livelawpk.com - Successor Entities in a Merger are liable for ---

Successor Entities in a Merger are liable for the Obligations of the Predecessor --- DHA was obligated under the Merger Agreement to resolve Member Disputes and honor Prior Allotments --- Supreme Court of Pakistan dismissed DHA petitions

3 days, 7 hours
11

Successor Entities in a Merger are liable for the Obligations of the Predecessor --- DHA was obligated under the Merger Agreement to resolve Member Disputes and honor Prior Allotments --- Supreme Court of Pakistan dismissed DHA petitions

Islamabad 19-12-2024: The Supreme Court of Pakistan dismissed two petitions filed by the Defence Housing Authority (DHA) and associated parties in a prolonged dispute involving the cancellation of a residential plot allotment. The case arose after the merger of the Local Government and Rural Development Employees Cooperative Housing Society (the Society) with DHA, during which the allottee’s plot was unlawfully cancelled.

The allottee, who had been a member of the Society since 1990, was allocated Plot No. 78-B. The Society later cancelled this allotment without issuing a show cause notice or following legal procedures. Following this:

The Registrar, Cooperative Societies, restored the allottee’s rights and directed the Society to either refund the paid amount or allot an alternate plot.
The Secretary, Cooperative Societies, modified this order, mandating DHA to allot the same or an equivalent plot in line with the merger agreement.
DHA contested these decisions, claiming lack of jurisdiction on the part of the Secretary and pursued litigation in the Lahore High Court, which dismissed their petitions.

The Supreme Court of Pakistan rejected DHA’s petitions as “hopelessly meritless,” reinforcing the binding nature of the 2005 merger agreement, which assigned DHA the responsibility for resolving all disputes of Society members. The Court observed:

The merger agreement’s clauses clearly mandated DHA to honor previous allotments and handle pending liabilities.
The petitioner’s claims lacked legal merit and unnecessarily prolonged the litigation.
The allottee had been unfairly subjected to hardship despite having valid allotment rights.

The Court upheld the orders of the lower Courts and statutory authorities, emphasizing that administrative decisions made with jurisdiction are presumed valid unless proven otherwise.

The Statutory authorities retain jurisdiction unless explicitly displaced by law. Successor entities in a merger are liable for the obligations of the predecessor. Cancellation of rights without notice is unlawful. Meritless petitions burden the legal system and invite costs.