TaxTMI 
TaxTMI 
2019 (12) TMI 395
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....pondents 1 and 2/plaintiffs, who were holding the post of Vice President and Honourable Secretary of the appellant in O.S.A.No.30 of 2019 for the term 2016-2018, but lost the election for the year 2018-2020 through the same procedure adopted by means of electronic voting, filed the suit inter alia alleging that there was a connivance between the elected office bearers/defendants and the scrutinizer. The following are the relevant averments made in the suit along with the relief sought for. "15. The plaintiffs further submit that the entire e-voting and manual voting conducted in the 1st defendant club for the term 2018-20 is vitiated by fraud and illegal manipulation by the scrutinizer viz., 2nd defendant and defendants 4 to 13. The office of the 1st defendant club is now forcibly and illegally occupied by the defendants 4 to 13. Further the 14th defendant has been made as a defendant as he was the Chairman of the AGM and he has obviously acted in support of the defendants 4 to 13 either due to collusion or due to coercion and he is guilty of not ensuring a fair procedure even after realizing the huge fraud. The reports of the 2nd defendant is totally manipulated and self-....
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....t is not maintainable in view of the express bar under Section 430 of the Companies Act, 2013. The dispute sought to be raised certainly would come within the purview of Sections 241 to 244 of the Companies Act, 2013 (hereinafter referred to as "the Act"). The decisions governing were not taken note of by the learned single Judge. The proceedings are not summary in nature, especially, in the light of Sections 424 to 429 of the Act. Therefore, the order of the learned single Judge would require interference as the only option that is left open to the plaintiffs/respondents 1 and 2 is to approach the Company Law Tribunal, if so advised. The submissions made are sought to be supported through the following decisions. 1.N.Ramji Vs. Ashwath Narayan Ramji and others (MANU/TN/1660/2017); 2.B.K.Educational Services Private Limited Vs. Parag Gupta and Associates (MANU/SC/1160/2018); 3.The Premier Automobiles Ltd., Vs. Kamlekar Shantaram Wadke of Bombay and others (MANU/SC/0369/1975); 4.S.Natarajan V. S.V.Global Mills Ltd., and Others (MANU/TN/2733/2015); 5.Dinekar Rai D.Desai and Others Vs. R.P.Bhasin and Others; 6.Shanti Prasad Jain Vs.....
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....f the affairs of a company are being conducted in a manner oppressive to any member or members including any one or more of those applying. The court then has power to make such orders under s. 397 read with s. 402 as it thinks fit, if it comes to the conclusion that the affairs of the company are being conducted in a manner oppressive to any member or members and that wind up the company would unfairly prejudice such member or members, but that otherwise the facts might justify the making of a winding up order on the ground that it was just and equitable that the company should be wound up. The law however has not defined what is oppression for purposes of this section, and it is left to courts to decide on the facts of each case whether there is such oppression. As calls for action under this section. 16. We may in this connection refer to four cases where the new s. 210 of the English Act came up for consideration, namely, (1) Elder v. Elder and Watson, (1), (2) George Meyer v. Scottish Cooperative Wholesale Society Ltd. (2), (3) Scottish Co-operative Wholesale Society Ltd. v. Meyer and another(3), which was an appeal from Meyer's case(2), and (4) Re. H. R. Harmer L....
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....t of applications under s. 210 in different cases must depend on the particular facts of each case, the circumstances in which oppression may arise being so infinitely various that it is impossible to define them with precision". The circumstances must be such as to warrant the inference that "there had been, at least, an unfair abuse of powers and an impairment of confidence in the _probity with which the company's affairs are being conducted, as distinguished from mere resentment on the part of a minority at being outvoted on some issue of domestic policy". The phrase "oppressive to some part of the members" suggests that the conduct complained of "should at the lowest involve a visible departure from the standards of fair dealing, and a violation of the conditions of fair play on which every shareholder who entrusts his money to a company is entitled to rely. ... But, apart from this, the question of absence of mutual confidence per se between partners or between two sets of shareholders, however relevant to a winding up seems to have no direct relevance to the remedy granted by S. 210. It is oppression of some part of the shareholders by the manner in which the affairs of t....
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....y and the members including others, who complain. It would also amount to mismanagement as they involve a process of fraud and collusion affecting the management as a whole. Thus, all the decisions emanated from such wrongly elected office bearers would become by-product of such an election. 8.5 Section 242 deals with the powers of the Tribunal. This provision has to be seen contextually and co-existing with Section 241. On a complaint, power is to be exercised towards redressal. Prejudice may either to a member, group of the company or the public at large. 8.6 A complaint touching upon the election conducted to the management of the company would go to the root. Such a challenge is to the very right to manage the affairs. A wrong election would certainly have a cascading effect on the affairs in the form of decisions and functioning of a company. Thus, it cannot be said that Section 241 of the Act would only involve a complaint touching upon the other affairs as against the process of election. As discussed above, the challenge is to the very election itself and therefore, there is no authority available to the office bearers to act and decide on behalf of the company if hel....
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....ation has been fixed as qualification for the Chairperson and Members of the Appellate Tribunal. Removal of members is to be done only after consultation with the Chief Justice of India on certain contingencies satisfied. 8.11 Section 424 of the Act deals with the procedure to be adopted by the Tribunal and the Appellate Tribunal. The forums are given liberty to go beyond the Code of Civil Procedure by applying principles of natural justice and subject to other provisions governing. Thus, they are not bound by the Code, which is obviously a procedural one. They can also formulate their own procedure. 8.12 Under Sub Clause (2) of 424 of the Act, the Tribunals are vested with the powers of the Civil Court as granted under the Code of Civil Procedure. Sub Section (3) gives sanctity to an order passed by the Tribunal or the Appellate Tribunal by elevating to it that of a decree. Sub Section 4 makes the position clear by deeming the Tribunal as a Civil Court though for the purpose of Section 195 and Chapter XXVI of the Code of Criminal Procedure. 8.13 The functioning of the Tribunal also has the protection for its action taken in good faith under Section 428 of the Act. The Tri....
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....nless the genus is identified a specie is not to be searched for. When a provision provides for many things among others, they cannot be compared with each other by using the principle of ejusdem generis. We may fruitfully refer the decision of the Division Bench of this Court in D. Sivakumar v. Government of Tamil Nadu, [2009] 5 MLJ 958), in which, one of us is a party (M.M. Sundresh, J.). The following paragraph would be apposite. '15. Principle of Ejusdem Generis: Ejusdem Generis is a Latin Expression which means "of the same kind". In other words, it means words of similar class. In so far as the principle of ejusdem generis is concerned, we are of the opinion that the said rule applies only when the subjects of enumeration constitute a class or category, statute enumerates the specific words, the general terms follow the enumeration and there is no indication of a different legislative intent. The principle of ejusdem generis would therefore apply only when there is an ambiguity while interpreting any statute. The said rule is applicable when particular words pertaining to class, category or genus are followed by general words. In this Connection, the Hon....
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.... v. Frank Jones (Tipton) Ltd. [1978] 1 All ER 948 (HL). Rules of interpretation do not permit the courts to do so, unless the provision as it stands is meaningless or of doubtful meaning. The courts are not entitled to read words into an Act of Parliament unless clear reason for it is to be found within the four corners of the Act itself. (Per Lord Loreburn L.C. in Vickers Sons)". The question is not what may be supposed and has been intended but what has been said. "Statutes should be construed not as theorems of Euclid", Judge Learned Hand said, "but words must be construed with some imagination of the purposes which lie behind them". (See Lenigh Valley Coal Co. v. Yensavage, 218 FR 547). The view was reiterated in Union of India v. Filip Tiago de Gama of Vedem Vasco de Gama [1990] 1 SCC 277 (SCC page 284, paragraph 16). In D.R. Venkatachalam v. Deputy Transport Commissioner [1977] 2 SCC 273, it was observed that the courts must avoid the danger of a priori determination of the meaning of a provision based on their own preconceived notions of the ideological structure or scheme into which the provision to be interpreted is somewhat fitted. They are not entitled ....
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.... much on one word and pay too little attention to other words. No provision in the statute and no word in any section can be construed in isolation. Every provision and every word must be looked at generally and in the context in which it is used. It is said that every statute is an edict of the legislature. (See: Gwalior Rayons Silk Mfg. (Wvg.) Co. Ltd. v. Custodian of Vested Forests, Palghat and Another, ((1990) Supp SCC 785); Union of India v. Deoki Nandan Aggarwal, ((1992) Supp (1) SCC 323); Institute of Chartered Accountants of India v. Price Waterhouse, ((1997) 6 SCC 312), Harbhajan Singh v. Press Council of India and others ((2002) 3 SCC 722) and Grasim Industries Limited v. Collector of Customs, Bombay ((2002) 4 SCC 297)). 20.The exposition of law as to the applicability of the rule of ejusdem generis is classically expressed by the Apex Court in the case of Siddeshwari Cotton Mills (P) Ltd. v. Union of India, [1989] 2 SCC 458, as follows: 12. The expression ejus-dem-generis "of the same kind or nature" signifies a principle of construction whereby words in a statute which are otherwise wide but are associated in the text with more limited words are, by im....
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....lication of the ejusdem generis doctrine'." In S.S. Magnhild v. Mclntyre Bros. & Co. (1920 (3) KB 321), Mc Cardie, J. said :(KB p.330) :So far as I can see the only test seems to be whether the specified things which precede the general words can be placed under some common category. By this I understand that the specified things must possess some common and dominant feature." 17. In Tribhuban Parkash Nayyar v. Union of India, ((1970) 2 SCR 732) the Court said : (SCC p.106, para 13: SCR p.740) "... The rule reflects an attempt to reconcile incompatibility between the specific and general words, in view of the other rules of interpretation, that all words in a statute are given effect if possible, that a statute is to be construed as a whole and that no words in a statute are presumed to be superfluous..." 18. In UPSEB v. Hari Shankar (AIR 1979 SC 65) it was observed : (SCC p.30, para 15 : AIR p.73) " ... The true scope of the rule of 'ejusdem generis' is that words of a general nature following specific and particular words should be construed as limited to things which are of the same nature as those specified. But the rule ....
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....on does not appear. In instant case, a contrary intention is clearly indicated inasmuch as the definition of `teachers' under Section 2(35) of the said Act, as pointed out above, is in two parts. The first part deals with enumerated categories but the second part which begins by the expression "and other" envisages a different category of persons. Here `and' is disjunctive. So, while construing such a definition the principle of ejusdem generis cannot be applied. 29. In this context, we should do well to remember the caution sounded by Lord Scarman in Quazi v. Quazi - [(1979) 3 All-England Reports 897]. At page 916 of the report, the learned Law Lord made this pertinent observation:- "If the legislative purpose of a statute is such that a statutory series should be read ejusdem generis, so be it; the rule is helpful. But, if it is not, the rule is more likely to defeat than to fulfil the purpose of the statute. The rule, like many other rules of statutory interpretation, is a useful servant but a bad master." 30. This Court while construing the principle of ejusdem generis laid down similar principles in the case of K.K. Kochuni v. State of Madras....
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....tiose. 34. It is, therefore, clear where there is a different legislative intent, as in this case, the principle of ejusdem generis cannot be applied to make a part of the definition completely redundant. 35. By giving such a narrow and truncated interpretation of `teachers' under Section 2(35), High court has not only ignored a part of Section 2(35) but it has also unfortunately given an interpretation which is incompatible with the avowed purpose of Section 53 of the Act."' Hence, in our opinion, the abovesaid principle has no place in interpreting Section 242(h) of the Act. 11. As various decisions have been relied upon by both sides, we need to consider them as well. 12. In Jai Mahal Hotels (P.) Ltd. (supra) the Apex Court was dealing with the scope of rectification and jurisdiction of the Company Law Board. Thus, it was dealing with Section 111(7) read with Section 155 of the Companies Act, 1956. While doing so, the Apex Court took note of the earlier decision rendered in Ammonia Supplies Corpn. (P.) Ltd., v. Modern Plastic Containers (P.) Ltd., [1998] 17 SCL 463 (SC). We may note that the facts involved are totally different along with the s....
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....en" in dispute. Therefore, to decide whether the ouster clause applies or not, one has to unmask the plaintiffs and find out the matter in dispute. Obviously, the matter in dispute is regarding affairs of the company alleged to be conducted prejudicial to the interest of the company, there is a matter which the Tribunal is empowered to determine. The subject matter squarely falls within the ambit of Section 242 and 242(2)(c)(h) of the Companies Act, 2013. 25. In the light of the facts and circumstances of this case, this Court is of the opinion that the word "member" employed in Section 241 of the Act cannot be given a restricted meaning. If restricted meaning is given, it may lead to abuse of the process law, as it is found in this case. Hence, it is essential to apply the doctrine of reading down to make the provisions under Chapter XVI of the Act purposeful. The golden Rule of statutory construction is that the words and phrases or sentences should be interpreted according to the intent of the legislature that passed the Act. Section 241 and 242 should be read together. If the words of the statutes raises doubt, it is inevitable to call in aid the ground and cause of ma....