TaxTMI 
TaxTMI 
1990 (7) TMI 372
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....nd 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 September 1985 (for short 'the Articles of Ass....
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....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 this list." By a letter dated 18-9-1989, plaint....
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....her 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, urged that defendants 2 to 4 were liable to be restrained fro....
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....ivil 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 background of the object with which Article 32 was amended are set o....
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....hey 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 injunction restraining defendants 2, 3 and 4 from acting and functioning as Stewards? ) Whe....
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....t 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 Ambaram owned a race horse called "courage" is illegal and invalid? ) Whether the plaintiff has waived his right to question the decision of the Club in rejecting h....
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....or 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 Tribunal has not acted in conformity with the fundamental principles of judicial procedure. XXX XXX XXX (7) An exclusion of the jurisdiction of the Civil Court is not readily to be inferred unless the conditions above set out apply." Sri V.....
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....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 common law, is created by a statute and that statute itself provided a machinery for the enforcement of the right, both the right and the remedy having been created uno flatu and a finality is intended to the result of the statutory proceedings, then, even in the absence of an excl....
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....nformity 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, therefore, his nomination may be accepted, in view of the said representations, the Club had thought it fit to include his nomination also in the printed list of nominations by appending the note extracted above to that printed list. Thereafter, it sought instructions from the Government reg....
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....tural 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 1040: "It is a fundamental Rule of Law that no decision must be taken which will affect the rights of any person without first giving him an opportunity of putting forward his case." And then it is observed after referring to the observations made by Megarry, V.C. in Mcinnes v. ONSLOW FANE (1978....
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....nation 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 majority to reject the nomination paper of the plaintiff. Material portion of the Resolution dated 27-9-1989 reads thus: "Thereafter, the Committee by majority taking into consideration the existing conventions, the object of Article 32, the submissions made by Mr. A. Krishna vide his letters dated 15th September, 1989, 16th Se....
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....e 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 admission cannot be brushed aside in this manner. The plaintiff had not chosen to amend the plaint or explain it in his deposition and without any material before it, the Court was not justified in characterising the admission as a typographical error." The word 'undivided' is also underlined in order to lay emphasis on the use of that word ....
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....e 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 answer that he did not object because he was upset by the announcement and then stated that it is true that he did not vote at the Meeting. There is no indication in Ex.D-10 that plaintiff was present in the emergent Meeting of the Managing Committee of the Club held from 3-30 p.m. on 27-9-1989 in which the Managing Committee decided to reject the nomi....
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.... 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 ascertain the legislative intent behind the provision? We are of the view that where a particular enactment or amendment is the result of recommendation of the Law Commission of India, it may be permissible to refer to the relevant report as in this case. What importance can be given to it will depend on the facts and circumstances of each case." XXX XXX XXX 19. However, the Court has to interpret the....
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....at 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 statement of Objects and Reasons, from Parliamentary debates, reports of committees and commissions which preceded the legislation and finally from all legitimate and admissible sources from where there may be light. Regard must be had to legislative history too. The draftsman may design his words to meet the 'primary situation.' It will then become necessary for the Court to impute an intention to Parliament in regard to 'Secondary situ....
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....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 him. In that context, their Lordships have observed in paragraph-15 at page 2433 that having appeared before the Selection Committee and taken the chance of having a recommendation from it, it is not subsequently open to the candidate to turn round and question the constitution of the Committee. Their Lordships have also referred to an earlier decision of the Supreme Court in Manak Lal's case SC/0001/1957 : [1957]1SCR575 wherein it was observed as under:....
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....rom 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 manner and those two conditions are: (1) that no race horse owner shall be a Steward; and (2) that no Member of the Managing Committee shall bet directly or indirectly. Sri N. Santosh Hegde, who was then functioning as Advocate-General, Government of Karnataka, in addition to being a Member of the Club has clarified to the Members that the Government had every right to interfere in the affairs of the Club since racing was not confined to 350 Members of the Club but a la....
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....lub 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 Introduce the said amendment if the owner of race horse only was to be disqualified from contesting Stewardship as it is clearly provided in Clause (b) of Article 32 that "no race horse owner shall be a Steward" in the Managing Committee. 33. Powers of the Stewards as enumerated in Article 51 are vast and of far-reaching consequence. As a matter of fact, plaintiff has clearly stated in his evidence that Stewards are incharge and full control of racing of the Club, which includes judging of ....
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....en 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 Court of the District Judge, Civil Station, Bangalore (Ex.P-2), copy of the compromise petition (Ex.P-3) filed in O.S.6/70, Estate Duty Officer's order (Ex.P-5) and copy of the plaint (Ex.P-6) in O.S.59/72 on the file of the Civil Judge, Civil Station, Bangalore are sufficient to infer that the plaintiff and Sri Venilal Ambaram were divided in status long prior to the controversy in respect of race horse 'courage' arose. 36. He also placed reliance on paragraph-278 at page 525 and paragraph-471 at page....
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.... 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 143(1) of the Income Tax Act 1961 passed by the Income Tax Officer, Circle-III in respect of the returns for the year 1984-85 to 1986-87 furnished by the plaintiff. Ex.P-5 is Estate Duty assessment order passed under Section 61 of the Estate Duty Act in respect of the Estate Duty assessment of the estate left behind by the late father of the plaintiff and his five brothers. It can be gathered from the certified copy of the Order Sheet in O.S.6/70 which forms part and parcel of Ex.P-3 that final decree proceedings are closed on 18-4-1987 as the ....
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....rse 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 meaning of the word 'of' is 'belonging to or belonging'. In this connection, he also referred to the view expressed by the Legal Adviser of the Club at page 237 of the paper book. While discussing the letter of the Government in the Meeting held on 17-9-1989, the Legal Adviser Sri N. Jayaraman has stated that as per the existing practice followed by the Club, any candidate seeking election to the office of Steward has been treated as race horse owner if one or more horses is/are registered in the name of the candidate or in the name of any of the relatives (....
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....herefore, 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 as a lessee." having regard to the use of the word 'either' before the words "in his own name or" and keeping in mind the intention or the object with which Article 32 was amended on 27-9-1985. It was argued by Sri V. Tarakaram that even if Article 32(c)(i) is read in that way, then also the plaintiff could not have been disqualified because in that event, Sri Venilal Ambaram was holding a race horse 'courage' as benamidar for and on behalf of the plaintiff and the Supreme Court has ruled in Mithilesh Kumari's case that benami transactions cannot be enforced and the real o....
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....esent 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 present in the Committee when the decision was taken and accepted in respect of nomination of Mr. Lachaiah Setty and he does not remember whether he was present in the Annual General Meeting held in 1985 when the question of Mr. Lachaiah Setty's nomination came up for consideration in the Annual General Meeting. In the course of his further cross-examination on 23-11-1985, plaintiff has admitted that he attended the Managing Committee Meeting held on 28-8-1985; that Ex.D-2 is the Minutes of the Meeting dated 28-8-1985 and he was not a contestant to the office of Steward prior to 19....
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....(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 apart, it is nowhere stipulated that nomination papers had to be scrutinised and accepted or rejected on or before such and such a date or prior to a specified period of the election date. Even in the calendar of events, mentioned in the Annual report of the Club for the year 1988-89 only the last date for filing nomination for election as Committee Member/Steward and the last date to give special notice to move Resolution by Club Members is mentioned as 12-9-1989. Therefore, there is absolutely no scope for contending that the Managing Committee of the Club having accepted the nominat....