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TMI Blog1956 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... ciation being wound up the liability of the members is limited to Rs. 20. Article 4 of the articles of association provides: "Any person, firm, association, company or corporation engaged or interested in Kirana trade desirous of joining the association shall be eligible for membership subject to the rules and regulations hereof." Article 7 requires that: "A candidate for election as a member...shall be proposed by one and seconded by another committee member and may be elected by the committee." Sub-paragraph to article 7 lays down that unless and until the candidate is selected by the committee he shall not be treated as a member of the association merely because he has made an application for membership and made the requisite payment. Article 9 runs as follows: "Any original member may withdraw from the association by giving not less than six months' notice in writing to the Secretary of his intention to do so and upon the expiration of the notice such member shall cease to be a member and in the case of other ordinary members one calendar month's notice shall be sufficient." The firm of Hazarimal and Company was in 1951 a member of this association. On 25th July, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consequence all the transactions entered into by that firm subsequent to the termination of its membership were null and void. The letter, (Exhibit P. 6) continued: "In the circumstances, I content myself with drawing your attention to the above facts and an immediate reply is solicited as regards the correctness of the facts set out by me so that I may consider my position with reference to business I have done with him subsequent to his ceasing to be a member of the association. May I further request you to notify the above facts immediately also to all the members." On 13th March, 1952, Sha Hindumull Dhalichand wrote to the Secretary of the Association asking for certified copies of the telegram and the correspondence between the association and Hazarimal and Company. No reply having been received, Sha Hindumull Dhalichand again wrote to the association on 17th March, 1952, stating that since no reply had been received they would presume that the facts set out in their letter were true. On 21st March, 1952, the Association wrote a letter, (Exhibit P. 9), to Sha Hindumull Dhalichand as follows: "With reference to your letters of the 12th, 13th and 17th instant we have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns as follows: "'Company' means a company formed and registered under this Act or an existing company." It was argued that the Madras Kirana Merchants' Association is only an association and not a company within the meaning of the Act, It was said that this argument derives strength from section 4 of the Act which begins, "No company, association or partnership consisting of more than ten persons" .. etc ." thereby suggesting that the Act itself makes a distinction between a company and an association. It was also pointed out that section 26 occurs under the heading "Associations not for profit and is thus distinguished from "Companies". It was finally stated, that an association registered under Section 26(1) of the Act is not a company at all. I am unable to accept this reasoning. So far as chapter headings and sub-headings are concerned it is well to bear in mind the rules set out on page 50 of Maxwell on the Interpretation of Statutes, 10th edition: "The headings prefixed to sections or sets of sections in some modern statutes are regarded as preambles to those sections. They cannot control the plain words of the statute but they may explain ambiguous words. A cro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a construction. That definition does not say that a company means a company formed and registered under the Act otherwise than under section 26(1) of the Act. An association can be given a corporate life in various ways. Associations which seek profit may get registered and acquire a corporate life by complying with sections 5 to 9 of the Act and certain other sections. Where the association does not seek a profit, a different mode by which it can be given a corporate life is provided for by section 26 of the Act. That an association not for profit acquires a corporate life by reason of a licence granted under section 26(1) of the Act does not make it any the less a company within the meaning of the Act. This is made clear by sub-section (3) of section 26 which runs as follows: "The association shall on registration enjoy all-the privileges of limited companies, and be subject to all their obligations, except those of using the word 'limited' as any part of its name/and of publishing its name, and of sending lists of members to the Registrar." The sub-section means that on registration an association will have all the privileges and all the liabilities of an ordinary comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficulty in giving effect to this reasoning lies in article 9, an article which has already been quoted above. It. is common ground that Hazarimull and Co. was not an original member of the association but only an ordinary member. Now, by virtue of article 9, on the expiration of one month from the date of the notice of withdrawal it automatically and without more took effect: there never was or could be any question of anybody accepting the resignation. Now, faced with this difficulty the explanation was offered that neither the telegram, Exhibit P. 1, nor the letter Exhibit P. 2 can be treated as a notice of withdrawal by Hazarimull and Co. Both the documents purport to be resignations and resignations have no place in the scheme of the articles of association. Hazarimull and Co. therefore continued to be members of the association. This line of reasoning, it seems to me, ignores the plain intention of the words used in Exhibits P.1 and P.2. They make it clear that Hazarimull and Company did not want to continue to be a member of the association. Whatever may be said about Exhibit P.1, Exhibit P.2 gives no room for doubt or argument. In that letter Hazarimull and Company accuse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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