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TMI Blog2020 (1) TMI 1272X X X X Extracts X X X X X X X X Extracts X X X X ..... multi layer arrangement with approval of 4.5 million church members or perhaps communicant members cannot be simply reversed - The Petitioner is one of the communicant members, even if 24 Consenters are taken into consideration; they are part of 4.5 Million of the church members. The church members at the parish level elect and send delegates to Dioceses, and Synod members. 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 16.01.2016 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. Whether a person on his own holds meetings and elections thereafter seek an imprimatur of this Bench to the actions of him? - HELD THAT:- In this case, it is not the case of the Petitioner that either he himself or the consenters are the members of R1 company, his case is only that they are Church Members (Parish members) therefore since they have been seeing that the company properties are being alienated for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Advocates, Arvindh Pandian, Sr. Advocate, Adrian D. Rozario, Bharathirajan, Jayesh B. Dolia and T. Geethanjalli, Advocates for Aiyar Dolia ORDER B.S.V. Prakash Kumar, Actg. President 1. It is a Company Petition filed u/s 241 of the Companies Act, 2013 (hereafter called as the Act ) by a non-member of a Section - 8 Company namely Church of South India Trust Association (R1/CSITA) against CSITA and 10 other Respondents on the ground R - 2 to 11 mismanaging the affairs of CSITA. 2. It is a Company incorporated u/s 26 of the Companies Act, 1913 (equivalent to Section 25 of the Companies Act, 1956/Section 8 of the Companies Act, 2013) on 20.06.1947 in the name of The Church of South India Trust Association having its Registered Office at Chennai to act as Trustee for The Church of South India (herein after called as CSI or Church ) to deal with movable and immovable properties and to use the income and proceeds of sale or mortgage of any of the assets of the church covering Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and Telangana. 3. CSI is the largest congregation of Protestant Churches in Asia spread over 5 states aforementioned, governed by its constitu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... secutively. 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 organisations. The Deputy Moderator shall reside at the Synod and look after functions of its Executive/Working Committee and he will perform other duties of the Moderator during his absence. If the Moderator and the Deputy Moderator are away from country, the Moderator in consultation with the synod working Committee will appoint acting Moderator. The General Secretary keeps the records of all actions of Synod and continues as Correspondent between the Synod and dioceses councils. The Treasure shall hold all money belonging to the Synod and keep submitting accurate statement of accounts to Synod or to such other bodies as the Synod may direct. Synod is the supreme governing and legislative body of CSI and final authority in all matters pertaining to Church. It has power to make rules and pass resolutions and take executive actions as may be necessary. The Company being charitable trust association to work as an Agent to all the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rious 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 31.03.2015. He says that the office bearers, without any authority heavily borrowed on the properties of CSITA by way of creating charge on the properties. 11. Another allegation he has raised is that the last Synod was constituted for biennium in January, 2014 and the same had expired on 13.01.2016. Thereafter, Synod election was not conducted and simultaneously election to the members of CSITA had also not been conducted, but whereas the lapsed Management Committee of CSITA has still been managing the affairs of it even after expiry of the period for which they were elected. He says that only 10 members are managing the affairs of CSITA without giving equal representation to 23 Units for several decades while more than 13,00,000 stakeholders are entitled to become members of CSITA. 12. The petitioner says that in the month of August, 2014, more than 40 members, who are entitled to become members of CSITA, had sent applications showing their willingness to become members o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficio members of CISTA. 16. The Petitioners present case is primarily assailing the amendment dated 05.03.2002, without consent of the Regional Director and approval of the Central Government, the then Officer Bearers of CSITA amended the Articles of Association (Article 4) empowering themselves, i.e. the Moderator of the Synod to act as the ex-officio Chairman of the Association, the General Secretary of the Synod the ex-officio Secretary of CSITA, the Treasurer of the Synod to continue as ex-officio Treasure of CSITA, but this modification, according to the petitioner, was done without taking the prior approval of the Central Government which is in violation of Rules adumbrated to Section 8 Company. As to other allegations, the company management indulged in alienating the valuable assets of it, the Management siphoning the funds of CSITA for their luxurious tours and Management Committee tenure of two years being over in the month Jan 2016, whatever actions of the Management Committee after expiry of the tenure shall be declared as null and void and then new Committee got elected after giving notice to the Management shall be allowed to continue as the new Management committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears 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 issue as it involves mixed questions of fact and law, which needs to he tried along with other issues raised. This view is fortified by the ruling given by the Division Bench of the Hon'ble Madras High Court reported in 1997 (90) Comp. Cas. 2905. 18. In the following paras of the order, this Bench held that in the meeting dated 16.01.2016 for having more than 200 beneficiaries from 5 States attended and appointed 53 General Members with the provisions to increase the members for giving representation to all Dioceses upto 88, and 53 new elected members elected 15 Directors, two Officer Bearers Viz. The Chairman and Treasures will carry out the management of the company. It has been further held that the Petition is in representative character therefore the Petitioner having represented a large number of persons common interest, the company being a Charitable Institution, this Bench felt that it is a fit case wher ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e investigation initiated against R1 had already been pending before the Hon'ble High Court of Madras and Honourable 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. 38814 of 2016 quashed the order passed by the Government of India u/s. 212 giving liberty to the Government to reconsider the order. Over which, the Government again u/s. 212 on 07.05.2018 passed another order and that was stayed by the Hon'ble High Court of Madras in W.P. 25236 of 2018 which is still pending. In between, this Bench has permitted subsequently elected Office Bearers (not the officers or members shown as elected on 16.01.2016 by the Petitioner) to administer CSITA by order dated 08.01.2019. The reason for doing so is the orders passed by Honourable High Courts and the newly elected members are not of the same members cited in this petition. When appeals were filed by another person called Dr. Jayakaran over the orders passed in Company Suits decided by learned Single Bench with regard to validity of extension of tenure and holding election to Synod, Learned Division Bench of the Hon'ble High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f 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 CSI and its Dioceses there under are controlled by the Moderator and the other Office Bearers of the Synod and the Dioceses are controlled by the respective Bishops and the Office Bearers of the Dioceses. With these submissions, the Respondents sought for the dismissal of this Company Petition with exemplary costs. 24. In between, the Applicant filed another application (C.A. 171 of 2019) seeking a direction for investigation of the affairs of CSITA by appointment of an Inspector u/s. 213(b) of the Companies Act, 2013 stating as follows: That this Hon'ble Tribunal may be pleased to order that the affairs of the 1st Respondent Company ought to be investigated by appointment of an Inspector under Section 213(b) of Companies Act, 2013 . 25. The Petitioner says for the Respondents having indulged in various acts of mismanagement, misappropriation of CSITA funds by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ments 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 for investigation by Serious Fraud Investigation Office and the said investigation is under progress. The Applicant has mentioned about a company petition CP 64/2017 filed by one Mr. E. Premkumar but that was dismissed by this Bench. It is evident on record that case was dismissed with reasons. The Applicant has further submitted that synod officer shall not be allowed to become office bearer of CSITA for there being no proper election to Synod. As to allegations and instigations against R1 officials, one - no adjudication has so far been given, merely by seeing criminal cases against the company, anybody and everybody cannot be seen as entitled to initiate proceedings under Section 241 of the Companies Act 2013. 30. The Applicant has further submitted that one Mr. K. Thomas Oommen (R8) claims to be the present ex-officio Chairman and another person Mr. Rathn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IA 252/2019 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 elected by the members purportedly on 16.01.2016 as managing committee of members of CSITA and permitted them to be new office bearers to take over the office and carry out the functions as managing committee of CSITA, how this Petitioner as well as another person Mr. Thyagarajan could execute several documents mentioned above creating lease over the properties of R1 company without having any position in R1 company. 34. In view thereof, he has sought for inclusion of those documents as part of the record enabling the Respondents to disclose the fraud high handedly manifested by the Petitioner and his men. 35. As to IA 252 referred above, the Petitioner submits that he has not denied the transactions mentioned in the Application, but his only argument is, the person filed the above application has not been authorized to file the IA and all these a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 case is: 40. This Petitioner is not the member of this Sec. 8 company, it is no doubt that this company has come into existence in the year 1946 u/s. 1913 with a licence to be a Trustee to the properties of the Church of South India spread over all over Southern India with more than 20 Dioceses, a member out of millions of Church Members cannot thwart the functioning of this company just by holding a meeting of three four hundred church members out of 4.5 million members and thereafter file a case saying that this company having not held elections within two years and having indulged in fraudulent activities, the company's administration shall go into the hands of an Administrator pending disposal of this case and thereafter to allow this so called body to take over the company is void ab initio in the eye of law. As there is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 in to existence with a fiduciary duty to deal with the economic affairs of CSI. There is a multi-layered election processes so to become members of this company. The persons acting as members of CSITA are in fact first elected by various Parishes falling under more than 20 Dioceses. And these parishes' members will elect people to Diocesan Council and also in Synod Council. These Synod members will in turn elect the members to this company. 46. The affairs of Synod i.e. Moderator, Dy. Moderator, Secretary, Treasurer will become ex-officio members along with the elected members of CSITA. When this membership has been refined from layer to layer, how an ordinary member, one among millions of Church members can throttle the entire process by filing an application showing an election held with some 250 members out of millions of members and take over the functioning of the Body which has been running with the acceptance of these 4.5 Million of people throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 company. Unless the petitioner has passed that test, the Tribunal ought not to have looked into the petition. 52. We would not have dealt with this issue and especially prima facie view taken at the earlier point of time, but because the petitioner counsel himself vehemently argued that this Bench should not look into maintainability issue on the ground this Bench has already decided the maintainability issue. 53. As per Wharton Law Lexicon, prima facie evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 management of the affairs of the company, where in the aggrieved is a member , if it is in compliance, Sub Rule 2 is as to whether any action of the necessary Respondents is complained of, if complained, next Sub Rule (i.e., 3) is to see as to whether such action is prejudicial to the public interest or in a manner prejudicial or oppressive to the complaining member or members or in a manner prejudicial to the interest of CSITA or any material change has been brought in the management or control of the company by change of Board of Directors or in the ownership of the company's share or if it has no share capital, in its membership which is likely that the affairs of the company will be conducted in a manner prejudicial to its interest or its members or any class of members. 59. About Rule-3, if Rule-1 and Rule-2 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 not have any bearing over this order for two reasons; one - an interim order always merges with the final order and two - as to maintainability, since order dated 18.11.2016 has left it open to be decided at the time of final hearing, it cannot be called as resjudicata against this order. 63. Prima facie view of consideration will come into operation when the petition under consideration is indicative of likelihood of getting a decree in favor of it unless and until that seemingly insurmountable materials are available on record is rebutted by the answering Respondent, at times courts grant an exparte ad interim relief looking at the material shown as sufficient to pass decree, but when other side later present and show the material shown by the plaintiff/petitioner could not make out a case, may be on the ground itse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 General Body Meeting was called and thereafter elected the body and then sought for approval of this Bench to allow that body to take over the management of the company. 70. To give a requisition notice to the Board to call an Extraordinary General Body Meeting of the company, as on the date of requisition, the members giving such requisition meeting must have one tenth of the total voting power of all the members as on the date of requisition notice, after giving such notice, if Board does not call for meeting within 21 days from the receipt of a valid requisition, the requisitionists can proceed to call a meeting for the consideration of that matter on a date not later than 45 days from the date of receipt of such requisition. 71. In this case, it is not the case of the Petitioner that either he himself ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 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 sweeping allegations without any particulars of that person in the management who is alleged to have committed an act and how such an act has become prejudicial to the interests of the Petitioner or Consenters to the Petition, the Petitioners have failed to prove that they are the members of the company, he has failed to prove that his economic interests or the consenters economic interests is involved. And it is pertinent to mention no particulars are provided reflecting the conduct of the persons in management of CSITA caused unfair prejudice to the interest of the company, except relying upon some cases initated by the ROC, if relied upon those cases, then also it is the petitioner's duty to explain independently that such and such action falls within the jurisdiction section 241 of the Companies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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