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TMI Blog1997 (4) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... e committee of the third respondent, that the same was not conclusive to the interest of the third respondent and that, therefore, the appellants should show cause why appropriate action as the committee of the third respondent thinks fit should not be taken against them for such prejudicial conduct. Both the appellants sent replies to the show-cause notice. On 9-1-1989, the third respondent issued orders suspending the appellants from the membership of the third respondent, viz., the appellant K. Leela Kumar for a period of 45 days from 11-1-1989 to 24-2-1989 and the appellant M. Subbiah for a period of thirty days from 11-1-1989 to 9-2-1989, in exercise of the power conferred on the management under article 28 of the articles of association of the third respondent club. 3. Aggrieved by the order of suspension, the appellants filed W.P. Nos. 667 and 769 of 1989 to issue a writ of mandamus directing respondent Nos. 1 and 2 to take appropriate action to enforce Circular No. 32 of 1975 dated 1-11-1975, issued by the first respondent for deletion of article 28 from the articles of association of the third respondent without any further delay. According to the appellants, respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugnant to the various provisions in the Companies Act pertaining to the rights of a member in a public limited company and cuts across the scheme of the Act as it has the effect of rendering nugatory the very powers of the Central Government under section 111 of the Companies Act, 1956, and the powers of the courts under sections 107 and 395 of the Act and is, therefore, void by the operation of the provisions of section 9 of the Act. The articles of association is a contract between the company and its members setting out the rights of members inter se under the contract, and expulsion of a member is not only a violation of this contract but it is also opposed to the principles of natural justice. Moreover, under section 23 of the Indian Contract Act, any agreement which is contrary to any law or opposed to public would be deemed to be unlawful and void. The Supreme Court in the case of Bajaj Auto Ltd. v. N.K. Firodia [1971] 41 Comp. Cas. 1 has laid down the law as to the condition on the basis of which directors could refuse a person to be admitted as a member of the company. The principles laid down by the Supreme Court in this case, even though pertaining to the refusal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellants that in the third respondent club, a few persons are controlling the affairs of the club and these persons in order to have absolute control in the affairs of the club and the dissent voice, started to invoke the powers under article 28. When they want to amend article 5 of the articles of association in regard to the voting pattern at the annual general meeting, they called for an extraordinary general meeting on 28-11-1988. On that date, the appellants and a few others openly criticised the above move. The President and other committee members who were present at the meeting, on seeing the appellants and other dissent members, decided to postpone the extraordinary general meeting specially convened at the instance of the management. When the appellants asked the President that when there was requisite quorum for the meeting to be held, why the meeting had to be postponed, the President without answering left the place along with the other committee members. Since requisite quorum was present, the members present electing a president conducted the meeting and the proposed amendment to article 5 was unanimously rejected by the members attending the meeting. 6. It is, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ections 31, 189 and 192 of the Act, which were also complied with. 9. The third respondent club contended in its counter-affidavit that article 28 in its present form was in existence on the date when the appellants became members of the third respondent club and that Circular No. 32 of 1975, referred to by the appellants merely represents the department s view in a case of amendment of the existing articles of association of a public limited company for expulsion of a shareholder. It is further averred in the counter-affidavit that the postponement of the extraordinary general meeting was perfectly valid and, consequently, the meeting held on that day after such postponement would not be valid and that the action of the committee is not in violation of the fundamental rights guaranteed under the Constitution of India. 10. In view of the rival contentions of the parties, the principal question to be decided in these appeals is, whether Circular No. 32 of 1975 dated 1-11-1975, issued by the first respondent can be enforced at the instance of the appellants and whether article 28 of the articles of association of the third respondent is liable to be deleted on the ground that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equated with public limited companies having profit motives, which is their sole aim. 16. Article 28 of the articles of association of the third respondent originally provided for termination of membership under certain contingencies. After obtaining the prior approval of the first respondent acting through the Regional Director, Company Law Board, Madras, the third respondent in its extraordinary general body meeting held on 29-6-1974, resolved, inter alia, to amend article 28 conferring power on the committee to suspend a member of the club up to a period of three months if, in its opinion, the member concerned had acted in a manner prejudicial to the interest, character and conduct of the club. It is also not out of place to mention that the Company Law Board had raised some queries, applied its mind to the replies sent by the third respondent and after satisfying itself had accorded approval to the proposed amendment. Both the appellants became members of the third respondents when article 28 in its present form was in existence. 17. As already seen, the appellants are seeking to enforce Circular No. 32 of 1975 issued by the first respondent which has been extracted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the third respondent sent a letter dated 3-1-1989, calling upon the appellants to show cause as to why appropriate actions should not be taken against them for their prejudicial conduct. Since the appellants did not give any explanation, the third respondent, after due consideration of the facts and circumstances, by letter dated 9-1-1989, suspended the appellants from the membership of the club, the appellant K. Leela Kumar for a period of 45 days and the appellant M. Subbiah for a period of thirty days, since, in the opinion of the committee, the conduct of the appellants was injurious to the prestige, interest and character of the club. We are of the view that the action of the committee is perfectly valid, legal and proper being also a matter pertaining purely to the internal administration of the club. We have already seen that the amendment was approved by the Regional Director of the Company Law Board, Madras, by letter dated 8-5-1974, by virtue of the power conferred on him under section 25, which has been delegated to him by the Government of India in Notification No. GSR 71, dated 1-1-1966. The appellants having been aggrieved by the order of suspension, have filed the wr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the State and disciplinary action may be taken against him, a member of the public who is aggrieved by the breach of such instructions cannot seek any remedy in the courts. The reason is, that not having the force of law, they cannot confer any legal right upon anybody, and cannot, therefore, be enforced even by writs under article 226." Since the appellants being third parties to Circular No. 32 of 1975, cannot enforce the same by approaching this Court under article 226 of the Constitution, they are not entitled to any relief in the present writ proceedings. We agree with the opinion expressed by the learned single Judge. There are no merits in the writ appeals. 22. The need or necessity for the retention of a clause of the nature impugned in the articles of association, in order to maintain internal discipline among members of a private club and protect the fair image and status of the club is a matter pertaining to private law or personal matters and no public law aspect or any violation of statutory rights or fundamental rights is involved therein. The wisdom or otherwise of the policy behind the bye-law of a private club is not a matter for consideration in a writ peti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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