1987 (3) TMI 442 - HC - Companies Law

General provisions with respect to memorandum and articles - Effect of memorandum and articles, Powers of Court to rectify register of members

Issues Involved:
1. Whether the DDCA could enroll members beyond the figure of 1,500.
2. Whether the executive committee had the authority to increase the membership beyond 1,500.
3. Whether the petition is maintainable under section 155 of the Companies Act, 1956.
4. Whether the members enrolled beyond 1,500 were necessary parties to the petition.
5. Whether the petition was barred by principles of res judicata due to a previous settlement in Suit No. 1587 of 1982.

Issue-wise Detailed Analysis:

1. Whether the DDCA could enroll members beyond the figure of 1,500:
The petitioner argued that according to Article 2 of the Articles of Association of DDCA, the number of members was fixed at 1,500 and any enrollment beyond this figure was illegal. The respondents admitted that the membership exceeded 1,500 and was currently 3,200. They contended that the enrollment was valid under Article 2, which allowed the general committee to increase the number of members. However, the court held that Article 2 of the Articles of Association, which purported to allow the general committee to increase the number of members, was void to that extent. The court emphasized that under section 27(2) and section 31 of the Companies Act, any alteration in the number of members required a special resolution by the general body and compliance with statutory procedures.

2. Whether the executive committee had the authority to increase the membership beyond 1,500:
The court determined that the executive committee did not have the authority to increase the membership beyond 1,500. The increase in the number of members required a special resolution by the general body, as per section 31 and section 189 of the Companies Act. The court found that the purported power of the general committee to increase the membership under Article 2 of the Articles of Association was contrary to the statutory provisions and thus void.

3. Whether the petition is maintainable under section 155 of the Companies Act, 1956:
The court held that the petition was not maintainable under section 155 of the Companies Act. The court reasoned that the issue of membership beyond 1,500 had already been addressed in Suit No. 1587 of 1982, where a settlement was reached, and the petitioner did not seek leave to file fresh proceedings on the same issue. Applying the principles of res judicata, the court concluded that the present petition was barred. Additionally, the court noted that members whose names were sought to be removed were necessary parties to the petition, and their absence rendered the petition non-maintainable.

4. Whether the members enrolled beyond 1,500 were necessary parties to the petition:
The court emphasized that in a petition under section 155 of the Act, the members whose names were sought to be removed from the register were necessary parties. The court found that the petitioner had not impleaded all the affected members, nor had he complied with the provisions of Order 1, Rule 8 of the Code of Civil Procedure, which allows for representative suits. The court concluded that without the necessary parties, no relief could be granted to the petitioner.

5. Whether the petition was barred by principles of res judicata due to a previous settlement in Suit No. 1587 of 1982:
The court found that the issue of membership beyond 1,500 was already litigated in Suit No. 1587 of 1982, where a settlement was reached, and the petitioner was a party to that suit. The court held that the petitioner was bound by the settlement and could not re-litigate the same issue. The court applied the principles of res judicata, as contained in Order 23, Rule 1 of the Code of Civil Procedure, to bar the present petition.

Conclusion:
The court dismissed the petition, holding that the executive committee did not have the authority to increase the membership beyond 1,500 without a special resolution by the general body. The court also found the petition non-maintainable due to the absence of necessary parties and the principles of res judicata. The petition was dismissed without any order as to costs.

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