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TMI Blog1987 (3) TMI 442X X X X Extracts X X X X X X X X Extracts X X X X ..... or the executive committee, as it is now called, of the DDCA. The Central Government has issued directions from time to time under sub-section (6) of section 408 of the Act. The petitioner, who claims to be a member of the DDCA, states that the DDCA is a company limited by guarantee without share capital. Though it was contended on behalf of the DDCA that it was now a company registered under section 25 of the Act, yet that fact was denied by the petitioner. Reference was made in this connection to a letter dated June 28, 1985, of the Regional Director, Company Law Board, Kanpur (annexure I to the affidavit dated September 13, 1985, of Mr. L. N. Tandon, general secretary of the DDCA filed by way of evidence). Mr. Mehra, learned counsel for the petitioner, however, submitted that certain conditions were stipulated in this letter for the DDCA to be registered as a section 25 company, as is now popularly known, but that those conditions were never fulfilled. During the course of arguments, a further affidavit of Mr. L. N. Tandon dated March 12, 1987, was filed with which a letter dated September 25, 1986, of the Company Law Board to the DDCA was annexed. In this it was mentioned tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of which the relief of declaration and injunction was sought, and which are relevant to the present petition as well, were: "VII. That inasmuch as article 2 of the articles of association of the DDCA fixed the number of members as 1,500, any change in the said article could have only been done by a special resolution of the general meeting of the DDCA and, therefore, the purported addition of new members in any event was illegal and without any authority". "IV. That the enrolment of more than 400 new members during the six months preceding the election was illegal and mala fide and had been done in order to manipulate a majority in favour of those who were then controlling the affairs of the DDCA". "V. That no decision was taken in any meeting to increase the number of registered members of the association and even assuming without admitting that any such decision was taken, the same was not valid inasmuch as no notice under section 97 of the Act of the said increase has been given to the Registrar. Moreover, the proper procedure was not followed in enrolling new members". If reference is made to the title of this suit, Mr. K. K. Mehra who is now appearing as counse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the discharge of his functions. Each member shall be entitled to one proxy only. Proxy form and notice of annual general meeting shall be sent by registered post only. The ballot papers and proxies will be issued by the supervisor himself. The right to east vote shall be available to all the members of the association who had been enrolled up to November 29, 1982, i.e. , the date when the interim order was made by this court. It is admitted that there has been no enrolment of members thereafter. On the completion of election of the general committee, the suit shall be dismissed as withdrawn. RO AC J.D. Jain, August 17, 1983. Judge. In view of the joint statement made by the counsel for the parties. I direct that the annual general meeting/election of the association, defendant No. 1 shall be held by or before September 30, 1983, without fail. The present general committee shall decide upon the necessary steps towards holding of annual general meeting and election, etc., as indicated above forthwith. Shri M. S. Joshi, a retired judge of this court, is appointed observer-cum-supervisor to ensure that the annual general meeting and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the plaintiffs to amend their plaint suitably in case the plaintiffs were not satisfied by the fresh elections as held on September 30, 1983. They may seek appropriate remedy, i.e. , by way of a fresh suit or other proceedings. The present suit, however, does not survive any longer. In conclusion, I hold that the suit is liable to be dismissed forthwith". The aforesaid observations of the court in Suit No. 1587 of 1982, it appears, led to the filing of the present petition. Obviously, the petitioner and his group lost the elections held on September 30, 1983, and September 30, 1984. Elections for subsequent years were stayed by this court by order dated August 28, 1985, and the respondents were also restrained from admitting new members. Respondents Nos. 17 and 18, who are nominees of the Central Government as directors in the DDCA, did not choose to appear in these proceedings. Reference to the respondents would, therefore, mean respondents Nos. 1 to 16. The respondents, in their reply, denied the allegations of the petitioner and submitted that members had been enrolled validly under article 2 of the articles of association. It was admitted that membership exceeded t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber was large and that they could be served by a public advertisement. The prayer in the application was that the petitioner be allowed to amend the petition by suing the members beyond 1,500 in the representative capacity and that the respondents be directed to defend the suit on their behalf and further that notice of the institution of the petition be ordered to be published in some newspaper as required under Order 1, rule 10, of the Code. The respondents opposed this application. It was submitted that the application was much too belated as the respondents had taken the objection about the non-impleading of the members in their reply to the petition and thereafter the petitioner even filed his rejoinder and then an affidavit by means of evidence wherein he had taken the stand that the members beyond 1,500 were not necessary parties to these proceedings. Then the respondents stated that the petition had been set for hearing on many occasions and that this application was filed to delay the proceedings inasmuch as the annual general meeting of the DDCA had been stayed by an order of the court and that the annual general meeting was urgently required to be held to meet certain re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the petition, and appear at the hearing in person or by your advocate. If you wish to oppose the petition, the grounds of opposition or a copy of your affidavit should be furnished with your notice. A copy of the petition shall be furnished to you if you require it on the payment of prescribed charges for the same. (Sd.) (K.K. Mehra), Advocate for the petitioner Dated the B-6, Asaf Ali Road, 28th May, 1986. New Delhi". In pursuance of this notice, four members, namely, Mr. Sneh Prakash Bansal (membership No. B-153), Mr. Ratan Lal (membership No. R-57), Mr. Shravan Kumar Lodha (membership No. L-31) and Mr. Satish Soni (membership No. S-500), appeared and filed their replies. They all opposed the petition. The matter rested at that. The petitioner did not seek any further orders on his application (CA No. 344 of 1986). Rather, I would say that the application was not pressed further. As I understood, according to Mr. Mehra, learned counsel for the petitioner, nothing more was required on his application and that the provisions of Order 1, rule 8, of the Code, had been complied with. It was submitted by M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in various ways. Then, if reference is made to the replies of the four members mentioned above, the members are not allotted numbers seriatim. For example, Mr. Soni has been allotted membership No. S-500. It is not possible for any member to know at a given time whether his number exceeds the figure of 1,500, Also the articles provide for different types of membership like life member, ordinary member, honorary member, etc. Still, enrolment of a member beyond 1,500 cannot be challenged after three years of his becoming a member in view of the bar of limitation. It is thus an ever-changing scenario. In such a circumstance, it cannot be said that the interest of all the members would be common. The petitioner had not sought to implead all the members against whom he had a cause of action. Rather he wanted to invoke the provisions of Order 1, rule 8, of the Code though styling his application (CA No. 344 of 1986) as one under Order 6, rule 17, and Order ], rule 10, of the Code. For the provisions of rule 8 of Order 1 to be applicable, it has to be shown that (1) there are numerous persons having the same interest, and (2) one or more persons with permission of the court be sued or m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oid to that extent. Under sub-section (2) of section 27 of the Act, the articles, in the case of a company limited by guarantee, shall state the number of members with which the company is to be registered. This number is 1,500. A company under section 31 of the Act may, by special resolution, alter its articles. As to how a special resolution is to be passed, reference may be made to section 189 of the Act. Sub-section (2) of section 173 requires that a statement of all material facts concerning the reduction or increase in the membership should be annexed to the notice of the meeting for the purpose of passing a special resolution. Section 9 of the Act prescribes that the provisions of the Act would have overriding effect and anything to the contrary either in the memorandum or articles of a company would be void and the provisions of the Act would have effect. Under section 97, where a company has, as in the present case, increased the number of its members beyond the registered number, it has to file with the Registrar notice of increase of members within 30 days after the passing of the resolution authorising the increase, and the Registrar shall record the increase and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n power earlier to the respondents, they were also enrolling members and even beyond the figure 1,500 on the eve of elections. The very argument which Mr. Mehra has now advanced would have applied to the petitioner and his group. It is not the case of the petitioner that at that time when he and his group were in power, the action of the executive committee in enrolling new members was not bona fide . It is the petitioner who has shown the way to the present executive committee and he cannot be heard to complain though one would suspect the bona fides of the executive committee in enrolling members indiscriminately for the purpose of winning elections. Along with the affidavit dated March 12, 1987, of Mr. L. N. Tandon, general secretary of the DDCA, there is an annexure "D" which is a letter dated September 25, 1986, from the Central Government to the DDCA. In this letter it is mentioned with reference to a letter dated August 4, 1986, of the DDCA that the Company Law Board in exercise of the powers conferred on it under section 405(5) of the Act approves the co-option of Mr. Manmohan Sood, National Selector, in the board meeting held on July 4, 1986. This clearly shows that the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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