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TMI Blog2020 (5) TMI 101X X X X Extracts X X X X X X X X Extracts X X X X ..... or wrong, as it has been left open to decide at the final hearing, this Bench is entitled to go into it - Qualification given one to ten cannot be read as qualification zero to ten. Here this person is a non-member; a member u/s.241 cannot be read as non-member just because an application could be allowed even a shortfall is there to the qualification u/s.244 of the Companies Act, 2013. However, this Bench ordered that the CP is maintainable owing to some complexities, therefore, it has been left open to decide this issue at the time of final hearing. Though it is not to make an observation against the interim order passed saying that this petition is maintainable, the basic standard under law is whenever a threshold is set out in the law to initiate proceeding, first that issue shall be looked into at the time of filing, if it is slipped out at the time of numbering, it has to be considered at the time of mentioning. The reason behind this doctrine is, the statute has not left any jurisdiction to the judiciary to consider petition filed by a non-member. The subject matter jurisdiction comes to this Tribunal only when the petitioner crossed the test of being a member of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ither of them - there are no merit in the argument of the Petitioner saying that the Managing Committee elected by the so-called 250 members as valid. Whether any case has been made out u/s.241 of the Companies Act, 2013 against the Respondents herein? - HELD THAT:- Every action that is falling under sec.213 or any unlawful actions falling under any of the companies Act cannot be straight away considered as an action attracting the provisions of sec.241 of the Companies, Act, 2013. The checklist and the measurement to bring it within the ambit of sec.241 are altogether different, here the Petitioner has miserably failed to establish any case u/s.241 of the Companies Act, 2013. Petition dismissed. - IA/252/2019, CA/171/2019, CP/2/2016 - - - Dated:- 20-1-2020 - B.S.V. Prakash Kumar, ACTG. President And S. Vijayaraghavan, Technical Member For the Petitioner : Jayesh B. Dolia, Ms. T. Geethanjalli, Adv. For the Respondent : V. Swaraj, D. Prabhu Mukunth Arunkumar, Advs. Arvindh Pandian, Sr. Adv., Adrian D. Rozario and Bharathirajan, Advs. ORDER B.S.V. PRAKASH KUMAR, ACTING PRESIDENT 1. It is a Company Petition filed u/s 241 of the Companies Act, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd lay persons representing each diocese according to the number of members of the respective church shall become members of Synod. Moderator will be elected by all Dioceses Bishops, but that decision is to be ratified by Synod members. In this process, these members of the Synod elect a Moderator, a Deputy Moderator, a General Secretary and Treasurer. All these four officers shall be elected by ballot of the synod. The Moderator and the Deputy Moderator shall be elected from among the diocesan bishops of the church. All officers shall be elected during each ordinary meeting of the Synod and shall hold office from the close of that meeting till close of the next ordinary meeting of the Synod. Provided if any vacancy occurs; the Executive Committee shall fill up such vacancy subject to the approval of the majority of the members of the synod. These members shall be eligible for re-election for another term of 2/3 years consecutively. The Moderator shall be presiding officer of the Synod and the Chairman of the Executive Committee. He shall be official representative during his term of office of the Church of South India (CSI) in all businesses with other churches and other organisat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d away, in view thereof, RoC, Coimbatore issued notice for inspection of CSITA, over which, CSITA got stay order against the notice for inspection issued by the RoC. Sometime later, the Hon'ble High Court of Madras vacated the stay with a direction to RoC, Chennai to carry out detailed inspection of CSITA u/s 209 of the Companies Act, 1956 wherein the RoC pointed out 27 irregularities, whereupon, 43 criminal cases were instituted against the Respondents before Economic Offences Court, Egmore, Chennai. 10. On the explanations sought by the RoC, the Petitioner says, CSITA replied that official members of it are on ordinary basis and keep changing every two years and these committee members are religious heads, therefore they are not conversant with the provisions of the Act. The RoC not being satisfied of such explanation, the Petitioner says, the RoC recommended action against CSITA and its office bearers through Serious Fraud Investigation Office (SFIO). The Petitioner says, CSITA did not hold Annual General Meeting for the year 2015 and it has also not finalised its financial statements for the Financial Year ended 31-3-2015. He says that the office bearers, without any aut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meeting of that kind and elect people as members of CSITA. 15. By giving this factual matrix, the Petitioner sought reliefs, declaring the acts of management of CSITA shall be declared ultra vires, the Management committee shall be restrained from managing the affairs of the company and the newly elected persons shall be declared as Management Committee by suspending the Managing Committee which was earlier elected by Synod with a direction to CSITA, to permit the newly appointed Management Committee to carry out the operations of CSITA or to appoint such other person to whom the Tribunal deems fit to supervise the functions of the newly appointed Management Committee, and to alter the register of members by including the newly elected members as members of the company, and to declare the amendment to the Article 4 of the Articles of Association dated 5-3-2002 ultra vires for authorising unto themselves as ex officio members of CISTA. 16. The Petitioners present case is primarily assailing the amendment dated 5-3-2002, without consent of the Regional Director and approval of the Central Government, the then Officer Bearers of CSITA amended the Articles of Association (Article ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without seeking leave of the Central Government by which the tenure of the Synod has been increased from two years to three years and the said exercise of amending constitution of CSI is sham and illegal. The tenure of the membership has expired on 14-4-2016 and the members so elected by the Synod are continuing without any legal authority, since the membership is under challenge. Therefore, a complex question of fact is involved in this Petition. In some of the judicial pronouncements, the courts have opined that if a complex question of fact is involved, then the Petition is not to be thrown out at the threshold and can be heard on the merits even if the petitioner has not established that he is a member. However, before the relief is finally granted, the petitioner should be able to establish that he is a member . Here in this case, on one hand, the election said to have been conducted by the Synod provide two years tenure of the said members, but the alleged illegal amendment made in the Articles of Association provides three years tenure of the members so elected. In these circumstances, the issue of maintainability of the -petition cannot he treated as preliminary legal iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussion, by holding the petition is maintainable; this Bench had proceeded to remove all the Directors and the Managing committee including office bearers by appointing Hon'ble Justice Shri. K. Sampath (Retd.) as the Chairman who is authorised to nominate four suitable persons to be chosen from the Sub-Units/Dioceses of the Churches and three Office Bearers by simultaneously directing the erstwhile Management Committee to handover all the documents and books of account and other records of CSITA to the Registry of this Bench in a sealed cover within a week from the date of pronouncement of the order. 20. But the Hon'ble Justice Shri SAMPATH having passed away even before taking up the reins of this company, for no other new Administrator has been appointed by this Bench, that direction could not take off. In the meanwhile, for this litigation with regard to the election tenure of Synod and over the investigation initiated against R1 had already been pending before the Hon'ble High Court of Madras and Hon'ble High Court of Hyderabad, subsequent to passing the order dated 18-11-2016, the Hon'ble High Court of Hyderabad vide order dated 16-11-2017 in W.P.3881 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e a different view now. 22. In addition to the above material, the Respondent counsel has filed IA252 of 2019 assailing the fake power of attorney alleged to be of the CSITA by the Petitioner in favour of one Mr. Thyagarajan and three fake lease deeds alleged to be of CSITA by Mr. Thyagarajan in favour of the third parties to show the extent of the impropriety and the illegality committed by this Petitioner and Mr. Thyagarajan in executing those deeds involving valuable properties held by CSITA without any power either from Synod or from CSITA. On the acts of the Petitioner and Mr. Thyagarajan, CSITA being aggrieved of, a complaint was filed on behalf of the CSITA to the Commissioner of Police at Chennai; the same was registered as FIR 83/2019 by the Central Crime Branch at Chennai. 23. The Respondents counsel submits that this Petitioner is only a communicant member of a Church under the Madras Dioceses of CSI, the total number of members running to about 4.5 Millions and odd. The Petitioner holds no office in the Church, therefore, the Respondents submit that the meeting conducted by him and the others and the alleged election of the Office Bearers is totally illegal. The C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amended without proper General Body Meeting therefore the Election held on 14-1-2017 shall be declared as invalid. 28. The Applicant has further stated that when the counsel for the Applicant was not present before the Tribunal, though the Applicant himself made a request on 8-1-2019 for adjournment, this Tribunal heard the matter and passed orders. He has further stated that this Bench dismissed MAs 19 to 23 of 2018 filed by the supporting respondents as withdrawn, and then dismissed the Applicants/Petitioners request for the interim reliefs against the alleged newly constituted Board to administer CSITA. The Applicant's case in this case is, no election has been held on 14-1-2017 therefore he reserves his right on the order dated 8-1-2019 before the Hon'ble NCLAT assailing that such an order ought not to have been passed without going into the averments made by the Applicant. As to these allegations, it is on record how these applications were dismissed. 29. The Applicant says that RoC Chennai issued several show-cause notices to CSITA for various irregularities committed by its management and the Registrar has sent a report to the Central Government recommending f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. On the order dated 13-12-2017 passed by Central Government, when R1 had preferred WP25236/2018 challenging the order dated 7-5-2018 passed by Central Government, the Hon'ble High Court of Madras stayed the order passed by the Central Government therefore, the present application u/s.213 of the Act will not interfere with the order of the Central Government hence sought for direction u/s.213 (b) of the Companies Act, 2013. When the Hon'ble High Court already stayed the proceedings u/s 212, how this Bench could pass a relief under section 213 of the Act. If it is assumed the proceedings initiated under section 212 are not stayed, even then where is the question of providing the same relief taking to the logical end what comes in section 212 of the Act. 32. While the Petitioner filed the above application seeking investigation, R1 has filed IA252/2019 to submit how this petitioner and one Mr. Thyagarajan created third party interest over the assets of the Company without any right to deal with the assets of the company. 33. In this Application, CSITA has raised a point that since the Petitioner himself asked a relief for appointment of the office bearers allegedly el ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they have been decided as follows: (1) Whether this CP is maintainable for it has been filed by a non-member of the company. (2) Whether sec.241 application is maintainable with regard to the affairs of the sec.8 Companies: 39. It is a case filed by a non-member u/s.241 of the Act by stating that though he is not a member of the CSITA, since CSITA has come into existence for the benefit of the members of CSI, this non-member issue cannot be construed as this Petitioner is not entitled to initiate section 241 proceeding against CSITA. Moreover, the Petitioner and the consenters stated that since CSITA has come into existence to work for the good of CSI, moreover this Petitioner having conducted General Body Meeting of the members of CSI and held an election to constitute a Managing Committee, it shall be permitted to take over the charge of CSITA for CSITA's earlier members tenure had expired and the elections were not being held despite notice given by the Petitioner, in view thereof, General Body meeting was held and the elected body shall run the company for it has to cater the needs of 4.5 Million members of the Church. The defence of the Respondents to this cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to a sect of members, the member unfairly prejudiced can proceed against the Management to arrest such kind of unfair prejudice against him or them. But to initiate such action under section 241, he shall have either 10% shareholding or 1/10th in number out of number of members of the Company; in this case leave alone fulfilling either of the mandates, this petitioner is not even a member of the Company. 44. If at all, the persons conducting the affairs of company get involved either to have personal gain or to cause loss to the members, who cannot control the company, that being unfair and a visible departure from fair play, member who is aggrieved of such action is given an extraordinary relief to seek remedy against such an action. Here the concern must be, it is not an ordinary relief, it is indeed an extraordinary relief so as to curtail the majority remaining unfair to the minority against the general expectations of these aggrieved parties when they have come into the company. 45. As to this company, it is a company that has come into existence with a fiduciary duty to deal with the economic affairs of CSI. There is a multi-layered election processes so to become me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot be read as non-member just because an application could be allowed even a shortfall is there to the qualification u/s.244 of the Companies Act, 2013. However, this Bench ordered that the CP is maintainable owing to some complexities, therefore, it has been left open to decide this issue at the time of final hearing. 50. We must also make it clear that all interim orders will be merged with main order; an interim order decided with a prima facie view can never be treated as res judicata to the main order passed. Here in this case in the interim order, the Bench has stated complexities are there, therefore left open to decide the issue of member qualification at the time of main hearing, in view thereof, we do not find any merit in the argument of this Petitioner saying that since interim order has been passed in his favour, the maintainability issue cannot be examined at the time of main hearing. 51. Though it is not to make an observation against the interim order passed saying that this petition is maintainable, the basic standard under law is whenever a threshold is set out in the law to initiate proceeding, first that issue shall be looked into at the time of filin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch as when factum of shareholding itself is in dispute, this factum of dispute shall be such that either the petitioner shall prove share certificates ought to be issued which has not been issued or transmission ought to have taken place but has not taken place. Beyond this, when the petitioner himself has not proclaimed himself as member, such person cannot initiate proceeding under section 241 of the Companies Act 2013. 57. This is all about jurisdiction, in view of the above legal principle, waiver entailment under section 244 cannot be construed as contra entitlement to a non-member to file petition. If such transgression is allowed, it will become in violation of a member rule set out in section 241 of the Company Petition. Therefore a member principle is not in compliance, neither section 241, nor section 244 jurisdiction is open either to the petitioner to file petition or to the Tribunal to entertain such petition. This is about Rule-1. 58. About Rule-2, when Rule-1 is complied with, Rule-2 could be split into three, Sub-Rule-1 is as to whether petition is against the Proper and necessary Respondents, here proper Respondents as per section 241 are persons in mana ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he jurisdiction so as to get the jurisdiction to deal with the case. Normally, determination of jurisdiction is not to be construed as discretion available to a Judge. Exercise of jurisdiction will arise only when Court is fit in within the jurisdiction given by the Statute. In the given case, the Applicant is admittedly not a member of the company. Who is a member of R1 Company is decided by the Articles of Association, if membership is on a rotation basis, which alone has to be considered as criteria to decide who the member is and who the member is not. Merely because membership is on rotation it cannot be said that anybody could be treated as member of the company. Section 241 petition itself is representative in character, it cannot be further be made open to make a non-member to canvass the assumed cause as a cause of action of a member of the company. 62. In this perspective, for this Bench in the earlier order dated 18-11-2016 having categorically mentioned that the discussion in that order will not have any bearing on the merit of the case and having left it open to decide it at the final hearing, we are of the considered opinion that the assumed prima facie view will n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Synod members will elect members of CSITA. This being the arrangement, there is no scope to assume that this Petitioner or 24 Consentors to this Petitioner or 200 members alleged to have attended the alleged General Meeting on 16-1-2016 can be equated with members of CSITA who have reached to CSITA passing through two layers of election. Therefore this Company Petition is not at all maintainable. 67. For the sake of completeness, we have even gone through little bit down to examine other issues assuming this Company Petition is maintainable to find out as to whether this petition is sustainable on other grounds. (3).Whether a person on his own holds meetings and elections thereafter seek an imprimatur of this Bench to the actions of him. 68. Notwithstanding the outcome of maintainability, for the sake of completeness and also to avoid unending litigation, we hereby deal with other issues also as if he is entitled to maintain this Company Petition. 69. It is the case of this Petitioner, that he issued a notice to R1 company on 07-12-2015 when the company did not hold General Body Meeting, the Petitioner says, for he being entitled to hold General Body Meeting, a Genera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... There is no statement that 250 members are members of the R1 Company. When the action taken by this Petitioner itself is in contravention to the provision of law and flouting all the rules under Rule Book, how can he be considered as aggrieved before this Bench to seek an imprimatur of this Bench to an illegal action without any basis for such approval? The Petitioner has gone to the extent of setting up letterhead of the company to prepare a resolution showing as if a committee has been constituted to R1 Company. Basic requirement to interfere with the Indoor Management of any company is that the person shall be either shareholder or member of the company. This Petitioner is neither of them. 73. In view of the reasons aforementioned, we do not find any merit in the argument of the Petitioner saying that the Managing Committee elected by the so-called 250 members as valid. (4). Whether any case has been made out u/s.241 of the Companies Act, 2013 against the Respondents herein. 74. When it comes to the facts of the case, it is evident that this Petitioner is a non-member and his consenters are also non-members, it is a sec.8 company, the allegations in the Petitions are s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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