Vishwa Ahimsa Sangh (Regd.) vs Acharya Sushil Muni Memorial ...
2009 Latest Caselaw 5166 Del

*              IN THE HIGH COURT OF DELHI AT NEW DELHI

                                                PRONOUNCED ON: 14.12.2009

+                              I.A. Nos.8802/1999 & 6153/2008
                                                in
                                     CS(OS) No.2112/1995

VISHWA AHIMSA SANGH (REGD.)                                                        ..... Plaintiff
                    Through: Mr. U.N. Bachawat, Sr. Advocate
                    with Mr. Kuldeep Pablay, Advocate.

                                       versus

ACHARYA SUSHIL MUNI MEMORIAL TRUST & ORS.                                       ..... Defendants
                    Through: Mr. T.S. Chaudhry with
                    Mr. Vinod Kumar, Advocates for D-1, 3-6.

CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT

1.

     Whether the Reporters of local papers                  Yes
       may be allowed to see the judgment?

2.     To be referred to Reporter or not?                     Yes

3.     Whether the judgment should be                         Yes
       reported in the Digest?

HON'BLE MR. JUSTICE S.RAVINDRA BHAT

%

1. The present order will dispose of two applications, I.A. No. 8802/1995 filed by the plaintiffs, under Order 39, Rules 1 and 2, Code of Civil Procedure (CPC) and IA 6153/2008.

2. The first Plaintiff, Vishwa Ahimsa Sangh is a society (hereafter called "the society") registered in 1958, under the Societies Registration Act, 1860 (hereafter the "Act"); it is claimed that the Plaintiff No.2 is the duly elected president of the plaintiff society. It is alleged that the first defendant trust (hereafter called "the trust" or the "defendant trust" was created on 23.02.1995, with its registered office at C-599, Chetna Marg, Defence Colony, New Delhi by Late Subhag Muni as the settler and Defendant Nos. 2 to 6 as its Trustees.

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 1

3. The plaintiffs say that the effect of the said recital is that the society along with the other societies and institution stand merged in the Trust and all the properties of those would henceforth be the properties of the Trust, under its (the trust's) control and management. The plaintiffs say that the declaration, and constitution of the trust, purporting to vest the entire society and its assets under its control, is contrary to law. In this, the plaintiffs rely on Sections 12 and 13 of the Act, as they provide for amalgamation and/or dissolution of registered societies and adjustments of their affairs. It is submitted that Clause 19 of the Memorandum of Association of the society also prescribes the manner for its dissolution, and that its procedure has not been followed.

4. In the light of the above circumstances, it is submitted that there is neither an amalgamation nor dissolution of the plaintiff society, as known to law. Such being the position, the plaintiffs state that in the first week of May, 1995 when it came to the notice that the Trust in question has allegedly been created on 23rd February, 1995 and Defendant Nos. 5 and 6 along with other defendants were its Trustees, the meeting of the executive committee of the plaintiff society was held, on 28.05.1995. The plaintiffs say that in the meeting by a unanimous resolution, Defendant Nos. 5 and 6 were suspended/removed from the post of President and Secretary respectively for the reason of their acting adversely to the interest of the plaintiff society and the second Plaintiff was appointed as the Acting President of the society. The resolution was ratified by the governing body, the highest body of the plaintiff society, on 10.06.1995 by its resolutions. It is contended that later, regular elections were held (on 10.12.1995) for election of office-bearers of the society where the second Plaintiff was elected as the President. It is claimed that in the subsequent elections too (held on 01.07.2001, 20.05.2004 and 24.06.2007) the second Plaintiff was unanimously elected as President of the society.

5. It is stated that the present suit was authorized by the society's governing body on and was necessitated as the defendants' action creates a cloud on the society's existence and control of its management and assets. The plaintiffs seek setting aside of the Trust Deed dated 23rd February, 1995 of Defendant No.1 and for injunction, restraining the Defendant Nos. 1 to 6 from interfering in the affairs and properties of the plaintiff society. The society also filed I.A. No. 8802/1995, under Order 39 Rule 1 and 2 and Section 151 CPC inter alia, for restraining the defendants from interfering/intermeddling in the affairs of the plaintiff society, representing

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 2 themselves before any authority/authorities regarding plaintiff society's affairs and properties, and from holding out themselves to be authorized persons in respect thereof.

6. Notice of I.A. No. 8802/1995 was issued and served on the defendants. They have not filed any reply to that application. Time was granted to the defendants to file their reply on 09.01.1996, again on 11.05.2002, and once again on 08.03.2002. The said application was directed to be heard on 12.12.2002 by order dated 28.08.2002. The plaintiffs have filed another application, (IA No.6153/2008) incorporating additional facts and subsequent events.

7. The suit is opposed by all these trustees, including Defendant Nos. 5 and 6, who were the President and Secretary of the society. Defendant No.5, who has been opposing the suit, filed an application, I.A. No. 9173/1995, supporting the validity of the Trust in question, seeking transposition as plaintiff in place of the second Plaintiff. The plaintiffs oppose this application, claiming that only a defendant, who has no hostility to the cause pleaded in the suit can be legitimately transposed as plaintiff, and that the fifth defendants move for transposition, is mischievous, since there is every likelihood of his withdrawing the suit or getting it dismissed. That application was dismissed, during pendency of the suit.

8. The plaintiffs mention about two suits, pending in the Fast Track Court of Sh. A.K. Garg, ADJ, Karkardooma, Delhi. One is on behalf of the plaintiff society and the other against the plaintiff society. At the time, those suits were instituted, the fifth Defendant was President of the plaintiff society. It is submitted that in terms of Section 6 of the Act, in the cause title of two suits, the fifth defendant is named as President of the plaintiff society. The plaintiffs, claiming that he (fifth defendant) is not the President of the society nor eligible because of his adverse interest vis-à-vis the first plaintiff society, filed an application under Order 22 Rule 10 CPC was filed to delete his name and substitute the name of Plaintiff No.2. The applications however, did not succeed.

9. It is contended that if the defendants, are not restrained during the pendency of the suit, from interfering into the affairs of the plaintiff society, and from representing themselves before any authority/authorities as the society's office-bearers, they would cause irreparable loss to the society as to its legal status and properties.

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 3

10. Reiterating the averments, the plaintiffs' learned senior counsel contends that the society has an independent legal status, which cannot be lost; nor can its affairs be carried on, except in the manner provided in Sections 12 and 13 of the Act and Clause 19 of its Memorandum of Association. Thus, the declaration in the Trust Deed in question that the plaintiff society and its properties have become the part of the Trust and that it has complete control and management of its properties is illegal, and unauthorized. The Trust as it creates cloud on plaintiff society's title and its affairs deserves to be cancelled. It is also submitted that the Plaintiff No.2 is the duly elected President of the society, and in such capacity, manages all the affairs of the society, including litigation in Courts, and other departments, filing Tax returns, etc. He, therefore has control of Management of the society and the Defendant No.5 has no prima facie right to continue as the President of the plaintiff society.

11. It is emphasized that a Local Commissioner appointed by this Court (by order dated 13.08.1995), visited the properties of the society and submitted the status of possession. The Local Commissioner's report stated that the property of the plaintiff was at Shankar Road, New Delhi, its registered address was with the Plaintiff No.2 as its President. It is submitted that irreparable loss and injury would occur if the interim relief, as prayed for is not granted.

12. It is argued that the Panchsheel Marketing (P) Ltd. against which a suit is pending, was inducted by the society as tenant at the rent of Rs.22,000/- per month. This company, in its turn, sub-let the premises to the State Bank of Bikaner and Jaipur at a monthly rent of Rs.3,22,641.50/-. The present market rental is more than Rs.6 to 7 lakhs per month. The Defendant No.5, allege the plaintiffs, in collusion with the defendants (in that suit) has been prolonging the suit and has been suffering orders adverse to the plaintiff society. It is also submitted that similarly, the counsel appointed by the Defendant No.5 on 09.07.1996 in CS 32/2006 stated before the Court that the matter has been compromised, which was wrong; when the Plaintiff No.2 intervened and brought to this to the notice of the Court by filing an application, making a statement that there was no compromise, that statement was withdrawn. Likewise, it is said that another suit, CS 32/2006 was got dismissed for default in appearance on 11.05.2000 and was then got restored by order dated 04.12.2000 by making an application, I.A. No. 5024/2000. On account of all these factors, the plaintiffs apprehend that the fifth defendant,

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 4 in collusion with opposite parties in the pending suits would get orders, adverse to the plaintiff's interest, passed.

13. It is urged that in Suit No. 30/2006, pending in the Court of Sh. A.K. Garg, ADJ, Karkardooma, a sum of Rs.1.50 crores is lying deposited in the recurring account in the State Bank of Bikaner and Jaipur towards rent and future rent, as directed by order dated 04.11.2004 of the Court is also being deposited in the aforesaid bank in recurring account. The defendants, (allege the plaintiffs), are likely to take away the amount lying in the aforesaid account and thus deprive the society of it sassets. The plaintiff society is running various charitable institutions (social and educational) from the building situated in the premises of the society at Shankar Road, New Delhi. Some of these institutions are:-

(i)     Jawaharlal Nehru Ahimsa Library.

(ii)    Ahimsa Women's Polytechnic.

(iii)   Bhagwan Mahavir Viklang Kendra.

(iv)    Bhagwan Parasnath Jain Mandir.

(v)     Jain Sthanak for stay of Monks/Sadhus.

14. The plaintiffs submit that if the defendants are not restrained by an ad-interim order of injunction they would start interfering in the affairs of the society which would be damaging to a large extent and paralyse its whole administration, resulting in the institutions turning into a bad shape, ultimately affecting their reputation.

15. The defendants submit that the applications are unwarranted and uncalled for, and liable to be dismissed. It is argued that the applications are preferred intentionally to prolong the suit proceedings, as the plaintiffs' conduct is evident on record.

16. It is contended that the Trust, the Defendant No.1 is only to maintain and to keep proper and effective control on the different properties of other societies/institutions. It can neither be said merged all properties nor that all the properties of different institutions/societies are merged in the trust, the Defendant No.1. It is argued that all institutions/societies are neither merged nor amalgamated into defendant trust and, therefore, neither is unauthorized nor illegal.

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 5

17. It is submitted that the second Plaintiff has no authority to call - and could not have called the meeting dated 28.05.1995 of the so-called Executive Committee, which is allegedly "bogus and unwarranted", as neither that party (Plaintiff No.2) was competent and authorized to hold any meeting nor he was having any power to suspend the duly elected President and Secretary of the Society, the Defendant Nos. 5 and 6 respectively. It is further submitted that there is no such post as "Acting President" in the constitution of the society. On the contrary, the Plaintiff No.2 was removed from the post of Vice-President on 17.06.1995. It is contended that if any election was held by the second Plaintiff in respect of the society, it is absolutely illegal and unconstitutional and without any legal authority. It is further submitted that appointment as acting president of society in the executive committee is illegal and without any power vested legally and, therefore, the election and appointment became ab initio void, and thereafter all subsequent elections cannot be termed as having any legal effect. It is urged that Defendant Nos. 5 and 6 are still holding the post of the President and General Secretary of the plaintiff society.

18. There is no denial that Defendant No.5 filed an application, I.A. No. 9173/1995 to transpose as plaintiff of the society. It is submitted that the Defendant No.5 is a man of great values and integrity and no one can have any doubt about this aspect. The defendants also submit that the second Plaintiff filed an application under Order 22 Rule 10 CPC in the suits pending before the Fast Track Court at Karkardooma ; the same was dismissed by order dated 23.11.2006. It is submitted that against that order of dismissal, the Plaintiff No.2 filed an appeal before this Court which is still pending. The defendants say that the plaintiffs have concealed and suppressed these material facts from the Court.

19. The defendants submit that the Defendant Nos. 5 and 6 are legally elected office bearers, duly appointed President and General Secretary of the society. It is argued that the second Plaintiff, is using delay tactics by filing applications after applicatioins to prolong the suit and intentionally does not want to proceed with the suit of 1995 expeditiously. It is, therefore, submitted that the plaintiff has no prima facie case and, therefore, no ad interim injunction should be granted.

20. The defendants submit that Sections 12 and 13 of the Act, and Clause 19 of the Memorandum of Association of the plaintiff society are matters of record. It is further denied that Plaintiff No.2 is the duly elected President of the society; they also deny that Plaintiff No.2

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 6 has any control or is managing the affairs of the society. It is submitted that the Defendant No.5 is duly appointed President of the society, and states that he is competent and able enough to do so. The defendants do not comment on the report of Local Commissioner, which, they say is matter of record.

21. Before deciding the applications, it would be necessary to extract relevant provisions of the trust deed (of the first defendant), and of the Act as well as the society's Memorandum of Association. They are as follows:

Provisions Of The Trust Deed

"WHEREAS declarant hereby declares and affirms that His Holiness Acharya Sushil Kumarji Maharaj was sponsor and founder of Vishwa Ahimsa Sangh, Acharya Muni Sushil Foundation, World Fellowship of Religious International Mahavir Jain Mission etc. of different places within India and abroad shall now be called the branches of the Trust known as "Acharya Sushil Memorial Trust".

XXXXXX XXXXXXX XXXXXX

That the Trust shall be known as "ACHARYA SUSHIL MUNI MEMORIAL TRUST" and its registered office shall be at C-599, Chetna Marg, Defence Colony, New Delhi whereas Acharya Sushil Asharam at 23, Bhai Vir Singh Marg, Market Road, New Delhi, Acharya Sushil Jain Asharam at Door No.5, G.S.T. Road, Pallavaram, Madras - 600 043, SIDDHACHALAM, 65, Mud Pond Road, Blairstown, New Jersey - 07825, Acharya Sushil Ashram, Ahimsa Bhawan, Shankar Road, New Delhi-60...."

XXXXXX XXXXXXX XXXXXX

"That this trust shall prevail upon all the immovable and moveable properties of which his Holiness Acharya Sushil Kumarji Maharaj was the founder and sponsor and all the decision of the trustees of this trust in respect of maintenance etc. with the aims and objects of this trust shall be binding and implemented accordingly."

Provisions of the Act

"12. Societies enabled to alter, extend, or abridge their purposes - Whenever it shall appear to the governing body of any society registered under this Act, which has been established for any particular purpose or purposes, that it is advisable to alter, extend or abridge such purpose to or for other purposes within the meaning of this Act, or to amalgamate such society either wholly or partially

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 7 with any other society, such governing body may submit the proposition to the members of the society in a written or printed report, and may convene as special meeting for the special consideration thereof according to the regulations of the society.

But no such proposition shall be carried into effect unless such report shall have been delivered or sent by post to every member of the society ten days previous to the special meeting convened by the governing body for the consideration thereof, nor unless such proposition shall have been agreed to by the votes of three-fifths of the members delivered in person or by proxy. And confirmed by the votes of three-fifths of the members present at second special meeting convened by the governing body at an interval of one month after the former meeting."

UNION TERRITORY AMENDMENT

Delhi:

It is applicable to the Union Territory of Delhi, in Section 12, after the words "other society" insert the words "or whenever the governing body of any society registered under this Act decides to change the name of the society" = Delhi Act 9 of 1964, Section 2 (30.10.1954)

13. Provision for dissolution of societies and adjustment of their affairs - Any number not less than three-fifths of the members of any society may determine that it shall be dissolved, and thereupon it shall be dissolved forthwith, or at the time then agreed upon, and all necessary steps shall be taken for the disposal and settlement of the property of the society, its claims and liabilities according to the rules of the said society applicable thereto, if any, and if not, then as the governing body shall find expedient, provided that, in the event of any dispute arising among the said governing body or the members of the society, the adjustment of its affairs shall be referred to the principal court of original civil jurisdiction of the district in which the chief building of the society is situated, and the Court shall make such order in the matter as it shall deem requisite.

Provided that no society shall be dissolved unless three-fifths of the members shall have expressed a wish for such dissolution by their votes delivered in person or by proxy, at the general meeting convened for the purpose;

Provided that whenever any Government is a member of, or a contributor to, or otherwise interested in any society registered under this Act, such society shall not be dissolved without the consent of the Government of the State of Registration."

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 8 Clause 19 of the Memorandum of Association of the society which prescribes the manner for its dissolution, reads as follows:

"19. Memorandum of Association:

In the case of dissolution of the Sangh, if there shall remain, after the satisfaction of all debts and liabilities any property or fund whatsoever, the same shall not be distributed among the members of the Sangh or paid to any of them but it shall be transferred and given to some other association having objects similar to that of the Sangh, and that shall be determined by the members personally present at the time of dissolution by a three-fourth vote."

22. There appears to be, from the above discussion, no dispute in regard to a few essential facts. These are that the first plaintiff is a society, registered under provisions of the Act. The conduct of its affairs is regulated by provisions of the Act, and its memorandum of Association. These provisions dictate the power and procedure to be adopted for amalgamation or dissolution. The question is whether the declaration in the trust, constitutes an instance of impermissible "take over" of the society, or its management or affairs.

23. The defendants do not deny that the trust deed, in certain aspects, indicates that all institutions and immovable as well as movable assets which had been acquired, or established by the settler, Acharya Sushil Muniji, would be controlled henceforth by the trust, whose trustees would be empowered to take charge of such assets and institutions. This intention (of the settler) is apparent from the following declaration:

"....That this trust shall prevail upon all the immovable and moveable properties of which his Holiness Acharya Sushil Kumarji Maharaj was the founder and sponsor and all the decision of the trustees of this trust in respect of maintenance etc. with the aims and objects of this trust shall be binding and implemented accordingly."

24. There can be no two opinions about the position in law, that a society or a registered -or incorporated body having its corporate personality is independent of its members. In a somewhat analogous situation, a Constitution Bench of the Supreme Court, in Daman Singh -vs- State of Punjab, AIR 1985 SC 973, commenting on rights of individual members of a co-operative society, in relation to achieving its objects, stated thus:

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 9 "Once a person becomes a member of a cooperative society, he loses his individuality qua the society and he has no independent rights except those given to him by the statute and the bye-laws."

Earlier, in Damayanti Naranga -vs- Union of India 1971 (1) SCC 678, the Supreme Court recognized the autonomy of members of a society to associate themselves with, or include other individuals, as inherent in the right to freedom of association, guaranteed under Article 19 (1)(c) of the Constitution of India, in the following terms:

"The right to form an association, in our opinion, necessarily implies that the persons forming the association have also the right to continue to be associated with only those whom they voluntarily admit in the Association. Any law, by which members are introduced in the voluntary Association without any option being given to the members to keep them out, or any law which take away the membership of those who have voluntarily joined it, will be a law violating the right to form an association. If we were to accept the submission that the right guaranteed by Article 19(1)(c) is confined to the initial stage of forming an Association and does not protect the right to continue the Association with the membership either chosen by the founders or regulated by rules made by the association itself, the right would be meaningless because, as soon as an Association is formed, a law may be passed interfering with its composition, so that the Association formed may not be able to function at all. The right can be effective only if it is held to include within it the right to continue the Association with its composition as voluntarily agreed upon by the persons forming the Association."

25. Sections 5 and 6 of the Act provide that:

"5. Property of society how vested.− The property, movable and immovable, belonging to a society registered under this Act, if not vested in trustees, shall be deemed to be vested, for the time being, in the governing body of such society, and in all proceedings, civil and criminal, may be described as the property of the governing body of such society by their proper title.

6. Suits by and against societies.− Every society registered under this Act may sue or be sued in the name of the president, chairman, or principal secretary, or trustees, as shall be determined by the rules and regulations of the society, and, in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion:

Provided that it shall be competent for any person having a claim or demand against the society, to sue the president or chairman, or principal secretary or the trustees thereof, if on application to the governing body some other officer or person be not nominated to be the defendant."

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 10 In the decision reported as Satyayart Sidhanfolankar and Ors. v. Arva Samaj, Bombay AIR 1946 Bom. 516 it was held as follows:

"41. The society is neither a corporation nor a limited company incorporated under the Indian Companies Act. It is a registered society of individuals which has acquired a legal status by reason of its registration with the Registrar of Joint Stock Companies under the provisions of the Societies Registration Act. Every member of a corporation or an incorporated company joins the same on the basis that prima facie the majority of the members is entitled to exercise its powers and control its operations generally. The same would be the position in the case of unincorporated associations of individuals whether the same be registered under the Societies Registration Act or not. The rule of the majority is the normal basis of these associations. The members of these associations do join these associations whether incorporated or unincorporated, whether registered or unregistered, knowing full well that the affairs of these associations would be conducted normally by the vote of the 'majority of the members thereof. In the absence of any specific rules and regulations governing the conduct of these affairs, this would be the normal presumption, and no member who joins any association would be heard to contend to the contrary."

26. It is thus clear that a society - the plaintiff society, in this case being no exception, after its incorporation acquires a personality, distinct from its members. Its affairs are regulated by the memorandum of association. The property of the society vests, (by operation of Section 5), in a trust (if created especially for that purpose) or in the members of its governing or executive council, by whatever name called. The defendants do not suggest here that the first defendant trust was created for the purpose of managing the property of the society, in the manner known by law, i.e by resolution of the governing body; there is no arrangement in the memorandum of association of the society creating the first defendant trust for the purpose. In these circumstances, the court is of the view that there is considerable merit in the plaintiffs' argument that the recitals in the trust deed have the effect of extra legally taking over the society, and its assets as well as its management. This is contrary to Sections 12 and 13 of the Act as well as the Memorandum of Association of the society. In these circumstances, it is held that the defendants cannot interfere in the affairs of the society, claiming that the trust has overall control of its management.

27. So far as the defendants' argument of the Plaintiff No.2's lack of locus standi is concerned, the court is of the opinion that since there is no challenge or contest to the local commissioner's report, which clarifies that the said second plaintiff was found in the premises of

IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995 Page 11 the society, as its President, the overall conspectus of circumstances point to the plaintiffs being in control of the society, when the present suit was filed. No doubt, the injunction application was not decided for these years. However, the position does not appear to have changed, since the defendant has not brought to the court's notice any substantial contrary material which is part of the record. In these facts and circumstances, the plaintiffs have been able to establish prima facie, that the defendants' attempt to create a trust adverse to the society's interest is contrary to law. The materials on record also point to the plaintiffs being in possession of the society and its premises. The plaintiffs have disclosed that the society controls several institutions, and is also entitled to receive rents for its immovable properties. In the circumstances, the balance of convenience is in favour of granting the plaintiffs an interim order.

28. The court is of opinion that the conduct of proceedings which commenced before the disputes constituting the cause of action for this suit, should not be interfered, with by this order, particularly because in those proceedings, the civil court declined to permit the second plaintiff to be impleaded, and take control of the proceedings. However, in the event of the society having to institute any suit against third parties to assert its rights or interests, it is clarified that the second plaintiff or the elected body or individuals who replace him, after elections held in accordance with the society's Memorandum of Association, would henceforth have the right to sue on behalf of the first plaintiff society.

29. For the above reasons, the plaintiffs two applications, I.A. No. 8802/1995 and IA 6153/2008 have to succeed. An ad-interim injunction is issued restraining the defendants from interfering with affairs of the first plaintiff society, or attempting to control its management, affairs or assets, till further orders. The said applications are allowed, to the above extent. IA. I.A. No. 9173/1995, filed by the defendants, is for the same reasons, dismissed. CS(OS) No.2112/1995 List for further proceedings on 25.02.2010.

December 14, 2009                                                     S.RAVINDRA BHAT
                                                                                (JUDGE)



IA Nos. 8802/1999 & 6153/2008 in CS(OS) 2112/1995                                             Page 12