Permanent Building Management and Fund Committee Vs. Naraina Industries Asso. - Court Judgment

Excerpt:
a) it was held that the grant of injunction under rule 1 and 2 of order 39 of the civil procedure code, 1908, is discretionary and the persons seeking equity should not offend the sameb) the case dealt with an application under rule 1 and 2 of order 39 of the civil procedure code, 1908, for restraining the defendant from letting out the property - the delhi development authority had not allowed letting out of the property beyond forty per cent of the total area of the premises - the memorandum and article of association had also not permitted the defendant to let out the property - the court allowed the application of the plaintiff and the defendants were restrained from letting out the premises till the time the same could be permitted by the constitution - - attention was drawn also to the fact that in the plaint, as well as in the interim application, the prayer is that the defendant association be restrained from letting out any portion of the building of the association since it is only plaintiff no. 4. shri mukul rohtagi, learned senior counsel appearing for the defendants also contended that is that the circular mentioned by the plaintiff does not absolutely prohibit or ban leasing out the properties like the one in question and that in the past the delhi development authority has not objected to the letting out of the said property by the associatin.ordervikramjit sen, j.1. this application under order xxxix, rules 1 and 2 was filed along with the plaint praying inter alias that the defendants be restrained from letting out any portion of building of the association bearing no. a-5, narayana industrial area, phase-ii, new delhi. at the time of the arguments this was the only prayer pressed.2. it was contended by mr. v.k. makhija, learned senior counsel for the plaintiff that the power to let out these premises was not contained in the memorandum and articles of association of defendant no. 1. he submitted that in the defendant's application i.a. no. 980/1999 in para 7 it has been stated that plaintiff no.1 'went to the extent of recommending amendment to the memorandum of association to insert a clause for letting out of the building of the association,' and thereforee this assertion stands admitted by the defendants. he further submitted that at present, the dda did not allow the letting out of premises beyond 40% of the total area of the concerned property and that the intention of the narayana industrial area was to let out the basement, second and third floors which is almost 60% of the total property. a circular dated 8.7.1996 of the dda was relied upon. a further grievance was made by the plaintiff that the constitution envisaged that the members of the association should not exceed 27 including the coopted members but in the present executive committee of the defendant there are 41 members which includes 10 co-opted members as against the permissible limit of 5 members.3. on behalf of the defendants, it has also been urged that plaintiff no.1 is not a legal entity and cannot maintain the suit and, thereforee, the plaint ought to be rejected. attention was drawn also to the fact that in the plaint, as well as in the interim application, the prayer is that the defendant association be restrained from letting out any portion of the building of the association since it is only plaintiff no.1 who is entitled to do so as per rule 8 of the constitution. the argument was that if plaintiff no.1 could claim to let out the premises, even in the face of the manifold objection raised in the plaint, then restraint orders ought not to be granted against the defendants; the plaintiff should not be allowed to approbate and reprobate and should be held bond by its ipse dixit.4. shri mukul rohtagi, learned senior counsel appearing for the defendants also contended that is that the circular mentioned by the plaintiff does not absolutely prohibit or ban leasing out the properties like the one in question and that in the past the delhi development authority has not objected to the letting out of the said property by the associatin. it was further submitted that various associations have let out similar properties without any objection having been raised by the dda. it was further stressed by learned counsel for the defendants that in the past plaintiff no. 2, had executed a lease deed between the defendant association and m/s. pearl agency, on the strength of a resolution dated 3rd february, 1998.5. there is no doubt that plaintiff no.1 is not a legal entity and there may be legal justification for even striking it out from the array of the parties. this could not have the consequence of rejection of the plaint since plaintiff no. 2 is a natural person and is admittedly a member of the defendant association. it cannot be gainsaid that he is precluded from agitating the points that are in issue in the present suit. 6. defendant no. 1, however, is a legal entity, having been duly registered under the societies registration act, on october 18, 1973. having been so incorporated it must act within the parameters and powers of its own constitution. the rigid and inviolable rigours of the principle of intravires and ultravires acts would be equally applicable to the defendant association/society as it would be to a company registered under the companies act. courts has assidously struck down or restrained actions taken by such persons where these actions do not have the sanction contained in the objects clause in its memorandum. it is no doubt true that courts must be extremely slow and shy from interfering in the internal affairs and management of a legallly constituted body. however, where the internal affairs of society are being conducted in a manner which is not envisaged or permitted by its own constitution, courts are duty bound to restrain such acts.7. there is considerable force in the defendant's argument that if the plaintiff no. 2 can claim power to let out the premises then he cannot be permitted to challenge the power of the defendant. grant of an injunction is in the realm of discretion and it has been repeatedly expressed and emphasised that those seeking equity must not themselves transgress it. thereforee, in the view which i have taken, it appears unassailable that if the defendant is precluded from letting out the premises this embargo will also visit plaintiff no. 2. i would have also thought it proper and appro-priate to decline the injunction on the ground that the plaintiffs had in the past let out the premises themselves. perhaps, what was let out in the past did not constitute more than 40% of the association's premises. knowing that the constitution did not envisaged the letting out of its premises, the plaintiffs are equally guilty of having violated it, and being so guilty could not be heard to oppose the proposed action of the defendant. it is obviously not the plaintiff's case that a mistake had occurred in the past which ought not to be repeated. the plaintiffs are themselves praying that if the premises have to be let out, it must be let out only by them. undoutedly, plaintiff no. 2 is now aggrieved at by being left out in the cold, since the parent body has now assumed the control over the decision taking.8. on a consideration of all the contentions raised before me i am of the view that whilst plaintiff no. 2 has no locus standi to challenge the decision of the defendant since he is a member of one of its sub-committees, the defendants cannot act in violation of its constitution. till such time as its memorandum & articles of association do not contain powers to let out its property, the defendant shall injuncted from taking any such action.9. in conclusion thereforee the plaintiff's application under order xxxix, rule 1 & 2 is accepted and the defendants are restrained from letting out the premises in question till such time its constitution permits such letting out. for the same reasons the defendants application being i.a. no. 980/99 seeking permission for letting out the premises is rejected.10. both the applications are disposed of with no order as to costs.

Judgment:
ORDER

Vikramjit Sen, J.

1. This application under Order XXXIX, Rules 1 and 2 was filed along with the plaint praying inter alias that the Defendants be restrained from letting out any portion of building of the Association bearing No. A-5, Narayana Industrial Area, Phase-II, New Delhi. At the time of the arguments this was the only prayer pressed.

2. It was contended by Mr. V.K. Makhija, learned Senior Counsel for the Plaintiff that the power to let out these premises was not contained in the Memorandum and Articles of Association of Defendant No. 1. He submitted that in the Defendant's application I.A. No. 980/1999 in para 7 it has been stated that Plaintiff No.1 'went to the extent of recommending amendment to the Memorandum of Association to insert a clause for letting out of the building of the Association,' and thereforee this assertion stands admitted by the Defendants. He further submitted that at present, the DDA did not allow the letting out of premises beyond 40% of the total area of the concerned property and that the intention of the Narayana Industrial Area was to let out the Basement, second and third floors which is almost 60% of the total property. A circular dated 8.7.1996 of the DDA was relied upon. A further grievance was made by the Plaintiff that the Constitution envisaged that the members of the Association should not exceed 27 including the coopted members but in the present Executive Committee of the Defendant there are 41 members which includes 10 co-opted members as against the permissible limit of 5 members.

3. On behalf of the Defendants, it has also been urged that Plaintiff No.1 is not a legal entity and cannot maintain the suit and, thereforee, the plaint ought to be rejected. Attention was drawn also to the fact that in the Plaint, as well as in the Interim Application, the prayer is that the Defendant Association be restrained from letting out any portion of the building of the Association since it is only Plaintiff No.1 who is entitled to do so as per Rule 8 of the Constitution. The argument was that if Plaintiff No.1 could claim to let out the premises, even in the face of the manifold objection raised in the plaint, then restraint orders ought not to be granted against the Defendants; the Plaintiff should not be allowed to approbate and reprobate and should be held bond by its ipse dixit.

4. Shri Mukul Rohtagi, learned Senior counsel appearing for the Defendants also contended that is that the Circular mentioned by the Plaintiff does not absolutely prohibit or ban leasing out the properties like the one in question and that in the past the Delhi Development Authority has not objected to the letting out of the said property by the Associatin. It was further submitted that various Associations have let out similar properties without any objection having been raised by the DDA. It was further stressed by learned counsel for the Defendants that in the past plaintiff No. 2, had executed a Lease Deed between the Defendant Association and M/s. Pearl Agency, on the strength of a Resolution dated 3rd February, 1998.

5. There is no doubt that Plaintiff No.1 is not a legal entity and there may be legal justification for even striking it out from the array of the parties. This could not have the consequence of rejection of the plaint since plaintiff No. 2 is a natural person and is admittedly a member of the Defendant Association. It cannot be gainsaid that he is precluded from agitating the points that are in issue in the present suit.

6. Defendant No. 1, however, is a legal entity, having been duly registered under the Societies Registration Act, on October 18, 1973. Having been so incorporated it must act within the parameters and powers of its own Constitution. The rigid and inviolable rigours of the principle of intravires and ultravires acts would be equally applicable to the Defendant Association/Society as it would be to a company registered under the Companies Act. Courts has assidously struck down or restrained actions taken by such persons where these actions do not have the sanction contained in the Objects clause in its Memorandum. It is no doubt true that Courts must be extremely slow and shy from interfering in the internal affairs and management of a legallly constituted body. However, where the internal affairs of society are being conducted in a manner which is not envisaged or permitted by its own Constitution, Courts are duty bound to restrain such acts.

7. There is considerable force in the Defendant's argument that if the Plaintiff No. 2 can claim power to let out the premises then he cannot be permitted to challenge the power of the Defendant. Grant of an injunction is in the realm of discretion and it has been repeatedly expressed and emphasised that those seeking equity must not themselves transgress it. thereforee, in the view which I have taken, it appears unassailable that if the Defendant is precluded from letting out the premises this embargo will also visit Plaintiff No. 2. I would have also thought it proper and appro-priate to decline the injunction on the ground that the Plaintiffs had in the past let out the premises themselves. Perhaps, what was let out in the past did not constitute more than 40% of the Association's premises. Knowing that the Constitution did not envisaged the letting out of its premises, the Plaintiffs are equally guilty of having violated it, and being so guilty could not be heard to oppose the proposed action of the Defendant. It is obviously not the Plaintiff's case that a mistake had occurred in the past which ought not to be repeated. The plaintiffs are themselves praying that if the premises have to be let out, it must be let out only by them. Undoutedly, Plaintiff No. 2 is now aggrieved at by being left out in the cold, since the parent body has now assumed the control over the decision taking.

8. On a consideration of all the contentions raised before me I am of the view that whilst Plaintiff No. 2 has no locus standi to challenge the decision of the Defendant since he is a member of one of its sub-committees, the Defendants cannot act in violation of its Constitution. Till such time as its Memorandum & Articles of Association do not contain powers to let out its property, the Defendant shall injuncted from taking any such action.

9. In conclusion thereforee the Plaintiff's application under Order XXXIX, Rule 1 & 2 is accepted and the Defendants are restrained from letting out the premises in question till such time its Constitution permits such letting out. For the same reasons the Defendants application being I.A. No. 980/99 seeking permission for letting out the premises is rejected.

10. Both the applications are disposed of with no order as to costs.