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TMI Blog2005 (7) TMI 356X X X X Extracts X X X X X X X X Extracts X X X X ..... y the majority members on the so-called minority, namely, the petitioners and also certain disputes about membership of some persons. The prayers which were made in the petition read as under : "(1) That the erring members of the Motion Picture Association/the erring office bearers/directors of the respondent No. 1, namely, Joginder Singh, Narain Dass, B.N. Gupta, M.B. Mathur and Dinkar R. Desai, respondents 2 to 6, respectively perpetuators of all mismanagement, misappropriation and oppression be disqualified, debarred and expelled for a period of at least 5 years from the membership and from holding any office or membership of the executive committee of the respondent No. 1. (2) The respondent-company may be restrained from in any manner amending or tampering with the articles of association and with any rules, bye-laws or regulations of the association and more particularly in admitting temporary provisional members. The amendment of articles effected by Shri Joginder Singh and B.R. Kundra in their individual capacity and as ordered by the Court vide order dated 20th February, 1978 may be set at naught and that the articles be amended after having representations from all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng annual subscription payable by the members to the association was allowed to be amended. By subsequent order dated 6th March, 1995, article 63, which contains resolution of disputes among the members through arbitration, was also amended and the proposed amendment to article 24 only remained for consideration. The original article 24 reads as under : "At every AGM all the office bearers and the remaining nine sitting members of the executive committee elected at the previous AGM shall retire from office. The retiring office bearers and retiring members of the executive committee shall be eligible for re-election in the AGM in which they retire." 4. The proposed article 24 for amendment is as under : "At every AGM which is to be called strictly in accordance with section 166 read with section 210, i.e., within six months from the close of each financial year, all office-bearers and members of the executive committee elected at the previous AGM shall retire. The retiring office-bearers and retiring members of the executive committee shall be eligible for re-election in the AGM in which they retire if eligible otherwise. However, any office-bearer/members of the executive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed, i.e., existing article 24 or proposed amended article 24. Total 157 ballot papers were issued and casted. Out of these 92 were issued and casted on white ballot paper (undisputed) and 65 were issued and casted on red ballot papers (disputed). In the undisputed ballot totalling No. 92, 76 in favour of existing voted article 24 to remain as it is and 16 voted for proposed amendment in article 24. Thus, more than 75 per cent of the voters did not want any amendment in article 24 of Motion Picture Association. Among the 65 disputed votes casted on red ballot papers, 58 votes were in favour of the existing article 24 and 7 votes in favour of proposed amendment, of article 24. Again this lot also more than 89 per cent were in favour of existing article 24 and did not want amendment. It is stated that out of the total 157 votes whether in the undisputed lot or in the disputed lot, majority, i.e., more than 75 per cent, voted and were in favour of existing article 24 to continue as it is. It is submitted that any amendment in the existing article required at least 75 per cent votes polled and situation being otherwise question of amendment in article 24 does not arise. The compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from among its members. ****** I have heard learned counsel for the parties at considerable length on the various questions that arise for consideration in these applications. While there are a number of questions, both of fact and law, which are in controversy between the parties, the basic hypothesis on which the petitioner justifies, relief is, by and large, undisputed. It is not in dispute that the present management of the company has over the years been in the control of the management of the company, either by themselves or through their associates, either because of their popularity with the majority of the members of the company, as contended on behalf of the company, or on account of the influence they wield and the patronage at their disposal on account of the levers of power that they have held over the years and the machinations by which they have been able to perpetuate their hold on the company, as claimed on behalf of the petitioner. It is also undisputed that during the loast many years there has been discontent among a section of the membership of the company, although the parties are at variance as to the real strength of the dissidents. It is also not in di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny. In the second instance, there is the need to protect the minority from any possible onslaught from the majority so that their vital interests are safeguarded and their right to carry on their trade is not allowed to be put in jeopardy, except in accordance with the articles of association, the rules and regulations and consistent with principles of justice, equity and fair play. Thirdly, there is the imperative that this Court would moderate relief in such a way that the company, which has been doing useful work in regulating the relations between different members of the company in relation to their trading activity, is not unnecessarily denigrated or be subjected to unnecessary judicial interference or in any manner exposed to ridicule. Lastly, it is necessary to ensure that the necessary protection to the minority against any oppressive acts of the majority, should not be allowed to be misused to the detriment of the company or its membership. ..." (p. 539) 7. In the case of Motion Pictures Association ( supra ), it was observed as under : "Motion Pictures Association is a company under section 25 of the Companies Act, controlling distribution and exhibition of Hindi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following judgments : ( i ) Dr. V. Sebastian v. City Hospital (P.) Ltd. [1985] 57 Comp. Cas. 453 (Ker.); ( ii ) Debi Jhora Tea Co. Ltd. v. Barendra Krishna Bhowmick [1980] 50 Comp. Cas. 771 (Cal.) and ( iii ) Bennet Coleman Co. v. Union of India [1977] 47 Comp. Cas. 92 (Bom.). 9. He submitted that the ratio of the aforesaid cases was to the effect that there can be no limitation on the Court s power while acting under sections 397, 398 and 402 of the Act. Instead of winding up a company, the Court has been vested with ample power to continue the corporate existence of a company by passing such orders as it thinks fit in order to achieve the objective by removing any member or members of a company or to prevent the company s affairs from being conducted in a manner prejudicial to the public interest. The Court under section 398 and section 402 of the Act has the power to supplant the entire corporate management. Under these provisions, the Court can give appropriate directions which are contrary to the provisions of the articles of the company or the provisions of the Act. On a reading of section 402( a ) and section 402( g ), there can be no doubt that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where such an embargo on re-election is contained as reflected in the proposed amendment. There is no such prohibition in any political elections as well. In fact the entire argument of Mr. Khan proceeds on the presumption that if a person is elected again and again he will indulge in oppression of the minority and mismanagement of the company/association. Even if it is presumed that there is history of such oppressions/mismanagement, remedy lies in giving directions of other nature when suitable petition under sections 397 and 398 of the Act is filed and precisely this has been done in earlier petitions filed which Mr. Khan referred to. Right of majority to get elected is different from their oppressive conduct. If the oppression and mis-management is to be removed it may not be achieved by prescribing such kind of restriction as contained in the proposed article 24. It would be of interest to note that in his affidavit dated 25th October, 2004 filed by Mr. Khan, he has stated that Mr. G.S. Mayawala (the original petitioner) and his henchmen came in majority in 1990-91 when Mr. Mayawala was elected as Hony. General Secretary for the first time and came in full control of the assoc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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