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TMI Blog2021 (12) TMI 1279X X X X Extracts X X X X X X X X Extracts X X X X ..... m 01.01.2013 to 05.11.2018 that any of the general meetings of these periods found it necessary to enlist more members for the activities of the Company or authorized the Director Board to enlist new members. We are also agreeable to the contention of the Administrator appointed to carry out the functions of the Company, that the Director Board has no authority or power to enroll new members without the sanction of the General Meeting. The resolutions passed to enroll Respondent Nos.2 to 20 as members, it is not stated that the General Meeting had been held and authorized the Director Board to enlist new members. Even though the Respondents stated that they have inducted the new members with the approval of the Board, they have not produced any record to show that this was approved by any General Body of the Respondent Company, which is mandated under the Rules/Articles of Association of the Company. It is declared that enrolment of R2 to R20 as members of 1st Respondent Company was done in clear violation of the Articles of Association of the Company. As such they are directed to be removed from the Register of Members of the 1st Respondent Company and rectify the Register o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssets of the Company amongst its members. 3. Aggrieved by the mismanagement and corruption of the then Managing Director and trustees, the Appellant along with five other members filed a complaint before the Registrar of Companies, Kerala at Kochi. The appellant received a notice on 05.06.2015 from the then Managing Director intimating that he has been removed from the membership of the Company. The Appellant was not even given a show-cause notice before terminating his membership. The Appellant approached the Hon'ble Munisiff Court, Ernkualam filing OS. No. 519/2016. The said suit was allowed by the Hon'ble Munisiff Court, Ernakulam in favor of the appellant vide judgment dated 24.02.2018. No appeal was preferred by the Respondent s/defendants against the Judgement of the Hon'ble Munisiff Court, Ernakulam, and, therefore, it has become final. As such, the Appellant continues to be a member of the Company. 4. Meanwhile few other members of the Company filed C.P. No. 29/2017 before the NCLT, Chennai under Sections 241 and 242 of the Companies Act, 2013 alleging various acts of oppression and mismanagement against the then managing Director and trustees who have bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to enroll new members without the sanction of the General Meeting of the Company. Therefore, the enrolment of Respondent Nos. 2 to 20 is illegal and in violation of Article 2 of the Articles of Association of the Company argued by the counsel. It is further argued that Respondent s 9 and 15 are not members of the Roman Catholic, Latin Christian of the parish of Our Lady of Mount Carmel, Chathiath. Hence, they cannot be enrolled as a member of the Company. 6. It is further stated that the appellant requested the Administrator on 04.09.2019 to issue him certified copies of Minutes of all the General meetings held from 01.01.2013 to 05.11.2018. The Administrator issued certified copies of the Minutes of all the General meetings held from 01.01.2013 to 05.11.2018 on a perusal of this it came to the light that no general meeting of the Company ever found necessary to enlist more members or authorized the Director Board to enlist new members. 7. It is contended that the Respondents 2 to 20 were enrolled as new members not only against Articles 2 and 3 of Articles of Association of the Company but also in gross disregard and disobedience of the order dated 18.05.2015 of the Munis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.09.2016, that Respondent Nos. 9 to 10 were enrolled as new members of the Respondent No.1 Company vide Director Board Resolution No. 9 dated 18.05.2017, and that Respondent s Nos. 11 to 20 were enrolled as new members of the Respondent No.1 Company vide Director Board Resolution No. 9 dated 05.09. 2017. ➢ The Director Board has no authority or power to enroll new members without the sanction of the general meeting is true. Respondent s no. 2 to 20 were admitted as new members by the Director Board and there is nothing in the resolutions of the Director Board mentioned above to show that the General Meeting has authorized the Director Board to enlist new members. In resolution No. 5 dated 09.09.2016, it is recorded that the Director Board decided to admit 7 new members in the vacancy that arose due to the cessation of membership of 7 persons on 29.05.2018. ➢ In resolution No. 9 dated 18.05.2017, it is recorded that the Director Board resolved to admit M/s. George Shine and Edwin K G. Respondent Nos. 9 10 as new members. ➢ In resolution No. 9 dated 05.09.2017, it is recorded that Director Board resolved to admit M/s. Neron Savio (R13), Antony Augus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (R13) Neron Savio 5,00,000.00 11 (R14) Jose Edwin 5,00,000.00 12 (R15) Simon T J 5,00,000.00 13 (R16) Jomon Antony 1,00,000.00 14 (R17) Jomon Paul 5,00,000.00 15 (R18) Joseph Vivera 5,00,000.00 16 (R19) Rintu Antony 5,00,000.00 There is no provision in the Memorandum of Association and Articles of Association of Respondent No.1 Company enabling the Director Board to sanction loans to the members of the Company. The said loans were granted without any application from the loanees and any security or agreements. 11. Respondent Nos.2 and 3 filed their counter and submitted that Appellant is not a member of the 1st Respondent Company, as defined in Section 2(55) of Companies Act 2013, as his name having been removed from the Register of Members of 1st Respondent and his claim to be a member of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of any provisions of the Articles of the Association. These Respondents are interfering with the affairs of the Administrator or his authority to manage the affairs of the Company. 15. The contention is that the Board of Directors has no authority to enroll members without the sanction of the General Meeting of the 1st Respondent Company and that the enrolment of these Respondents is illegal is strongly refuted by the Respondents. It is stated that there is no illegality in the enrolment of these Respondents as members of the 1st Respondent Company. 16. The learned counsel for Respondent Nos.4, 6 to 9, 11, and 13 to 18 filed their counter and stated that the appellant was removed from the Register of Members on 29.05.2015. The appellant had filed a suit before the Munsiff's Court, Ernakulam as O.S. No.519 of 2016 seeking a declaration that he is a member of the 1st Respondent Company and his membership is not liable to be cancelled, for the reasons stated in the notice intimating the removal of his name from the membership. The relief for mandatory injunction for entering his name in the Register of Members was not incorporated in the plaint and as such the suit has res ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Respondent s from expending any sum exceeding ₹ 2,500/- fixed by Articles of Association, till the constitution of the new Board of Directors or the disposal of the suit, whichever is earlier. Thereafter, a fresh notice dated 01.08.2015 was issued and the Annual General Meeting for Financial Year 2013-14 was conducted on 17.08.2015. Annual General Meeting for the Financial Year 2014-15 was declared to be conducted on 30.09.2015 and the same has been adjourned and held on 26.09.2016. Further, the Annual General Meeting for the Financial Year 2015-16 was also conducted on 26.09.2016. Annual General Meeting for Financial Year 2016-17 was conducted on Year 30.9.2017 and the same got concluded on 28.12.2017. Thereafter, no Annual General Meeting was conducted on account of the order of the NCLT dated 28.08.2018. FINDINGS 20. The submissions of the learned counsel appearing for the Appellant and the Respondents and thoroughly perusing the records placed before us. The petitioner filed this petition under Section 59 of the Companies Act 2013 for rectification of the share register. 21. This Tribunal cull out the facts of the case in short as gleaned from the pleadings. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -clause (b) of Clause 48 of the AOA which reads as follows: b) Members who unnecessarily files a suit against the Company, cause damage to the Company and act in controversy to the resolution of general meetings, shall loss their membership It could be seen that the said Clause 40(b) stipulates three conditions for losing membership: I. Members who unnecessarily file suits against the Company; II. Cause damage to the Company; and III. Act in controversy to the resolution of general meetings. A careful reading of the said conditions, it could be understood that the said three conditions are not mentioned in isolation with each other and whereas it is connected with each other. Therefore, one would lose membership when the member commits all the three and it is also pertinent to note that no word or is used in between the conditions to separate from each other and only the word and is prefixed with the third condition which makes all the three the conditions inseparable. It is also on record that the Third Additional Munsif and Rent control court Ernakulam has passed an order in IA No. 3828/2015 in OS No. 6/2015 in the Suit has been filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... associations like clubs etc .. were enjoined to observe the principles of natural justice in dealing with its members. In our considered view, the post facto communications are patently illegal and void, therefore, we hold that the removal of the petitioners is made in contravention of Clause 40(b) of the A0A, in contravention of the order, dated 18.11.2015 by the Munsif Court and also without adhering to the principles of natural justice. Therefore, the removal of the petitioners from the membership of the Company is declared null and void and, therefore, is set aside. Though the other removed members are not before us, this order is applicable to the members removed without adhering to the principle of natural justice and also a contravention of Clause 40(b) of the AOA. 24. The appellant received a notice on 05.06.2015 from the then Managing Director intimating that he has been removed from the membership of the Company. The Hon ble NCLT declared the removal of the appellant as null and void. Therefore, we are of the considered view that the appellant is a member of the 1st Respondent Company and, therefore, he is qualified to file this application. 25. Now, the question ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The admission fee will be refunded if the application 1st applied is not accepted. 29. It appears from the aforesaid Articles of Association that the number of members can be increased only up to 500 if the general meeting is of the opinion that it is necessary to add more members for the activities of the Company. From the minutes of the meeting of all general meetings held from 01.01.2013 to 05.11.2018 that any of the general meetings of these periods found it necessary to enlist more members for the activities of the Company or authorized the Director Board to enlist new members. We are also agreeable to the contention of the Administrator appointed to carry out the functions of the Company, that the Director Board has no authority or power to enroll new members without the sanction of the General Meeting. The resolutions passed to enroll Respondent Nos.2 to 20 as members, it is not stated that the General Meeting had been held and authorized the Director Board to enlist new members. 30. During the course of the arguments, the learned counsel for the Respondents has raised a new contention on the limitation and maintainability of the appeal. However, on perusal of the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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