2011 (3) TMI 1487 - Board - Companies Law

Summary

Issues:
1. Challenge to the expulsion of a member from a club by the board of directors.
2. Jurisdiction of the Company Law Board under section 111(4) of the Companies Act, 1956.

Issue 1: Challenge to the expulsion of a member from a club by the board of directors

The petitioner filed a petition under section 111(4) of the Companies Act, 1956, seeking to declare the proceedings of the board of directors' meeting held on July 21, 2008, as illegal, invalid, and not binding. The petitioner, a member of the club, alleged that the majority of directors were managing the club in a manner detrimental to its interests. The petitioner raised objections and requested information during the annual general meeting, leading to threats of expulsion. Subsequently, the board resolved to expel the petitioner, citing abusive language and endangering the club's harmony. The petitioner contended that the expulsion was unjust, mala fide, and motivated by personal vendetta, seeking redress through the Company Law Board.

Issue 2: Jurisdiction of the Company Law Board under section 111(4) of the Companies Act, 1956

The respondent argued that the petition was misconceived and not maintainable under section 111(4) of the Act. The respondent contended that the petitioner deliberately mischaracterized the issue to challenge the board's decision to expel him. It was emphasized that section 111(4) pertains to rectification of the register of members, not expulsion cases. The respondent asserted that the petitioner's grievances were civil in nature and should be pursued through a civil suit, not under section 111(4) of the Act. The respondent highlighted that the petitioner's expulsion was in accordance with the club's articles of association and not a matter of rectification of the register of members. Consequently, the respondent argued that the petition was an abuse of process and should be dismissed.

In the judgment, the Company Law Board dismissed the petition, ruling it as not maintainable under section 111(4) of the Companies Act, 1956. The Board clarified that the provision pertained to rectification of the register of members concerning shares or interests, not expulsion cases like the petitioner's. It was emphasized that the cessation of club membership was a civil matter warranting recourse through a civil court, not within the jurisdiction of the Company Law Board. The dismissal was based on the lack of jurisdiction rather than delving into the merits of the case. No costs were awarded, with the Board underscoring that club membership disputes are civil rights issues falling under common law remedies in civil courts.