Harbir Singh vs Shaheed Udham Singh Smarak ...
2010 Latest Caselaw 805 Del

       * 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

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

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

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.

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

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

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.

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

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

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.

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.

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

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.

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

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