2021 (1) TMI 614 - Tri - Companies Law

Seeking expulsion of the appellants from membership of the club taken by the managing committee of the respondent company - seeking rectification of register of Member of Respondent NO. 1 company by restoring the name of the appellant in the register without any break or interruption in his membership - HELD THAT - The right of a member in a club is an important right which cannot be taken away only if such member raises his voice amongst members inter se regarding some irregularities in functioning of the Club and which messages are not made public, specially the content of which do not indicate that it was in any way derogatory to the prestige of the Club or was made With the intention to malign the reputation of the Club. Expulsion or termination of membership after initiation of the disciplinary proceedings is like imposing a major punishment which is to be done Very carefully and in such cases where it is proved beyond doubt that the member is guilty of a misconduct which has amounted to tarnishing the image of the Club or in any way hampering the best interest of the club. Records of the present case does not show anything to that affect. Perusal of Clause 36 of the Articles of Associations pertains to termination of membership of the Club, Clause 61 relates to the disciplinary proceedings against a member and Clause 62 relates to the expulsion of a member from the membership of the Club - The said provisions will apply only in case it is found by the Committee of Members that a particular member is showing/ doing such misconduct which requires the termination of membership to attract Clause 36 and identically Clause 61 and 62 of the Articles of Associations would only be applied when such allegations is found to be proved beyond any doubt. As in the present matter, a passing referencing has been made in the enquiry report about the publication in the newspaper but no such publication was brought on record apart from the two messages which has also being admitted by the Respondents that they have sent the same but on that basis alone it cannot be said that the said provisions would be attracted in the present case - Petition allowed.

Summary

Issues Involved:
1. Legality of expulsion of appellants from club membership.
2. Procedure followed for expulsion.
3. Validity of allegations against appellants.
4. Compliance with Articles of Association.

Issue-wise Detailed Analysis:

1. Legality of Expulsion of Appellants from Club Membership:
The appellants, permanent members of the respondent company since 30.09.2000, were expelled from membership on 31.01.2017 based on a resolution passed on 04.12.2016. The appellants contended that their expulsion was illegal and fraudulent, without sufficient cause, and sought rectification of the membership register to restore their names.

2. Procedure Followed for Expulsion:
The appellants argued that the expulsion violated Article 62(a) of the Articles of Association, which mandates a 2/3rd majority vote by secret ballot and a recommendation from the Hony. Secretary. They claimed no recommendation was made, and the resolution was not passed by secret ballot. Additionally, the enquiry report by Mr. Ashish Tiwari, IPS, was questioned as he was not officially appointed as the enquiry officer by the club.

3. Validity of Allegations Against Appellants:
The appellants were accused of distributing pamphlets with obnoxious messages harming the club's image. However, they denied these allegations, stating they only sent two SMS messages regarding financial irregularities within the club, which were not intended to tarnish the club's image. The tribunal found no evidence of pamphlet distribution or any publication in the newspaper, as alleged.

4. Compliance with Articles of Association:
The tribunal noted that the right of a club member is significant and cannot be taken away lightly. The disciplinary proceedings and expulsion must be conducted carefully, ensuring that the misconduct is proven beyond doubt. In this case, the tribunal found that the expulsion decision did not comply with the required procedures under Clauses 36, 61, and 62 of the Articles of Association, as the allegations were not substantiated with concrete evidence.

Conclusion:
The tribunal concluded that the expulsion of the appellants was not justified. The decision of the managing committee dated 04.12.2016 was set aside, and the appellants' membership was ordered to be restored. The petitions (C Appeal No. 130/ALD/2020 and C Appeal No. 234/ALD/2020) were disposed of with no order as to cost.