Judgment:
1. Going by the names of the subscribers to the memorandum of association of the first defendant club, this court may have some excuse in taking interest in matters pertaining to it; yet that can be no reason to give a go-by to the principle that civil courts should leave the management of a company to its members and office-bearers, more so if it is a social club. Five barristers and two solicitors got together in 1909 to set up the Saturday Club and had their agreement witnessed by two other barristers and another solicitor.
2. The suit is by the president and two other members of the general committee of the club challenging their temporary suspension from the club. The reliefs claimed in the suit also call upon the court to ratify certain decisions relating to the club’s affairs taken at the instance of the plaintiffs and in which they betray considerable personal interest. At the interlocutory stage, however, the argument has been confined to the decision of the club to suspend the plaintiffs’ rights and privileges as members of the club for a period of three months.
3. As matters of such kind are now given to degenerating into free-fights of “us” versus “them” without so much as a thought spared for the image or reputation of the club, so has it been in this case. The plaintiffs complain of a coup within the general committee that resulted in elected office-bearers, including the president, no less, being shown the door and kept out of office for almost the remainder of their tenure. The defendant committee members cite the conduct of the three in entering into dubious deals with third parties and insinuate that the offices of love were unabashedly abused for personal aggrandisement which warranted the extraordinary measures being taken that have been impugned in the present proceedings.
4. The defendants say that they have played by the book and suggest that even if some minor transgression is noticed in the procedure, the court should allow the matters to be resolved within the domestic forum and not venture to restore the powers of wrong-doers for the club failing to cross the t’s and dot the i’s with the finesse of a well-oiled corporate entity. The contesting committee members seek continually to draw attention to the gravity of the charges that they say were brought and established against the recalcitrant plaintiffs and exhort that the court should rather see the substance than the form. It is precisely such matters that the defendants seek to engage the court in, that the court must eschew looking into.
5. Matters pertaining to the dealings of a company, particularly a social club, are scarcely justiciable. But the court would probably be less restrained in its inquiry if the expulsion or suspension of a member is challenged on the ground that it was not in accordance with the rules of the organisation. Expulsion, or even suspension, would carry a stigma which may be deserving in some cases; but before the taint of such nature is endorsed upon a challenge relating to it being carried to a civil court, the court is called upon to look into the legality of the action, the compliance with procedural fairness and the adherence to the substantive rules of natural justice. It is by the same tests that the impugned action of the club would have to be assessed.
6. It is necessary at the outset to notice the rules governing the organisation that is the club. The club is a company within the meaning of Companies Act, 1956 and is limited by guarantee. The management of the affairs and concerns of the club are vested, under Article 48 of its articles of association, in a committee comprising a president, a vice-president and eight other elected members of the club. It is such committee that has come to be known as the general committee. The articles of association of the club provide for several others committees, including a membership committee and a balloting committee. The membership committee is primarily responsible for the election of permanent members of the club and consists of the members of the general committee with ten additional permanent members. Such ten additional permanent members make up the balloting committee. The full strength of the membership committee is thus 20.
7. Article 56 recognises the president, and in his absence the vice-president, as the chairperson at all meetings of the general committee. In the event of an equality of votes at a meeting of such committee, the chairperson has a second or casting vote. Article 57 reiterates the powers of the general committee and subjects its authority to the statute, the articles and the supreme powers of the general body of the club. The general committee is authorised to appoint a secretary of the club or nominate one of its members as an honorary secretary.
8. The general committee may depute such duties as it thinks proper to the secretary or honorary secretary and is also empowered to revoke the appointment. Article 62 of the articles of association of the club falls for particular consideration in the light of the impugned action having been taken under such provision:
“62. The Committee shall take cognisance of any infraction of the Articles or Bye-laws of the Club and of any circumstances whether within or without the Club likely to affect the character or good name of the Club or cause annoyance to other Members and the Committee may-and shall upon requisition made by 20 Permanent Members call a Meeting of the Membership Committee at which or any adjournment of which a quorum shall be 11 Members thereof. Notice shall be given to the Member or Members concerned of the convening of such a meeting and the reason thereof and such Member or Members shall be entitled to attend for the purpose of being heard. Such Meeting shall have power by a resolution passed by seventyfive per cent or more of the Members present in person and voting either by ballot or otherwise to expel the Member or Members concerned who shall subject to the provisions of Article 63(1) cease to belong to the Club and forfeit all claims and privileges attached to Membership or in lieu of the expulsion of any such Member the Membership Committee may call upon such Member to make such reparations and/or tender such apology as the Committee may consider adequate and/or prohibit such Member from using the Club for a period not exceeding 3 months without prejudice to liability for payment of subscription.”
9. At the ad-interim stage of the present application, the plaintiffs insisted on an injunction restraining further effect being given to the impugned decision of the club to temporally suspend the three as members. The plaintiffs also sought the minutes and records leading up to such decision to be preserved by any officer to be appointed for such purpose. The minutes of the meetings of the general committee were required to be carried to court and the plaintiffs were granted inspection thereof. The court declined to interfere, at the ad-interim stage, with the decision to temporarily suspend the plaintiffs as members of the club primarily on the ground that a civil court should be wary in barging into the internal matters of a social club.
10. The plaintiffs complain of a coup brewing within the general committee for several months culminating in battle-lines being drawn with seven committee members on the one side and the three plaintiffs on the other. They refer to minutes of the meetings of the general committee whereat matters relating to the club’s dealings with outside agencies were on the table and to the second defendant vice-president usurping authority with the aid of the majority members of the general committee to unseat the president from the chair shortly after the commencement of the general committee meeting held on April 4, 2011.
11. The plaintiffs suggest that a motivated and vindictive approach was adopted by the majority committee members to not only show the plaintiffs in poor light but to also effectively curtail their tenure in office. The plaintiffs say that notwithstanding Article 62, elected office-bearers of the club who are veritable directors of the company deserve more respect than has been accorded to the plaintiffs by the majority members of the general committee who had ganged up against them. It needs to be emphasised at this stage that the plaintiffs’ attempt to justify their conduct and their dealings on behalf of the club with external agencies cannot be made the subject-matter for consideration by a civil court.
12. The articles confer the general powers of management of the club on the general committee and such committee is governed by the majority rule. Corporators and directors of companies have the freedom to decide on matters pertaining to the company, particularly its business dealings, which are ordinarily not justiciable in a civil court. It is perfectly in order for the directors of a company to fritter its assets as long as the general members endorse the directors’ action; unless a derivative action on behalf of the company, founded primarily on illegality, is carried to a civil court. In other words, absurd business decisions of a company, unless illegal or demonstrated to be for the personal aggrandisement of the directors at the expense of the company, cannot ordinarily be challenged in a civil suit on the ground that they are unprofitable or foolhardy.
13. It is, in such circumstances, completely unnecessary to explore the basis of the majority committee members’ angst towards these plaintiffs. Equally, it is utterly irrelevant in the context to be prejudiced by the perceived recklessness of the plaintiffs in their dealings on behalf of the club if the roadmap charted by the club to temporarily suspend them falls foul of the rules governing the club or the more wholesome tests of procedural fairness and substantive compliance with the principles of natural justice. The murmurs that began towards the end of 2010 about the propriety of the first plaintiff president of the club entering into one or more contracts on behalf of the club with third parties grew into more of a rumbling by mid-March of this year before exploding at the meeting of the general committee held on April 4, 2011.
14. The majority members of the general committee harboured serious misgivings as to the legitimacy of the plaintiffs committing the club to unprofitable transactions. Though doubts persist as to the authenticity of the recording of the minutes of the meeting of the general committee held on April 4, 2011, particularly in the light of the minutes not having been confirmed at any subsequent meeting, it is evident that seven of the committee members had virtually declared war on the other three on their perception that the interest of the club had been seriously compromised by the plaintiffs and their position abused in course of certain contracts having been executed on behalf of the club at the plaintiffs’ behest. Whether or not the minutes relating to the meeting of the general committee held on April 4, 2011 accurately capture the business transacted thereat, it is apparent that the plaintiffs were in a minority and it was the second defendant vice-president who had taken the lead in the conduct of the meeting upon the president being unceremoniously tossed off the chairman’s perch. Though the items of business said to have been transacted at such meeting do not correspond to the revised agenda therefor, item no. 9 of the minutes betrays the vertical divide between the plaintiffs on one side and the defendant nos. 2 to 8 on the other.
15. In its first part, item no. 9 of the minutes relating to such meeting records that the general committee, by a majority of seven members approving and the three plaintiffs abstaining, passed a resolution that a meeting of the membership committee be called in accordance with Article 62 and notices be issued to the three plaintiffs in connection with the findings and “Suggestions/Recommendations” of the legal sub-committee meetings recorded in the minutes dated March 16 and March 29, 2011. The second part of item no. 9 is a resolution authorising the defendant nos. 2 to 8 general committee members to call a meeting of the membership committee “in case a requisition/request is received from members of the Club pursuant to Article 62.” The revised agenda for such general committee meeting has been disclosed in the affidavit-in-opposition filed by the defendant nos. 1 and 2.
16. A copy of the minutes of the relevant meeting has also been appended thereto. The veracity of such minutes has been doubted in the affidavit-in-reply filed by the plaintiffs. They say that the minutes of such meeting were not made over to them till May 11, 2011 when a direction to such effect was issued at the ad-interim stage of the present application. The plaintiffs say, at paragraph 8 of the reply, that though the minutes have been shown to have been prepared and signed by the secretary of the club on April 5, 2011, correspondence exchange between the president and the secretary on April 6 and 7, 2011 would show that the minutes had not been finalised till April 7, 2011.
17. The plaintiffs add that the minutes are discrepant and the extent of the alleged discrepancy is detailed in Annexure C to the reply. The defendant nos. 4 to 7 suggest that even prior to the general committee meeting being held on April 4, 2011, two members of the club had complained of the plaintiffs’ conduct by a letter dated April 1, 2011 addressed to the vicepresident. The reliance on such letter is misplaced since, notwithstanding the notice exhorting the vice-president (not the club) to take steps under Article 62, the notice did not meet the numerical qualification recognised in Article 62 that would oblige the general committee to take cognisance thereof.
18. It appears from the papers relied upon that on April 4, 2011 a notice was put up at the club by the secretary for the information of the members that the second and third plaintiffs had entered into an “unauthorised and purported” contract with a third party without informing or obtaining the approval of the general committee. Such agreement, the notice said, was countersigned by the plaintiff president and the secretary. The notice declared that such “purported contract being illegal has been struck off” and steps had also been taken to “strike off” two other contracts. The notice promised that the general committee would “endeavour to realise the dues/ penalty or any other expense incurred or maybe incurred in connection with the above mentioned cases” from the relevant general committee members.
19. By April 12, 2011 the club received a notice from 22 members requisitioning a meeting of the membership committee under Article 62 on the following terms :
“We the undersigned request you to call and requisition a Membership Committee meeting under article 62 of the Articles of Association of the Club to deliberate the acts/omissions of very serious nature concerning the members, who happen to be also General Committee members, namely Mr. Ravi Saberwal, Mrs Ranjini Sikri and Mr. Ashis Malhotra. This refers to the alleged illegal and unauthorized actions or omissions in the signing of various agreements or entering into arrangements with M/s United spirits Ltd, M/S Reliance industries Ltd, L.T.Group (Dawaat) etc and the alleged misbehaviour of Mr Ravi Saberwal in the Legal Sub-Committee meeting held on 09.04.2011.”
20. As to what happened immediately after the requisitionists placed the notice in the hands of the secretary to whom it was addressed is unclear. The defendants rely on a bunch of documents containing seven identical letters issued by the secretary to the defendant nos. 2 to 8 on April 25, 2011, formally informing such general committee members of the notice issued by the requisitionists. Each of the copy letters produced by the defendants has a handwritten endorsement, presumably of the individual addressee, approving or requiring the convening of a membership committee meeting. It appears that the second defendant vice-president suggested a date for the membership committee meeting to be convened and one of the other general committee members agreed to the date. The five other defendant general committee members merely endorsed that a meeting of the membership committee be convened but did not specify either the date or the time therefor.
21. Though not much had been made of the manner in which the meeting of the membership committee had been convened in course of the plaintiffs’ opening submission, it is evident from each of the plaintiffs’ initial reaction upon being informed of the membership committee meeting that the convening thereof was alleged to be illegal. What is evident is that the secretary of the club to whom the requisitionists had submitted their demand had chosen to inform only seven of the general committee members of the development and there was no meeting of the general committee held to consider the requisitionists’ demand; but the membership committee meeting was convened on the basis of the endorsement of five of the general committee members that such meeting be convened and of the vice-president giving the date for the meeting and another general committee member endorsing the vice-president’s proposal.
22. There was a flurry of activity immediately thereafter, though the defendants have not produced the notices issued to the members of the membership committee (comprising the members of the general committee and the members of the balloting committee) for convening the meeting on April 28, 2011. By April 26, 2011 the three plaintiffs had been issued similarly-worded letters of April 25, 2011 informing them of the membership committee meeting convened on April 28, 2011 and requiring them to be present at such meeting “to afford to you an opportunity of knowing exactly and more fully what is the case of complaints or charges against you and if possible to satisfy us that no good cause of complaint exists…” The plaintiffs make three points on the notices of April 25, 2011 issued to them by the seven other members of the general committee in the name of the club. They say that as general committee members, the plaintiffs were entitled to be invited to participate at the membership committee meeting other than as delinquents and in the plaintiffs not having been so invited, there was no valid convening of the membership committee meeting.
23. The plaintiffs contend that the notice that the general committee is obliged to issue to a delinquent under Article 62 envisages the grounds alleged by the requisitionists to be made known to the delinquent. They suggest that in the final paragraph of the notices of April 25, 2011 announcing that the plaintiffs would be informed “exactly and more fully” of the charges levelled against them only at the membership committee meeting, there was no meaningful opportunity afforded to the plaintiffs to deal with the complaints against them. On the third limb of the challenge to the notices, the plaintiffs say that such notices were both in derogation of the mandate of Article 62 and in contravention of the principles of natural justice that were required to be complied with even if Article 62 provided otherwise.
24. The near-identical notices of April 25, 2011 to the three plaintiffs carry four paragraphs. The first paragraph expresses the general committee’s anguish and concern at the alleged unlawful activities of the plaintiffs. The second paragraph refers specifically to the agreements entered into by the club at the plaintiffs’ behest (four agreements are referred to in the notices issued to the first and second plaintiffs and three contracts are mentioned in the notice issued to the other plaintiff). The third paragraph of the letters inform the concerned plaintiff of a requisition being made on April 12, 2011 by 22 permanent members of the club and specifies that the letters were to be treated as notices pursuant to Article 62. The fourth paragraphs of the three letters vary as to the time that each plaintiff was to be present before the membership committee.
25. The plaintiffs argue that the individual letters to the three plaintiffs suggest in the fourth paragraph that exclusive meetings of the membership committee for the consideration of the conduct of the three plaintiffs had been convened at different times on April 28, 2011. While that may be a possible way of reading the notices, a more charitable view would be to understand the notices implying that the three plaintiffs were to be present at different times and not suggesting that three several meetings of the membership committee had been convened to be held at the appointed hours in the evening of April 28, 2011.
The plaintiffs’ initial response, upon receipt of the notices of April 25, 2011, is contained in two letters dated April 26, 2011: one addressed by the president and the other jointly by the second and third plaintiffs. The president’s letter refers to a rival requisition having been placed before the president for convening a meeting of the membership committee in respect of charges levelled against the seven other general committee members.
26. The president expressed the view that before convening any meeting of the membership committee, an independent legal opinion ought to be obtained as to whether any disciplinary action could be taken by the membership committee against general committee members who were elected directors of the company. The president acknowledged receipt of the notice of April 25, 2011 and suggested that it was inappropriate for seven members of the general committee to take any action that was not in conformity with the articles of association of the club or the provisions of the Companies Act. The president suggested that the most dignified and proper course of action would be to convene an extraordinary general meeting of the club and ascertain the general members’ views on the rival sets of allegations.
27. The president also expressed his reservation as to the manner in which the membership committee meeting of April 28, 2011 had been convened. The two other plaintiffs challenged the basis of the convening of the membership committee meeting since the matter had not been first placed before the general committee. On April 28, 2011, the club received three letters at about 5.35 pm from the three plaintiffs styled in identical words. At the outset, the plaintiffs complained of the requisitionists’ notice not having been furnished to them for them to appreciate the basis of the complaint. They asserted that the allegations contained in the first two paragraphs of the notices of April 25, 2011 appeared to be those brought by the seven other committee members and not those put forth by the 22 requisitionists.
28. The plaintiffs sought a deferment of the membership committee meeting and requested for copies of the requisitionists’ notice to be made available to the plaintiffs and at least seven days’ advance notice before the matter was considered by the membership committee. These letters of April 28, 2011 were evidently prepared by the plaintiffs prior to receipt of copies of the requisitionists’ notice. It is admitted by the plaintiffs that between 4.45 pm and 5.35 pm on the date of the membership committee meeting, they were handed over copies of the requisition notice of April 12, 2011.
29. The plaintiffs challenge the decision of the membership committee on divers counts. They refer to a copy of the minutes of such meeting made over to them at the ad-interim stage of the present proceedings. They question the minutes from the first line which describes the second defendant as the president who had taken the chair. The first sentence of the first paragraph of the minutes says that since the president was not present at the meeting the vice-president was proposed to the chair. The plaintiffs say that the plaintiffs had no independent notice of the membership committee meeting save as delinquents against whom some disciplinary action was contemplated. The plaintiffs refer to paragraphs 5, 13 and 21 of the minutes where the vice-president as chairman has been elevated to the status of the president of the club.
30. They draw attention to a private briefing on an unspecified day, referred to at paragraph 8 of the minutes, where the members of the membership committee agreed to attend the meeting that had been convened. Such recording is somewhat echoed at paragraph 21 of the affidavit-in-opposition which reveals that “the seven members of the General Committee had informally met in Room no.1 on 19th April, 2011 at 18.30 hrs and decided to convene the Membership Committee meeting.” As to the decisions taken in respect of the three plaintiffs at the membership committee meeting, the plaintiffs say that the requisite numerical support for passing a decision to suspend the plaintiffs was not achieved in case of any of the plaintiffs. The plaintiffs reason that 75% support had not been obtained out of the members present at the meeting in respect of the resolutions to suspend the second and third plaintiffs. They say that if the plaintiffs had also been permitted to attend the membership committee meeting, as they were entitled to by virtue of their being general committee members, the situation would have been worse and even the resolution to suspend the president as a member would not have been carried in terms of Article 62.
31. To this argument as to the validity of the resolutions shown to have passed at the membership committee meeting relating to the plaintiffs, the appearing defendants have made a three-fold submission. They suggest that Article 62 requires a decision for expulsion to be taken on the strength of 75% votes of those present and voting at the membership committee meeting, but the lesser punishment of suspension would require a simple majority. The appearing defendants’ second contention is that those membership committee members who had not supported the resolutions to suspend the three plaintiffs had abstained from voting and though they were present, they cannot be counted for the purpose of the expression “present and voting.” The third line of defence – one which is common to both the membership committee meeting and the convening of such meeting by the truncated general committee – is that it is absurd to suggest that the opinion of the committee members who had been charged with delinquency would have to be taken into account in the matter of either placing the requisitionists’ demand before the general committee or in ascertaining the views of the membership committee.
32. There is substantial merit in the argument that Article 62 is capable of being read to imply that only a decision to expel a member would require the support of 75% of the members of the membership committee present and voting at the meeting, subject to the quorum for the meeting being achieved. There is no need to express a firm opinion on such issue once it appears that a plausible view has been taken. Again, the second count of defence urged by the appearing defendants is flawless. If the minutes of the membership committee meeting correctly reflect the business transacted thereat – and no one has questioned the same – some of the members are shown to have abstained from expressing any opinion in respect of the measures adopted by the overwhelming majority members of the membership committee. The members who abstained from expressing any opinion or voting cannot be counted as members present and voting and the denominator would be reduced by the appropriate number for the exalted three-fourths majority to have been achieved in respect of the individual resolutions pertaining to the three plaintiffs; even though such support may have been unnecessary. But that leaves the two more fundamental aspects unanswered.
33. Before going into the validity of the business transacted at the membership committee meeting, it has first to be assessed whether such meeting had been validly convened. Though there is a charge of mala fides that has been carried by the plaintiffs, the adjudication of the legality of the procedure adopted has to be divorced from the prejudice factor that a charge of mala fides inevitably entails. Even if the minutes of the general committee meeting held on April 4, 2011 are accepted as sacrosanct and, despite the plaintiffs’ protest, item no.9 of the business transacted thereat taken at face value, there are several anomalies that remain. Notwithstanding the resolution reflected in the opening limb of item no.9 of the business transacted at the general committee meeting of April 4, 2011, of the seven defendant committee members being authorised to convene a meeting of a membership committee, it is the appearing defendants’ case that the meeting of April 28, 2011 was convened on the requisitionists’ demand. The notices of April 25, 2011 confirm such position.
34. Article 62 of the articles of association of the club is somewhat inadequately worded and inappropriately punctuated. For instance, what appears as a hyphen between “may” and “and”, is really a dash. It is often that a clause is included in a sentence within a dash at the beginning and another at the end to indicate a particular situation or to furnish an incidental information not central to the message generally conveyed in the sentence. In case of Article 62, the words “and shall upon requisition made by 20 Permanent Members” ought to have been preceded by a dash and followed by another to convey how the general committee had to react to a particular situation. Article 62 in its opening limb contemplates the general committing taking cognisance of any infraction of the rules or similar acts of misdemeanour. In such case, the general committee having taken cognisance of such matter is afforded a choice – as implied by the use of the word “may” – in calling a meeting of the membership committee to address the delinquency of which suo motu cognisance has been taken by the general committee.
35. The second limb of the first paragraph of Article 62 – particularly in the use of the word “shall” in the special circumstance – commands that the general committee would have to call a meeting of the membership committee upon a requisition made by 20 permanent members. Again, the nature of the requisition has to be seen in the context of the article and the requisitionists’ complaint qua a member has to be on the grounds indicated in the opening lines of the article. The remaining third of the first paragraph of Article 62 spells out the quorum for the membership committee meeting and mandates a notice being issued to the delinquent member containing the reason for convening the membership committee meeting and providing an opportunity to such member to attend the membership committee meeting “for the purpose of being heard.” The second paragraph of Article 62 pertains to the various measures that may be adopted at the membership committee meeting against a delinquent member and is not relevant in the immediate context.
36. Article 62 provides for the general committee to “call” a meeting of the membership committee. When the article ordains is that it is the committee as a body which has to convene the membership committee meeting. A decision by even the overwhelming majority members of the general committee would not suffice for the purpose of Article 62. On the other hand, it would be possible for the strict requirement of a meeting of general committee to be dispensed with if the requisition notice is circulated to all members of such committee and the approval of the majority of such members is obtained for convening the meeting of the membership committee. Section 289 of the Companies Act is this statutory guide in such regard. A resolution may be passed by the board of directors of a company by circulation provided all members of the board have been circulated the relevant material and the decision is made by a majority of the members as are entitled to vote on the resolution. On the appearing defendants’ showing, the requisitionists’ notice was not circulated to three members of the general committee and, hence, the fundamental basis for carrying the resolution by circulation in lieu of a meeting was not met.
37. The appearing defendants assert that it was superfluous to circulate the requisitionists’ notice to the three plaintiffs since such notice proposed measures being taken against them. The argument is fallacious. The mere issuance of the requisitionists’ notice did not have the effect of the committee members referred to therein being divested of their authority as elected committee members upon certain allegations being brought against them. The conduct of the secretary is called into question in such context. There is nothing evident from the affidavit filed by the club, or the documents relied upon by the parties, that would have permitted the secretary to receive a complaint against some of the committee members and suo motu rule that such committee members had been unseated as such upon the slightest allegation being made against them. That is not to be belittle the charges levelled against the plaintiffs by the requisitionists, but only to highlight the illegality in the procedure adopted. Though under Article 62 the general committee cannot sit in judgment over a requisition notice, yet there is an element of application of mind by the general committee to a requisition notice.
38. The requisitionists have to make out a ground answering to the nature of infraction specified in the opening clause of Article 62 for the committee to be obliged to convene a membership committee in pursuance thereof. There is also the matter of the general committee being entitled to scrutinise whether 20 permanent members had issued the notice. There is next the general committee’s authority to fix the date for the membership committee meeting. The glimpse at a possible scenario may help clear the air. Say, a reckless allegation not conforming to the grounds enumerated in Article 62 was brought by a requisition of 19 permanent members seeking the ouster of five general committee members as members of the club. If the answering defendants’ argument has to be accepted that the general committee members against whom charges are brought stand disqualified as general committee members to consider the requisitionists’ notice, the five remaining members, who would form a quorum according to the articles, would then have authority to push through an illegal requisition notice to the membership committee.
39. It is unacceptable that the authority of the general committee to convene a meeting of the membership committee under Article 62 can be usurped by the majority members of such general committee. If the articles require the general committee as a body to convene the meeting of the membership committee following a requisition in such regard, then it is only the committee as a body that has the authority. Undeniably, it would be the majority decision of the general committee members that would hold sway, but the majority rule does not contemplate that some of the committee members need not be given notice at all as long as the majority approval is obtained. The decision to convene the meeting of the membership committee was not that of the general committee but of only some – never mind whether it was the majority view – of its members. Despite the majority rule, the overwhelming majority members of the general committee cannot, under the articles, be a substitute for the general committee as a body.
For one, if the plaintiffs had been given notice of the matter they, as general committee members, would have had the opportunity to dissuade the other members from acting on the basis of the requisition on some ground that may have been available. The point is not in assessing whether there was a valid ground to deny the requisitionists’ demand, but a matter of principle. Further, the action contemplated against the plaintiffs was qua members of the club. Even if it is accepted that a delinquent membership committee member whose case is being considered by the membership committee may not participate in the voting relating to such matter, the two other plaintiffs in each case had a right to participate in the membership committee meeting at which they were not invited to attend save as delinquents.
40. There was no valid convening of the membership committee meeting and all actions taken in respect of the requisitionists’ notice of April 12, 2011 are found to be invalid on such score. Even the second part of the resolution under item 9 of the business transacted at the meeting of the general committee on April 4, 2011 would not validate the convening of the membership committee meeting. If the articles require a membership committee meeting to be convened by the general committee, such authority cannot be delegated by the general committee to a sub-committee comprising even the majority members of the general committee. The matter would have been different if the requisitionists’ notice was placed before the general committee meeting on April 4, 2011. Then the general committee would have considered the notice and the ministerial duty of intimating the membership committee members of the meeting and the fixing of the date would only have been delegated but the substantive duty of taking a decision on the requisition notice would have been discharged by the committee itself.
41. As at April 4, 2011, when the general committee last met, the requisitionists’ notice that is at the heart of the subsequent action was still unborn. The decision taken against the three plaintiffs is also liable to be set aside on the ground that no notice meeting the requirement of Article 62 had been issued to them. The first two paragraphs of the notices of April 25, 2011 did not allude to the requisitionists’ notice; the third paragraph did, but it did not disclose the contents of the notice and the fourth paragraph suggested that the charges levelled by the requisitionists would be made known to the plaintiffs at the meeting of the membership committee where they were to answer the same. Such procedure militates against the mandate of Article 62 and the principles of natural justice built into it and is otherwise found to be unfair.
42. Though the club has climbed down from the position indicated in the notices of April 29, 2011 issued to the plaintiffs, it is evident that the communication of the resolutions adopted by the membership committee went beyond the measures sanctioned by such committee. The notices of April 29, 2011 informed the plaintiffs that their membership rights and privileges “will remain prohibited” during the period of their suspension though the minutes of the meeting of the membership committee do not reflect such additional punishment. The other question that incidentally arises is as to whether Article 62 and the punishment meted out by the membership committee to the plaintiffs thereunder have the effect of dislodging the plaintiffs from their posts despite being elected thereto by the general body of the company.
43. Doubtless, the president continued to remain the president and two other plaintiffs continued on the general committee of the club notwithstanding the purported decision of the membership committee to prohibit the plaintiffs from using the club for a period of three months. But such aspect is academic since it has been found that the purported membership committee meeting of April 28, 2011 had not been validly convened and the notices issued to the plaintiffs were not in accordance with the command of Article 62. The plaintiffs have referred to three judgments for the proposition that in an appropriate case the civil court would have the authority to intervene in a matter pertaining to a club. The judgment reported at AIR 1963 SC 1144 (T.P. Daver v. Lodge Victoria No. 363, S.C. Belgaum) is cited for the principle recognised therein that in a matter of the present nature rules of the organisation have to be strictly followed and the power to take action against a member should be discharged in honesty and good faith. A Division Bench judgment of this court reported at AIR 1995 Cal 140 (Kalyan Kumar Dutta Gupta v. B.M. Verma) dealt with the expulsion of a member from an unincorporated members’ club.
44. However, the consideration in that case was whether the proceedings before the domestic forum were liable to be stayed since criminal proceedings founded on the same facts were pending. In another judgment reported at AIR 1999 Bom 133 (Capt. Kailash Nath Harsh v. D.C. Patel) the court found that the president of the concerned club had not acted bona fide. The defendant nos. 3 and 8 have referred to a judgment reported at (1970) 3 WLR 42 (Gaiman v. National Association for Mental Health) for the proposition that the principles of natural justice may not be applicable if the articles of a company limited by guarantee provide otherwise. However, as would be evident from Article 62 of the articles of association of defendant club, a delinquent is required to be issued notice and furnished the charges brought against him and he is further entitled to attend the membership committee meeting for the purpose of being heard.
45. The mandate of Article 62 appears, prima facie, to not having been complied with in the present case: both in the membership committee meeting of April 28, 2011 not having been convened according to the command of the article and in the notices issued to the plaintiffs not indicating the charges that had been brought by the requisitionists against them. As a consequence, the decision to prohibit the three plaintiffs from using the club for a period of three months is set aside. That would not imply, however, that the four contentious contracts entered into by the club at the behest of the plaintiffs have been validated. The majority decision of the general committee invalidating the relevant agreements is not interfered with.
46. In the light of the acts of impropriety levelled against the plaintiffs and the outstanding notices requiring membership committee meetings and extraordinary general meetings of the company to be convened (under Article 62 and Article 70, respectively) following the present controversy, it is deemed fit and proper that an extraordinary general meeting of the club be convened to be held within six weeks from date for the general body to consider whether any action is to be taken against any of the plaintiffs or any of the other general committee members.
47. The date and time of such meeting (to be held within six weeks from date) will be decided by the majority at a general committee meeting to be convened for such purpose within a week from date. The proposed resolutions and the explanatory statements for the extraordinary general meeting should be unbiased and state the two sides’ versions and reflect the spirit of this order. The President of the club will specify the date and time for the general committee meeting for such purpose. GA No. 1349 of 2011 is disposed of without any order as to costs.
48. Urgent certified photocopies of this judgment, if applied for, be supplied to the parties subject to compliance with all requisite formalities. (Sanjib Banerjee, J.)
49. Later : The appearing defendants pray for a stay of the operation of the order which is declined.