public societies

Code of Civil Procedure, 1908-Order 39, Rules 1 and 2-Interim injunction-Grant of-Prima facie case-Registered Society-Persons inducted as Promoter-Members into General Body allegedly by resolution of Board of Governors and subsequently approved by General Body-Society claiming that induction was null and void as resolution of Board of Governors was merely a `proposal’ and subsequent approval of General Body of Society from holding election of Governing Body authority-Interim injunction to restraint Society from holding election of Governing Body without giving them opportunity of participation-Rejected by Courts below on lack of prima facie case-Correctness of-Held-Resolution of Board of Governors merely stated that nine persons will be inducted into General Body as per Constitution of Society-As per Articles of Association of Society an amount had to be paid by a person before his admission, and that was not paid either at the time of meeting of Board of Governors or General Body meeting ; it was paid only after impugned resolution was passed and that too without informing Society-Even if there was a mistake, it was not a mutal mistake-Notice calling for explanation and opportunity of hearing was not required as controversy did not relate to expulsion of member and issue whether induction into General Body was legal, was yet to be decided-In absence of any particulars, it cannot be said that action of Society was mala fide or colourable exercise of power-Photographs, reports etc. showing that all throughout they were treated as Promoter-Members and worked as such, were immaterial, if admission in Society was illegal. Respondent is a registered Society. Its Founding Members Constituted General Body as well as Governing Council/Executive Body. It is the case of the appellants that they were inducted as Promoter-Members into the General Body of the Society by a unanimous resolution of the Board of Governors dated January 27, 2000, in exercise of their power under Clause 11(i) of the Articles of Association, and this was subsequently approved by the General Body of the respondent on March 22, 2006. They were therefore entitled to participate in the election of Board of Governors as per the Memorandum and Articles of Association. They received a caveat from the respondent stating that their claim as Promoter-Members of the society and calling for General Body Meeting was not tenable because their admission as Promoter-Members was null and void. It stated that the resolution dated January 27, 2000 was merely a `proposal’ with a condition that nine persons would be admitted as members at an appropriate time, and the resolution dated March 22, 2006 passed by the General Body of the Society admitting them as Promoter-Members was without authority and null and void. Aggrieved by the above, the appellants filed Original Petitions in the City Civil Court for a declaration that they were legally inducted members and were entitled to participate in the management and administration of the respondent. A prayer was also made for permanent injunction, along with application for interim injunction under Order 39, Rules 1 and 2 read with Section 151 of the Code of Civil Procedure, 1908, to restrain the respondent from holding election of the Governing Body without including them and without giving them opportunity of participating in the election process. The City Civil Court dismissed the application for interim injunction inter alia observing that no prima facie case had been made out. Aggrieved by this order, the appellants preferred Revision Petitions. The High Court dismissed all Revision Petitions, and directed the trial Court to dispose of Original Petitions. This is challenged by all the appellants in the present appeals. Appellants contended that (i) neither the Memorandum of Association nor Articles of Association imposed a condition precedent for payment of Rs.1 lakh for becoming a Promoter-Member, and its non-payment cannot be made a ground to expel or remove them; even otherwise, they had never refused to pay the said amount; (ii) apart from the fact that Articles of Association prescribed no time limit within which a payment of Rs.1 lakh was to be made, even respondents were of the same opinion; it was thus a case of mutual mistake for which they cannot be blamed; (iii) the payment has already been made and that fact ought to have been considered by the Courts and relief ought to have been granted in their favour; (iv) no notice was issued by the respondent to show cause why their Membership should not be terminated or discontinued, nor an opportunity of hearing was afforded, nor principles of natural justice were observed; (v) they were always treated as Promoter-Members which fact is proved from various photographs and reports (vi) the action of respondent was mala fide and has been taken in colourrable exercise of power with a view to deprive them from participating in election. Respondents contended that (i) Article 4(i)(b) provides clearly that an applicant who `pays’ Rs.1 lakh would become a Promoter Member; (ii) no such payment was made in March, 2006 when the so-called approval was granted by the General Body; (iii) the said amount was deposited by the appellants directly in the Bank without even informing them; (iv) it was not a case of mutual mistake; the relevant clauses of Articles of Association were unambiguous and since no payment was made as required, no right accrued in favour of the appellants and the action of the Society was legal and lawful; (v) it was not a case of removal, termination or expulsion of a Member and hence there was no question of issuing notice, calling for explanation or affording opportunity of hearing or observance of principles of natural justice or fair play. =Dismissing the appeal, the Court HELD: 1. Neither the trial Court nor the High Court had committed any illegality in refusing interim relief. [Para 18] [784-C] 2. Reading of the Minutes of 85th meeting of the Board of Governors of the Society makes it clear that nine persons were selected and as stated in the minutes, they “will be inducted” into General Body as per the Constitution of the Society. [Para 20 and 21] [786-A-B; F-G] 3.1. Prima facie, the contention of the Society is well founded that an amount ought to have been paid by a person before he is admitted as Patron Member in the light of the phraseology used in Clause 4 (b) of the Articles of the Association. [Para 22] [787-C-D] 3.2. It is not even the case of the appellants that they had paid an amount of Rs.1 lakh before or on January 27, 2000. [Para 21] [786-F-G] 3.3. Even if there was a mistake, it was not a `mutual mistake’. [Para 28] [789-B-C] 3.4. So-called payment was made only after the impugned resolution was passed and that too without informing the Society. [Para 28] [789-B-C] 3.5. It is also pertinent to note that the payment was made by the appellants on October 26, 2006 and a petition was filed in the Court on October 29, 2006 along with an application for the interim relief. But even in the application for interim relief, the factum of payment of amount after the resolution was passed, was not disclosed by the applicants. [Para 28] [789-C-D] 4. The controversy does not relate to expulsion of a member. The question is whether the appellants can be said to have been legally admitted as Promoter-Members. Once it is held that the appellants were properly inducted and had become Promoter-Members of the Society, principles of natural justice required issuance of notice, calling for explanation and affording reasonable opportunity of being heard. The case of the Society, however, is that appellants were never legally inducted as Promoter-Members and their so called induction was not in consonance with law. The said issue is yet to be decided. [Para 24] [788-A-C] Board of Control for Cricket in India and Anr. v. Netaji Cricket Club & Ors., [2005] 4 SCC 741, referred to. T.P. Daver v. Lodge Victoria, No. 363, S.C. Belgaum, [1964] 1 SCR 1, distinguished. Halsbury’s Laws of England, Fourth Edition, Vol. 19(1), p 143, para 201, referred to. 5. No particulars, much less sufficient particulars, have been placed on record to show that the action taken by the Society was mala fide or had been taken in colourable exercise of power. [Para 31] [790-D-E] 6. The plea that the appellants were all throughout treated by the Society as Promoter-Members and they had worked for all these years which is established from various photographs, reports etc., is of no consequence. If the appellants had not been legally admitted as Patron Members, they could not be treated as such and cannot get benefit on the basis of photographs, reports, functions, etc. [Para 27] [788-G-H; 789-A-B] K.K. Venugopal, Soli J Sorabjee and Ravindra Shrivastava, Dr. S.K. Verma, Kunal Verma, Ramakanth Reddy, Ranbir Singh Yadav, Arjun Garg, Ardhendunauli KR. Prasad, M. Mannam and Rajul Shrivastava for the Appellant. K. Rajendra Chowdhary, K. Swami, Prabha Swami, Rakesh K. Sharma, Bina Madhavan, S. Udaya Kumar Sagar, Venayagam and Mishi Choudhari (for M/s. Lawyers’ Knit & CO.) for the Respondents.

CASE NO.: Appeal (civil) 2197 of 2007 PETITIONER: D. DWARAKANANTHA REDDY RESPONDENT: CHAITNYA BHARATHI EDUCATIONAL SOCIETY & OTHERS DATE OF JUDGMENT: 27/04/2007 BENCH: C.K. THAKKER & ALTAMAS KABIR JUDGMENT: J U D G M E N T CIVIL APPEAL No. 2197 OF 2007 Arising out of Special Leave Petition (Civil) No. 288 OF 2007 WITH … Continue reading →