TaxTMI 
TaxTMI 
1990 (7) TMI 372
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.... issuing fresh calendar of events and further declaring that the election of defendants-2 to 4 as Stewards for a period of two years from 27-9-1989 in the election held on that date is illegal and unsustainable in law and consequently, restraining defendants-2 to 4 by means of a perpetual injunction from acting, functioning or participating in the Committee of Management of the club as its duly elected Stewards for a period of two years from 27-9-1989. 2. For the sake of convenience, reference will hereinafter be made to the parties to these appeals with reference to the positions they occupied in the suit in the trial Court, 3. First respondent A. Krishna in these appeals was the plaintiff in the suit. 4. The material averments made by the plaintiff in the plaint presented in the trial Court on 6-10-1989 are that he is a member of the Bangalore Turf Club Ltd., (for short 'the Club') which is a Company registered and incorporated under the Companies Act, 1956 (for short 'the Act'). One of the objectives of the Club was to conduct horse races in Bangalore and to carry on other functions in accordance with the Memorandum of Articles of Association, as amended upto 27th Septe....
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....ves to be accepted. Plaintiff also filed his affidavit to the same effect on 16-9-1989. Plaintiff had also mentioned in his letter dated 15-9-1989 that there were disputes between him and his brother and litigation was pending between them for over two decades and final decree proceedings were still pending. By Notification dated 17-9-1989, the Secretary of the Club notified the plaintiff of the nominations made for Stewards and Committee Members and the Club had printed the name of the plaintiff under the heading "Nomination for Stewards" and added a note as under: "As per records available with the Club, Mr. Venilal Ambaram, brother of Dr. A. Krishna is the owner of a Race Horse and as such Mr. A. Krishna is to be treated as a Race Horse Owner, as defined in Article 32(c)(i) of the Articles of Association of the Club. (Reproduced in the enclosure for ready reference). But, Mr. A. Krishna has taken a different view and claims that he is not to be treated as a Race Horse Owner. Hence, clarification is being sought from the Government of Karnataka at whose instance the relevant Article was incorporated and pending receipt of that clarification his name has been included in ....
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....the Managing Committee of the Club. Plaintiff further averred in paragraph-10 of the plaint as under: "Both in law and in fact, plaintiff cannot be treated as a Race Horse owner merely because his brother owns or owned a race horse. Plaintiff had made it repeatedly clear that he has no right, title or interest in the race horse purchased and owned by his undivided brother Sri. Venilal Ambaram. Besides, the Committee of Management have not considered the effect of the provisions of the Benami Transactions (Prohibition) Act, 1988 and the Judgment of the Hon'ble Supreme Court of India reported in [1989]177ITR97(SC) , which was brought to their notice. In the circumstances, the decision of the Committee of Management of the club in rejecting the nomination of the plaintiff was unjust, void and illegal........." Thereafter, the plaintiff referred to the vital role played by the Stewards in the conduct of races at Bangalore. He further pleaded that the participation of defendants 2 to 4 in the affairs of the Managing Committee would be illegal and the entire business of the Committee will be beset with illegalities and would be rendered void and ultra vires. He, therefore, ur....
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....h jurisdiction in the matter by Section 10 of the Act and the Civil Court is not a Court conferred with such jurisdiction and, therefore, the suit as brought in the Civil Court was not maintainable and the Civil Court has no jurisdiction to grant any of the reliefs sought in the plaint or the interim relief sought in I.A.I. First defendant further pleaded that the nomination paper of the plaintiff had been rejected on valid grounds as his brother Sri Venilal Ambaram, who according to the plaintiff's own say in paragraph-10 of the plaint was his undivided brother, was the owner of a race horse called "courage" and Article 32(c) of the Articles of Association provides that no race horse owner shall be a Steward in the Managing Committee and it is further clarified in Article 32(c)(i) that "for the purpose of Article 32 a race horse owner means a person who owns a race horse either in his own name or of a relative as enumerated in Schedule-I 'A' to the Indian Companies Act or as a lessee" and plaintiff's brother came in the category of relative enumerated in Schedule-1 'A'. The correspondence made by the Club with the Government regarding the interpretation of Article 32 and the backg....
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....elative had been disqualified from functioning as Stewards. They contended that the provisions of the Benami Prohibition Act have no application to the facts of the case and the decision of the Supreme Court referred to in the plaint has also no bearing. They pleaded that the post of a Steward is that of a Judge and a person holding such a post should be above all suspicions and that is why Article 32 had been introduced in the Articles of Association with the avowed object of conducting the races in a manner free from any manner of suspicion by race-goers. They further stated that they would adopt the stand taken by the first defendant in its written statement in order to avoid repetition. 8. On the said pleadings of the parties, the trial Court raised the following issues: ) Whether the plaintiff proves that the rejection of his nomination for the office of Stewards for the election held on 27-9-1989 is not valid and not proper? ) Whether the plaintiff proves that he is entitled for mandatory injunction to accept the nomination of the plaintiff to the office of Stewards and to conduct fresh elections? ) Whether the plaintiff is entitled for injunctio....
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....n all the three appeals on several dates from 26-6-1990 till 18-7-1990 and have placed reliance on more than 50 decisions in support of their respective contentions. A list of those decisions is found in the memorandum of notes of arguments which is kept in the records and reference to some of the important decisions cited by them would be made as and when necessary. 15. The broad points that arise for determination in the light of the enlightened arguments submitted by the learned Counsel on both sides are as under: ) Whether the Civil Court has no jurisdiction to entertain the suit in view of the provisions of Section 10 and other provisions of the Companies Act, 1956? ) Whether the club has violated the principles of natural justice and fair play in rejecting the nomination paper of the plaintiff for the Stewardship of the Club at its meeting held on 27-9-1989? ) Whether the amendment of paragraph-10 of the plaint sought by the plaintiff in the amendment applications filed in these appeals deserves to be granted? ) Whether the decision of the Club in rejecting the nomination paper of the plaintiff on the ground his brother Sri Venilal Ambar....
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....ances, the need for resort to the Court for relief by way of representative or derivative action is indeed very limited and is nowadays much less than before. If, nevertheless, occasion should arise for such interference, it will be limited to the following matters : (1) Where the act complained of is illegal or ultra vires the Company; XXX XXX XXX (5) Where the voting right and other personal rights of a shareholder are infringed." In all these cases, any aggrieved Member of the Company may seek redress in the ordinary Civil Court. 18. In this connection, Sri V. Tarakaram, drew my attention to the observations of the Supreme Court in DHULABHAI v. STATE OF M.P. 1968 : [1968]3SCR662 of Mulla's Code of Civil Procedure, Vol.I, IV Edition, wherein it is observed as under: "Where the Statute gives finality to the orders of the special Tribunals, the Civil Court's jurisdiction must be held to be excluded, if there is adequate remedy to do what the Civil Courts would normally do in a suit. Such a provision, however, does not exclude those cases where the provisions of the particular Act have not been complied with or the statutory Tribuna....
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....he nature under consideration In these appeals but its jurisdiction is rather limited having regard to the facts and circumstances of the particular case under consideration. 19. Reliance was also placed by Sri V. Tarakaram on another decision of the Supreme Court in ANNE BESANT NATIONAL GIRLS HIGH SCHOOL v. DEPUTY DIRECTOR OF PUBLIC INSTRUCTION AND ORS 1982 : (1983)IILLJ274SC . wherein it is observed that the Civil Court has jurisdiction to examine whether action or decision of an administrative authority was intra vires the relevant Rules even if the Rules are in the nature of administrative or Departmental instructions. Without multiplying the decisions on this point, I consider it useful to refer to one other recent decision of the Supreme Court in RAJA RAM KUMAR BHARGAVA (dead) By L.Rs. v. UNION OF INDIA AIR 1983 SC 752. After referring to the pronouncements of the Judicial Committee and the Supreme Court in several decisions including the decision in DHULABHAI v. STATE OF M.P. referred to above, their Lordships have observed in paragraph-9 at page 756 as under: "Generally speaking, the broad guiding considerations are that wherever a right not pre-existing in comm....
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...."Personal hearing not part of natural justice; A personal hearing is not an essential ingredient of the principles of natural justice. So long as an order is passed after giving full opportunity and after considering the written representations or the appeals presented, the order is in conformity with the principles of natural justice. Though it may be desirable to give a hearing in complicated cases, it may not be obligatory to do so. Therefore, unless the Rules provide for oral hearing the right of oral hearing cannot be claimed as an essential part of the principles of natural justice." It is manifest from the averments made in the plaint that the plaintiff was aware from 15-9-1989 itself that his nomination was likely to be rejected on the ground that his brother Sri Venilal Ambaram had purchased a race horse by name "courage" in June, 1989. After getting that information, plaintiff has addressed letters to the Secretary or the Chairman of the Club on 15-9-1989, 16-9-1989 and again on 27-9-1989 stating in those letters and also in his affidavit that he had nothing to do with the race horse owned by his brother and that his brother was the exclusive owner of that horse and, t....
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....f which) that action was proposed. If there was any correspondence between the New Delhi Municipal Committee and any other authority about the subject matter or any of the allegations, if information was given and gathered it was for entirely different purposes. In our view, the requirements of natural justice are met only if opportunity to represent is given in view of proposed action. The demands of natural justice are not met even if the very person proceeded against has furnished the information on which the action is based, if it is furnished in a casual way or for some other purpose. We do not suggest that the opportunity need be a 'double opportunity' that is, one, opportunity on the factual allegations and another on the proposed penalty. Both may be rolled into one. But the person proceeded against must know that he is being required to meet the allegations which might lead to a certain action being taken against him. If that is made known, the requirements are met............" Sri S.G. Sundaraswamy also placed reliance on another decision of the Supreme Court in CHINGLEPET BOTTLERS v. MAJESTIC BOTTLING CO. 1984 : [1984]3SCR190 in which it is observed in para-29 at page....
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....been observed. The non-observance of natural justice is itself prejudice to any man and proof of prejudice independently of proof of denial of natural justice is unnecessary." In my opinion, the said observations have no bearing to the facts of the case on hand as the Managing Committee of the Club has rejected the nomination paper of the plaintiff after taking into consideration the written representations of the plaintiff and all other relevant aspects. Extracts of the Minutes of the emergent Meeting of the Managing Committee, of the Club held at 3-30 p.m. on 27-9-1989 is marked as Ex.D-10, a copy of which is found at pages 245 to 249 of the paper book. It shows that the subject of accepting or rejecting the nomination paper of the plaintiff was considered on 26-9-1989 and deferred for detailed consideration on 27-9-1989 and, accordingly, the matter was considered and discussed at great depth in the background of the opinion furnished by Advocates M/s. Sundaraswamy, Ramadas and Anand and the legal adviser of the Club Sri N. Jayaraman, who was also present, and in the light of the various views expressed in the meeting, the proposal was put to vote and it was decided by majorit....
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.... the trial Court was not justified in observing that it was a typographical error. Amendments of pleadings are no doubt allowed in exceptional cases in the ends of justice if the Court is of the view that disallowing of the amendment will result in great injustice to a party or it would result in multiplicity of suits etc. In my opinion, the case on hand cannot be regarded as one such exceptional case. It is not as if the plaintiff was unaware of the admission made by him inasmuch as the first defendant Club has referred to this admission by stating in para-graph-11 of its written statement that "it is not disputed that plaintiff's brother (admittedly undivided brother) by name Sri Venilal Ambaram is the owner of a race horse by name 'courage' and is registered as such on 2-6-1989 with Madras Racing Undertaking which is a Turf Authority." Again, it is stated in paragraph-13.5 of the first appellant's Memorandum of Appeal in R.F.A. 140/89 as under: "13.5. The Court below erred in holding that a significant admission in the plaint namely that Sri Venilal Ambaram was an undivided brother of the plaintiff was a typographical error. This observation is wholly unjustified. A material ....
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....ly affect the case of the defendants and results in great prejudice to them as specifically contended by the appellants in R.F.A. Nos. 140 and 141 of 1990 in their objection statement. Taking all these aspects into consideration, I hold on point No. (3) that the amendment sought by the plaintiff cannot be granted at this stage. Consequently, the amendment applications (I.A.II. in R.F.A. 139/90, I.A.II in R.F.A. 140/90 and I.A.III in R.F.A. 141/90) filed in these appeals are dismissed. 23. Before going into consideration of point No. (4) which is a very vital point in these appeals, I propose to consider point No. (5). 24. POINT NO. (5): Sri Udaya Holla argued that the plaintiff has waived his right to question the rejection of his nomination paper as well as the election: of defendants 2 to 4 in view of his conduct in not protesting and not voting against the resolution though he was admittedly present in the Annual General Meeting held on 27-9-1989. He advanced that argument taking advantage of the evidence of the plaintiff in cross-examination that it is true that he did not object for the rejection of the nomination held at 4 p.m. on 27-9-1989 and then volunteered the answ....
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....950, their Lordships of the Supreme Court have further observed in Vatan Mal's case referred to above in paragraph-12 at page 1540 as under: "In construing the terms of Section 13-A, the Court has to bear in mind the object underlying the introduction of the Section by the Legislature. It is a settled principle that the interpretation of the provisions of a statute should conform to the legislative intent as far as possible and the Courts should not take a narrow or restricted view which will defeat the purpose of the Act.........." 28. It is also observed by the Supreme Court in MITHILESH KUMARI AND ANR. v. PREM BEHARI KHARE /SC/0318/1989 : [1989]177ITR97(SC) in the context of considering the question whether the Senami Prohibition Act is retrospective or retroactive in operation that external aid like the Report of the Law Commission can be referred to for construing the provisions of a statute and for ascertaining the legislative intent. This is what their Lordships have observed in paragraphs-15 and 19 at pages 3252 and 1253 of the said decision: "15....................................... It is permissible to refer to the Law Commission's Report to ascertai....
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....30. In view of the law laid down by the Supreme Court in the above referred latest decisions, I do not consider it necessary to refer to all the earlier decisions of the Supreme Court cited by the learned Counsel on both sides except to one decision in GIRIDHARLAL AND SONS v. BALBIR NATH MATHUR AND ORS. /SC/0544/1986 : [1986]1SCR383 , wherein their Lordships have observed as under: "The golden rule of construction is that where the words of statutes are plain and unambiguous effect must be given to them. The real basis of this rule is that since the words must have spoken as clearly to legislators as to Judges, it may be safely presumed that the legislature intended what the words plainly say. Even where the words of statutes appear to be prima facie clear and unambiguous it may sometimes be possible that the plain meaning of the words does not convey and may even defeat the intention of the legislature; in such cases the true intention of the legislature, if it can be determined clearly by other means, should be given effect. Parliamentary intention may be gathered from several sources such as from the statute itself, from the preamble to the statute, from the st....
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....the 1st defendant Club. I was present in that meeting. I did not oppose the Resolution accepting and amending.........." Minutes of the proceedings of the Meeting dated 27-9-89 is marked as Ex.D-1 and its copy is found at pages 204 to 218 of the paper book. It shows that A. Krishna (plaintiff) was also present in that Meeting. After a lengthy discussion, Special Resolution No. 1 regarding the incorporation of Article 32(b) to (e) in its present form was put to vote and it was passed by majority of 132 Members voting for the Resolution and one Member voting against the Resolution. Plaintiff's admission that he did not oppose the resolution accepting the amendment would mean that he voted for the Special Resolution. At this stage, I consider it useful to refer to a decision of the Supreme Court in DR. G. SARANA v. UNIVERSITY OF LUCKNOW AND ORS /SC/0067/1976 : (1977)ILLJ68SC . in which the "doctrine of waiver and estoppel" is considered. In that case, a certain candidate voluntarily appeared before the Selection Committee and took a chance of favourable recommendation from it. Thereafter, he made a complaint against the Selection Committee by contending that it was biased towards h....
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....t some checks were necessary on the affairs of the Bangalore Turf Club, in regard to racing. It was in the background, he said, that various Government Orders had been passed prohibiting owners Stewards from functioning as Stewards in respect of the particular race or for the whole day when his horse/s was participating in the races. In this background, the present proposal of the Government to amend the Articles of Association of the Club to prohibit race horse owners from becoming Stewards should not be considered as anything new as it was only an extension of the measures directed by Government since 1983, Mr. Shankaranarayanan said. He added that even when the memorandum of understanding, with the Club, was entered into in 1979, it was in modification of an earlier direction of Government that race horse owners should not be Stewards." He has further stated that the Government has felt, in order to infuse confidence in the mind of the public, that it was necessary to inquire into these matters and the Commissioner of Police had recommended in his report based on Police enquiry that two conditions should be imposed in order to carry on racing in a healthy, proper and clean ma....
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....h by majority of 132 Members voting in favour of the Resolution and one Member voting against the Resolution. I have already pointed out that the plaintiff, who was present in the Meeting, had voted in favour of the Resolution. The matter had been discussed in the Meeting held on 28-9-1985 also in which the plaintiff was present (Vide Ex.D-2). In that Meeting, Sri Shankaranarayanan had clarified that the intention of the Government was to ban race horse owners from being Stewards of the Club and there is no ban on race horse owners serving as Committee Members to the extent of not more than 2 out of 4 elected Committee Members could be race horse owners. It is in pursuance of Dr. S.R. Girirajan's views supported by the plaintiff that the proposed amendment was deferred in the Meeting held on 28-9-1985 for consideration in the Annual General Meeting which was held on 27-9-1989. Therefore, it is clear that Article 32 was amended and Clauses (b) to (d) as they exist now were incorporated practically by an unanimous decision but for lone dissenting vote of one member in the Extraordinary General Meeting held on 27-9-1985 to which the plaintiff was also a party. There was no need to Int....
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....t his brother Sri Venilal Ambaram is the registered owner of a horse called "courage" and has then denied the suggestion that Sri Venilal Ambaram was his undivided brother even as on that date. 35. Much argument was advanced by the learned Counsel on both sides on the question whether Sri Venilal Ambaram was the divided or undivided brother of the plaintiff. Plaintiff has all along referred to Sri Venilal Ambaram as his brother and that apart, he has nowhere stated that he was his divided brother. Even in paragraph-6 of the plaint he has stated that the race horse "courage" belongs absolutely and exclusively to Sri Venilal Ambaram and there could be no benami ownership after the Benami Prohibition Act came into force. What he has pleaded in paragraph-10 of the plaint is already extracted above. It was only at the stage of evidence that the plaintiff tried to make it appear that there was no love lost between him and his brother Sri Venilal Ambaram and they were divided. But, no document evidencing partition between him and his brother Sri Venilal Ambaram is produced. However, Sri V. Tarakaram argued that the Settlement Deed (Ex.P-1), copy of the plaint in O.S.22/60 filed in the ....
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.... The power extends not only to effecting a division by metes and bounds, but also to a division of status. In all these cases, the father's power must be exercised BONA FIDE and in accordance with law; the division must not be unfair and the allotments must be equal ......." 37. After giving my anxious consideration ,to the argument of the learned Counsel for the plaintiff and the above extracted passages relied on by him, I find it extremely difficult to persuade myself to accept that argument. Ex.P-1 is only a certified copy of Settlement Deed dated 12-2-1951 effected between Ambarak Fakir Bhai Vakaria (father of the plaintiff) and his sons A. Thakurdas, Venilal, A. Ramanlal, A. Suklal alias Laljee, A. Narayanan and A. Krishna @ Kishanlal mentioned at Sl.No. 5. He is stated to be the plaintiff. Except producing a certified copy Ex.P-1 of that Settlement Deed, its execution is not proved and much less, is it established that the terms of that Settlement Deed had been given effect to. Exs.P-2, P-3 and P-6 are only certified copies of the plaint in O.S.22/60, compromise petition filed in that suit, plaint in O.S.59/72. Ex.P-4 is the Assessment order under Section 14....
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.... mentioned as relatives referred to in Section 8(c) of the Act. The relative mentioned against item No. 19 of that list is brother (including step-brother). Even mother including step mother, son including step-son, daughter including step-daughter, sister including step-sister are mentioned in that list. It is not mentioned against item No. 19 that brother does not include an undivided brother. Therefore, even an undivided brother will have to be considered as a relative referred to in Article 32(1)(c). If it was the intention of the Government that race horse owners only are disqualified from becoming Stewards, there was no need for the Government to suggest amendment to Article 32 by introducing Clauses (c) to (e). The use of the word 'of' after the words "either in his own name" and before the words 'a relative' as enumerated in Schedule-I 'A' of the Act" in Article 32(c)(i) has no doubt given room to present controversy. Sri Udaya Holla wanted the Dictionary meaning of the word 'of' to be substituted in place of the word 'of'. If his argument that the words 'in the name of' cannot be substituted before the words 'a relative' is not acceptable. According to him, the Dictionary ....
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....statute can be construed widely so as to salvage the remedial intendment, the Court, must adopt it. Minor definitional disability divorced from the realities of the industrial economics if stressed as the sole touchstone is sure to prove disastrous when special types of economic legislation like Monopolies and Restrictive Trade Practices Act having object is to inhibit concentration of economic power. Therefore when two interpretation are feasible, that which advances the remedy and suppresses the evil as the legislature envisioned must find favour with the Court." Therefore, I am of the opinion that the substitution of that Dictionary meaning of the word 'of' in Article 32(c)(i) would make that clause meaning less and, on the other hand, the substitution of the words 'in the name' would render Article 32(c)(i) meaningful and it is also in consonance with the object with which Article 32(c)(i) was amended. In that event, Article 32(c)(i) has to be read as under: "For the purpose of this Article, a race horse owner means a person who: (1) owns a race horse either in his own name or (2) in the name of a relative as enumerated in Schedule-I 'A' to the Indian Companies Act or ....
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....n in order to prove that certain Stewards whose son or brother was a race horse owner had tendered resignations to the post of Stewards held by them, after Article 32 was amended and he was aware of the same. He has admitted that the son of Mr. A.M.C. Gowda who, was a Steward in 1985 owned a race horse. But, he has denied the suggestion that Mr. A.M.C. Gowda tendered resignation because his son owned a race horse and then volunteered the answer that he tendered resignation but he does not know the reason. He has further stated that he does not remember if suggested that he was present on 28th August 1985 at the meeting of the Managing Committee of the Club. He has further deposed that he does not know if it is suggested that brother of Mr. Lachaiah Setty owned a race force in 1985 although he was in the Committee of the Club in 1985 and he does not remember in which Committee the question of Mr. Lachaiah Setty's nomination came up for consideration and has then stated that the Committee might have considered that Mr. Lachaiah Setty was a race horse owner because his brother owned a horse but he does not know. He has also deposed that he does not remember if suggested that he was pr....
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....ragraph-4 at page 7 supra. Pursuant to the resolution followed by the notice (Ex.P-9) dated 17-9-1989, clarification is sought from the Government regarding the, interpretation of Article 32(c) and the matter is discussed on 26-9-1989 and then deferred for detailed consideration on 27-9-1989 and it is decided by majority decision after taking into consideration the reply received from the Government and also the views expressed by Advocates M/s. Sundaraswamy, Ramadas and Anand and Legal Adviser Sri N. Jayaraman to reject the nomination paper of the plaintiff. All that Article 33(b)(i) mandates is that the Committee shall, after scrutinising the proposals, inform the club members of the candidature of a person for the Office of Committee Member or the intention of the Member to propose such person as a candidate for that Office by serving individual notice on the Club Members not less than seven days before the Meeting. Provided it shall not be necessary for the Club to serve individual notice upon the Members as aforesaid if the Club advertises such candidature or intention, not less than 7 days before the Meeting in at least two newspapers circulating in Bangalore......" That apar....