2008 (9) TMI 551 - HC - Companies Law

Ceasing of plaintiff s membership - Plaintiff held two memberships of defendant-company - Held that - The plaintiff has a prima facie case of participating in the ensuing elections of the committee of defendant. Election is an important event or facet of membership and the plaintiff would suffer irreparable injury, if in spite of having a prima facie case is not permitted to participate in the elections. In these circumstances, also find the balance of convenience in favour of the plaintiff. The application is, therefore, allowed. The plaintiff has already tendered the subscription and application readmission fee for both membership. The defendant is free to encash the cheques deposited by the plaintiff for the said purpose. The plaintiff shall before participating in election also pay ₹ 500 in addition towards restoration expenses (postal charges, etc.), if any, of both membership. Needless to add that since the plaintiff upon tendering the amount is found to be a member, the plaintiff shall be entitled to participate in the ensuing elections of the defendant subject to the rules thereof.

Summary

Issues:
1. Interpretation of Articles of Association regarding membership termination.
2. Dispute over restoration of membership and discretionary powers.
3. Allegations of falsehood by the defendant.
4. Relief sought by the plaintiff and its consistency with the interim relief claimed.

Interpretation of Articles of Association regarding membership termination:
The plaintiff, holding two memberships of the defendant company, filed a suit seeking injunction and damages due to the defendant treating the memberships as ceased for non-payment of subscription. Article 8 of the Articles of Association specified conditions for membership cessation, including non-payment of subscription. The defendant argued that membership ceased automatically on 1st July for unpaid subscriptions. However, the plaintiff contended that Article 10 allowed restoration upon payment, without discretion for the defendant to refuse.

Dispute over restoration of membership and discretionary powers:
The defendant claimed the plaintiff practiced falsehood regarding subscription payment dates. The defendant formed a Sub-Committee to consider restoration applications, citing non-timely payments by members. The plaintiff argued for restoration based on compliance with Articles and absence of discretion for the defendant to deny readmission. The court found no basis for the defendant to delay decisions on readmission, emphasizing fair treatment without bias.

Allegations of falsehood by the defendant:
The defendant alleged the plaintiff's falsehood in payment dates, but the court noted discrepancies in postal stamps on the envelope and the letter. The court found the falsehood not crucial for the plaintiff's case, as the main issue was compliance with the Articles for membership restoration.

Relief sought by the plaintiff and its consistency with the interim relief claimed:
The plaintiff sought relief from ceasing membership and restoration, with an interim application for restoration during the suit. The court acknowledged drafting errors but ruled in favor of the plaintiff's right to participate in elections, granting interim relief for membership restoration upon payment of dues. The court emphasized the importance of allowing the plaintiff to exercise membership rights and participate in the elections.

In conclusion, the court interpreted the Articles of Association, clarified restoration procedures, addressed allegations of falsehood, and granted interim relief for membership restoration to enable the plaintiff's participation in the defendant's elections.