* IN THE HIGH COURT OF DELHI AT NEW DELHI
Order reserved on: 02.02.2010
% Order delivered on: 11.02.2010
+ I.A.NOS.11323/2008, 11324/2008, 12251/2008
IN CS(OS)1957/2008
HARBIR SINGH ......Plaintiff
Through: Mr. Sanjeev Kr. Jha, Advocate
for plaintiff no1.
Mr.Sanjay Kumar Singh,
Advocate for plaintiff nos.2
to10.
Versus
SHAHEED UDHAM SINGH SMARAK SHIKSHA SAMITI & ORS.
.......Defendants
Through: Mr. B.B. Gupta, Advocate for D-1
& 2.
Mr. Rajat Aneja, Advocate for
defendant
nos.3,4,5,6,11,15,19,20,34 &
39.
CORAM:
HON'BLE MS. JUSTICE INDERMEET KAUR
1. Whether the Reporters of local papers may be allowed to see
the judgment?
2. To be referred to the Reporter or not? Yes
3. Whether the judgment should be reported in the Digest?
Yes
INDERMEET KAUR, J.
1. By this common order, three applications shall be disposed off:
(i)- I.A.No.11323/2008: This is an application filed by the plaintiff under Order XXXIX Rule 1 &2 CPC read with Section 151 CPC seeking a restraint order against defendant no.2 and I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 1 of 15 its other office bearers restraining them from interfering with the functioning of the schools and the management of defendant no.1.
ii. I.A.No.11324/2008: This is an application filed by the plaintiff under Section 151 CPC for appointment of an administrator in the present suit.
iii.I.A.No.12251/2008: This is an application filed by the plaintiff under Order XXXIX Rule 1 & 2 of the CPC for the stay of the operation of the notice dated 18.9.2008 issued by defendant no.2 in his capacity as secretary of defendant no.1. Vide this notice defendant no.1 had notified the convening of an Annual General Meeting of the society for various purposes inter alia also including amending the bye-laws of the society and confirming the enrolment of its newly inducted members. On 24.11.2008 both these items i.e. item nos.1 and 5 of this impugned notice were directed to be stayed; defendant no.1 was at liberty to deal with other items mentioned in the said notice.
2. The present suit is a suit for declaration and perpetual injunction. The plaintiff is a life member of the defendant no.1 society which had been formed in the year 1979. The defendant nos.2 to 51 are the members of the defendant no.1. As per the averments made in the plaint, defendant no.31 to 51 are the only valid members of the defendant no.1 society; defendant nos. 2 to 8 I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 2 of 15 have been expelled from the society by a Board Resolution dated 25.5.2003; defendant nos. 9 to 30 have been illegally enrolled as members without following the due process. Prior to this suit, there has been several rounds of contentious litigation between the parties. The plaintiff has alleged embezzlement of fund by defendant no.2.
3. The instances of embezzlement have been detailed in para nos.14 to 16 of the plaint. It is submitted that a Disciplinary Committee constituted to inquire into these irregularities, in its report had recommended the expulsion of defendants no.2 to 8 for which a general body meeting was convened on 25.5.2003. On 25.5.2003 in the general body meeting, it was unanimously resolved that the membership of defendant no.2 to 8 be cancelled. However, in the electoral roll which was prepared by the subsequent Court Commissioner Mr.Justice Satpal the names of defendant no.2 to 8 who had validly been expelled, continued to find mention. This electoral roll is under challenge. It is pointed out that on various dates in various proceedings court commissioners have been appointed to conduct the elections of defendant no.1 society.
4. Instances of the irregularities committed by the defendant nos.2 to 8 have been detailed in the arguments advanced before this Court. Attention has been drawn to the report of Court Commissioner Mr.Justice Charanjit Talwar dated 18.5.1994. This I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 3 of 15 report had pointed out defaults relating to misappropriation of the funds of the primary school of defendant no.1 society; the account books of the society having not been submitted; aspersions had been cast on R.N. Singhal, the then cashier (defendant no.3 in the present suit). Allegations levelled against Goverdhan Sharma (defendant no.2 in the present suit) had also been noted in the said report who was then Secretary. Presently also defendant no.2 is working in capacity as Secretary of defendant no.1; further defendant nos.2 and 3 had not handed over the account books of the society to the Administrator.
5. Attention has been drawn to the report of the court commissioner Mr.Justice Satpal dated 26.11.2007. In para no.26, it has been noted that the minute books produced by defendant no.2 contained the minutes from 06.9.2001 to 09.5.2007; these minute books are prima facie fabricated as the election had been held on 09.9.2001 and there could not have been any minutes recorded prior in time to the election held on 9.9.2001 i.e. of 6.9.2001.
6. Attention has been drawn to the affidavit filed by defendant no.2 dated 26.12.2007 in the election proceedings of defendant no.1. In para no.3, it has been stated that Ami Chand has never attended any election till date. It is stated that this is a false statement made by defendant no.2 on oath and this is clear from the election meeting note/minutes recorded on 10.8.2003; name of Bhagat Amit Chand find mention at serial no.12. I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 4 of 15
7. It has been argued that the defendant no.2 is a man of tainted antecedents; the press release filed along with the list of documents, shows the criminal imputations attached to Pramod Kumar who is the son of defendant no.2. Defendant no.2 is also embroiled in a case of forgery. On this count, learned counsel for the defendant has stated that a closure report has since been filed as the investigation had revealed that defendant no.2 is not involved in any such transaction.
8. It is further pointed out that a part of the agenda for the meeting scheduled for 18.9.2008 was stayed by an order of this Court dated 24.11.2008 Items at serial no.1 and 5 relating to the amendment in the bye laws of the society and confirmation of the newly inducted members was kept in abeyance. Learned counsel for the defendant has pointed out that the amendments prayed for in this Annual General Meeting were only formal amendments and this is clear from the reply which has been filed by him in I.A.No.12251/2008. The amendments relate to the change of the name of the school of the society; enhancement of the membership fee; the reduction in the number of special invitees.
9. In the written statement, these allegations have been refuted. The replies to the present applications have reiterated the averments made in the written statement. It is stated that the society is being run in a democratic and transparent manner and no new members have been enrolled after 01.8.2003; no violation of I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 5 of 15 any bye laws or regulations of the defendant society has been pointed out by the plaintiff. It is nowhere mandated that the election of the President has necessarily to be conducted by the General Body Meeting and such an order cannot be passed by the Members of the executive.
10. Counsel for the defendant has submitted that the Court should refrain from lifting the corporate veil unless there are compelling reasons to do so; it is only in those cases where the court feels that the corporate form/veil is being misused it will rip through the corporate veil and expose its true character. In this case there are no such specific allegations. Reliance has been placed upon a judgment of this Court reiterated on 21.4.2009, in CS (OS) No.1195/2008 titled Shri Deepak R. Mehtra & Ors. Vs. National Sports Club of India to support this submission.
11. There is no doubt that the consistent view of the Courts has been that the Court should refrain from interfering in the internal management of a society or a club as they are governed by their own charter; the Court should not to sit in appeal over the decisions taken by the management and the majority of the society as long as the Court is prima facie satisfied that the said decisions are taken by the persons authorized to do so and as per the Rules and Regulations of the said society. But for adequate reasons made out, the court will ignore the corporate veil to reach out to the true I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 6 of 15 character of the concerned company or in the relevant case the society.
12. Record reveals that in the instant case in Civil Writ Petition (CWP) Nos.202/1989, 3281/1990, 2469/1991 Mr.Justice Jagdish Chander was first appointed as a Commissioner to hold the elections of the Executive Committee, vide order dated 01.10.1991. On 14.02.1994, Mr.Justice Jagdish Chander was again appointed as a Court Commissioner for conducting the subsequent elections of the Society. This order was passed in suit no.2435/1993. Report of the Commissioner dated 22.02.1994 was submitted. List of 42 Member of the defendant no.1 society was prepared and they were allowed to participate in the ensuing elections to be held in 1995.
13. Elections were conducted on 15.10.1995. This was under the administration of Mr.Justice Charanjit Talwar who had been appointed as a Court Commissioner on 18.05.1994. In this election, 11 members were elected as office bearers of defendant no. 2. Gordhan Sharma was elected as a member of the Executive Committee.
14. On 17.10.1996, these elections were challenged i.e. the election dated 15.10.1995. The management was restrained from taking over the Administration of defendant no.1. The Administrator appointed i.e. Mr.Justice Charanjit Talwar was directed to continue to hold office.
I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 7 of 15
15. This order of 17.10.1996, was subsequently vacated on 10.08.2001. These proceedings were conducted in CS (OS) No. 2435/1993. While vacating the order dated 17.10.1996, the newly elected office bearers of defendant no. 1 society were handed over the management of defendant no.1. They were directed to assume charge immediately and to manage the affairs of the society as also to run the schools of the society. It was directed that the term of the office of the Managing Committee will commence from the date of such assumption of charge. The role of the administrator had come to an end.
16. From the said date i.e. from 10.08.2001 upto 17.09.2002, there were no disputes between the parties. This is prima-facie borne out from the fact that there was no intervening litigation between the warring factions in this intervening period.
17. On 17.09.2002, a notice was given by defendant no.1 to its members to convene a general body meeting which was scheduled for 20.10.2002; this triggered the disputes between the parties.
18. CS (OS) no.1499/2003 was filed. On 14.07.2007, this suit was dismissed for non-prosecution. While dismissing the suit, it had been observed that this matter relates to the elections of a society which elections already stand conducted.
19. CS (OS) no.1479/2007 was thereafter filed. In these proceedings, on 21.08.2007, Mr.Justice Satpal was appointed as a Court Commissioner to hold the elections of defendant no. 1 society I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 8 of 15 which had fallen due in September, 2007. The dispute about the electoral roll/voter list was also to be settled by the Court Commissioner. This is evident from the fact that in these proceedings the question of the veracity of the memberships had been assailed which had been disposed of vide order dated 18.09.2007. It was held that the question of the genuineness of the membership of the plaintiff society would be decided by the Court Commissioner and the said issue may be raised before him. Another similar application raising dispute about the veracity of the membership list was dismissed vide the subsequent order dated 11.12.2007.
20. The objections raised on this voter list/electoral roll/membership of defendant no. 1 was decided by the Court Commissioner Mr.Justice Satpal in his report dated 26.11.2007. He had given a finding that there are 51 members of defendant no. 1 society; 42 members ratified by the report of Jagdish Chander dated 22.02.1994, of whom one member Mr.Randhir Singh was in dispute. Thereafter 12 persons have died. Apart from these 29 members, 10 members were enrolled in terms of the general body meeting dated 10.10.2004 which was earlier approved in the minutes of the executive committee meeting held on 09.12.2002. 12 new members were inducted in terms of the meeting of the executive body on 17.06.2004 approved by the general body in its meeting I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 9 of 15 held on 10.10.2004. A total of 51 members was held to be the valid membership list. This was in terms of this report dated 26.11.2007.
21. The elections were thereafter held in 26.12.2007. Present suit i.e. CS (OS) no.1957/2008 was thereafter filed. It is prayed that the said election dated 26.12.2007 is vitiated as it is based on an illegal electoral roll; other declarations sought are :-
(i) defendants no. 2 to 8 have been illegally expelled from the membership;
(ii) The general body meeting dated 20.10.2002 is bad and the enrolment of the 10 members pursuant thereto is also bad;
(iii) The executive meeting dated 17.06.2004 is illegal and the enrolment of the 12 members subsequent thereto is also illegal and bad;
(iv) Plaintiff and defendant nos. 31 to 51 are the only legally appointed members of the society; defendant no. 2 be restrained from interfering in the administration of the society.
22. The prayers made in the present suit are in fact the reliefs sought by way of present applications as well. Where a grant of temporary injunction would amount practicably in granting the relief claimed in the suit, the Court should be very slow in granting such a prayer; see Indian Cables Vs. Sumitra Chabroborty AIR 1985 Cal.248.
I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 10 of 15
23. Prima-facie findings of the Court Commissioner, Mr.Justice Satpal in terms of his report dated 26.11.2007, are on record. It is not in dispute that the Court Commissioner had the requisite powers to decide the question about the genuineness of a particular member; it was within the ambit and scope of his powers to prepare the voter list. This voter list of 51 members was submitted by him in this report.
24. There is ample evidence on record to show that the litigations between the parties is not only contentious but it has reached a war-footing. Allegations and counter-allegations have been made right from 1991; Court Commissioners have been appointed to conduct the elections. On 10.08.2001, after a long period of time, the management that is the newly elected office-bearers of defendant no. 1 who had been elected on 15.10.1995, were permitted to take over the management of the society. Since then, the management continues to vest with the said office-bearers. For the purpose of election which was to be held in December, 2007, Mr. Justice Satpal was appointed as a Court Commissioner.
25. Allegations made against the contesting defendants who are the officer bearer member of defendant no. 1 and by and large general; no specific allegations have been highlighted.
26. I.A.No.11323/2008 A prima facie case has to be made out in favour of the plaintiff before he can seek the reliefs he is asking for. I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 11 of 15
27. Under Order 39 Rule 1, a temporary injunction may be granted in anyone of the contingencies:-
(a) that any property in dispute in a suit is in danger of being wasted, damaged or alienated by any party to the suit, or wrongfully sold in execution of a decree;
(b) that the defendant threatens, or intends, to remove or dispose of his property with a view to defrauding his creditors;
(c) that the defendant threatens to dispossess the plaintiff or otherwise cause injury to the plaintiff in relation to any property in dispute in the suit.
28. The object of the temporary injunction is to protect status quo while the rights of the party are being litigated. Principles governing grant of injunctions are well settled. There may be cases in which the grant of injunction will alone meet the ends of justice and an alternative safeguards for the preservation of the rights of the challenging party cannot at all be thought of. The applicant party must show that there is a prima facie case, irreparable loss and balance of convenience in his favour. It is merely a process by which the Court enforces equity; it is an order of an equitable nature; it is an interlocutory and interim relief to preserve the matter in suit unless the case can be tried.
29. In this case as held supra no specific instance of embezzlement or fraud or of the dates on which they were I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 12 of 15 committed by the defendant has been pointed out by the plaintiff. On 10.8.2001, the management of defendant no.1 society had been handed over to its newly appointed management and it is ever since continuing with them. In this case, the final voter list stood finalized on 10.10.2004 in the last general body meeting of the defendant no.1. This voter list was filed in the Court by Court Commissioner Mr. Justice Satpal on 26.11.2007. As per this report 41 members had been approved on 22.2.1994; 10 members as on 10.10.2004 and again 12 members on 10.10.2004 i.e. 63 members; of whom 12 members had since died. Voter list comprised thus of 51 members. This voter list is a subject matter of challenge in the present suit. Last election was held on 26.12.2007. In the prior two elections of 2003 and 2005 plaintiff had participated but he had lost the election. Present suit was filed thereafter.
30. Plaintiff in this case has failed to make out a prima facie case in support of the claim made by him. Balance of convenience is also not in favour of the plaintiff. It is on this scale that the balance has to be tested; the inconvenience of the applicant if the temporary injunction is refused will be balanced and compared with that of the other party, if granted. No irreparable loss or the injury is suffered by the plaintiff if this order of injunction is not granted in his favour. Application has no merits; it is dismissed.
I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 13 of 15
31. I.A.No.11324/2008 Vide this application plaintiff has sought for the appointment of an administrator. The principles governing the appointment of an administrator are the same which have to be taken into consideration at the time of appointment of a receiver which is a power granted to the Court under Order 40 Rule 1 CPC. The object of this rule is to save the property in the suit from being wasted. For such a prayer to be granted in favour of plaintiff, he must show not only a case of adverse and conflicting claims to the property but he must also show some emergency or danger or loss demanding an immediate action and his own right must reasonably be clear and free from doubt. This power has to be exercised on sound judicial principles taking the circumstances of each case into account and to meet ends of justice. No such case is made out in favour of the plaintiff. Such an order, if passed, will have the effect of depriving the defendant of its rights which have been recognized when the court on 10.8.2001 handed over the management of defendant no.1 to its officer bearers. This will result in a wrong to them. Application is dismissed.
32. I.A.No.12251/2008 The order dated 24.11.2008 staying item no.1 and 5 of the impugned notice dated 18.9.2008 vide which the defendant no.1 had notified the convening of an Annual General Meeting is I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 14 of 15 vacated. Defendant has established that the amendments sought for (item no.1 in the agenda) in the notice dated 18.9.2008 are formal amendments only. Item no.5 in the agenda is the confirmation of the enrollment of the newly inducted members. This voter list had been finalized on 10.10.2004. It is under challenge in the present suit. While permitting defendant no.1 to hold the Annual General Meeting, it is made clear that all decisions taken therein will be subject to the final outcome of the present suit. This application is disposed of in the above terms.
33. Parties will file their respective documents within three weeks. Parties will admit/deny the documents chronologically and in serial order and endorse the same in the index column. For admission/denial of documents, list before Joint Registrar for 26.4.2010.
(INDERMEET KAUR) JUDGE JANUARY 11, 2010.
nandan I.A.11323, 11324 & 12251 of 2008 in CS(OS) 1957/08 Page 15 of 15