IN THE SUPREME COURT OF PAKISTAN 
 
  (Appellate Jurisdiction) 
 
 
 
 
 
Present: 
 
 
 
 
Mr. Justice Anwar Zaheer Jamali, CJ. 
 
 
 
 
Mr. Justice Amir Hani Muslim 
 
 
 
 
Mr. Justice Umar Ata Bandial 
 
CIVIL PETITION NO. 1648-L OF 2010 
(On appeal from the judgment/order dated 26.04.2010 of the  
Lahore High Court, Lahore in W.P. No. 14739 of 2003) 
 
 
Muhammad Rafique Bhatti & others 
… 
… 
Petitioners  
 
 
 
 
Versus 
The Cooperative Judge,  
Lahore High Court, Lahore & others  
… 
… 
Respondents.  
 
 
For the petitioners   
: 
Mr. Muhammad Munir Piracha, ASC.   
 
For respondent No.2 
: 
Mr. Nadeem-ud-Din Malik, ASC.  
 
 
 
 
 
Mr. Khushi Muhammad Nazir,  
 
 
 
 
 
Manager (Properties).  
 
Date of hearing  
 
: 
15.10.2015. 
 
 
 
 
 
JUDGMENT 
 
UMAR ATA BANDIAL, J. – The judgment dated 26.04.2010 
rendered by a learned Division Bench of the Lahore High Court, 
Lahore is assailed in this petition. The impugned judgment affirmed 
the view taken by the learned Single Judge of the High Court, who in 
exercise of his jurisdiction as Cooperative Judge dismissed on 
28.04.2003  the petitioners’ application filed against the order dated 
28.04.2001 passed by the Chairman, Punjab Cooperative Board for 
Liquidation (“PCBL”). By this order the Chairman, PCBL cancelled the 
“No Objection Certificate (“NOC”)” dated 30.10.1997 issued by his 
predecessor for sale to the petitioners of land measuring 193 Kanals 12 
CP.1648-L of 2010 
2
Marlas situated in village Maraka, Tehsil & District Lahore belonging 
to National Industrial Cooperative Finance Corporation (“NICFC”) in 
exchange for cash deposit receipts (“CDRs”) issued by the NICFC and 
National Industrial Cooperative Credit Corporation (“NICCC”), both 
being defunct undesirable cooperative corporations (“CFCs”).  
2. 
 
Learned counsel for the petitioners submits that the 
concurrent findings given by the High Court and the Chairman, PCBL 
are barred by locus poenitentiae. The said transaction of sale in favour of 
the petitioners was concluded under two agreements to sell executed 
on 28.10.1991 and 05.11.1991 by Ch. Abdul Majeed, Chairman of the 
both NICFC and NICCC. Out of total sale consideration of Rs.25.268 
million, an amount of Rs.25.093 million already stood adjusted against 
CDRs for funds held by the petitioners before this Court in the 
accounts of the two defunct CFCs, with the balance amount of 
Rs.74,229/- being payable in cash on execution of the sale deed. On 
30.10.1997 the Chairman, PCBL gave his NOC to the sale in favour of 
the petitioners and on 26.06.1999 he gave permission to execute sale 
deed in their favour. The petitioners state that the sale consideration 
under the agreements to sell exceeds the value for the land transacted 
and the cancellation of NOC dated 30.10.1997 by the Chairman, PCBL 
on 28.04.2001, as affirmed by the High Court, violates the vested rights 
of the petitioners.  
3. 
 
We have heard the learned counsel for the parties and 
have carefully scanned the record of the case. The following features in 
this case may be noted before discussing the plea taken by the learned 
CP.1648-L of 2010 
3
counsel for the petitioners. In the early 1990s, the Province of Punjab 
was engulfed in a financial scandal involving a number of CFCs, which 
were engaged in unlawful deposit taking, lending and investment of 
public money without obtaining licenses for such activities from the 
State Bank of Pakistan. When billions of rupees of public money got 
jeopardized for one reason or the other, the Provincial Legislature 
passed legislation, namely, the Punjab Undesirable Cooperatives 
Societies (Dissolution) Act, 1993 (“PUCS Act, 1993”). The PUCS Act, 
1993 was preceded by Punjab Undesirable Cooperative Societies 
(Dissolution) Ordinance XX of 1992 and Cooperative Societies 
(Amendment) Ordinance XII of 1992 issued by the Governor of the 
Province and other executive actions including attachment order 
passed by the Deputy Registrar, Cooperative Societies on 26.08.1991 in 
exercise of powers under Section 55 of the Cooperative Societies Act, 
1925. The said events merely set out the context in which the disputed 
transaction of sale in the present case was concluded pursuant to 
agreements to sell dated 28.10.1991 and 05.11.1991. It is a matter of 
record that whereas the land under sale belongs to NICFC, its price is 
being paid, inter alia, by adjustment of CDRs issued by NICCC that are  
held by some of the petitioners. No resolution of the Board of Directors 
or the General Body of the NICFC was passed to authorize the sale of 
its land, fix the sale price thereof or to authorize adjustment of its value 
against CDRs issued by NICFC or another CFC. The agreement to sell 
is executed by Mr. Abdul Majeed without delegation of authority by 
the Board of Directors 
CP.1648-L of 2010 
4
to show that the said Chairman has authority under the charter of the 
said CFCs to unilaterally or single handedly sell the immovable 
property of the NICFC. Consequently, the impugned judgments and 
the impugned order have considered the underlying agreements to sell 
to be collusive. This is concluded also for the reason that at least 23 
unconnected persons holding CDRs in the two CFCs have, without 
being members of a family or a legal entity or having any other mutual 
link, combined to purchase immovable property from NICFC. This is 
done without even fixing their individual shares in the property agreed 
to be purchased, indicating the presence of benami interests. The 
enterprise undertaken by the petitioners ostensibly seeks pre-emptive 
recovery of their blocked funds in the two defunct CFCs by the 
acquisition of an asset having readily realizable value. By this means, 
they purport to secure priority and advantage over other similarly 
placed depositors/creditors of the two defunct CFCs.  
4. 
 
The provisions of the PUCS Act, 1993 and its preceding 
legislation appoint PCBL as liquidator of defunct CFCs. The 
liquidation of these CFCs is ordained by the said law on account of 
their illegal activities, heavy indebtedness to the public and consequent 
insolvency. It is a settled principle of law that a liquidator/receiver of 
an insolvent entity is vested with the power to avoid voluntary 
transfers made by the insolvent. Likewise, a liquidator/receiver has the 
power to avoid transactions that may be deemed to constitute 
fraudulent preferences. These powers are codified, inter alia, in Section 
53 and 54 of the Provincial Insolvency Act, 1920. The principles of law 
CP.1648-L of 2010 
5
enshrined in the said provisions have also been incorporated in the 
Companies Ordinance, 1984. In relation to the defunct CFCs, similar 
powers have been vested in the PCBL under the provisions of Section 
7(b), (e), (h) and (p) of the PUCS Act, 1993 that are reproduced below: 
“7. Powers of a Co-operatives Board. A Cooperative 
Board when appointed as a Liquidator under this Act 
shall have all the powers exercisable by a Liquidator 
under the Co-operative Societies Act, 1925 and in addition 
to that shall have the power to--  
(a) 
 … 
(b) 
 unearth and proceed against any concealed or 
hidden property of an Undesirable Co-
operative 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 
person, body, company or firm acquired or 
purchased by using or diverting the funds of 
such a society;  
… 
(e) 
cancel all agreements entered into by an 
Undesirable 
Co-operative 
Society 
or 
its 
previous managements or Directors, officers or 
agents which in the opinion of the Co-
operatives Board, are mala fide and against the 
interest of such a society or the members 
thereof;  
 
… 
(h) 
determine the validity of adjustment of the 
CP.1648-L of 2010 
6
to any lawful scheme notified by the PCBL or the Provincial 
Government under the PUCS Act, 1993 for settlement or adjustment of 
claims by depositors. Otherwise the settled principle of law for 
distribution of assets among the same class of creditors of an insolvent 
is done ‘pro rata’ through proportionate abatement of claims as 
envisaged in Section 61 of the Provincial Insolvency Act, 1920.  By this 
method, all the creditors of equal standing, in the present case, the 
CDR holders of a defunct CFC are put to equal risk/loss in case of non-
realization of their respective debts in entirety.  
5. 
 
The foregoing approach is noticeable in the impugned 
order dated 28.04.2001 passed by the Chairman, PCBL, which mentions 
the provisions of clauses (b) and (e) of Section 7 of the PUCS Act, 1993. 
Quite apart from the said valid grounds adopted by the impugned 
decisions, to our minds, the general powers of a liquidator/receiver, 
namely, to avoid voluntary transfers and make pro rata distribution 
meant to treat similarly placed creditors of an insolvent entity equally 
are encapsulated in the provisions of Section 7 of the PUCS Act, 1993. 
Accordingly, the preference given to the petitioners over other 
similarly placed creditors of the two defunct CFCs defeats any claim of 
locus poenitentiae posited by the petitioners. The said reason therefore 
suffices to cancel the NOC issued in favour of the petitioners. 
Consequently, the impugned judgments of the High Court and the 
impugned order of the Chairman, PCBL are lawful and valid.  
CP.1648-L of 2010 
7
 
 
For the foregoing reasons, we do not find any merit in this 
petition, which is accordingly dismissed alongwith all ancillary Misc. 
Applications. Leave to appeal is refused.  
 
 
 
 
 
 
 
 
 
         CJ. 
 
 
 
 
 
 
 
 
 
 
J. 
 
 
 
 
 
 
 
 
 
 
J. 
Islamabad, 
15.10.2015. 
Irshad Hussain /* 
 
 
 
 
 
APPROVED FOR REPORTING.