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TMI Blog1977 (5) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... a partisan manner so as to benefit the group in control and their supporters and to prejudice the interest of the minority and to take vindictive action, including action of expulsion from membership and other adverse actions in the matter of registration of motion pictures and settlement of claims. One of the allegations is that the group in the control of the management of the company is running rough shod over its affairs and conducting the affairs of the company in a manner which is contrary to the provisions of the articles of association of the company and the various bye-laws, rules and regulations made by the company for the conduct of its business. On the basis of these allegations, and certain others, the petitioner seeks the removal of certain directors and their being debarred from holding any office under the Act, adequate representation on the executive committee for the minority group, free and fair election to the executive committee in a general meeting, to be convened for the purpose, in accordance with the rules and regulations and certain other directions with regard to the admission and expulsion of members and registration of motion pictures by the members. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder of August 30, 1976, the aforesaid order, which was ex parte, was confirmed. Leave was, however, granted to the company to initiate the proceedings for expulsion from membership, but the order of expulsion is not to be implemented without the leave of the court. It was further observed that the court would consider the question as to the appointment of two "additional directors" after elections had been held and that, in case such appointment was made, the continuance of the observer would be unnecessary. Pursuant to his appointment as court observer Mr. Joshi attended a number of meetings and has submitted a number of reports setting out, what appeared to him to be the manner in which the meetings were conducted and pointing out alleged irregularities in the conduct of the affairs of the company. By C.A. No. 736/76 the petitioner, inter alia , seeks relief by way of supersession of the executive committee and prays, in the alternative, for adequate representation being given to the minority group on the committee. By C.A. No. 737/76 the petitioner seeks leave to amend the petition so as to assail the validity of some of the articles in the articles of association of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the petitioner has the support of a large number of members of the company, which the petitioner claims, and as to whether the petitioner and his supporters have been subjected to any vindictive action by the management with a view to pressurise them into submission or to otherwise prejudicially affect their interests and to even put their membership of the company into jeopardy, prima facie , there is ground to believe that in the historical background of the dispute, the discontent among a section of the membership and the rather acrimonious course that the conflict between the two groups has taken, the apprehension that the minority, which has taken cudgels against the majority, which is said to be in the control of the management, is likely to be subjected to vindictive action, cannot be altogether brushed aside either as unwarranted or unreasonable and, in the situation that has emerged, there is a possibility that the management of the company may be conducted in a manner that may be prejudicial to the interests of the minority and, therefore, to that extent, prejudicial to the interests of the company. Such a possibility would ordinarily justify protective measure by cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the affairs complained of. Leave is opposed on behalf of the company on the ground that if leave was granted it would change the nature of the petition and would permit the petitioner to set up an entirely new case which the petitioner is unable to do by a fresh petition because of lack of support required under section 399 of the Act. It is urged that the members, who are claimed to have given their consent to the institution of the existing petition, have either withdrawn their support or have disowned the consent and that the petitioner was, therefore, unable to file a fresh petition on the cause of action which is sought to be incorporated by the amendment. It is further urged that leave should not be granted particularly where there is a serious doubt as to whether the petition is maintainable in view of the allegations that the consent in support of the same was fictitious or had since been rescinded. After hearing learned counsel for the parties it appears to me that, having regard to all the circumstances, leave should be granted to the petitioner to amend the petition. The petition is grounded on allegations of oppression of the minority at the hands of a management ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any group in the control of management of the company. These averments do not appear to either constitute a fresh cause of action or be said to constitute a new case. The complaint of the petitioner in the petition is that a group has sought to perpetuate its hold on the management of the company and has been oppressing the minority by various actions prejudicial to the minority members. That certain provisions of the articles of association of the company are also capable of being misused as instruments of oppression and of perpetuation is not foreign to the existing petition but is a different approach to the same problem, namely, the elimination of possibility of perpetuation and oppression. The petition is still at a preliminary stage and the amendment does not in any manner cause prejudice to the company which cannot be remedied by costs. On the contrary, the proposed amendment would enable this court to determine the real question in controversy between the parties with regard to the proper management of the company and avoid an unnecessary multiplicity of proceedings. Leave cannot be refused merely because the company challenges either the validity or the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... members in such a way that a member is not compelled to seek the aid of a court to recover dues from another member. By C.A. No. 334/76 made in C.P. No. 32/76 the company was sought to be restrained to expel members from the company pursuant to the power of the executive committee under article 15 on account of the alleged failure of certain members to pay the dues of other members on the allegations that in the atmosphere of hostility that prevailed in view of the group rivalries within the membership of the company the members of the company, who were the supporters of the petitioner, and those who had given consent to the filing of the petition, were being or were likely to be harassed by the group in control of the management, inter alia , by removing such members even where the claims made against them were bona fide disputed by them, without giving a reasonable opportunity to the members sought to be expelled of being heard. It was further alleged that the management of the company was guilty of discriminatory action in that proceedings for the removal of members, who were supporting the management, and the members of the various committees of the company were not being ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be removed on the basis of an arbitrary decision of the committee that the members are liable to pay, even though in case there is a bona fide dispute proceedings for removal could not be resorted to unless the liability has first been determined in appropriate proceedings of arbitration. It is further urged that while the petitioner and their supporters, constituting the minority group, are being harassed by proceedings for their removal on account of alleged non-payment of the dues, the company has failed to take steps over the years to enforce the claims of members against the members of the management of the company, their associates and supporters, which run into a tidy sum of a crore and odd because of the influence that these members wield in the management of the company. It is further urged that no uniform policy is pursued in the matter of granting time or instalments for payment and the members of the minority group and their supporters are discriminated against in these matters. It is urged that removal of a member, unlike the removal of a member of an ordinary company, is a matter of considerable significance because the removal would disentitle the member to carry ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... weeks to initiate proceedings for the expulsion of all such members against whom allegations have been made that they have failed to pay the dues of a member and take appropriate steps in accordance with the articles, bye-laws, rules and regulations of the company but subject to the aforesaid directions. These applications are disposed of in these terms. By C.A. No. 736/76 the petitioners pray for the super session of the executive committee or in the alternative suitable representation for the minority group on the committee. The application is, by and large, grounded on the allegations on which the main petition is based and the relief is sought to be justified with reference to the discontent amongst the minority group and the apprehension that by various decisions prejudicial to the interests of the members of the minority group they would be victimised, inter alia , with a view to frustrate the object of the present petition. The application is opposed. The question as to the propriety of appointing additional "directors" so as to give representation to the minority group was considered by Dalip K. Kapur J. on an earlier occasion while dealing with C.A. No. 334 of 1976. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elected at a meeting of the petitioner and the members, who have given their consent to the filing of the petition, which may be held for the purpose, should be nominated as additional members of the executive committee. On the assumption of office by the nominees Mr. Joshi shall cease to act as observer. I would, therefore, direct that a meeting of the petitioner and the members, who are alleged to have given their consent to the filing of the petition, would be convened for the purpose of electing two additional members of the executive committee, out of the said members. The meeting will be convened and presided over by Shri Satya Dev Sharma, advocate. The venue, date and time of the meeting and the modalities for its convening would be decided by Mr. Sharma in consultation with the counsel for the parties. Mr. Sharma would be paid a fee of Rs. 500 in addition to the actual out of pocket expenses to be incurred in convening the meeting. Mr. Sharma would submit his report within four weeks. C.A. No. 736/76 is disposed of in these terms. C.A. No. 180/77 By C.A. No. 180/77 the petitioner seeks directions with regard to the procedure for registration of motion pictures, se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e hostile or friendly to one of the parties. Various directions are, therefore, sought with a view to ensure that the existing rules, regulations and norms are not allowed to be flouted and the members of the minority group are not allowed to be subjected to harassment. On behalf of the company the various allegations are denied. With regard to the registration of claim by Shri Sood in relation to a motion picture it was urged that in terms of rules no motion picture could be registered at the instance of a member unless the outstanding claim of another member in relation to the picture has first been satisfactorily settled. The allegation that in the case of Shri Sood the registration of the picture was threatened even though the claim of Shri Sood had been registered in relation to the same picture was denied. The allegation that Shri Sood was prevented from registering the picture within the time envisaged by the rules was denied and the imposition of the maximum penalty was sought to be justified on the ground that there was power in the executive committee to impose the penalty. It was, however, not denied that such a penalty was rarely imposed and the maximum penalty had al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proper to make directions which would safeguard the interest of the members, leaving, as far as possible, the power of the management of the company to conduct its affairs unimpaired. In the circumstances, I would make the following directions : ( a )The penalty imposed on M/s. Globe Films on account of the delayed registration of its picture entitled "Main T'ulsi Tere Aangan Ki" is set aside, but the company is granted liberty to consider what penalty, if any, should be imposed on account of delay in registration after granting to the member concerned a reasonable opportunity of being heard. ( b )Pending further orders no penalty would be imposed on account of delay in registration without granting to the affected person a reasonable opportunity of being heard. ( c )A member shall not be appointed to be an arbitrator in a dispute between the members of the company if any of the parties to the dispute objects to the arbitration by such a member on the grounds that the proposed arbitrator is interested in any of the parties or is hostile to the member, who complains of it, or is otherwise interested in the subject-matter of the dispute. If any party to the dispute expresses ..... X X X X Extracts X X X X X X X X Extracts X X X X
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