Delhi High Court
Delhi And District Cricket ... vs Vinod Tihara & Ors on 2 July, 2019
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* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: 02.07.2019
+ FAO 62/2019
DELHI AND DISTRICT CRICKET ASSOCIATION ..... Appellant
Versus
VINOD TIHARA & ORS ..... Respondents
Advocates appeared in this case:
For the Appellant: Mr. Sandeep Sethi, Sr. Adv. with Mr. Saurabh Chadha, Mr.
Kunal Vats and Mr. Sidharth, Advs.
For the Respondents:
Mr. Dayan Krishnan, Senior Advocate with Sanjeevi
Seshadri, Mr. Gaurav Mitra with Mr. Khowaja Siddiqui, Mr.
Arup Sinha, Mr. Ashwini Kumar and Ms. Palak Vasisth,
Advs. for R-1.
Mr. Vikas Kumar Jha and Ms. Ritu Anand Vishwakarma,
Adv. for R-2/BCCI
Mr. Kirti Uppal, Sr. Adv. with Mr. Saurabh Chadda, Mr.
Aditya Awasthi and Mr. Rohit Bhagat, Advs. for R-4.
CORAM:
HON'BLE MR. JUSTICE NAJMI WAZIRI
NAJMI WAZIRI, J
FAO 62/2019, CM APPLs. 7284/2019 and 7286/2019
FACTS
:
1. This appeal impugns an order dated 02.02.2019 passed by the Learned
Addl. District Judge, injuncting the appellant from suspending respondent no.
1 (plaintiff) from his post of Secretary of the appellant Association. By order
dated 14.08.2018 the appellant Association had suspended respondent no.1
from the aforesaid position and had also restrained him from discharging his
duties as Secretary, DDCA pending the adjudication before the learned
Ombudsman in terms of Article 62 of the Articles of Association (AOA) of the
DDCA, apropos his alleged indiscipline and misconduct.
2. The reference to the learned Ombudsman was made apropos certain
allegations of misdemeanour by respondent no.1. In his decision dated
05.12.2018, the learned Ombudsman (a distinguished former Judge of this
Court as well as former Chief Justice of Jammu & Kashmir High Court) held
the said respondent guilty of indiscipline and misconduct which was
detrimental to the interest of DDCA. He has observed as under:
"17. On going through the said circular, it is clear that
Mr.Tihara has stated that the appointment of CEO, CFO,
COO and GM was done without following transparent
recruitment norms. According to him, the apprehensions were
that:-
(i) No information was shared with the Secretary, DDCA Office
or the fellow Directors regarding the list of total applicants for
the posts invited.
(ii) No panel disclosed or appointed to shortlist the applicants.
(iii) No interview Board appointment or disclosed.
(iv) No venue for interview disclosed.
(v) Eligibility criteria compromised.
These statements/allegations were made by Mr.Vinod Tihara
despite the fact that he- had approved the appointments-by
signing the Resolution by Circulation dated 29.07.2018. Be
that as it may, I am not going into the legality or validity of the
said appointments. The issue here is whether Mr.Tihara could
on his own purport to take action contrary to the decision of
the Board and, particularly, when he himself was a party to
the decisions. As per the learned counsel for the
Complainant/DDCA, all the appointments were made in a
transparent manner and in view of specific authorization
contained in the Board Resolution of 02.07.2018.
18. Direction No.1 given in the Circular of 12.08.2018
was that appointment of CEO, COO, CFO and GM be kept on
hold till further orders and that no contract, appointment
letter, salary etc., be issued or released to any new appointees,
as the same, according to Mr.Tihara, would amount to
contempt of Supreme Court directives. This was in clear
contradiction to the Board Resolution by Curriculum dated
29.07.2018, which was also signed by Mr.Tihara. The
Resolution Nos.2 and 7 of the Board Meeting of 02.07.2018
have already been referred to above and it is clear that those
resolutions did not empower Mr.Tihara to issue a direction of
the nature of Direction No.l referred to above. I agree with the
submission of the learned counsel for the Complainant that the
Secretary by himself did not have the power or authority to
issue such a direction. Furthermore, even if a wrong decision
has been taken by the majority, a lone Director cannot take
law in his hands and override the said decision. Such a
decision can only be undone either by the DDCA/its Board or
before the court/ Company Law Tribunal.
19. Insofar as Direction No.2 is concerned, it is evident
that Mr.Tihara sought to scrap all the Cricket Committees,
Selection Committees and sought to direct DDCA employees
not to entertain or issue any contract, letter or correspondence
in respect of the Cricket Committees/ Selection Committees.
Once again, I find that no such authority or power can be
traced to any Articles of Association of DDCA or to the
Resolution Nos.2 and 7of the Board Meeting of 02.07.2018. In
fact, Article 47 of the Articles of Association of the DDCA
specifically provides that the management -and control of the
Association shall be vested in the Executive Committee (which
has also been referred to as the "Board of Directors").
Neither Article 47 nor Article 48, which also deals with certain
specific powers of the Executive Committee (Board of
Directors) confers any specific power on the Secretary,
DDCA. All powers of the Secretary are therefore in terms of
the Resolutions of the Executive Committee / Board of
Directors. No powers to issue the directions of the nature
contained in the Circular dated 12.08.2018 have been
conferred by the Executive Committee /Board of Directors on
the Secretary, DDCA.
20. On the other hand, it will be seen that Resolution No.3 of
the Board Meeting held on 02.07.2018 specifically authorize
/empower the President, DDCA, to form various Committees /
sub-Committees for the proper functioning of the Association
and also directed that he shall be ex-officio member of all the
Committees so formed. According to the Complainant, the
appointments reflected in the Resolution of 29.07.2018 were
made pursuant to Committees constituted for the purpose by
the President, DDCA and as such the appointment process
cannot be faulted. However, as already pointed out above, I
am not going into the issue of validity or legality of the said
appointments, as that is not the nature of the complaint; which
is essentially limited to the question of alleged indiscipline or
misconduct on the part of Mr.Tihai in issuing the Circular
dated 12.08.2018.
21. With regard to the Direction No.3 contained in the said
Circular dated 12.08.2018, it is evident that the direction is
prohibitive in the sense that all DDCA employees have been
directed not to leave the DDCA premises. The employees have
also been directed not to serve the office-bearers. Directors
for their personal work or visit personal offices or business
locations. A direction has also been given that no DDCA
employee shall take any order on SMS, email, verbal etc., from
the personal employees of the office-bearers or Directors,
DDCA employees were also directed to serve DDCA from the
DDCA premises alone and all Board Meetings and Committee
Meetings were to be held in DDCA premises and that no
additional costs shall be incurred on TA, DA, hotel costs etc.,
by the DDCA. According to the learned counsel for the
Complainant, Direction No.3, which is addressed to the
employees of the DDCA, is designed to disrupt the, functioning
of the DDCA and the employees have been encouraged to
question the orders/directions of the superiors. This would be
completely disruptive to the functioning of the DDCA itself.
Mr.Vinod Tihara has also directed that Board Meetings and
Committee Meetings are to be held in the DDCA premises
alone, when there is no such Prescription in the Articles of
Association.
22. It may also be pointed out that each of the directions
are also coupled with a threat to the effect that if there was
any violation of the directions given, strict disciplinary action
would be initiated against the concerned person and the
services of the concerned employee can even be terminated for
dereliction of orders.
23. Considering the said direction, it is first of all found that
no such power or authority vested in the Secretary, DDCA, to
issue the directions. Such a power cannot be traced either to
the Articles or to any Board Resolution. Secondly the
directions are contrary to the Board Resolution and what is
even more striking is the fact that he himself was a party to the
very resolution, which he seeks to annul by virtue of the
directions given in the Circular dated 12.08.2018. Thirdly,
alone member of the Board cannot take law in his own hands
and trying to bring the functioning of the company to a
standstill. This would be completely against the principle of
corporate democracy under which all companies function,
where decisions are taken by majority, which cannot be
annulled by a lone member or a minority of members. The only
recourse would be by the Board itself altering its decision or
the same being set aside or annulled by a court of law /
Company Law Tribunal.
24. Fourthly specific direction given by Mr.Tihara
scrapping the Cricket Committees / Selection Committees was
designed to cause disruption in the cricketing affairs of the
DDCA. This would clearly be detrimental to the game of
cricket. The fact that the circular sought the annulment of all
the appointments of CEO etc., amounted to disruption of the
Administration of the DDCA. The direction given to the
employees of the DDCA would tend to create indiscipline
amongst the employees and result in a state of anarchy.
25. In view of the foregoing, even though there is no specific
regulation defining "misconduct", it is clear that the conduct
of a person may yet amount to misconduct in the special facts
of a case. In fact, in MS Dhantwal (Supra) it has been pointed
out that even though a given conduct may not come within the
specific terms of "misconduct" described in the standing order,
it may still be misconduct in special facts of a case. This is so
stated in para 23 of the said decision. In WM Avnani (Supra),
it is provided that even in the absence of standing order, it
would be open to the employer to consider reasonably as to
what conduct can be treated as misconduct. Therefore, the
ground taken by learned counsel for Mr.Tihara that there was
no definition of the terms -"indiscipline" or "misconduct" and,
therefore, Mr.Tihara's action of issuing the Circular dated
12.08.2018 cannot fall within the said terms, is not tenable.
The facts and circumstances are of such a nature, which
indicate that the conduct of Mr.Tihara in issuing the said
circular, consequently, the directions contained therein, was in
the nature of clear indiscipline and misconduct, which was not
only detrimental to the interest of the DDCA, but also to the
game of cricket.
26. In view of the foregoing, I hold that the Circular
dated 12.08.2018 was not in consonance with the Articles of
Association, the Companies Act and law in general and in
issuing the same, Mr.Tihara has exhibited indiscipline and
misconduct, which is detrimental to the interest of the DDCA
and the game of cricket."
3. The learned Senior Advocate for the appellant submits, that pursuant to
the aforesaid findings, respondent no.1 was issued a Show Cause Notice on
20.12.2018, to show why he be not expelled from the membership of DDCA.
4. Aggrieved by the said Show Cause Notice, the respondent sought a
restraint order. After hearing the parties, the learned Trial Court was, prima
facie, of the view that, respondent no. 1 could be removed from the said
position only by way of decision/ voting by the General Body and not by the
Apex Council, which had issued the Show Cause Notice.
5. The appellant refers to Article 5(c) of the AOA of DDCA, which reads
as under:
"5. TERMINATION OF MEMBERSHIP
(c) If any member refuses or neglects to comply with any
provision of the Memorandum and Articles of Association or
any by-law made there under or is guilty of conduct which the
Apex Council may consider likely to endanger the harmony or
effect the character or stability or interest of Association, such
member shall be liable to be expelled, subject to the provisions
of Article 42, on the vote of two third of the members present
at special meeting of the Apex Council summoned for the
purpose, provided that at least one week before meeting, such
member(s) shall have had notice thereof, and of the intended
resolution for his expulsion and that he shall at such meeting
and before the passing of such resolution have had an
opportunity of giving orally or in writing any explanation he
may think fit."
6. The appellant contends that in view of the learned Ombudsman‟s
conclusion, that respondent no.1 was guilty of indiscipline and misconduct,
which was detrimental to the interests of the DDCA, requisite measures have
been initiated in terms of the Article 5(c) by the Apex Council, which is
empowered to remove any Member from the appellant Association. Therefore,
the restraint ordered by the impugned order is erroneous and needs to be set
aside.
7. The appellant submits that (i) since it is an incorporated company, its
Secretary, i.e. respondent no. 1 could be treated as a Director of the company,
his removal from that post would, to a large extent, be covered by section 284
of the Companies Act, 1956; (ii) additionally, the appellant‟s AOA provides a
specific power to the Apex Council to remove members of the appellant
Association (company), if such member is found guilty of misconduct,
indiscipline or working contrary to the interests of cricket or to the interests of
the appellant; and (iii) that in an identical circumstance, this Court had
occasion to examine the issue, in Ravi Prakash Singh vs. Sugar Limited &
Ors. in (CS(OS) No.1875/1993) decided on 12.07.2007, and observed, inter
alia :-
"16. In my considered view, there can be no doubt that the
provisions of Section 284 of the said Act have to be adhered
to for purposes of removal of a Director in terms thereof.
This is a mandate of the Act. This mandate would require
an advance notice to be given and a shareholders meeting
held where an ordinary resolution should be passed. In the
present case the notice dated 11.06.1993 was for the Board
Meeting to held on 29.06.1993 and thus there was an
advance notice of fourteen days. However the notice was
for a meeting of the Board of Directors and not for a
shareholders meeting. The question thus arises as to
whether a shareholders meeting was necessary to remove
the plaintiff or could the Board of Directors have removed
the plaintiff. The scope and effect of Section 284 of the said
Act form part of the discussion in a Division Bench
Judgment of the Allahabad High Court in A.K. Home
Chaudhary v. National Textile Corporation U.P. Ltd 1948
(48) Indian Factories and Labour Reports The relevant
portion at page 101 is extracted as under:
"Learned Counsel for the petitioner then urged
that the petitioner being a Director of the
Government company could be removed only in
accordance with the procedure laid down by
Section 284 of the Companies Act, 1956. The
Board of Directors had no authority to remove the
petitioner who was a Director of the company.
Section 284 lays down that a company may, by
ordinary resolution to remove a director. On
receipt of the notice of resolution to remove a
director, the company shall forthwith send a copy
thereof to the director concerned, and if he makes
representation to the company, the same may be
placed before the committee of the company for
consideration. It was urged that the procedure
prescribed by Section 284, no doubt, provides
procedure for removal of a director of a company
by ordinary resolution at a meeting of the
shareholders of the company. But the selection is
not exhaustive. A director may cease to hold office
by retirement, dismissal, removal, or by vacating
his office voluntarily. He may be removed, by the
Board of Directors or share holders at a meeting
of the company. Section 284 merely provides for
removal of a director by share holders and
prescribed procedure for the same, it does not
prohibit removal of a director otherwise than in
accordance with Section 284. Sub-section 7(b) of
Section 284 lays down that nothing in the section
shall be taken as derogating from any power to
remove a director which may exist apart from this
section. The section itself thereforee contemplates
removal of a director in addition to the provisions
contained in the Section. Thus where the Articles
of Association confer powers on the Board of
Directors to remove the Managing Director or
other directors, such power is not affected by the
provisions of Section 284.
Article 84 of the Memorandum and Articles of
Association of National Textile Corporation (Uttar
Pradesh) Limited provides for constitution of
Directors. Article 85 makes provision for
appointment of Chairman cum Managing Director
and other directors. Article 85(d) provides that
Chairman cum Managing Director and the
Directors shall be entitled to be appointed whole
time Directors. Article 86(c) provides that the
Chairman cum Managing Director and the
Directors shall have the power to remove any
whole time Director appointed in accordance with
Article 85(d) at any time, in their absolute
discretion. Thus, a Director appointed under the
Articles of Association by the Board of Directors is
liable to be removed at any time. The petitioner
was appointed a whole time Director under Article
85(d) and his services have been terminated by the
Board of Directors in exercise of their powers
under Article 86(c). The Articles of Association do
not place any fetter on the power of the Board of
Directors to remove a Director from service. The
powers of the Board of Directors with regard to
removal of Director remains unaffected by Article
284 of the Companies Act. The impugned order of
termination, therefore, is not violative of Section
284 of the Companies Act.
17. In view of the aforesaid, it is not in doubt that though
there is a mandate contained under Section 284 of the said
Act that is not the only methodology for removing a
Director. It is noted in the judgment that there may be
eventualities like retirement, dismissal, removal or vacation
of office voluntarily. The present case is one of removal of
the plaintiff. The judgment makes it clear that where
Articles of Association confer power on the Board of
Directors to remove a director, such power is not affected
by the provisions of Section 284 of the said Act. I am in full
agreement with this view. The Articles of Association are in
the nature of an agreement between the shareholders who
are the joint owners of the company. If some specific
methodology is devised by consent, nothing precludes the
members/shareholders from doing so. The question to be
considered is whether the present Articles of Association do
provide for such a procedure.
xxx xxx xxx
19. Article 112(a) of the Articles of Association provides for
strength of the Board of Directors and who has to make the
appointment of the Directors. It provides for six directors to
be nominated by co promoters out of which the number of
non rotational directors shall not exceed three. It is not in
dispute that the plaintiff is a rotational director. Article
112(h) provides that both UPSIDC and co-promoters shall
have the right to remove or withdraw their nominees from
the Board of Directors and further have a right to provide
substitutes thereof. It is in furtherance of this power that the
co-promoters have exercised their rights in the present case
and sought to withdraw the plaintiff as a director
nominated by them. I am thus of the considered view that
the co promotors were well within their rights to have
issued the letter dated 11.06.1993 whereby they sought to
withdraw the nomination of the plaintiff as director of the
co promoters. Such nomination is not in the realm of
nomination by the Central Government under Section 408
of the said Act but the exception to Section 284 of the said
Act would also arise where articles provide to the contrary.
The present case is one where there is such provision in the
Articles. I am thus of the considered view that the
discussion resulting in the decision taken on 29.06.1993
whereby the plaintiff was removed from Board of Directors
cannot be faulted. The issue is answered against the
plaintiff."
8. The appellant contends, that likewise, all that is required to be examined
in this case is whether the Apex Council, which is akin to the Board of
Directors of an incorporated company, had issued due notice and granted
appropriate opportunity to the noticee, to present his case before the said Apex
Council (Board of Directors). It is stated that this exercise of due opportunity
and natural justice has been carefully undertaken. Therefore, there can be no
challenge to the procedure adopted by the appellant, nor can there be any
question as to the Apex Council‟s power to remove a Member or Secretary of
the appellant Association, because the Council is akin to a Board of Directors.
It is further contended that a similar view has been taken in The Madras Stock
Exchange Limited v. S.S.R. Rajakumar 2003 SCC OnLine Mad 148 and in
K. Leela Kumar/M. Subbiah v. The Government of India, Ministry of Law
Justice, Dept. of Company Affairs & Ors. 1997 SCC OnLine Mad 308.
9. In The Madras Stock Exchange Limited (supra) it was held as under:
"46. In case of companies limited by guarantee a
provision for expulsion in the articles would not per se
be inconsistent with the requirements of the
Companies Act. In a club registered under the
Companies Act, the privileges that accompany
membership being personal to the member, the
collective welfare of the Members would require that
each one of them conform to a discipline which all of
them agree to observe. Breaches of such discipline
would require to be penalised, and if the conduct of the
Member is such as to make his continued presence
wholly undesirable amidst other members, there is
nothing in principle that would come in the way of
such a member being expelled"
10. In K. Leela Kumar/M. Subbiah (supra) it was held, inter alia:
"19. Mr. A.S. Chandrasekaran, learned counsel for the
3rd respondent, made some submissions with reference
to Circular No. 32 of 1975. They are:
"(a) The circular is merely recommendatory in
nature and must be confined to the facts and
circumstances under which the circular came
to be issued and has no effect whatsoever
unless legally implemented.
(b). The Circular is not a statutory direction,
legally enforceable and no writ will lie for the
enforcement of the said Circular.
(c) The Circular deals with only expulsion of a
share-holder of a public limited company as
the various provisions of the Companies Act
mentioned in the circular indicate and it does
not deal with a case of suspension for a short
period.
(d) The Circular cannot at any rate be
applicable to Clubs, Associations, etc.,
incorporated under Section 25 of the
Companies Act.
He further contends that the suspension of a
member of a social club on the ground that he
has acted in a manner injurious to the prestige,
interest and character of the Club, is not
opposed to public policy and is also not
opposed to law."
20. The above submissions of Mr. A.S.
Chandrasekaran merit acceptance. The provisions of
the Memorandum and Articles of Association of the
3rd respondent Club are perfectly legal and they are
not void ab initio, as contended by the learned counsel
for the appellants. In any event, the validity of the
proceedings of the impugned meeting is not in issue in
the writ petitions. It is a matter of record that the 3rd
respondent sent a letter dated 3-1-1989 calling upon
the appellants to show cause as to why appropriate
actions should not be taken against them for their
prejudicial conduct. Since the appellants did not give
any explanation, the 3rd respondent, after due
consideration of the facts and circumstances by letter
dated 9-1-1989 suspended the appellants from the
membership of the Club, the appellant K. Leela Kumar
for a period of 45 days and the appellant M. Subbaiah
for a period of thirty days, since, in the opinion of the
Committee, the conduct of the appellants was injurious
to the prestige, interest and character of the club. We
are of the view that the action of the Committee is
perfectly valid, legal and proper being also a matter
pertaining purely to the internal administration of the
Club. We have already seen that the amendment was
approved by the Regional Director of the Company
Law Board, Madras, by letter dated 8-5-1974 by virtue
of the power conferred on him under Section 25 of the
Act, which has been delegated on him by the
Government of India in Notification No. GSR 71 dated
1-1-1966. The appellants having been aggrieved by the
order of suspension, have filed the writ petitions
challenging the validity of Article XXVIII of the
Articles of Association which confers power on the 3rd
respondent to suspend a member.
21. It is the case of appellants that the said article
cannot be enforced in view of the provisions of Section
9 of the Act and Circular No. 32 of 1975 issued by the
1st respondent. We are unable to appreciate the above
contention for the following reasons. Necessary
approval for amendment of Article XXVIII was given
by the Regional Director, Company Law Board,
Madras by his letter dated 8-5-1974, by virtue of
powers delegated to him by the Government of India,
whereas Circular No. 32 of 1975 was issued by the 1st
respondent only on 1-11-1975. As rightly pointed out
by the learned counsel for the 3rd respondent,
Circular No. 32 of 1975 contains the mere opinion of
the Department. It is not a statutory order issued
pursuant to any statutory provision. The said Circular
contains only certain administrative instructions and
therefore it will not bind third parties like the 3rd
respondent. Therefore, in our opinion, the writ
petitions filed by the appellants to enforce those
administrative instructions by filing a writ of
mandamus invoking Article 226 of the Constitution of
India, are not maintainable. Circular No. 32 of 1975
deals with only expulsion of a share-holder of a public
limited company and it does not deal with a case of
member for a short period. In any event, the said
circular is not applicable to clubs, associations, etc.,
incorporated under Section 25 of the Act. It is settled
by cateina of decisions of this Court and also of the
Supreme Court, that the petition for issue of a writ of
mandamus will not lie to enforce administrative
instructions. The Circular in question, which contains
clarifications issued by the 1st respondent, which are
administrative in character, cannot confer any
enforceable fights on third parties like the appellants.
As already mentioned, the Circular in question is not a
statutory order passed in exercise of any statutory
power and therefore, it has no legal effect or
sanction."
11. Mr. Sandeep Sethi, the learned Senior Advocate for the appellant refers
to this Court‟s order dated 20.09.2018 passed in FAO No. 413/2018 wherein
the earlier orders of the learned Trial Court dated 28th & 30th August, 2018 had
been modified to the extent that the operation of suspension of respondent no.1
purportedly dated 14.08.2018 issued by the Apex Council of DDCA had been
stayed till a decision on the interim applications under Order 39 Rule 1 & 2
CPC was made on merits and the DDCA was further restrained from
obstructing respondent no.1 in discharging his duties and functions as
Secretary, DDCA to the extent that he function in accordance with the AOA of
the DDCA till adjudication of the application under Order 39 Rule 1 & 2 CPC
before the learned Trial Court or till the adjudication by the learned
Ombudsman in terms of Article 62 of the AOA of DDCA. He submits that
now that the learned Ombudsman has given his decision indicting and holding
respondent no.1 guilty of indiscipline and misconduct, both being detrimental
to the interest of the Association as well as to the game of cricket, the only
option available to, indeed it is the duty of the appellant to take appropriate
corollary steps under Article 5(c) of the AOA. He submits that the aforesaid
modification by this Court would effectively have to be reviewed i.e. the
suspension of R-1 would become operational automatically. He submits that:
i) this would be a logical sequitor because respondent no.1 has been found to
have conducted himself contrary to the interest of the DDCA; ii) the appellant
does not wish to suffer any further at the hands of respondent no.1; iii) the
appellant argues that respondent no.1 has harmed the DDCA and has the
potential of further damaging the interest of the institution as a whole and
indeed the game of cricket itself; iv) therefore, the appellant would like to take
a decision about whether the said person should be kept on its rolls as a
member or at all be retained in an administrative position. The appellant
argues that in its SLP against the order of this Court‟s dated 20.09.2018 no
substantive order has been passed and only notices have been issued. It is
stated in the interim that the present impugned order has proceeded ahead and
has disposed-off the plaintiff‟s application under Order 39 Rule 1 & 2 CPC. It
is stated that it is open to the appellant to withdraw the SLP in view of the
aforesaid altered circumstances, including the fact that the learned
Ombudsman has given his decision to the reference.
12. The appellant states that in the SLP it has contended that for suspension
of a member from the Association, it was not necessary to await the decision
of the learned Ombudsman; that in any case in the interim the circumstances
have changed and respondent no.1‟s actions have been found to be a case of
clear indiscipline and misconduct, which is not only detrimental to the DDCA
but also to the game of cricket. The appellant refers to various orders passed
by this Court as well as by the Supreme Court, directing that the constitution
of DDCA be brought in consonance with the structure of the BCCI, as
proposed by the Justice Lodha Committee Report and approved by the
Supreme Court. The amendments to the constitution of DDCA would be duly
carried out both in terms of the orders of the Supreme Court as well as those
suggested by the Committee of Administrators of the BCCI.
13. In the context of the above, the appellant contends that the
administrative structure of DDCA as of today is legitimate. It comprises
elected members and persons appointed by the three nominees of the
Government of India (as mentioned in the appeal paper book at page 792).
14. Lastly, the appellant reiterates that insofar as Article 5(c) of the
Constitution of the DDCA remains unaltered, the Apex Council has absolute
powers to remove any member of the DDCA, whom it finds working against
the interests of the DDCA as well as the interests of the game of cricket. The
appellant contends that the only issue at hand is: whether the suspension
against R-1 should continue till the Apex Council takes a decision on the reply
by R-1 to the Show Cause Notice issued on 20.12.2018.
15. The appellant states that the impugned order dated 02.02.2019 does not
even refer to the finding of the learned Ombudsman, which concludes that the
conduct of R-1 has been seriously wanting.
RESPONDENTS‟ ARGUMENTS
16. Refuting therefore, the said argument, Mr. Dayan Krishnan, learned
Senior Advocate for respondent no.1 submits, that under Section 169 of
Companies Act 2013, there is a subtle alteration of the statutory scheme for
removal of directors of companies. Therefore, the aforesaid judgments passed
in the context of Section 284 of the Companies Act, 1956 would not be
applicable. Section 169 of the 2013 Act is essentially the same as section 284,
except that the last word of sub-section 8 of section 169 has been changed to
„Act‟ from „section‟. Sub-section 8 of Section 169 reads as under :-
"169. Removal of directors
xxx xxx xxx
(8) Nothing in this section shall be taken--
(a) as depriving a person removed under this section of any
compensation or damages payable to him in respect of the
termination of his appointment as director as per the terms of
contract or terms of his appointment as director, or of any
other appointment terminating with that as director; or
(b) as derogating from any power to remove a director under
other provisions of this Act.
(emphasis supplied)
17. Clause 7(b) of Section 284 of the Companies Act,1956 read as under :-
"284. Removal of directors.
xxx xxx xxx
(7) Nothing in this section shall be taken-
(a) xxx xxx xxx
(b) as derogating from any power to remove a director which
may exist apart from this section."
(emphasis supplied)
18. The learned Senior Advocate contends that in the earlier Act there was
ample scope for devising an alternate scheme for removal of a Director,
provided that such alternative scheme was not substantially removed from the
statutory scheme provided under Act. However, under the 2013 Companies
Act, alternate schemes are drastically curbed and circumscribed; the removal
of a Director has only to be in terms of what is specified under the Act. It is
argued that section 169(c) mentions that the Director can be removed only by
the Company and not by the Board of Directors, which in turn is appointed by
the company i.e. its shareholders.
19. He further contends that section 6(a) of the 2013 Act is of wide ambit.
It, in effect, renders redundant all alternate schemes for removal of directors of
a company whether by way of memorandum, or articles of a company or
resolutions, which are not in consonance with the statutory scheme,
irrespective of whether the said scheme was registered, executed or passed
either prior to or after coming into effect the Act of 2013. It is contended that
insofar as Article 5(c) of the DDCA is repugnant to the scheme of the Act, it
becomes void under Section 6(a) of the 2013 Act. It is argued that therefore,
the impugned order does not suffer from any deficiency or error and this
petition, being without merit, should be dismissed.
20. It is the respondent‟s case that the correct body for taking a decision on
the suspension of respondent no. 1 from his post of Secretary of DDCA can be
taken only by its General Body (shareholders).
21. In rebuttal, the appellant argues that the scheme of management of an
incorporated company gives sufficient latitude under section 5(2) of the Act
for the formation of an alternate scheme, so long as such scheme is not
contrary to the scheme of the Act. It is argued that whenever the statute seeks
to prohibit something, it stipulates so specifically and in unambiguous terms;
such as in Section 164 and Section 175 which begin with the expression "no
person shall" i.e. the prohibitory language is explicit. However, in contrast
such a prohibitory expression is not to be found in section 5(2) of the Act read
with section 169 thereof. The appellant contends that on the contrary, section
284 of the Companies Act, 1956 which is akin to Section 169 of the
Companies Act, 2013, envisages the formation of an alternative additional
scheme for removal of directors, insofar as it does not derogate from the
statutory scheme. The appellant submits that its present scheme of governance
and management has the imprimatur of the Supreme Court, insofar as its AOA
have been amended in consonance with the structure of administration as
proposed by Justice Lodha Committee Report and approved by the Supreme
Court. Therefore, article 5(c) of its AOA stands duly approved as being in
consonance with the statutory scheme, and the said provision empowers the
appellants‟ Apex Council to remove any member from the Association (i.e. the
appellant company).
22. The Court, however, is not persuaded by the aforesaid arguments of the
appellant because very significantly amended provisions of the 2013 Act,
permit for removal of directors. Under section 284(8)(b) of 1956 Act an
alternate scheme for removal of directors was permitted as a stand-alone,
specific provision, provided as said alternate scheme did not derogate from
any power which existed under that section. In other words, the test of
derogation, if any, was limited to section 284 only. However, under section
169 of the 2013 Act, the power for alternate scheme of removal of directors
has been made subject to other provisions of the entire Act i.e. the alternate
scheme would have to ensure that it does not derogate from any power to
remove a director as specified under any other provision of the Act. That
being the clear language of the statute, the only method in which a director
could be removed is the one prescribed under section 169 of the 2013 Act,
which stipulates that a director may be removed by ordinary resolution by a
company. Section 6 (a) confers a paramount status to the provisions of the Act,
overriding all other memorandum or articles, agreements or resolutions passed
by the company. Section 169 (8) (b) ensures that the power to remove a
director under other provisions of the Act are not affected by what is stipulated
under the said section itself.
6. Act to override memorandum, articles, etc.-- Save as otherwise
expressly provided in this Act--
(a) the provisions of this Act shall have effect notwithstanding
anything to the contrary contained in the memorandum or articles
of a company, or in any agreement executed by it, or in any
resolution passed by the company1 in general meeting or by its
Board of Directors, whether the same be registered, executed or
1 company means a company incorporated under this Act or under any previous company law;
passed, as the case may be, before or after the commencement of
this Act; and
23. Section 169 requires that a director of a company be removed only by
an ordinary resolution of the company (general body of shareholders) for the
specific purpose. When a statute specifically mandates that the director shall
be removed by the company, i.e. the shareholders/general body of the
company, then the statutory scheme would have to be followed in letter and
spirit. The Apex Council under Article 5(c) of the Articles of Association of
the appellant, is akin to the Board of Directors of a company. It does not
constitute or substitute for the General Body of the company, therefore, it
cannot usurp any powers of the General Body of shareholders. Article 5(c)
may well be applicable apropos an ordinary Member, but the Secretary (i.e. the
Director) of the Association is in a different position, and he can be removed
from that post only by the General Body which had appointed him. The
underlying principle being that only the appointing authority can be the
dismissing/removing authority and not the peers of the Apex Council, who are
collectively chosen and entrusted with the administration of the DDCA by its
General Body. Members of the Apex Council are equal to each other in terms
of their appointment and cannot be removed by a peer. Although the position
and functions of the members of the Apex Council are defined in terms of the
AOA, nevertheless they being appointed by the General Body can only be
removed by the latter, higher authority. Therefore, the reference to Ravi
Prakash Singh (supra) is misplaced because it dealt with an alternate scheme
of removal of directors under the scheme provided under section 284 of the
1956 Act. Whereas Article 5(c) of AOA is now being examined under the
provisions of Section 169(8)(b) read with Section 6 (a) of the 2013 Act, which
makes alternate schemes subject to the entire Act not only to a particular
section. There is no answer forthcoming to the query as to whether this issue
was examined earlier apropos the exercise undertaken for the amendment of
Articles of Association, so as to bring the structure and administration of the
appellant in consonance with the administrative structure of BCCI, as
proposed by the Justice Lodha Committee Report.
24. The decision of the learned Ombudsman may be non-justiciable in terms
of the AOA, inasmuch as he has found that respondent no.1 has acted against
the interests of the DDCA as well as against the interest of the game of cricket.
However, the conduct of respondent is not under examination by this Court.
Instead, what is to be determined is whether R-1, as Secretary of the DDCA
(akin to Director of a Company) can be removed by the appellants‟ Apex
Council (Board of Directors‟) or by the company itself i.e. by the General
Body of the shareholders.
25. What clearly emanates from the above discussion is that only the
company i.e. General Body can remove a director, because anything other than
that would be in derogation of the statutory provisions. In view of the above,
there is no reason to interfere with the impugned order. The petition is without
merit and is, accordingly, dismissed.
26. Lest the administration of the DDCA fester in internal squabbles of the
parties and ultimately affect the game of cricket in Delhi, it would be prudent
that the matter be resolved at the earliest i.e. the issue be placed before the
General Body of the Association to consider the position of the respondent‟s
Membership/Secretaryship, in view of the decision of the learned
Ombudsman. The appellant may take a decision in this regard in four weeks
from the date of this order.
27. With the aforesaid observations, the appeal is dismissed.
NAJMI WAZIRI, J
JULY 2, 2019
