) relevant Entries are 14 and 46 which are as under:--

"14. Contempt of Court, but not including contempt of the Supreme Court.

46. Jurisdiction and powers of all Courts, except the Supreme Court, with respect to any of the matters in this List."

Relevant provisions of the Indian Constitution, reference whereof has been made hereinabove, show, that, as far as power and jurisdiction of Supreme Court of India is concerned including conferment of any supplemental powers to such Court, it is the Parliament of India which is the competent Legislature and the State Legislatures are not competent to make any law relating to the powers and jurisdiction of the Supreme Court including any supplemental powers. It may be reiterated that another distinguishing feature of the Indian Constitution as compared to the provisions of the Pakistan Constitution is that, for matters which are not covered by any of the entries in the State List or Concurrent List, it is Parliament which is the competent Legislature for such matters and not the State Legislature, whereas under the Pakistan Constitution it is the Provincial Legislatures which are competent to make laws in respect of any matter not covered by the Federal Legislative List or the Concurrent Legislative List. The position under the Indian Constitution, therefore, is very clear that, even for conferring any supplemental powers on the Supreme Court, it is Parliament alone which is the competent Legislature and not the State Legislatures and if any additional or supplementary power is to be conferred on the Supreme Court, State Legislatures cannot competently make any law in this regard.

16. Reference may also be made to the relevant entries in the previous Constitutions of Pakistan. In 1956 Constitution, there were three Legislative Lists (in the Fifth Schedule), i.e. Federal List, the Concurrent List and the Provincial List. Relevant entries are Entry No. 29 in the Federal List, Entry No. 19 in part II of the Concurrent List and Entiy No. 92 in the Provincial List. All these entries gave powers in relation to jurisdiction and powers of the Courts except the Supreme Court. The jurisdiction on the Supreme Court was conferred by the Constitution but there was one Article 160 which gave additional jurisdiction to the Supreme Court as follows:

"160. Notwithstanding anything in this Part, the Supreme Court may grant special leave to appeal from any judgment, decree, order or sentence of any Court or tribunal in Pakistan, other than a Court or tribunal constituted by or under any law relating to the Armed Forces."

Under 1956 Constitution, therefore, no law could be made by either the Federal Legislature or the Provincial Legislatures conferring any additional or supplementary powers on the Supreme Court but, under Article 160, the Supreme Court had been conferred jurisdiction to grant special leave to appeal from any judgment, order or sentence of any Court or Tribunal other than a Court of Tribunal constituted by or any law relating to the Armed Forces.

Under 1962 Constitution, there was only one Legislative List namely the Federal List (Third Schedule) and Entry No. 38 in such List reads as follows:

"38. Supreme Court, including-

(a)   the constitution, organization, jurisdiction and powers of the Supreme Court;

Cb)   fees to be taken in that Court; and

(c)    persons entitled to practice before that Court."

Reference may also be made to Article 60 of the 1962 Constitution whereby it was provided that any addition to the jurisdiction conferred on it by that Constitution, the Supreme Court shall have such other jurisdiction as may he conferred on it by law. In view of Article 60 read with Entry No. 38 in the Federal List specifying matters with respect to which the Central Legislature had exclusive powers to make laws, any additional or supplemental powers could only be conferred on the Supreme Court by a law made by the Central Legislature.

In the Interim Constitution of 1972 also there were three Legislative Lists (in the Fourth Schedule), i.e. List I (Federal List). List II (Provincial Last) and List III (Concurrent Legislative List). Relevant entries in the 1972 Interim Constitution were Entry No. 55 in List I, Entry No. 2 in List II and Entry No. 16 and in List III. Reference may also be made to Article 188 of 1972 Interim Constitution which provided that in addition to the jurisdiction conferred on it by such Constitution, the Supreme Court shall have such other jurisdiction as may be conferred on it by law.

Entry No. 55 in List No. I (Federal List) of such Constitution is identical to Entry No. 55 in the Federal Legislative List of the 1973 Constitution. Entiy No. 2 of the Provincial Legislative List in the Interim Constitution read as follows:

"Jurisdiction and powers of all Courts except the Supreme Court with respect to any of the matters in this List; procedure in rent and revenue Court."

From the aforesaid entries it follows that, under the Interim Constitution, additional/supplemental jurisdiction could only be conferred upon the Supreme Court by a law made by the Federal Legislature.

17. Coming now to the present Constitution of 1973, it may be observed that, according to Mr. Abid Hassan Minto, learned counsel for the Government of Punjab, in view of Article 175(2) of the Constitution, under which jurisdiction can be conferred on any Court including the Supreme Court by or under any law, in relation to matters in respect of which Provincial Legislatures have power to make laws (including Cooperative Societies), additional/supplemental jurisdiction or powers can be conferred on the Supreme Court by the Provincial Legislatures as the "law" mentioned in Article 175(2) includes a Provincial law and additional/supplemental jurisdiction or powers in the form of an appeal to the was being conferred on the Supreme Court in respect of a matter on which Provincial Legislatures have exclusive jurisdiction under the Constitution to enact laws. Learned counsel also relied on the observation made by the Sindh High Court in the case of Inamur Rehman v. Federation of Pakistan (PLD 1977 Karachi 524). Passage relied upon appears at page 532 of the report and it reads as follows:-

"Item 55 of the Federal Legislative List in the Interim Constitution brings within the scope of the Federal Legislature the jurisdiction and powers of all Courts, except the Supreme Court, in respect of matters within its legislative field, and even in respect of the Supreme Court, it conferred powers upon the Central Legislature to enlarge its jurisdiction and confer supplemental powers therein. So far the Permanent Constitution is concerned, Article 175(2) thereof expressly provides that "no Court shall have jurisdiction save as is or may be conferred on it by the Constitution or by or under any law." It is thus permissible for the appropriate Legislature, acting within the scope of its Constitutional powers, to take away or enlarge the jurisdiction of any Court or enact that a particular matter shall not be determined by normal Courts, except that the Legislature cannot abridge the Constitutional jurisdiction and powers of the superior Courts save by way of amendment of Constitution."

In our view there is no ambiguity in interpreting Entry No. 55 of Part I of the Federal Legislative List (Fourth Schedule) of the 1973 Constitution. Such Entry readwith Articles 175(2) and 142(a) of the Constitution confers exclusive powers on the Parliament to make laws for enlargement of jurisdiction of the Supreme Court or conferring on it of supplemental powers.

If Entry No. 55 was not there in the Federal Legislative List, it could be argued that under Article 175(2) of the Constitution, in respect of matters relating to Cooperative Societies exclusively falling under the competence of the Provincial Legislatures, a law can validly be made by a Provincial Legislature enlarging jurisdiction of the Supreme Court and conferring on it supplemental powers but Article 175(2) is not to be interpreted in isolation. It has to be read and interpreted alongwith Article 142(a) and the entries in the Legislative Lists. Under Entry No. 55 of Federal List, Federal Legislature 4s competent to make laws regarding jurisdiction and powers of all Courts (except the Supreme Court) with respect to any of the matters in such list. The other part of this entry makes the Federal Legislature competent to make laws for enlargement of the Supreme Court and the conferring thereon of supplemental powers with the proviso that this is to such extent as is expressly authorized by or under the Constitution. Powers and jurisdiction conferred on the Supreme Court by the Constitution can neither be interfered with or varied nor taken away by the Legislature. However, jurisdiction of tl e Supreme Court can be enlarged and supplementary powers can be conferred on the Supreme Court by "law" in view of Article 175(2) of the Constitution, and Entry No. 55 read with Article 142(a) of the Constitution leaves no doubt that such enlargement of jurisdiction and conferment of supplementary + powers can only be done through law made by Federal Legislature.

Mr, Abid Hassan Minto has stressed the word "appropriate Legislature" in the judgment of the Sindh High Court in the case of Inamur Rehman v. Federation of Pakistan (PLD 1977 Kar. 524 (relevant passage reproduced hereinabove). If by the use of the word "appropriate Legislature", Sindh High Court was of the view that Provincial Legislature could enlarge jurisdiction of the Supreme Court or confer supplementary powers or: it, such view is not correct as such view would be based on reading of Article 175(2) of the Constitution in isolation and not interpreting such provision with Article 142(a) and Entiy No. 55 in the Federal List.

Contention of Mr. Minto would have had substance if Entry No. 55 in the Federal List had be worded differently like Entry No. 14 in such list which reads as under:

"14. Administrative Courts and Tribunals for Federal subjects." But the words "for Federal subjects" are not to be found in Entry No. 55.

19. We are, therefore, of the view that Section 22 of the impugned' legislation is ultra vires the Constitution. The Provincial Governor and the Provincial Assembly are not competent to enact any law whereby jurisdiction of the Supreme Court could be enlarged by providing an appeal to the Supreme Court against the orders of the Cooperatives Judge. We hold accordingly and to such extent confirm the view taken by the High Court in the impugned judgment.

All these appeals are, therefore, allowed and the impugned judgments of the Lahore High Court are set aside except that the view of the High Court that Section 22 of the impugned legislation (Punjab Ordinance

XX of 1992 and Punjab Act I of 1993) are ultra vires the constitution is confirmed and to that extent the appeals are dismissed.

There shall be no order as to costs.

20.          Before parting with this judgment, we are compelled to observe that over a decade has passed but the travails and sufferings of the  epositors/investors and members of the Cooperative Societies, have not ended and they who had deposited/invested moneys (representing in most of the cases their live savings) in such Cooperative Societies, are still waiting  or refund of their investments/deposits. They are entitled to refund of their funds/deposits together with profits/interests/dividends.  In some cases payments have been made to such  depositors/investors but not full payments and mostly without any profits.

21.          It can be said without fear of contradiction that the Provincial Cooperatives Department of Punjab and the Punjab Cooperatives Board for Liquidation have not discharged their responsibilities and performed their functions expected from them. It is high time that the Punjab Government takes up this matter on priority basis and deal with it effectively without any delay. If any re-organization of the Liquidation Board is required, such action should also be taken without any delay. Results of such actions should start appearing in the next month or so and not years as had been happening in the past Though the number of investors/depositors may run into lacs but people affected by this tragedy must be numbering in millions. It is a human problem of enormous proportions and unimaginable suffering which has not yet received the attention from the Government which was required.

We have also noticed that the Cooperatives Judge is not able to give his full time and attention to the work required to be done by him under the law in question as, apart from exercising jurisdiction and performing the functions as Cooperatives Judge, he discharges his responsibilities as a Judge of the Lahore High Court and usually performs his functions as the Cooperatives Judge only during one day in a week on which day also he is not able to give his full .time and attention. Punjab Government should ensure that the claims of the depositors/investors are settled within three to six months and the learned Chief Justice of the Lahore High Court may ensure that the Cooperatives Judge is not burdened with any High Court work so that the Cooperatives Judge can devote his full time and attention to lis functions and responsibilities under the legislation in question.

The Liquidation Board and the Registrar, Cooperative Department are also directed to submit monthly reports to the Registrar of this Court commencing from 1st week of December, 1999, showing in sufficient detail the progress of the work being done so that if it is considered necessary this burt may give directions or pass further orders as may be required.

(A.A.J.S.)                                                                        Appeal accepted.