Shri K.K. Jain vs Federation Of Indian Export ...
2002 Latest Caselaw 449 Del

JUDGMENT

J.D. Kapoor, J.

1. An interesting mixed question of law and fact has cropped up for determination in the instant application moved under Order 39 Rule 1 & 2 CPC. The question is whether a person holding an office of a fixed tenure but subject to the fulfillment of the eligibility condition can be allowed to hold the office to complete the tenure in the case he ceases to be eligible for holding that office even for a short while though subsequently by way of re-election becomes eligible for contesting the election of the said office.

2. The application seeks stay of the resolution passed by the Managing Committee of defendant no.1-Federation of Indian Export Organisation (in short 'FIEO') in the meeting held on 30.10.2001. The relevant excerpt is as under:-

"Mr. K.K. Jain during his tenure as President, FIEO ceased to be a member of the Managing Committee. Consequently he also ceases to be President of FIEO. He is therefore not eligible to hold the Office of President, FIEO unless he is re-elected."

3. The facts germane for determining the aforesaid contentious issue are like this.

4. FIEO is a body duly registered under the Societies Registration Act. As per Memorandum and Articles of Association there is a Managing Committee which manages its affairs. It consists of the following members:-

"a) 9 members elected to the Managing Committee under these rules and

b) up to a maximum of 6 members who will have to voting rights to be co-opted, representing the following bodies:

1) Ministry of commerce.

2) Department of Economic Affairs/Banking.

3) Export Commissioner (CCI&E) Organisation.

4) EXIM Bank.

5) Representative of Shipping and Transport Ministry.

6) D.C. (SSI).

c) The Chairman of Export Promotion Councils Commodity Boards (Tea, Coffee & Spice) and Authorities (MPEDA & APEDA) will be ex officio member of the Managing Committee of FIEO by virtue of their occupying that position. 9 Members to the Managing Committee as stated above in terms of Article 19(i)(a) are elected members among the Associate Members from among themselves as indicated therein."

5. The aforesaid nine members are termed as associate members and elected in terms of election rules from the following categories:-

"i) 1 member from the recognised trading house.

ii) 5 members from recognised Export House.

iii) 2 Members from State Export Organisation.

iv) 1 member from Consultancy Organisation."

6. M/s Reflex Textile Limited is a recognised Export House and at the relevant point of time the plaintiff was its Chairman-cum-Managing Director. On 12.1.99 M/s. Reflex Textiles Ltd. was elected as Associate Member of this Organisation. On 10.10.2001 the plaintiff was elected as President of FIEO. Admittedly the term of the plaintiff as a Member of the Managing Committee of FIEO was to expire on 30.10.2001. On 19.10.2001 the election to fill up two vacancies occurring on 30.10.2001 was conducted wherein the plaintiff scored the maximum votes. However the announcement of the result was to be made at the end of Annual General Meeting (in short 'AGM') to be held on 30.10.2001. According to the defendants, since the plaintiff was to retire on 30.10.2001 thereby making a vacancy was election of which was though held on 19.10.2001 but result was to be announced at the end of AGM, the plaintiff ceased to be the Associate Member of the Managing Committee and hence became ineligible to hold the office of President and was, therefore, removed from the post at the commencement of the AGM. It is further the case of the defendants that merely because Reflex Industries Ltd. was declared elected as Associate Member of the Managing Committee of the FIEO at the end of the AGM, it did not confer the right upon the plaintiff to hold the post of the President without undergoing the process of re-election.

7. It is pertinent to mention here that pursuant to the directive of the Government of India for making the tenure of the President for a period of two years the General Body of the FIEO carried out the amendment in Article 29 which is as under:-

"29. i) The tenure of the President shall be for a period of two years and at the end of the two year term there shall be a change or a break, without any bar to re-election subsequently after a two year break."

8. Other relevant Articles and Rules referred to and relied upon by the counsel for both the parties are as under:-

Article 12: The Principal business of the Annual General Meeting shall be:-

a) To consider the Annual Report and Statement of Accounts submitted by the Managing Committee;

b) To elect the members of the Managing Committee as provided in Rule 19;

c) To elect the auditors of the Federation and fix their remuneration; and

d) To transact such other business as may be properly brought before the meeting.

Article 20

i) At every Annual General Meeting, one third of the total number of members of the Managing Committee representing the Associate Members (the sub-constituencies considered together) shall retire, and the vacancies caused by such retirement shall be filled by election by the Associate Members from amongst themselves respectively. The elections will be passed on the reserved quotas as determined in 19(ii) above."

Article 22: A person shall cease to be a member of the Managing Committee:-

i) if he resigns his membership and the Managing Committee accepts his resignation; or

ii) if he files a petition for insolvency or is adjudged an insolvent; or

iii) if he is adjudged by a competent court to be of unsound mind, or

iv) if he is convicted of any offence involving moral turpitude; or

v) if he or the member of the Federation whom he represents ceases to be a member of the Federation; or

vi) if he is ceased to be representative of the member of the Federation which has nominated him as a delegate."

Article 28 i) Immediately after every alternate Annual General Meeting, the Managing Committee shall elect from amongst themselves one member to be President of the Federation.

Rule 8. After the decision as to who will retire from the Managing Committee, the vacancies thus determined shall be noticed to all the members in the concerned categories of the Federation of Indian Export Organisations.

Rule 12.1 Any Associate Member can only propose the name of another Associate Member from this own category and not any Associate member from this own category. It is necessary for one Associate Member from a particular category to seek nomination by another Associate Member from the same category.

9. Dr. A.M. Singhvi, learned senior counsel for the plaintiff/applicant has contended with vehemence that at no point of time during his Presidentship, the plaintiff ceased to be the member of the Managing Committee of FIEO from its quota of Recognised Export Houses as on 19.10.2001 election for filling up two vacancies arising on 30.10.2001 was held wherein the plaintiff and one O.P. Garg scored the maximum votes to fill in the two vacancies though the formal announcement of the result was to be declared at the time of the AGM and therefore the bias of the defendant in removing the plaintiff from the President is writ large as inspire of having been re-elected as Member of the Managing Committee on 30.10.2001 for which election took place on 19.10.2001, plaintiff was removed from the office of the President on the plea that he ceased to be member of Managing Committee for an interval of an hour i.e. from 10. A.M., the time when the AGM commenced and 11 A.M. when the result of the two vacancies was declared.

10. In support of this contention, Dr. singhvi, has relied upon the following facts:-

i) On the directive of the Government of India in writting, General Body of the defendant no.1-FIEO amended the provisions of tenure of the President by making its term for a fixed period of two years.

ii) On 12.1.1999, the plaintiff was elected as an Associate Member of the Managing Committee of defendant no.1 in category of Recognised Export Houses.

iii) On 10.10.2001 in the 172nd meeting of the Managing Committee, the plaintiff was elected as President through secret ballot.

iv) On 19.10.2001, the plaintiff was re-elected as Associate Member though its term as such was to expire on 30.10.2001.

v) On 23.10.2001, a notice and agenda papers for 177th meeting of the Managing Committee scheduled for 30.10.2001 was sent to the plaintiff wherein items either regarding the eligibility of the plaintiff as President or removal or re-election of President did not figure.

(vi) On 30.10.2001, Annual General Meeting was held at 10. A.M. at Mumtaz Mahal, Taj Palace Hotel, New Delhi, wherein the result of election of successful candidates for Associate membership of the Managing Committee conducted on 19.10.2001 was declared. However, the result was declared at 11.00 A.M. or so.

vii) On 31.10.2001, the impugned letter removing the plaintiff from the office of President was sent to him with draft minutes of the 177th Managing Committee held on 30th October, 2001.

11. Main thrust of the arguments of Dr. Singhvi is that at no point of time, during his continuation as President, the plaintiff ceased to be the member of the Managing Committee of FIEO in the category of recognised export houses as the membership of the plaintiff was to expire on 30.10.2001 whereas on 19.10.2001, election for filling up two vacancies arising on 30.10.2001 was held wherein t he plaintiff polled the maximum votes though it was mentioned that announcement of the result will be declared at the time of the Annual General Meeting.

12. According to Dr. Singhvi, the removal of the plaintiff from the office of President in spite of the fact he was re-elected as member of the Managing Committee on 30.10.2001 though election has taken place on 19.10.2001 is patently illegal as the declaration of result was a formality because the term of Mr. Jain as a member of the Managing Committee was going to expire on 30.10.2001 at the end of A.G.M.

13. In the view of Dr. Singhvi the term of Associate Member and the term of President are neither co-terminus nor identical or similar as the President by constitution of FIEO has a fixed tenure of two years whereas Membership of Managing Committee has a prescribed tenure of approximately three years which has neither any connection nor linkage with the office of Presidentship as in actuality it has never happened that a person starts his term as a President and as Member simultaneously. According to Dr. Singhvi, the intent of the framers of Rules could not have been to subject the tenure of two years to another election. What is required for being a President or continuing as a President is that one must exist as a member of the Managing Committee.

14. In the conception of Dr. Singhvi, the membership term comes and goes and so long gets re-elected as member, law does not recognize vacuum or void unless there is explicit rule in the governing Constitution linking the term of President with the term of member and any other interpretation would lead to highly unjust and disastrous consequence as the member elected as a President knows that his term would continue towards the end of his Associate Membership except for a period of few months or weeks. Both the offices are elective offices. The incumbent gets elected after elections. It is not a privilege conferred upon it. During its term as President, the member has again to seek re-election if the term of its membership is expiring during that time. Dr. Singhvi thinks that if that be so, there is reason to deny him continuance. But not otherwise.

15. In nutshell Dr. Singhvi contends that a person who is a member of the Managing Committee contests the election of President with the full knowledge that he will hold this office for a period of two years and if he succeeds in being re-elected as member of the Managing Committee during the period of two years he has to complete the term of two years, unless his tenure is cut short because of ineligibility. Thus, according to Dr. Singhvi the onus is open such a person to get himself re-elected as a member of the Managing Committee if he wants to" fulfill his term of two years as the intention of the rule prescribing two years term was in no way to subject a person to re-election even if he succeeds in being elected as member of the Managing Committee during his tenure of two years as President. In other words a person should not and could not be subjected to rigour of re-election during the prescribed period of his post of President unless he found to ineligible to hold that office.

16. Dr. Singhvi further contended that it is not a case where the AGM takes place at 10 A.M. and the member is also elected at 10 A.M. There has to be a short interregnum period may an hour or so that Associate member would cease to be the member of the Managing Committee and to say that he would also forfeit his right to continue as President would be inconceivable interpretation of the rule of fixed tenure and the rule of eligibility as such as interpretation is valid if the President ceases to be the Member of the Managing Committee because of having been defeated in the AGM.

17. In the opinion of Dr. Singhvi law does not allow any vacuum nor does it create any deliberate break in continuity unless there is any statutory provision of a specific nature to the contrary and instead the established principle of law is the doctrine of relating back. Since the plaintiff was admittedly re-elected on 19.10.2001 and its election as a member of defendant no.1 was confirmed and ratified in the AGM on 30.10.2001 it cannot be said that there was a break of even one hour or there was any vacuum for the plaintiff as a member of the Managing Committee. The plaintiff's membership of the Managing Committee before and after 30.10.2001 is not disputed as in the said AGM there was nothing but formalisation of the result of the election conducted on 19.10.2001.

18. While canvassing the proposition that in such a situation where there is a break in continuity for a marginal period, the doctrine of relating back is applicable, Dr. Singhvi placed reliance upon Deo Nandan and Anr. v. Ram Saran and Ors. wherein one Bachan filed an application on 25.8.1964 under Uttar Pradesh Zamindari Abolition Act before the revenue authorities and paid an amount ten times and prayed that he should be declared as bhumidar. After the said application, the authorities executed a sale deed selling the said land to the appellant. Before any order could be passed he died on 15.9.1974. The problem arose on 5.1.1975 when the widow sold the land to respondents on 9.5.1975. The sanad was issued in July, 1964. It was held that as and when the said application was accepted and order was passed it must relate back to the date when the application was filed. Such orders have retrospective effect and have to relate back to the date of the application.

19. Another judgment relied on by Dr. Singhvi is A. Raghavamma and Anr. v. A. Chanchamma and Anr. where in the question was whether intention to separate from co-parcernary would be relevant date or whether the relevant date would be date of communication of this intention to the members of co-parcenary. The Supreme Court after nothing that the Doctrine of Relation back has been recognised by Hindu Law held that upon communication of the intention to separate the date would relate back to the formation of intention.

20. From these cases, Dr. Sighvi has tried to derive strength and analogy by contending that the process of election was commenced by the Managing Committee on 10.8.2001 and counting of ballots was done on 19.10.2001. wherein the result was declared but it was only in the AGM that the result was ratified and therefore the election the plaintiff as a member of the MC on 30.10.2001 has to relate back to the date of declaration of result i.e. 19.10.2001 and thus at no point of time the plaintiff ceased to be the member of the Managing Committee right from the start of the AGM which took place at 10 AM till the result of election conducted on 19.10.2001 was ratified or confirmed.

21. According to Dr. Singhvi the instant case does not fall within the category of a director of a Company and therefore cannot be said to have vacated the office the moment new AGM commenced. Rather the plaintiff was only to retire at the end of the AGM. Had it been the case of the plaintiff that he has lost the election by virtue of Rule 12 though he was elected for a fixed tenure of two years his continuance would have been invalid and unjustified but not in a case where the President continues member of the Managing Committee till the end of the AGM and during that period he is declared to have been re-elected as member of the Committee on the basis of the elections conducted and declared on 19.10.2001. Has such a break been the underlying intention the rule would have the provisions that the term of the President is co-terminus with the term of the membership of the Managing Committee.

22. Dr. Singhvi has further urged that since the constitution of FIEO envisaged that the term of Presidentship and membership would be different being for two AGMs and three AGMs respectively it must mean that ordinarily during term of presidentship, the membership would expire but so long as the person was re-elected as member no break in presidentship could be envisaged because immediately on re-election as member the continuity to membership is provided otherwise President's term would be shortened and would not be for a fixed period of two years.

23. While furthering the concept of relating back, Dr. Singhvi contended that undoubtedly to continue as a President there should be no break or interruption as the requirement of Presidentship is that a person must no cease to be a member but since the terms of Presidentship and membership are independent in constitution itself, re-election situations are bound to occur during each president's term and if he is re-elected as a member both at the Managing Committee and at the AGM re-election provides full continuity and no question of break would arise. Break of a minute or an hour is an artificial notion and is against the letter and spirit of the Constitution of FIEO.

24. Dr. Singhvi illustrated this interpretation like this. A person shall be a member for 3 AGMs but shall be President only for 2 AGMs. The term of the two AGMs and three AGMs may well be different but he still shall continue to be President for two AGMs provided if during his Presidentship term his membership expires, he is re-elected as the member not only by the Managing Committee but also by the AGM. This according to Dr. Singhvi preserves the full integrity of the organization because at no point has the person left the membership of the organization while the contrary interpretation that the marginal break would give rise to frequent presidential elections with presidential periods of two AGMs being reduced say by five or six months or even a year is difficult to accept as Dr. Singhvi thinks that in order to avoid such a situation the Government took a conscious decision vide letter dated 19.11.1996 directing that the tenure of the President should be for a period of two years and at the end of the two years there should be a change or break.

25. According to Dr. Singhvi, earlier the constitution provided (Article 29.1) that the President and the Vice President elected shall hold office until immediately after next annual general meeting. Amendment for fixed period of two years was mooted and carried out in the constitution to preserve the continuity and to avoid frequent elections.

26. Dr. Singhvi has contended with all vehemence that merely because Article 28.1 provides that immediately after AGM one member of Managing Committee will be elected President from amongst themselves does not mean that the tenure of the President shall not be for two years. Article 28.1 is applicable in exceptional circumstances and not in relation to Article 29 and therefore, it is Article 28 which is redundant so far as the tenure of the President is concerned as year is defined from one AGM to another AGM. Dr. Singhvi further contended that the concept of break in the membership of Managing Committee is alien to the Articles of Association as it is in the same AGM both the member of the Committee as well as President are elected and once he is elected member of the Managing Committee there is no break in the tenure of the Presidentship.

27. According to Dr. Singhvi, Article 21 contemplates three AGM term for membership but does not talk of a break at the time of commencement of the AGM nor does it by any stretch of imagination postulate break the moment AGM is held and the correct interpretation would be that between the holding of AGM and till its conclusion there shall be continuity of a person as a member of the Managing Committee and the vacancies caused thereby shall stand filled through re-election as a person retiring at the AGM can be re-elected and such a re-election would not cause any vacancy and the re-election would relate back to the vacancy so caused.

28. In other words, Dr. Singhvi considers that it is in such like unoccupied fields and vacuum created for an hour or so because of the break period of holding the AGM that the theory of relating back gets invoked in case a person is re-elected in the same AGM. Unless there is a rule to the contrary, the theory of relating back shall always be applicable as the law does not recognize any vacuum and it is in this context that the letter dated 19.10.2001 and the letter of the defendant to the plaintiff is relevant wherein he was informed that the plaintiff has polled maximum number of votes to fill up the vacancy. But at the same time says that the result would be declared in the next AGM.

29. To fortify this view, Dr. Singhvi placed reliance upon Consolidated Nickel Mines Limited, Chancery Division (1914) 883 wherein Articles of association of a company provided that general meetings should be held once in every year at such time and place as might be prescribed by the directions; that at the ordinary meeting in 1906 all the directors should "retire from office"; and that the directors should be remunerated at a certain rate per annum. Section 49 of the Companies Act, 1862 provided that a general meeting should be held once in every year. No general meeting was held or called in the year 1906 or 1907 but the directors continued as such. It was held that the directors vacated office on December 31, 1906 (being the last day on which a general meeting for that year could have been held) and wee not thereafter entitled to any remuneration until they were re-elected.

30. On the contrary, Mr. A.S. Chanhiok, learned senior counsel appearing for defendant no.1-FIEO confuted Dr. Singhvi mainly on the premise that the scheme of election, rules and Articles of Association postulate that at every AGM, 1/3rd of the total members of the Managing Committee representing the associate members (sub-constituencies considered together) shall retire and the vacancies arisen there from shall be filled by the election by the associate members from amongst themselves respectively and in the instant case the society or the associate member the plaintiff was representing was elected a member of the Managing Committee for three AGMs. w.e.f. 12.1.1999 and since the Associate Member whom the plaintiff was representing itself ceased to be the member of the Managing Committee either w.e.f. 12.1.2001 or on 30.10.2001 the date of the holding the AGM whichever was earlier, the plaintiff also ceased to hold the office of President. According to Mr. Chandhiok, these provisions do not confer on a person elected any right to the office unless and until the elections are notified as it would be an anomalous position to say that the plaintiff was elected as a Member of the Managing Committee earlier to 30.10.2001, the actual date when the vacancy occurred and again on 30.10.2001 when its election was notified as there cannot be two persons holding the Membership of the Federation at the same time. In other words it is the date on which the election is notified which is material to decide the date of expiry or commencement of the term and no other date. To say that the plaintiff was elected on 19.10.2001 and therefore continued to be the Member even on the day when the vacancy arose that was filled up by way of notification of the result is not correct as on that date there was no vacancy and the question of filling up the vacancy on 19.10.2001 did not arise at all. The vacancy arose only on 30.10.2001 when the plaintiff had retire.d

31. Mr. Chandhiok has placed reliance on Krishna Ballabh Prasad Singh v. Sub-Divisional Officer Hilsa-cum-Returing Officer and Ors. wherein it was held that election process comes to an end only after declaration of the result in Form 21 and the candidate is regarded as duly elected only after election in the said Form or Form 21D is made under Rule 64 of the Conduct of Election Rules and until such declaration is made mere announcement by the Returning officer that the candidate has been elected until grant of certificate in form 21 under Rules 66 would not confer right on the election of the candidate.

32. Article 13.4 of the Election Bye-laws is on the same parameter as form 21 C Rule 64. Relevant, extracts of Article 13.4 are as under:-

13.4: The ballot papers shall be scrutinised by a panel of three persons appointed by the Managing Committee and including the Secretary General of the Federation and two officials from amongst Ordinary Members. The name of those candidates who have received the largest numbers of votes would be put up on the Federation's Notice Board. They will be considered elected Members of the Managing Committee for the ensuing year after the results have been formally declared at the Annual General Meeting."

33. As regards defendant no.2, Mr. Prag P. Tripathi, learned senior counsel appearing for it has challenged the maintainability of the suit on the ground that suit has not been instituted by a member of the FIEO and since Mr. Jain is not a member of the said Federation in his individual capacity, he has no right to institute the suit as the office of the Chairman-cum-Managing Director does not ipso facto confer upon Mr. Jain a status of member of the Federation. It is the member of the Federation who has locus standi to institute the suit. If at all, suit was to be instituted by Mr. K.K. Jain it has to be instituted on behalf of said member i.e. M/s. Reflex India Ltd.

34. It is further contended that until and unless there was authorisation of the registered society in favor of Mr. Jain, Mr. Jain could not have filed the instant suit. In this regard, Mr. Tripathi has placed reliance upon Kanti Chaudhary v. Indian Olympic Association wherein suit was filed by three plaintiffs each of whom claimed to be the President of their respective sports bodies. These sports bodies were Societies registered under the Societies Registration Act, 1860. It was held that a registered society can sue and be sued in its own name. The suit was not filed by the three registered societies whose Presidents the plaintiffs claimed to be, nor was there any averment that the suit was filed by the three plaintiffs on behalf of their respective sports bodies.

35. In view of absence of such an averment it was held that it would be necessary to look for any authorisation by the respective sports bodies whose Presidents, the plaintiffs claim to be, in favor of three plaintiffs authorising them to file the present suit on behalf of these bodies. It was also observed that the mere fact that the associates or bodies for which they are the Presidents, are members of defendant no.1 will not make any difference since this is not even averred by the plaintiffs that they have filed the suit on behalf of their respective associations/bodies. It was further held that prima facie plaintiffs have no locus standi to file the present suit and further such a matter appears to be a matter pertaining to internal affairs of a registered society and the plaintiffs not being members have no locus standi to interfere.

36. Mr. Tripathi further contended that in the instant case even if Mr. Jain is assumed to be representative of the member i.e. export house on account of being Chairman, still the fact remains that the management of the Federation which is again a registered society is an internal matter i.e. dispute with regard to internal management of the society since there is no averment as to the action being ultra vires nor the act complained of constitutes a fraud nor the impugned action is illegal, the instant suit is not maintainable.

37. In support of this theory, Mr. Tripathi also relied upon Shridhar Misra and Ors. v. Jaichandra Vidyalankar and Ors. wherein it was observed that ordinarily the civil court will not interfere with the internal management of a Society registered under the Societies Registration Act at the instance of some of the members of the Society unless the impugned action is ultra vires the Society; the act complained of constitutes a fraud and where the impugned action is illegal.

38. Mr. Tripathi further urged that wherever locus standi of a person is in serious doubt, the court should always refrain from granting injunction. While convassing the proposition that if there is uncertainly as to the locus standi of the person to initiate the action, the court should always be to settle the parties' rights once for all. Mr. Tripathi placed reliance upon the decision of the Full Bench of this Court in Chandu Lal v. Municipal Corporation of Delhi . Observations in this regard are note worthy and are as under:-

"Undoubtedly there is no gainsaying the fact that the court should always be reluctant to grant interlocutory injunction if the locus standi is in serious doubt but at the same time, the endeavor of the court should always be to determine the rights of the individual who has not filed the suit in his own capacity but as the representative of the society to determine the rights for the purpose of interlocutory injunction irrespective of his locus standi being doubtful but in that case, the determining factor would be right of the individual from either the society of which he happens to be member or Chairman or Managing Director, the statutory rights accruing from the Federation or the organisation of which society he represents or holds same or other office in his capacity...as the member of the society from the statutory provisions of main federation of the society. If the interlocutory application is refused merely on the fact that there is some doubt as to the locus standi, the irreparable loss or injury may occur to the individual if the individual succeeds in making but a prima facie case as balance of convenience also lying in his favor. This principle may be true with regard to grant of temporary injunction but where request for mandatory injunction is there, the court has to scan the facts with great circumspection.

39. The Supreme Court approved the principles guiding for grant or refusal interlocutory injunction laid down by Lord Diplock in Cyanamid case in Colgate Palmolive (India) Ltd. v. Hindustan Lever Limited , which are as under:

(1) The plaintiff must first satisfy the court that there is a serious issue to decide and that if the defendants were not restrained and the plaintiff won the action, damages at common law would be inadequate compensation for the plaintiff's loss.

(2) The court once satisfied of these matters will then consider whether the balance of convenience lies in favor of granting injunction or not, that is, whether justice would be best served by an order of injunction.

(3) The court does not and cannot judge the merits of the parties' respective cases and that any decision of justice will be taken in a state of uncertainty about the parties' rights.

40. Let us test the case of the plaintiff on the anvil of aforesaid guidelines in the context of relevant bye laws and rules.

41. As per Article 28 of the Memorandum and Articles of Association and Election Bye-laws, immediately after every alternate Annual General Meeting, the Managing Committee shall elect from amongst themselves one member to be President of the Federation. This means that such a person is the representative of the Associate Member i.e. recognised Export Houses and not any individual. As per Article 29, the tenure of the President is for a period of two years provided he remains the member of the Managing Committee. In other words, the election of the President is co-terminus with the term of membership of the Managing Committee. If the President ceases to be the member of the Managing Committee at any given point of time, he automatically ceases to be the member of the organisation irrespective of the fact whether he is re-elected as member of Managing Committee on the same day. This is so for the simple reason that if the said person does not get re-elected, he becomes ineligible even for participating in the election for the post of President. Merely because a person holding the office of President succeeds in getting re-elected as a member of Managing Committee does not mean that his continuation as President remains uninterrupted or without any break. Interruption or break even for a moment has the effect of discontinuation and cannot be related back. Question of vacuum or void does not arise.

42. It is not a case of relating back. It is a case where the membership of the managing Committee alone depends upon the result of election meant for filling up the vacancy. Success in such an election does not vest the right to hold the office of the President of the Federation for the simple reason that the defeat in the election of membership of the Managing Committee itself forfeits the right of the person to even participate in the election of President of the Federation.

43. To show that the term of membership of the Managing Committee and the term of President of the Federation are co-terminus, an illustration may be provided:

44. Suppose A is elected as a member of the Committee and by virtue of member of the committee, he is also elected as President and if the election of A as member of the Committee is challenged and set aside, then A cannot continue as President of the Federation. On the same pedestal stands the cessation of membership of the Committee as the question of re-election arises as and when the vacancy arises. Question of vacuum or void does not arise as there is always someone to fill the gap by way of caretaking or stop gap arrangement may be for a short while.

45. There is no denying the fact that the Constitution of the Federation did not envisage or intend or contemplate the term of its President and others either coinciding or co-terminating with the term of the member of the Managing Committee. The term of the member of the Committee is independent of the term of the President of the FIEO. Term of the Member of the Managing Committee is at the end of 3rd AGM which loosely may be termed for 3 years. In the similar vein the term of the President may be loosely termed for 2 years i.e. till the 2nd AGM i.e. at the alternate AGM. Thus the term of the President is co-terminus either with the term of the member or for a period of two years whichever is earlier.

46. Admittedly notice for 36th AGM of the FIEO which was to be held on 30.1.2001 at 10.00 A.M. at Mumtaz Mahal, Taj Palace Hotel, Sardar Patel Marg, New Delhi, mentioned therein the business of be transacted; the first business was to receive and adopt the report of the proceedings of the managing Committee for the year ending 31.3.2001 as required under Rule 12 of the Rules and Regulations of the FIEO and the last business was announcement of the result of the elections to the Managing Committee; as per programme the announcement of quorum was to be done at 10.05 A.M. and the result of the election committee at 10.55 A.M.

47. Though for a period of 50 minutes the plaintiff ceased to be the member of the Managing Committee yet his re-election as a member of the Managing Committee at 10.55 A.M. was of no relevance. Even if we assume that till then plaintiff continued to be holding the office of Associate Member still the fact remains that his re-election as a Member of the Managing Committee was for a fresh term for 3 years and not in continuation or extension of the office of President to complete the tenure of 2 years. Had it been so there would have been a special provision in the Articles of Association or the Rules, bye-laws etc that if any Associate Member ceases to be a Member before the expiry of 2 years tenure and is re-elected either earlier to the expiry of tenure of its Associate Membership or on the day when the Associate Membership expires such a Member will be entitled to complete the tenure of 2 years.

48. It was in view of Article 22 of the Association and Rules 12, 13 & 14 that reference was made in the Draft Minutes of the 177th meeting of the Managing Committee held on 30.10.2001 that since an issue regarding the eligibility of Mr. Jain was raised it was agreed that be would step down as Chairman of the meeting and in his place the Members elected Mr. Ahmed to chair the meeting. So much so it was Mr. Jain who presided over the meeting, welcomed all the Members for attending the meeting and it was thereafter that reference received for the Government challenging the eligibility of Mr. Jain as President was taken up. The eligibility of Mr. Jain was brought to the notice of the Government as well as the Members by the Vice President and since Mr. Jain himself stepped down, his re-election immediately thereafter was of no relevance at all.

49. Article 22(2) provides that members of the Managing Committee of either capacity who shall retire shall be those who have served longest in the office as amongst themselves. It was under this Article that the plaintiff got elected as the Member of the Managing Committee on 12.1.1999 was having longest term in office amongst the others of its category was to retire at the AGM to be held on 30.10.2001. The concept of having been elected as a member of the Managing Committee for three years is strange to the Article 20 as it stipulates that immediately after every AGM, the Managing Committee shall elect from amongst themselves one member to be the President of the Federation. The essence of Article 20 and 28 for the purpose of being member of the Managing Committee is the date of holding the AGM and not for a fixed tenure of 3 years and on the same analogy a fixed tenure of two years for the President of the Federation as provided under Article 29 it is subject to the eligibility condition.

50. If the contention of Dr. Singhvi is accepted as to the fixed tenure, it would mean that if the President was elected on the 12th of January, 1999 in the AGM, the alternative AGM of the Managing Committee will taken place on 12.1.2000 and that in that case if he was elected on 12.1.1999 then he should have retired on 12.1.2001 whereas the case of the plaintiff is that he would have retired in the AGM that took place alternatively on 30.10.2001. For instance, if the plaintiff was elected as President on 12.1.1999 he would have retired on 30.10.2001 when the alternate AGM took place but according tot he plaintiff, its tenure would have continued for two years w.e.f. 12.1.1999 irrespective of the fact that alternative AGM takes place earlier or at later point of time which would mean that if the alternative AGM does not take place within a period of two years or is co-terminus with two years time then the plaintiff shall have continued as President till the alterative AGM takes place which may be even after more than two years period.

51. Thus, the plaintiff is in any case eligible for re-election only after holding of two AGM as the object of making the tenure of President for two years is to grant him minium tenure of two years which is with reference to the holding of AGMs and in that eventuality if there is a break on account of the person ceasing to be member of the Managing Committee the said person is eligible for re-election because of his having not completed term of two years in terms of Article 28.

52. Article 11 provides that there shall be a meeting within a period of six months from the expiry of membership of the Federation called the AGM. Article 13 gives discretion to the Managing Committee to fix time and date of the AGM which though in normal course will be last week of September every year but it is again subject to the decision by the Committee. Further that the holding of the AGM is important for deciding the tenure either as member of the Managing Committee or as the President of the Federation as Article 21 provides that first Managing Committee shall hold the office till the first AGM. Therefore AGM is important and the determining criteria.

53. Even the aforesaid provisions cannot provide refuge to the plaintiff for availing benefit of doctrine of "relating back". These provisions suggest that the vacancy is caused the moment AGM is held and by the same token the contention of Dr. Singhvi that declaration of result on 30.10.2001 was merely and administrative formality whereas the plaintiff was actually elected on 19.10.2000 holds water like a sieve as it is the declaration of the result of the AGM which accrues the right to the plaintiff to be member of the Managing Committee and not merely holding of election. The commencement of the election process and even any other stage in the election process/till the election results are declared at the AGM is of no relevance as no person can have benefit of having been declared elected even if he is elected from the date of election process.

54. In Consolidated Nickel Mines Limited, Chancery Division (1914) 883 which was relied upon by Dr. Singhvi, it was specifically provided in Article 101 of Articles of Association that a retiring director shall retain office until the dissolution of the meeting at which his successor is elected. In Article 106, there was also a clause that if in any meeting at which an election of directors ought to take place the places of the retiring directors or some of them, are not filled up, the retiring directors, or such of them as have not had their places filled up, shall, if duly qualified, be deemed to have been re-elected, unless the meeting determines not to fill up such vacancies. In view of this specific provisions, it was observed that "A director on his appointment does not ordinarily step into an office which is perpetual unless terminated by some act, but into an office of holding of which is limited by the terms of the articles. the meaning of article 101 is that the holding of the office of director was only to last until the end of 1906 or until the earlier date on which the ordinary meeting for that year was held. So much so, the director re-elected was held not entitled to any remuneration for the period between December 31, 1906 and August 30, 1908 when they again became Directors.

55. In Deo Nandan and Anr v. Ram Saran and Ors. , Section 134 UPZALR Act, 1950 expressly provided that a person was entitled with effect from the date on which the amount had been deposited to a declaration that he has acquired the rights mentioned in Section 137 of the Act. Section 137 provided for grant of certificate. Supreme Court held that the underlying intention of the legislature, therefore, clearly is that as and when the said application is accepted and order is passed under Section 137, it must relate back to the date when the application was filed. Neither does such a situation exist in the instant case nor is such a plea available in law.

56. In Howrah Trading Co.Ltd. v. Commissioner of Income Tax, Central, Calcutta , the question was whether in the event that a shareholder whose name is mentioned in the shares transfers his shares to a third party continues to remain shareholder or not. The court held that i) between the transferor and transferee, the real owner was the transferee for consideration; ii) as far as company is concerned, it would recognise the person whose name was there on the register.

57. In A. Raghavamma and Anr. v. A. Chanchamma and Anr., the Supreme Court pointed out that if during those two dates one of several events took place including the case where a person expressing the intention loses his interest in the family property, then there would be no relating back.

58. This instance is similar to the one in present case where the plaintiff looses his locus the moment he ceases to be the member of the Managing Committee and therefore the applicability of doctrine of relating back does not arise. Applying the said principles to the present case, it is to be concluded that with the holding of AGM, the plaintiff ceased to be the member of Managing Committee and therefore lost his status as the President and even if doctrine of relating back was to otherwise applying, the plaintiff's case would be hit by the exception recognised in the above case.

59. Article 20 stipulates that at every AGM, one third of the total number of members of the Managing Committee representing the Associate members shall retire and the vacancies caused by such retirement shall be filled by election by the Associated members from amongst themselves respectively. Therefore this Article specifically contemplate creation of vacancies at the connencement of every AGM and filling up of these vacancies by way of election thereafter. This article specifically contemplate creation of vacancies at the commencement of every AGM and filling up of these vacancies by way of election thereafter. This article specifically recognised vacancies during this interregnum.

60. The upshot of the aforesaid discussion is that the plaintiff/applicant has failed to establish a prima facie case. Neither does the balance of convenience lie in his favor nor would he suffer irreparable loss or injury in case injunction is not granted. If he is so keen to fulfill term of two years he should contest the election again as the edifice on which he stood as President has crumbled on 30.10.2001. As a result, the application is dismissed. Interim ex-parte injunction dated 13th December, 2001 stands vacated.