P L D 2006 LAHORE 437


Per Umar Ata Bandial, J-Constitution of Pakistan, (1973) Arts. 199, 23 & 24-

Although the Coop is a distinct legal entity that is financially autonomous and owns substantial assets including the disputed commercial land, however, the management and control of its business, property and affairs vests in the Registrar and his nominees. In substance, the Coop is managed and operated as a public sector enterprise by public functionaries exercising control over its affairs. It is axiomatic that in the discharge of their duties in relation to the Coop, be it the registrar, the Coop board of directors or the respondent no. 1, their acts are subject to the rules of transparency, good governance and fairness. The application of these rules establishes the legal validity of acts of public functionaries taken particularly in pecuniary and proprietary matters.

So long as the impugned action meets the standard set by the said rules, it is neither necessary nor proper for the Court to consider the sufficiency or detail of the terms of the proposed lease of the Coop’s land. Indeed the Court confines itself to the application of objective criteria to assess the validity of public action. In this context some salient facts of the present case are noted as follows. Valuable commercial land owned by the Coop is being leased to PITB without inviting tenders or offers from the public to establish its market value. This action is based on the premise that the grant of 99 years lease of land is not a transfer or disposition that attracts the said measures establishing transparency. Transfer of property owned by a cooperative society to a government agency is deemed to be valid and permissible at a notionally determined price solely because its prospective use may be in the public interest. The bye-laws of a cooperative society specifying its business and the objects for which is property and funds may be employed, can be ignored by public functionaries acting in exercise of statutory power. A cursory mention that benefit is provided to members and employees of a cooperative society by the long lease of its principal asset is considered to be legally sufficient to justify the transaction without quantification, deliberation and decision on the basis of a feasibility or benefit analysis being undertaken.

The lease of an immovable property involves a transfer of an interest in that property in relation to the rights of its possession and enjoyment. Such a lease interest takes away incidents of ownership, namely possession and enjoyment of property for an agreed period of time from the owner and vests them in the lessee. The longer the lease the greater the attributes of a the ownership interest in the property that are transferred to the lessee. The contemplated lease of the disputed property for a long duration of 99 years therefore, transfers the substantive rights of ownership leaving the bare title of the disputed property with the Coo. Clearly, the respondents have misunderstood the legal significance of the impugned transfer. The disposition, transfer or vesting of property that belongs to the public or is done at the hands of public functionaries is governed by the rules of transparency, good governance and fairness. In essence these rules require a fair procedure to be adopted to fetch the best market value for the interest and property transferred and to ensure that the full price is received in the purse of the transferor. Depending on the facts of the case, an invitation for offers or a public tender for the property under transfer, as the case may be, are steps commonly taken by public functionaries to arrive at the best bid for the proprietary interest offered.

“Further a contract, carrying elements of public interest, concluded by functionaries of the State, has to be just and fair, transparent, reasonable and free of any taint of mala fides, all such aspects remaining open for judicial review. The rule is founded on the premise that public functionaries, deriving authority from or under law, are obligated to act justly, fairly equitably, reasonably, without any element of discrimination and squarely within the parameters of law, as applicable in a given situation. Deviations, if of substance, can be corrected through appropriate orders under Article 199 of the Constitution”.

The foregoing principles dictate the pursuit of the best terms of transfer although rights be overridden. Reference may be made to Javedan Cement Mehnat Kash Union and another v. The Federation of Pakistan and other 1998 SCMR 2182 and Javed Iqbal Abbasi and Co v. Province of Punjab 1996 SCMR 1433. The facts of the present case necessitated that the feasibility of the lease and, if so, the fair market value of the property under transfer by way of lease, ought to have been assessed by the respondents which was not done. It should not have mattered that the respondent public functionaries were acquiring the disputed property for a public purpose. The Coop is distinct legal entity and the respondents exercise control of its affairs as trustees. Under the constitutional mandate of Article 23 and 24 of the Constitution as well as statutory law, the acquisition of the Coop’s property must be at fair market value. If, however, the Coop is considered a public enterprise, the respondent public functionaries were again under a duty to apply and deal with its property as trustees in furtherance of the Coop’s objects. It is not sufficient that the property of a cooperative society may be taken over without fair consideration or due deliberation merely because of executive expediency.

In the result, the impugned order by the respondent no. 1 dated 23-1-2006 and the proceedings that it affirms, namely, the Coop board resolution dated 23-9-2005 and actions taken pursuant thereto in respect of the disputed property of the Coop are declared to be illegal, without lawful authority and of no legal effect. Respondent no. 2, Registrar, who is the governing authority in all matters pertaining to the affairs of the Coop, shall cause the feasibility and, if so, the terms of the proposed transaction to be objectively and fairly assessed in order for a considered and fair decision to be taken in the matter. Petition allowed.[p. 441,442 & 443] A,B,C,D & E

Iqbal Hameedur Rehman for petitioner.

Muhammad Saeed for respondents Nos. 1 and 4

M. Javed Iqbal for Respondent No. 3.

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