2008 (9) TMI 556 - HC - Companies Law

Interim injunction restraining the respondent-club from conducting any general body meeting before registration of the respondent-club - Held that - The respondent is directed to convene an extraordinary general body meeting within one month from the date of this order for the specific purpose of discussing the subject as to whether the respondent shall be registered under the Societies Registration Act or under section 25 of the Companies Act. On passing such a resolution, the respondent shall take steps to register the respondent-club either under the Societies Registration Act or under the Companies Act in deference to the resolution passed in the said extraordinary general body meeting within two months thereafter.

Summary

Issues:
1. Application for interim injunction to restrain the respondent-club from conducting any general body meeting before registration.
2. Appointment of a receiver to manage the affairs of the respondent-club until registration is complete.
3. Allegations of mismanagement and misappropriation of funds by past office bearers.
4. Dispute regarding the registration of the club under the Societies Registration Act or the Companies Act.
5. Discrimination against lawn members in voting rights and management participation.

Analysis:
1. The applicants, lawn and rowing members of the Madras Boat Club, sought an interim injunction to prevent the respondent-club from holding any general body meeting before registration. They alleged mismanagement and misappropriation of funds by past office bearers, leading to a need for a receiver to oversee affairs until registration completion.

2. The respondent-club argued that registration, though beneficial, was optional for a sports-promoting club. They contended that the managing committee, comprising past presidents and co-opted members, was effectively addressing past irregularities. The respondent opposed the appointment of a receiver, citing the functioning managing committee's competence.

3. Both parties agreed to register the club under the Societies Registration Act or the Companies Act. The applicants claimed no further resolution was needed, while the respondent sought an open house discussion to decide between the two registration options, leaning towards the Companies Act.

4. The court found that an extraordinary general body meeting was necessary to finalize registration under the chosen act, despite a previous resolution in favor of the Societies Registration Act. The court emphasized the importance of the club's best interests in the registration decision-making process.

5. Regarding the alleged discrimination against lawn members in voting rights and management participation, the court held that such claims should be addressed through challenging the club's bye-laws in a competent legal proceeding, not in the current suit. The court directed the respondent to convene an extraordinary general body meeting to discuss registration within a specified timeline.

In conclusion, the applications seeking the appointment of a receiver were dismissed, while those for an interim injunction were partially allowed. The court mandated the respondent to convene a meeting for registration decision-making within a stipulated period.