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1981 DIGILAW 310 (KER)

COMMONS CLUB v. P. M. MATHEW

1981-11-24

P.SUBRAMONIAN POTI, SUKUMARAN

body1981
Judgment :- 1. Commons Club, Kanjirappally, like many of its ilk had laudable objectives to wit: promotion of fine arts and sports, propagation of knowledge, encouragement of physical and mental activities and the like. Founded in the year 1954, it appears to have a period of inaction for some time. Active functioning was resumed by about 1966. A new set of officebearers was elected in March, 1969. Soon thereafter there appeared to have arisen some unfortunate dissatisfaction among a section of the members about the manner of functioning of the 1st defendant -Secretary. In the wake of certain allegations, the Secretary resigned from the office on 14 71969. That apparently did not abate the already ignited ill feelings against him on the part of the dissident members. This led to the institution of the present suit by one among the members of the Governing Body of the Club. Though the plaintiff could have been described in a better and more accurate form in the plaint, we are of the view that in substance and in effect, it is one instituted by a member of the Club, on behalf of the numerous members of that Club having the same interest. It was averred in the plaint that a final settlement of accounts in respect of the financial transactions during the time the Ist defendant was functioning as the Secretary of the Club was necessary and that a decree should be passed against him. A petition under Order I, R.8 of of the Code of Civil Procedure was also filed, supported by an affidavit giving the reasons justifying the invocation of the provisions of that Order. This was duly considered by the court and the prayer was ultimately granted. Pursuant to this, publications as envisaged under that Rule were effected. 2. Various contentions were raised by the defence. However, having regard to the limited nature of the questions raised in the second appeal, it is unnecessary to refer to all of them. The maintainability of the suit on behalf of the Club was one of the important and fundamental contentions so raised. The exact period for which liability could be fastened on the 1st defendant was another. However, having regard to the limited nature of the questions raised in the second appeal, it is unnecessary to refer to all of them. The maintainability of the suit on behalf of the Club was one of the important and fundamental contentions so raised. The exact period for which liability could be fastened on the 1st defendant was another. The latter question arose when the plaintiff contended that the period for which rendition of accounts was to be made by the 1st defendant projected back to a period commencing from 1966 where be was effectively carrying out the functions of the Secretary of the Club, though not eo nomine elected as the Secretary of the Club. 3. The trial court held that the suit is maintainable, and that pw.1 who signed the plaint was competent to sue, particularly having regard to the attitude of deliberate recalcitrance shown by the 2nd defendant-President and certain other members of the Managing Committee to institute a suit against the 1st defendant. The court also referred to the notice under Order T, R.8 issued with the permission of the court The liability of the 1st defendant for the rendition of accounts was also found to exist, despite his contention to the contrary. The quantification of the liability was relegated to the final decree proceedings. A preliminary decree in terms of Para.37 of its judgment was thus passed by the trial court. 4. The 1st defendant carried the matter in appeal The contentions referred to earlier were agitated before the appellate court also. The appeal was allowed by the Court below holding that the suit was not maintainable. The basis of its judgment was the assumption that the person who signed the plaint had no right to represent the Club. According to the appellate court, the plaintiff could file the suit but the Club had to be made party defendant. It took the view that Ext. P1 byelaws of the Club held the field and that thereunder only the President could represent the Club in a suit. The fact that the treasurer and the members of various committees had not been impleaded was also noted by that court. It took the view that Ext. P1 byelaws of the Club held the field and that thereunder only the President could represent the Club in a suit. The fact that the treasurer and the members of various committees had not been impleaded was also noted by that court. As regards the period for which the 1st defendant was to be made liable, the court below took the view that there was no liability to account for, both as regards the period prior to 23-3-1969 (the date when 1st defendant was elected as the Secretary) and the period between 23-3-1969 to 14-7-1969 (when the Ist defendant's resignation from the post was accepted). For the period prior to 23-3-1969, according to the appellate court, the 1st defendant could not be termed as the Secretary even though be had attended to the correspondence as Secretary, in a situation in which'all the office-bearers abdicated their responsibility In respect of the latter period, according to the court below, the accounts were to be written by a treasurer under the byelaws and that excluded liability on the part of the Secretary unless there existed an express authorisation in favour of the Secretary to deal with the financial transactions and act on behalf of the Club in respect of such matters. 5. This second appeal is preferred against the judgment of the lower appellate court. 6. The main question relates to the maintainability of the suit, which in turn depends on the proper interpretation of Order I R.8, CPC. and its application to the facts of the case. 7. The matter was argued before a learned single judge, Justice P. C. Balakrishna Menon. The learned judge felt that there was a conflict of judicial views on this question, one expressed by Sankaran, J. (as His Lordship then was), while rendering the decision in Narayanan Nambudiri v. Kurichithanam Educational Society, 1957 KLT. 932= AIR. 1959 Kerala 379, and the other by the Nagpur High Court in The G. I. P. Railway Senior Institute, Ajni, Nagpur and another v. Mohit Kumar Barat, AIR. 1954 Nagpur 29. The learned judge felt that the suit was instituted by an unregistered Club, and therefore it could not even apply for and obtain permission as provided under Order I, R.8. In that view of the matter it was further felt that the decision taking a contrary view in 1957 KLT. 932= AIR. 1954 Nagpur 29. The learned judge felt that the suit was instituted by an unregistered Club, and therefore it could not even apply for and obtain permission as provided under Order I, R.8. In that view of the matter it was further felt that the decision taking a contrary view in 1957 KLT. 932= AIR. 1959 Kerala 379 required reconsideration It is pursuant to this order of reference made on 16-10-1980 that the second appeal has come up for reconsideration before this Bench. Indubitably, the question, is one of general importance and of frequent recurrence, particularly having regard to the phenomenal increase in the number of the Clubs organised at different levels and by different sections of the society Dr. Milla Alihan is perhaps right when she observed: "Membership in a prestigious club in town is not only a status-plus for a young executive but also a convenience: a pied-a'-terre to entertain business associates, or arrange an overnight stay for an out of tour visitor." (See -Corporate Etiquette by Dr Milla Alihan, Canadian Edition of 1974, page 110). That two Chapters of her interesting and popular book have been devoted to club life, is perhaps an index of the popularity and importance of clubs in the modern social life. 8. Before we refer to the conflict in the judicial opinion on this topic, it is desirable to read the statutory provision contained in Order I, R.8 (1) which is in the following terms: "8. One person may sue or defend on behalf of all in same interest. (1) Where there are numerous persons having the same, interest in one suit, (a) one or more of such persons may, with the permission of the Court, sue or be sued or may defend such suit, on behalf of, or for the benefit of, all persons so interested; (b) the Court may direct that one or more of such persons may sue or be sued, or may defend such suit, on behalf of or for the benefit of, all persons so interested." 9. This rule, as Megarry. J. termed the corresponding rule of the Supreme Court Order 15 R.12, is "but a flexible tool of convenience in the administration of justice". (See John v. Rees and Others, (1970)1 Ch. 345 at p. 370). This rule, as Megarry. J. termed the corresponding rule of the Supreme Court Order 15 R.12, is "but a flexible tool of convenience in the administration of justice". (See John v. Rees and Others, (1970)1 Ch. 345 at p. 370). The wisdom behind it was indicated by Lord Eldon when he said nearly two centuries back in Cockburn v. Thompson, 16 Ves. Jun. 321: " -The strict rule' was that all persons materially interested in the subject of the suit, however numerous, ought to be parties ...but that being a general rule established for the convenient administration of justice must not be adhered to in cases to which consistently with practical convenience it is incapable of application. It was better to go as far as possible towards justice than to deny it altogether " Lord Eldon was quoted a century back in the classic statement made by Lord Macnaghten in Bedford (Duke of) v. Ellis. (1901) A.C. 1, the relevant portion of which may usefully he extracted in this connection: "The old rule in the Court of Cnancery was very simple and perfectly well understood. Under the old practice the court required the presence of all parties interested in the matter in suit in order that a final end might be made of the controversy. But when the parties were so numerous that you never could 'come at justice', to use an expression in one of the older cases, if everybody interested was made a party, the rule was not allowed to stand in the way. It was originally a rule of convenience: for the sake of convenience it was relaxed. Given a common interest and a common grievance, a representative suit was in order if the relief sought was in its nature beneficial to all whom the plaintiff proposed to represent." 10. As regards the application of the provisions of Order I, R.8, CPC. to a club, there could not be much difficulty if we understand the nature and functioning of a club as understood in law. 11. As Daly puts it, "the word 'Club' means 'essentially an association of individuals in a way that involves to some degree the factors of free choice (which connotes a power of exclusion), permanence, corporate identity and the pursuit as a common aim of some joint interest other than the acquisition of gain ". 11. As Daly puts it, "the word 'Club' means 'essentially an association of individuals in a way that involves to some degree the factors of free choice (which connotes a power of exclusion), permanence, corporate identity and the pursuit as a common aim of some joint interest other than the acquisition of gain ". With reference to the term'corporate identity' referred to above, the author has hastened to caution in his note as follows: "Not to be confused with corporate status: a club may be a corporate body, but may also be an unincorporated association." (See Daly's Club Law, Seventh Edition, P.1) The fact that the objects of a club should be immune from every taint of com-merciality, had been emphasised in the decision in Inland Revenue Commissioners v Westleigh Estates Company Limited, (1924)1 K.B 390 at p. 421, while dealing with the features of the Eccentric Club, Limited. Halsbury's Laws of England conveys the same idea when it defines 'club' as "a society of persons associated together, not for the purposes of trade, but for social reasons, the promotion of politics, sport, art, science or literature, or for any other lawful purpose". (See Halsbury's Laws of England, Volume 6 page 56). "An unincorporated members' club, not being a partnership or legal entity, can neither sue nor be sued in the club name". This statement of law in Daly's Club Law occuring at page 42 is well supported by the observation of Lord Buckmaster in London Association for Protection of Trade v Greenlands, Ltd., (1916) 2 A. C. 15. Halsbury's Laws of England also deals with this aspect at page 88, para 279 in the following terms: "An unincorporated members' club, not being a partnership or legal entity, cannot sue or be sued in the club name..." This, however, does not mean that what is termed as representation orders in the rules of the Supreme Court as it obtained in the United Kingdom are not available in respect of actions relating to Clubs. For, "where all the members of the club have the same interest, proceedings may be started by or against one or more members in a representative capacity. In such an action against a club the court may on the application of the plaintiff make a representation order adding other members as further representatives. For, "where all the members of the club have the same interest, proceedings may be started by or against one or more members in a representative capacity. In such an action against a club the court may on the application of the plaintiff make a representation order adding other members as further representatives. Judgment may be given in such an action against all members of the club but the leave of the court must be obtained for enforcement against members who were not nominal parties to the suit". See Daly's Club Law, P. 42) And the same idea is expressed in Halsbury's Laws of England in the self-same Para.279 in the following words: "Where numerous persons have the same interest in the proceedings, the proceedings can be begun and, unless the court orders otherwise, continued by or against one or more of the club members as representatives of the other members or some of them." 12. The question whether one member of an unincorporated association could sue or be sued on behalf of that association, was considered more than two decades back by Sankaran, J., as he then was, in the decision to which reference has already been made, Narayanan Nambuduri v. Kurichitha-nam Educational Society, 1957 KLT. 932. Unaided (and perhaps uninhibited by precedents), the learned judge, with his characteristic incisive analysis, summed up the position in the following words: "It is pointed out that the plaintiff in the suit is the Kurichithanam Educational Society which is an unregistered society and that such an unregistered society is not a juridical person and cannot figure as a plaintiff. Even though the society is described as the plaintiff the individual claiming to be its present President has brought forward the suit as its representative. Since the society is itself an unregistered one, the individual claiming to be its President cannot represent the society and maintain the suit on behalf of the society. It is for curing that defect that the said individual has applied for the sanction of the court under Order I, R.8 to institute the suit for and on behalf of the society. With the issue of such sanction, the defect in the frame of the suit stands remedied. After the publication of the notice as directed by the lower court, the suit will be treated as a suit instituted with the sanction under Order I, R.8." 13. With the issue of such sanction, the defect in the frame of the suit stands remedied. After the publication of the notice as directed by the lower court, the suit will be treated as a suit instituted with the sanction under Order I, R.8." 13. The above statement, in our opinion, encapsulates the correct law on the point. 14. The learned judge had earlier referred to the requirements for a sanction under Order I, R.8, namely, the existence of numerous persons interested in the suit and the necessity of such interest to be same or similar. It is a matter of discretion for the court to decide in a given case whether the number of persons having the same interest is so large as could be said to be 'numerous'. A discretion exercised by court in that behalf is seldom disturbed in a revisional jurisdiction. 15. The discordant note on this question is the one recorded by the decision of the Nagpur High Court in The G. I P. Railway Senior Institute, Ajni, Nagpur and another v. Mohit Kumar Barat. AIR. 1954 Nagpur 29, reference to which has been made by our learned brother, P. C. Balakrishna Menon, J. in the order of reference. However, the ratio of the decision has not commended itself for acceptance either in that court or other jurisdictions. The latest case which had specifically referred to the judicial decisions on the point and expressly dissented from and disapproved of the dictum in Nagpur decision is the one reported in Saran Club v. Chandradeo Theosophical Lodge, AIR. 1974 Patna 158. 16. A Division Bench of the Madhya Pradesh High Court in Saraf and Swarnkar Samiti, Marar and others v. Munnal Lal and others, AIR. 1973 M.P. 216, analysing the object behind the enactment of Order I, R.8 stated as follows: "The rule is enacted to avoid inconvenience and delay in the hearing of a suit where the parties are numerous but have the same interest in the suit, and, therefore, it must be liberally construed in order to achieve the purpose of the rule." After referring to the decision in Kodia Goundar v. Velandi Goundar, AIR. 1955 Madras 281, the analysis of Order I, R.8 was given by that court in paragraph H of the judgment, which may, with advantage, be extracted: "If we carefully analyse the provisions of Order I, R.8 of the Code of Civil Procedure it would appear from the words 'sue or be sued or defend' occurring therein that it gives option to the plaintiff on the one hand to sue some of the defendants in their representative capacity as representing the interest of the whole body. On the other hand if the plaintiff chooses to implead large number of persons having the same interest in the suit it gives option to some of the defendants to seek permission to defend on behalf of or for the benefit of all." 17. The ruling of the Nagpur High Court in The G. I. P. Railway Senior Institute's case, AIR. 1954 Nagpur 29, was then referred to and discussed; the Division Bench expressed its dissent in the following words: "With great respect, we must observe that we are unable to agree with the view expressed in G. I. P. Railway, Senior Institute v. Mohit Kumar, AIR. 1954 Nag. 29, that Order I, R.8 of the Code of Civil Procedure would apply only where there is a properly constituted suit before the court." 18. We agree with the analysis of the content of Order I, R.8 by the Division Bench of the Madhya Pradesh High Court and the conclusions reached by it in the context of a suit instituted against a Samithi which was not a juristic person. It may also be noted that this decision had referred to the conflict of views between the G. I P Railway Senior Institute's case, AIR. 1954 Nagpur 29. and the unreported decision of the same court in Municipal Council, Shivpuri v. Sugar Dealers' Association, Civil Revision No. 26 of 1968 The question was considered by the Division Bench of the Madhya Pradesh High Court on an express reference made to the Division Bench by the Chief Justice before whose notice the difference of views had been brought 19. and the unreported decision of the same court in Municipal Council, Shivpuri v. Sugar Dealers' Association, Civil Revision No. 26 of 1968 The question was considered by the Division Bench of the Madhya Pradesh High Court on an express reference made to the Division Bench by the Chief Justice before whose notice the difference of views had been brought 19. In the light of the foregoing discussion, it is unnecessary to refer to the large number of other decisions cited at the Bar for the proposition that in situations such as the present one, a permission under Order I, R.8 is one which the court can grant and that the effect of a grant of such permission would be to cure the defect in the frame of the suit which would have otherwise existed having regard to the fact that the Club is not a juristic person. We, therefore, hold that the law laid down by this court in Narayanan Nambudiri's case, 1957 KLT. 932, represents the correct legal position and that The G.I P. Railway Senior Institute's case, AIR 1954 Nagpur 29, is wrongly decided. 20. The further but subsidiary question which remains to be considered in this case relates to the period of accountability as regards the Secretary. The plaint in the present case, on a proper reading of the same, seeks to make the 1st defendant liable only from the time he became the Secretary of the Club. The general statements in the plaint do not seek to make him liable for any anterior period, on the ground that he was the de facto Secretary of the Club. The learned Munsiff took the view that the 1st defendant was liable to account for this period also, on the reasoning that the 1st defendant acted as if he was having the full responsibility and liability to account for the receipts and expenditure even during that period. The liability of the Ist defendant can arise only if there had been proper pleadings by which the basis of such a liability is cast on the 1st defendant As stated earlier, the averments in the plaint do not seek to make the 1st defendant liable for any period anterior to his assumption of office as Secretary of the Club. The liability of the Ist defendant can arise only if there had been proper pleadings by which the basis of such a liability is cast on the 1st defendant As stated earlier, the averments in the plaint do not seek to make the 1st defendant liable for any period anterior to his assumption of office as Secretary of the Club. In that view of the matter we hold that the decree of the trial court shall be modified to the extent that the liability of the 1st defendant to render accounts shall be restricted to the period subsequent to his becoming the Secretary and until he resigned that post. 21. The actual liability on the part of the 1st defendant, will be determined in the final decree proceedings. 22. The second appeal is accordingly allowed to the extent indicated above. We direct the parties to bear their respective costs. Allowed.