9911796707
TMI Blog2022 (9) TMI 641X X X X Extracts X X X X X X X X Extracts X X X X ..... y illegal being contrary to the Articles of Association of the said company. Petitioner has prayed for the following reliefs: A. Appoint the Presidential Nominee of Petitioner No. I to act as the President of FHRAI with the stipulated Term of 1 year from the date such Presidential Nominee assumes charge as President of Respondent No. 1; B. Restrain Respondent Nos. 2 to 15 from making any changes to the Articles of Association of Respondent No. 1 unless such changes have been made with the leave of this Hon'ble Tribunal; C. Pass such further orders that this Hon'ble Tribunal may, in the interest of justice, deem necessary for bringing an end to the acts of oppression, prejudice and mismanagement in the running of Respondent No. 1. 2. Petitioner No. 1 is a company limited by guarantee and incorporated under Companies Act, 1956. Petitioner No. 1 was originally incorporated as the Hotel and Restaurant Association of Calcutta Region on 18 July 1961 and subsequently renamed as the Hotel and Restaurant Association of Eastern India ("HRAEI" or "Eastern Region") on 6 Jan 1984, pursuant to which a fresh certificate of incorporation was issued by the ROC. 3. Petitioners do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Presidential Nominee for the forthcoming year. This nomination was pursuant to the meeting of HRAEI's managing committee held on 06.09.2018. It is further submitted by the Petitioners that it was legitimately expected that such nomination would be confirmed at the ensuing first meeting of the EC, which was to take place immediately after the AGM on the same date. The nomination of Petitioner No. 11 as the President of FHRAI had also been conveyed by the Petitioner No. 1 to FHRAI vide email dated 19 Sept 2018. * Petitioners further submit that the meeting of FHRAI held on 30.10.2018 at 2.00 P.M. is void ab initio and so are the decisions taken therein. It is further submitted that erstwhile President Mr. Garish Oberoi (Respondent 2) retired and the said 2.00 P.M. meeting held on 30.10.2018 was also chaired by Mr. Garish Oberoi impersonating himself as the President notwithstanding the fact that he had retired as the member of the EC in the earlier held AGM and had ceased to be the member of EC itself. It is further submitted by the Petitioners that instead of proposing the name of the candidate chosen by Petitioner No. 1 as its candidate for President i.e. Petitioner No. 11, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Federation President from its own members on a rotational basis in the following order: Eastern region Western region Southern region Northern region * Petitioners further submit that for the year 2018-2019, it was admittedly the turn of HRAEI (petitioner No. 1) to elect the President and the Eastern Region had unanimously voted/nominated petitioner No. 11 i.e. Mr. Sudesh Kumar Poddar as the President. * It is the submission of the petitioner that Mr. Garish Oberoi along-with some members resorted to illegal and high handed behavior as stated above and took upon themselves to propose random names of members of Eastern Region other than petitioner No. 11. It is pertinent to mention that AOA do not provide any power to any of the respondents of other region or Respondent 1 or any other person to propose for appointment of any candidate to be nominated for HRAEI other than what is proposed by Petitioner No. 1 for the year 2018-2019. * Petitioners submit that by disregarding the presidential nomination of the Eastern Region proposed by Petitioner No. 1, the Respondents have sought to nullify the AOA especially Article 52. This act clearly amounts to oppression. * On t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be eligible for re-nomination to the Executive committee for a period of 2 terms thereafter Provided that upon expiry of the said period of 2 terms a person may once again be re-nominated to the executive committee for an additional maximum period of 4 terms only. * Subsequently, without any meaningful participation and due deliberation between the members of the Executive Committee, the Respondent published the Notice dated 29.08.2017, for the 61st AGM of the members of FHRAI scheduled to be held on 23 September 2017. This Notice contained a special agenda item No. 4 to "approve alteration in Articles of Association of Company (FHRAI)" so as to amend Article IV of Appendix A to the Articles by deleting clauses IV(b) and IV(c) and proviso to Clause IV(c) of Appendix A. * Aggrieved by the aforesaid highhanded actions of the then existing members of the Executive Committee, one of the members of FHRAI-Casino Hotels (a unit of M/s. CGH Earth Pvt. Ltd.) approached this Hon'ble Tribunal by filing a petition being Company Petition No. 273(ND)/2017 ("Casino Hotels Petition") (annexed as Annexure 16) dated 21 September 2017 under sections 241, 242 and 244 of the Act agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017, the Executive Committee under the Chairmanship of Mr. Garish Oberoi, approved the minutes of the Administrative Committee meeting dated 11 October 2017 in toto, even though the members of the Eastern Region had dissented. Subsequently, the Administrative Committee in its next meeting held on 18 January 2018 inter alia noted in item No. 2 that it had "already suggested in the last meeting and further ratified in this meeting that the tenure of the executive committee Member should be changed to 12 years in continuation with a 1 year break and further maximum of 4 years, if elected from the Region and sent to the FHRAI's board'. It is the submission of the Petitioners that the then members of the EC apprehended that the members of the Eastern Region would not support them as it is in flagrant disregard to the orders and directions of this Hon'ble Tribunal, the Administrative Committee in its meeting dated 18 January 2018 requested Petitioner No. 11 and Mr. Pranav Singh (Petitioner No. 4) to withdraw from the case before the NCLT. Minutes of the Administrative meeting is annexed as Annexure 21. * Petitioners further submit that apart from manipulating the records, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st the contemptuous respondents, FHRAI filed an affidavit dated 18 April 2018 before this Hon'ble Tribunal stating that a circular resolution was passed by the Executive Committee on 17 April 2018 to the effect that the Executive Committee do not wish to proceed with the alteration of any clause of the Articles. The said circular resolution dated 17 April 2018 read as follows: "RESOLVED THAT the Executive Committee be and hereby resolves not to proceed or otherwise take up in any manner whatsoever, any proposed alteration or amendment to Articles of Association of the Federation of Hotels and Restaurant Association of India in relation to the provisions of maximum period/tenure of office bearers and Executive Committee of FHRAI" * In view of the aforesaid circular resolution, this Hon'ble Tribunal vide order dated 23 April 2018 while closing the proceedings for contempt initiated under section 425 in CA No. 242 (ND)/2018 and disposing off the Casino Hotels Petition, clarified that the Resolution dated 17 April 2018 shall remain binding on all concerned and if any modification in the Articles of Association (Appendix A) in respect of clauses (iv)(b) and (c) is brought, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 03/2018 dated 27 September 2018 under sections 241, 242 of the Companies Act, 2013 before this Hon'ble Tribunal inter alia seeking restraint against the Respondents from adjourning the 62nd AGM scheduled to be held on 29 September 2018 in pursuance of the Notice of AGM dated 10 September 2018, and to set aside the decision taken in the Emergent Meeting of the Executive Committee dated 27 September 2018 to adjourn the 62nd AGM. In the proceedings before this Hon'ble Tribunal on 28 September 2018, Petitioner No. 1 pointed out that Mr. K. Syama Raju, Mr. K. Murali Rao and Mr. T. Nataraajan have already completed the tenure of 8 years and would not be eligible for re-appointment as members of Executive Committee. Accordingly, this Hon'ble Tribunal restrained Mr. K. Syama Raju, Mr. K. Murali Rao, and Mr. T. Nataraajan from functioning as members of the Executive Committee. Copy of this Hon'ble Tribunal's order dated 28 September 2018 is annexed as "Annexure-33" * Subsequently, in the proceedings in Casino Hotel Petition held on 22 October 2018 before this Hon'ble Tribunal, the counsel for FHRAI, and Mr. Garish Oberoi (in person) stated that the AGM will be held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held that: 151. Normally, the following factors are required to be noticed by the Tribunal before forming its opinion as to whether the application merits 'waiver' of all or one or other requirement as specified in clauses (a) and (b) of sub-section (1) Section 244:- (i) Whether the applicants are member(s) of the company in question? If the answer is in negative i.e. the applicant(s) are not members), the application is to be rejected outright. Otherwise, the Tribunal will look into the next factor. (ii) Whether (proposed) application under Section 241 pertains to 'oppression and mismanagement'? If the Tribunal on perusal of proposed application under Section 241 forms opinion that the application does not relate to 'oppression and mismanagement' of the company or its members and/or is frivolous, it will reject the application for 'waiver'. Otherwise, the Tribunal will proceed to notice the other factors. (iii) Whether similar allegation of 'oppression and mismanagement', was earlier made by any other member and stand decided and concluded? (iv) Whether there is an exceptional circumstance made out to grant 'waiver', so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elected as the President. It does not in any manner suggest that the President ought to be person nominated by the concerned region. * Another important clause of AoA which is referred by Respondent No. 1 is: "If the President be absent from India or notified to the Vice-President as well as to the Honorary Secretary that he will be unable to perform, the Vice Presidents in the order of their precedence shall perform the functions and duties of the President." * Respondent No. 1 submits that the same procedure was followed for electing president as was followed in the past since amendment in 2010. The EC members from Eastern region who were elected by the majority vote declined to take the chair of President. Mr. Ashoke Singh then proposed the name of Mr. Sudesh Poddar (Petitioner No. 11 herein) and Mr. P.S. Ghai proposed the name of Mr. Vijay Dewan. Mr. Dewan won by 8 votes and was elected as the President. But he was coerced by Petitioner No. 11 into not accepting the President's post owing to which he declined to take up the post of President [It is important to note that Vijay Dewan has not joined the Petitioners in filing the present petition]. Only 5 EC members vote ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ally to exercise all powers and functions of the Federation not, by Act or hereby, exclusively conferred upon the General meetings of the Federation. i) To present a report of their proceedings and a statement of accounts of the Federation duly certified by the auditors at the Annual General Meeting of the Federation. j) To appoint Sub-Committees of the Members of Committee or of the members of the Federation and such Sub-Committees may be permanent or temporary or for such special purposes as the Committee may determine. k) To delegate, subject to such conditions as they may think fit, any of their powers to Sub-committees and to make, vary and repeal such bylaws or rules for the regulation of the proceedings of the Sub Committees. l) To consult, appoint and nominate counsel, legal advisors and solicitors and pleaders, to advise them on all or any matters connected with the Federation and authorise them to represent the Federation in all duly constituted courts, either civil or criminal or revenue and arbitration courts, either as Plaintiffs or as defendants and to represent them before any Officer or body or men or the legislative councils or any other council or before t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... convention. * Respondent No. 1 further submits that the next AGM of FHRAI is statutorily required to be held on or before 30.09.2022. Thus, the next term will also begin from the conclusion of said AGM. It is further submitted that as per Article IV(c) of Appendix A to the AOA, a person who has been EC Member for 8 terms continuously shall automatically cease to be a member and shall not be eligible for renomination to the EC for a period of 2 terms thereafter. It is submitted that Petitioner No. 11 would be completing 8 years continuously as EC Member on the date of next AGM and thus even if the present petition be allowed, the Petitioner No. 11 cannot be the EC Member of FHRAI and thus cannot become the President of FHRAI for the term commencing from next AGM. * It is further submitted that the term of the Eastern Region came to an end in August 2019. However, since the stay order dated 20.12.2018 was in operation which was passed at the instance of Eastern Region, the other three regions have been deprived of their right to a have a President from their Region. Thus it, would be just and equitable that the Western region is given the right to have President from their regio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... candidate for the President post is nominated by the 6 members of that particular Regional Association, whose turn falls for appointment of President as mandated in Article 52. That is how Article 52 has been implemented by all AGM in the past. There is no justification for its departure this term. 7. It is also seen from the facts submitted by the Petitioners and not denied by the Respondents that many other names of candidates of HRAEI were proposed/nominated to be elected act as President, but they declined to accept the position saying that it is the Petitioner No. 11 who was nominated by the members of the EC of HRAEI. If the objective of equal representation is not given effect, it goes against the grain of AOA of Respondent 1 and its objects. 8. Also, on perusal of the minutes of the meeting for earlier election which took place in Federation (Minutes of the Executive Committee Meeting dated 23rd September 2017, Annexure 18), relevant portion of the meeting is extracted hereinafter as: "The Chairman" ("we may point out that he is the chairman for meeting to elect the President as per nomination region wise") called for the nominations for the Election of the new Preside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Region as the President. Below is the relevant para from the minutes of the meeting: "The Chairman highlighted that usually voting does not take place in FHRAI for the post of the President, but since two names have been proposed by members i.e. Mr. Sudesh Poddar and Mr. Vijay Dewan for the Presidents' position of FHRAI, he requested the members to give their opinion & vote on this. Thirteen members gave their assent for Mr. Dewan as the President and five members in favor of Mr. Poddar. Thus, Mr. Dewan was elected as President by a majority vote. Mr. Dewan was contacted over telephone by Mr. Sudesh Poddar and informed him about the decision of the EC to elect him as the President of FHRAI Mr. Dewan conveyed over telephone that tradition should be followed in FHRAI and the nomination from the Eastern Region for the President remains with Mr. Sudesh Poddar and no one else. Further, Mr. Dewan declined to take up the post of President, FHRAI for 2018-19." 9. It is evidently clear from the above-mentioned Minutes of the Executive Committee meeting, that inspite of having a nomination from die Eastern Region, few members of other regions took upon themselves the task to nomi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, if that be so, then Petitioner No. 11 was an EC Member in 2015-16 and the EC chose not to take any action against him despite having the authority to do so as per AOA Article 7(1)(d) extracted below: 7(1) The rights and privileges of a member shall not be transferable and shall cease: (a)..... (b)..... . . (d) Upon the Executive Committee finding by a majority of 2/3rd of its Members in a meeting where a specific agenda is framed to consider such issue, that a member has been acting in derogation of the interests of the Federation in spite of a written notice from the Committee to refrain from doing so; Provided that before passing any such resolution for removal of the member, the Executive Committee shall give a proper and prior opportunity of showing cause against the proposed action by the Committee. This appears to be a lame excuse and an afterthought to deny petitioner of its right to nominate a member of its choice. The Respondents appears to be harbouring some ilk against one or more individual of the Eastern Region. 13. The second contention of the Respondent 1 is with respect to the maintainability as the Petitioners do not meet the criteria of 1/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be held today at 12 Noon. Mr. Parekh could not dispel our impression that the meeting fixed today would not prejudice the rights of the petitioner. Reply be filed within two weeks with a copy in advance to the counsel for the petitioner. Rejoinder if any be filed within three days with a copy in advance to the counsel opposite. In the mean while the meeting which is posted for today at 12:00 P.M. shall not be held and is hereby stayed. The interim order shall operate till the next date of hearing." This conduct of the outgoing President of Respondent 1 and members of EC of other regions proposing names in violation of the convention in implementing Article 52 will clearly make out a case of oppression. 14. Further, the EC of Eastern Region has the mandate of all the hotels of Eastern Region. The EC of Eastern region has nominated Petitioner 11 as their presidential candidate. Hence, Petitioner No. 1 has the lawful authority to represent the Eastern Region. In any event, he is an EC Member. Hence, waiver can be granted in the facts of the present case. Furthermore, the conduct of the Respondent 1 on the earlier round of litigation which has been recorded in detail in this o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall not be held and was stayed. Respondents further submit that no EC meeting has taken place after 30.10.2018 and the Vice President continues to discharge the functions and duties of the President. On perusal of the minutes of the meeting dated 30.10.2018, it is found that Election of office bearers has taken place and continued under the chairmanship of Mr. Garish Oberoi, who had ceased to be a member of EC on completion of his tenure at that time. One of the Member Mr. Ashoke Singh (Petitioner No. 9) pointed out in the meeting itself that as per the tradition, the new President in consultation with the Executive Committee appoints the office bearers but not the outgoing president. Another member of the EC also made a mention that the due process was being circumvented and suggested to take a legal opinion on the point. 17. In our opinion, this event of election of office bearers of EC (Election of Mr. Dilip Datwani from western Region for the post of Honorary Secretary, Mr. DVS Somaraju from southern region as Honorary Treasurer, Mr. Pradeep Shetty from Western Region and Dr. Venkadasubbu from the southern Region for the post of Joint Honorary Secretary) was not as per the es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat few of the EC members of the period in question who are Respondents acted in a manner prejudicial to the interests of Respondent No. 1 by proposing names of unwilling members of Eastern Region resulting in stalemate. 20. The object of Respondent 1 to promote the interest of Hotels of various regions by encouraging and protecting the hospitality industry in India has been defeated due to petty squabbles time and again. The object of AOA of Respondent No. 1 has been given a go by and personal interest has come to loom over the functioning of Respondent No. 1. This has to be curbed. Certain members of the various regions of the Respondent No. 1 (Federation) are breeding litigation for personal reasons and we strongly disapprove of it. 21. The Ministry of Corporate Affairs is directed to look into the affairs of Respondent No. 1 if it is conducted in a manner compliant with the provisions of Companies Act. This we do so because of the series of litigation that is breeding due to conduct in the affairs of Respondent No. 1. What encourages the parties to seek more terms of appointment, the position they seek to hold, and for objective is troubling this Tribunal. If there is no pers ..... X X X X Extracts X X X X X X X X Extracts X X X X
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