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2024 DIGILAW 1169 (CAL)

Cardiological Society of India v. Sunip Banerjee being the Secretary of Cardiological Society of India, West Bengal Branch

2024-06-21

HIRANMAY BHATTACHARYYA, T.S.SIVAGNANAM

body2024
JUDGMENT : Hiranmay Bhattacharyya, J. 1. This intra Court appeal is at the instance of the Cardiological Society of India (for short “CSI”) and its Secretary and is directed against an order dated 10.05.2024 passed by a learned Single Judge in WPA 11057 of 2024. 2. By the order impugned, the writ petition was allowed on contest and the respondent bank was directed to immediately defreeze the accounts in question and the writ petitioners/first respondent herein was permitted to operate the accounts fully. 3. The facts giving rise to this appeal in a nut shell are as follows. The petitioner claims to be the Secretary of Cardiological Society of India – West Bengal Branch (for short “West Bengal Branch”). One general member filed a suit for declaration and injunction against the West Bengal Branch before the learned Civil Judge (Senior Division), Sealdah being Title Suit no. 120 of 2023. In connection with the said suit an application for temporary injunction was filed and an order dated 13.04.2023, which was subsequently modified on 18.04.2023, was passed thereby restraining the West Bengal Branch from holding Special General Body Meeting on 22.04.2023. The said orders dated 13.04.2023 and 18.04.2023 were set aside by the Hon’ble Division Bench of this Court by an order dated 06.03.2024 in FMA 564 of 2023. Thereafter, a letter dated 05.03.2024 was issued by the second appellant herein intimating the 5th respondent herein about the suspension of the members of the executive committee of the West Bengal Branch with a direction upon the 5th respondent herein to stop the operation of the accounts of the West Bengal Branch. The respondent bank restrained the writ petitioner from operating the accounts of the West Bengal Branch maintained at their branches. Challenging the action of the respondent bank of freezing the bank accounts of the West Bengal Branch, the 1st respondent herein filed the writ petition. 4. In connection with the said writ petitions an application being CAN 1 of 2024 was filed by the first respondent praying for an order to allow him to operate the accounts maintained at the MCC branch of the State Bank of India till the disposal of the writ petition. 5. 4. In connection with the said writ petitions an application being CAN 1 of 2024 was filed by the first respondent praying for an order to allow him to operate the accounts maintained at the MCC branch of the State Bank of India till the disposal of the writ petition. 5. The said application along with the writ petition were taken up for hearing and the learned Single Judge by an order dated 10.05.2024 allowed the writ petition, thereby quashing the decision of the bank to freeze the accounts in question with a direction upon the bank to immediately defreeze the said accounts and permitted the first respondent herein to operate the accounts fully. 6. Being aggrieved by the said order, CSI and its secretary has approached this Court. 7. The appellants have filed an application for stay of the order passed by the learned Single Judge which is impugned in this appeal. The case made out by the appellants in the stay application is summarised hereunder as follows. 8. The West Bengal Branch applied for holding the 75th annual conference in December, 2023 in Kolkata. The executive committee of the Central CSI accepted and placed the names of the Organising Secretary and the Organising Chairman proposed by the West Bengal Branch to host the 75th Annual Conference in the year 2023 at Kolkata before the general body. At a meeting held by the general body of the CSI, Organising Secretary and Chairman of the Organising Committee of the 75th annual conference were appointed. An organising committee was formed under the leadership of the Organising Secretary and Organising Chairman from the members of the West Bengal Branch which was ratified in the General Body Meeting of the West Bengal Branch on December 18, 2021. Thereafter, the office bearers of the West Bengal Branch appointed an Organising Secretary and a Joint Organising Secretary for the purpose of 75th Annual Conference. Alleging that such purported appointments of Organising Secretary and a Joint Secretary by the West Bengal Branch to be wrongful and illegal and contrary to the articles of the constitution of CSI, the CSI through its secretary filed a suit for declaration and injunction before the learned Civil Judge (Senior Division) at Sealdah which was registered as Title suit no. 49 of 2023. 49 of 2023. The learned Civil Judge (Senior Division) at Sealdah by an order dated 24.02.2023 and a subsequent order dated 16.03.2023 restrained the Organising Secretary and the Joint Organising Secretary appointed by office bearers of the West Bengal Branch from acting in such capacities in the 75th Annual Conference. 9. Thereafter, the executive committee received a purported notice dated 01.04.2023 from the office bearers of the West Bengal Branch for convening a Special General Meeting on 22.04.2023. The said notice was challenged by one Dr. Dhurjati Prasad Sinha who was appointed as the Organising Secretary in the 75th Annual Conference by filing a suit for declaration and injunction before the learned Civil Judge (Senior Division) at Sealdah which was registered as title suit no. 120 of 2023. The learned Civil Judge (Senior Division) at Sealdah, by an order dated 13.04.2023, which was subsequently modified on 18.04.2023, restrained the defendants therein from permitting any member of the society from holding any Special General Body Meeting scheduled to be held on 22.04.2023. Purported resolution was passed in the Special Annual General Meeting held on 22.04.2023, thereby dissolving the organising committee of the 75th Annual Conference 2023 including its office bearers. Alleging that the first respondent herein along with six others have acted in violation of the provisions of the constitution of the society and also acted prejudicially to the interest of the society, the executive committee of the CSI resolved to suspend the first respondent herein along with six others from the post or activities of the parent body and its branches with effect from 06.12.2023. The accounts in question are in the name of the West Bengal Branch and the same are only operated by the office bearers of the West Bengal Branch with its authorization. As such during the subsistence of the order of suspension, the suspended office bearers like the first respondent has no right to operate the Bank Accounts of the West Bengal branch. 10. Mr. Mainak Bose, learned advocate appearing for the appellants submitted that CSI is the parent body and as per the constitution of CSI, the CSI branches are under the administrative control of the parent body. 10. Mr. Mainak Bose, learned advocate appearing for the appellants submitted that CSI is the parent body and as per the constitution of CSI, the CSI branches are under the administrative control of the parent body. He submitted that the parent body appointed the Organising Secretary and the Chairman of the Organising Committee of the 75th Annual Conference and an Organising Committee was formed which was ratified in the General Body Meeting of the West Bengal Branch on 18.12.2021. He submitted that the appointment of the Organising Secretary and a Joint Organising Secretary for the purpose of 75th Annual Conference by the office bearers of the West Bengal Branch were illegal and contrary to the constitution of the parent body. He further submitted that the purported resolution adopted in the Special Annual General Meeting held on 22.04.2023 was in violation of the order of injunction passed in Title suit no. 120 of 2023. He submitted that since the first respondent along with six others acted in violation of the provisions of the constitution of the society and also acted prejudicially to the interest of the society, the executive committee of the society suspended the first respondent along with six others from the post and activities of the parent body and its branches with effect from 06.12.2023. He submitted that the suspended office bearers cannot be allowed to operate the bank accounts standing in the name of the West Bengal Branch as there is a chance of siphoning funds from the bank accounts in question at the instance of the first respondent and other suspended office bearers. He concluded by submitting that the first respondent as well as other suspended officer bearers should not be allowed to operate the bank accounts of the West Bengal Branch. 11. Mr. Kar learned Senior Counsel representing the first respondent seriously disputed the submission of the learned advocate for the appellant. He contended that the writ petition was filed by the respondent herein challenging the action of the State Bank of India by which the accounts of the West Bengal Branch maintained at the MCC branch of the State Bank of India were debit freezed. By placing reliance upon a decision of the co-ordinate bench in FMA 74 of 2020 in the case of Rina Habiba vs. The Bank of India and Ors., order passed on 07.01.2020, Mr. By placing reliance upon a decision of the co-ordinate bench in FMA 74 of 2020 in the case of Rina Habiba vs. The Bank of India and Ors., order passed on 07.01.2020, Mr. Kar highlighted the circumstances for which an account may be debit freezed by a bank. He submitted that the circumstances for which debit freezing of a bank account may be permitted are totally absent in the case on hand. He submitted that the authorities of the bank exceeded their jurisdiction in proceeding to debit freeze the account of the West Bengal Branch merely on the strength of a letter/complaint made by some interested parties without any order of any adjudicatory forum. In support of such contention he also placed reliance upon a judgment of a learned Single Judge delivered on 17.05.2023 in WPA 8041 of 2023 in the case of M/s. Modello Ventures LLP vs. The Indian Indian Overseas Bank and Ors. Mr. Kar submitted that the West Bengal Brach is an independent registered society and having its own constitution and the executive committee was constituted by an election process. He submitted that though the first appellant is the parent body but the same does not have any financial control over the West Bengal Branch and, therefore, the operation of the bank account of the West Bengal Branch cannot be controlled and/or regulated by the appellant society. He further submitted that the decision to suspend the first respondent from the post and activities of Central and State branches of CSI contained in the letter dated 06.12.2023 is illegal, void and without jurisdiction. He submitted that the Title suit no. 120 of 2023 was filed without impleading the first respondent or any of the executives of the West Bengal Branch as a party therein. He also submitted that the orders dated 13.04.2023 and 18.04.2023 in Title suit no. 120 of 2023 were passed behind the back of the respondent. He submitted that the said orders were ultimately set aside by the Hon’ble Division Bench of this Court by an order dated 06.03.2024 in FMAT 564 of 2023. He, therefore, submitted that since the order of injunction passed on 13.04.2023, and subsequently modified on 18.04.2023, were ultimately set aside by this Hon’ble Court, the orders of suspension of the first respondent along with six others are without any basis. He, therefore, submitted that since the order of injunction passed on 13.04.2023, and subsequently modified on 18.04.2023, were ultimately set aside by this Hon’ble Court, the orders of suspension of the first respondent along with six others are without any basis. He submitted that since the action of the respondent bank in debit freezing the account of the West Bengal Branch was the only issue in the writ petition and the learned Single Judge passed the order after taking into account the settled proposition of law, no interference is called for by this Court in an intra court appeal. 12. Heard the learned advocates for the parties and perused the materials placed. 13. CSI is a society registered under the Societies Registration Act XXI of 1961 and its aims and objectives are advancement of scientific knowledge and research in relation to the Cardiovascular system in all its aspects to improve the basic understanding and to find better preventive measures and treatment of all types of Cardiovascular diseases. 14. The constitution of CSI provides that for furthering the aims and objectives of the society, branches of the society may be formed in any place where there are at least 25 members present provided that is sponsored by the local members and approved by the executive committee. It was further provided that the branches shall be governed by the rules of the society. 15. Article VII of the Constitution provides that all CSI branches (city and state branches) shall be under the administrative control of the parent body and the branches must follow the Constitution of the CSI with regard to membership, elections, functions of the office bearers and aims and objectives. It was further provided that each branch should have its own articles of association and rules and regulations registered with the Registrar of societies. It was further provided that each branch should have its own bank account and the branches shall enjoy complete financial autonomy with regard to funds collected by them. However, wherever a large capital expenditure of more than 5 lakhs is contemplated, prior permission of the headquarter should be obtained. 16. Article VIII deals with conferences. It provides that an annual scientific conference shall be held every year by the society and the executive committee shall appoint Scientific Committee Chairman for organising the scientific program for the annual conference who shall be the President Elect. 16. Article VIII deals with conferences. It provides that an annual scientific conference shall be held every year by the society and the executive committee shall appoint Scientific Committee Chairman for organising the scientific program for the annual conference who shall be the President Elect. It has been further provided therein that 33% of the net profit of the conference shall go to the central CSI Fund. The accounts of the conference should be audited promptly by an accredited chartered accountant at the local level. The audited account should be submitted to the Honorary General Secretary of CSI within one year of the conclusion of the conference. If necessary, the executive committee should decide to get those accounts verified by other auditors or committee itself and finally, the account should be submitted to the general body for approval. 17. CSI West Bengal Branch is a society registered under the West Bengal Societies Registration Act. From the constitution of the CSI West Bengal Branch it is evident that income from conferences-local and central constitutes an important source of funds of the West Bengal Branch. The constitution further provides that all cheques shall be signed jointly by the Treasurer and the Secretary. 18. After going through the constitution of the parent body and the West Bengal Branch it appears to this Court that though the West Bengal Branch is a society registered under the West Bengal Societies Registration Act, the same is a branch of the parent body namely CSI. The parent body also has administrative as well as supervisory control over the West Bengal Branch. In so far as the financial control is concerned, this Court finds that though the West Bengal Branch enjoys financial autonomy with regard to the funds collected by them, the parent body has some control over the financial matters as prior permission of the headquarter should be obtained wherever a large capital expenditure is contemplated and the audited accounts of the Branch are to be submitted to the Headquarter and consequences for non-submission of the same have also been provided. That apart a percentage of a net profit of the conference shall also go to the central CSI fund. 19. The first respondent approached the writ court challenging the action of the respondent bank of debit freezing the bank account of the West Bengal Branch maintained with the MCC branch of the State Bank of India. That apart a percentage of a net profit of the conference shall also go to the central CSI fund. 19. The first respondent approached the writ court challenging the action of the respondent bank of debit freezing the bank account of the West Bengal Branch maintained with the MCC branch of the State Bank of India. 20. A co-ordinate bench in the case of Rina Habiba (supra) held that in the absence of a bank either having claim against a constituent or a lien of the bank account or the bank being obliged to obey any instruction of the Central Bank or any order of court a bank cannot freeze any account of its constituent for any period at all. The co-ordinate bench held thus- “It is elementary that a bank, particularly a nationalized bank, is obliged to follow the commands of its constituent, particularly when there is a credit balance in the bank of the constituent. However, if instructions are issued by the Reserve Bank of India or if orders of court are passed restraining the concerned bank from allowing a constituent to operate the relevant account, the bank is obliged to follow such instructions or obey the relevant orders. Ordinarily, a bank cannot act on the basis of a stray complaint of a cooperative society or like organization and freeze the account of a constituent. Indeed, in several situations, the bank adopting such procedure is found liable to compensate the constituent by way of damages if cheques issued by the constituent are dishonoured on presentation. In the absence of any lien being exercised by the bank over the relevant account or the funds lying to the credit of a constituent, the bank cannot stop or freeze the operation of any account. At the very highest, the bank may put the constituent on notice that it has received complaints or the bank may call upon the complainant to obtain an appropriate freezing order from a forum duly authorized to pass such an order. In the absence of a bank either having a claim against the constituent or a lien on the bank account or the bank being obliged to obey any instructions of the Central Bank or any order of court, a bank cannot freeze any account of its constituent for any period at all.” 21. In the absence of a bank either having a claim against the constituent or a lien on the bank account or the bank being obliged to obey any instructions of the Central Bank or any order of court, a bank cannot freeze any account of its constituent for any period at all.” 21. The learned Single Judge in M/s. Modello Ventures LLP (supra) after noting the decision in the case of Rina Habiba (supra) observed that bank accounts cannot be frozen on the strength of a solitary complaint without the order of an adjudicatory forum. 22. The learned Single Judge rightly noted that the order of injunction passed by the Civil Court was not with regard to the operation of the bank accounts in question. The learned Single Judge further noted that there is no order of the court directing freezing of the accounts nor any order has been passed by any authorised forum compelling the respondent bank to freeze the bank account in question and also that the bank does not have any claim or lien over such accounts. In the light of the aforesaid findings the learned Single Judge quashed the decision of the bank to freeze the accounts in question. The learned advocate appearing for the appellant, however, could not controvert the aforesaid observations of the learned Single Judge in course of hearing of this appeal. 23. In view of the aforesaid well settled proposition of law laid down by the co-ordinate bench in Rina Habiba (supra) this Court is of the considered view that the learned Single Judge was right in directing defreezing of the accounts in question. The larger issue, however, would be whether the learned Single Judge was right in permitting the writ petitioner i.e., the first respondent herein to operate the bank accounts in question. The first respondent claims to be the Secretary of the West Bengal Branch. He prayed for issuance of a mandamus to allow him to operate the accounts in question maintained at the SBI MCC Branch. 24. It is not in dispute that an order dated 13.04.2023 was passed in Title Suit no. 120 of 2023 restraining the defendants therein from permitting any member of the defendant no. He prayed for issuance of a mandamus to allow him to operate the accounts in question maintained at the SBI MCC Branch. 24. It is not in dispute that an order dated 13.04.2023 was passed in Title Suit no. 120 of 2023 restraining the defendants therein from permitting any member of the defendant no. 1 i.e., the Cardiological Society of India to hold any Annual General Meeting and further restrained from passing any resolution or decision at the meeting to be held on 22.04.2023 or any subsequent date. The said order was subsequently modified by an order dated 18.04.2023 to the extent that the defendants were restrained from permitting any member of the defendant no. 1 through its West Bengal Branch to hold any special general body meeting and further restrained from passing any resolution or decision at the meeting to be held on 22.04.2023 or any subsequent dates as on that date till the next date. Record reveals that the aforesaid orders were challenged in FMAT 564 of 2023 and a Co-ordinate Bench by an order dated 06.03.2024 was pleased to set aside the said orders. 25. This Court finds that the Co-ordinate Bench in the order dated 06.03.2024 noted that the orders dated 13.04.2023 and 18.04.2023 are bereft of the required reasons to be furnished in an order of ad interim injunction and any laconic order is a stark violation of the principles of natural justice. The Co-ordinate Bench further noted that the captioned meeting has already been held on 07.12.2023 to 10.12.2023 and such meeting has been held at the behest of the persons nominated/selected by the respondent no. 2 in the said appeal, which is the parent body. 26. It is evident from the materials on record that the Honorary General Secretary, CSI on behalf of CSI- Executive committee issued a letter dated 06.12.2023 addressed to the first respondent herein informing him that he has been suspended from any post or activities of Central and State branches of CSI for being involved actively in sabotaging the Platinum Jubilee Annual Conference of CSI because he was involved in calling a Special General Body Meeting on 22.04.2023 and taking a resolution for dissolving the existing organising committee of annual conference of CSI 2023 despite subsistence of restraint order dated 18.04.2023 passed by the learned Civil Judge (Senior Division) Sealdah in Title Suit no. 120 of 2023. 120 of 2023. It was further stated in the said letter that the first respondent has acted in violation of the provision of the constitution of CSI and his act is prejudicial to the interest of CSI. The said letter further states that the first respondent has been suspended from any post or activities of central and state branches of CSI with effect from 06.12.2023. 27. Mr. Kar would contend that the order dated 13.04.2023 as modified by order dated 18.04.2023 had lost its force in view of the order dated 06.03.2024 passed in FMAT 564 of 2023 and the parent body cannot suspend the office bearers of the Branch. The letter dated 06.12.2023 communicating the decision to suspend the 1st respondent along with six others stated that the Special General Body Meeting was held and resolution passed in violation of the restraint orders dated 13.04.2023 as modified by the subsequent order dated 18.04.2023. 28. No decision as to the legality or otherwise of the order of suspension on the allegation that certain steps or action has been taken in violation of the restraint order dated 18.04.2023 during its subsistence can be arrived at without considering the effect of setting aside such order by a higher forum. 29. Considering the limited scope of this appeal, this Court refrains from making any observation on the aforesaid issue and as such the same is left open. 30. In this appeal this Court cannot also decide the issue as to whether the order of suspension was illegal, void and without jurisdiction as contended by Mr. Kar, learned Senior advocate for the first respondent as the decision of suspension of the first respondent along with several others as communicated vide letter dated 06.12.2023 was not in issue in the writ petition out of which the instant appeal arises. The suspension order as communicated vide letter dated 06.12.2023 is staring at the face of the 1st respondent. 31. The question that arises for consideration is whether the suspended secretary of the West Bengal Branch should be allowed to operate the bank accounts of the West Bengal Branch. 32. Record reveals that the Honorary General Secretary of CSI by a letter dated 14.12.2023 informed the concerned Manager of State Bank of India, MCC Branch that Dr. Sunip Banerjee and Dr. 32. Record reveals that the Honorary General Secretary of CSI by a letter dated 14.12.2023 informed the concerned Manager of State Bank of India, MCC Branch that Dr. Sunip Banerjee and Dr. Prakash Kumar Hazra who were the signatories of the accounts in question have been suspended with effect from 06.12.2023 by Central CSI Executive Committee. By the said letter the bank was requested to take cognizance and take appropriate steps in that regard. 33. It is not in dispute that in the records of the bank the 1st respondent herein and one Dr. Prakash Kumar Hazra are the authorised signatories in respect of the bank accounts in question. The constitution of the West Bengal Branch authorizes the Treasurer and the Secretary to operate the bank accounts of the society. The 1st respondent herein claims to be the Secretary of the West Bengal Branch and he prayed for an order before the writ court permitting him to operate the bank accounts in question. It appears from the letter dated 06.12.2023 that the 1st respondent has been suspended from any post or activities of the central and state branches of CSI on the grounds as stated in the said letter. The order of suspension was not in issue before the writ court. No document has been placed before this Court to show that the order of suspension has been withdrawn or revoked by the competent authority. No order of any adjudicatory forum setting aside, modifying and/or varying the order of suspension has been produced before this Court. In such a factual scenario, the order of the learned Single Judge permitting the writ petitioner/1st respondent herein to operate the bank accounts in question would amount to giving a seal of approval to the action of the suspended officer bearers including the 1st respondent herein and would also result in nullifying the order of suspension without the same being an issue in the writ petition. 34. This Court is, therefore, not inclined to permit the 1st respondent or any of the suspended office bearers to operate the bank accounts of the West Bengal Branch. 34. This Court is, therefore, not inclined to permit the 1st respondent or any of the suspended office bearers to operate the bank accounts of the West Bengal Branch. It is for the CSI West Bengal Branch to nominate any of its non suspended officer bearers to be the authorised signatories in respect of the bank accounts in question in order to facilitate operation of such bank accounts till any final decision with regard to the suspension of the 1st respondent and/or any of the authorised signatories of the bank accounts in question is reached. 35. For the reasons as aforesaid, this Court is inclined to interfere with the portion of the impugned order in so far as it permitted the writ petitioner/the first respondent herein to operate the accounts fully. Accordingly, the appeal is allowed in part. The portion of the order quashing the decision of the bank to freeze the account in question as well as the direction for immediate defreezing of the said accounts in question is not interfered with. The portion of the order permitting the writ petitioner/first respondent herein to operate the accounts fully stands set aside and quashed. Liberty is granted to CSI, West Bengal Branch to nominate the authorised signatories of the bank accounts in question from amongst its non-suspended office bearers. However, taking note of the fact that the first respondent was permitted to operate the accounts in question fully by virtue of the impugned order, this Court permits the first respondent to operate the accounts in question for a period of fortnight from the date of receipt of a server copy of this order or till communication of nomination of the authorised signatories of the bank accounts from amongst non-suspended office bearers by the West Bengal Branch to the Bank and compliance of formalities in this regard, whichever is earlier. This Court further directs that during the aforesaid period the first respondent shall be restrained from incurring any capital expenditure and the first respondent is permitted to withdraw amounts from the accounts in question that are necessary to meet the recurring and day to day expenses of the West Bengal Branch only. 36. There shall be, however, no order as to costs. The connected application stands disposed of accordingly. 37. Urgent photostat certified copies, if applied for, be supplied to the parties upon compliance of all formalities. I agree. 36. There shall be, however, no order as to costs. The connected application stands disposed of accordingly. 37. Urgent photostat certified copies, if applied for, be supplied to the parties upon compliance of all formalities. I agree. Later: After this judgment was pronounced, Mr. Jaydeep Kar, learned Senior Counsel representing the 1st respondent prays for stay of the portion of the order modifying the order of the learned Single Judge. Such prayer is opposed by Mr. Bose, learned advocate appearing for the appellants. Prayer for stay is considered and rejected. I agree.