Eastern Indian Motion Picture Association v. Milan Bhowmik
2024-02-09
BISWAROOP CHOWDHURY, I.P.MUKERJI
body2024
DigiLaw.ai
JUDGMENT : I.P. Mukerji, J. 1. These two appeals with common facts were heard out together, after dispensing with all formalities. We dispose of these appeals and connected applications by this common judgment and order. APO 3 of 2024: 2. Eastern India Motion Pictures Association, the appellant/first defendant is an association of members. It was incorporated as a company limited by guarantee under the Companies Act, 1955 and now one under Section 8 of the Companies Act, 2013. It has its registered office at 98E, B N Sircar Sarani, Kolkata – 72. Two members Milan Bhowmik and Md. Nurul Hassain producers of Bengali films are members of this association, plaintiffs in the suit and respondents in this appeal. The suit (C.S 224 of 2021) was filed by them as co-plaintiffs challenging the election of the executive committee of the association for the tenure 2021-23. The plaintiffs claims that the election of the defendant Nos.2, 4, 5, 6, 7, 8, 10, 11, 16, 18, 19, 20, 21, 22, 24, 25, 26, 28, 29, 30 and 31 as President and Executive Committee members of the association was null and void. There was violation of the articles of the association and election conduct rules of the organisation. These defendants have also joined the appeal with the association. 3. This appeal arises out of a judgment and order dated 8th February, 2023 passed by a learned Single Judge of this Court in an application made by the association and the defendants mentioned in that order for rejection of the plaint and dismissal of the suit (GA 2 of 2022). By the said impugned judgment and order, this application was dismissed. 4. Hence this appeal. 5. On 20th November, 2023 the appeal appeared in our list to be admitted. As the point involved was very short we heard out the appeal on the day of admission itself. 6. This appeal is preferred by the association and its executive committee members. They say that they were elected for the year 2021 to 2023. 7. At this point of time it is essential to set out the reliefs sought in the plaint:- a) Decree for declaration the steps taken by the defendant in conducting of the election of the executive committee for the tenure 2021-2023 in contravention to the Clauses of the Article of Association and Election Conduct Rules is illegal and void ab initio.
At this point of time it is essential to set out the reliefs sought in the plaint:- a) Decree for declaration the steps taken by the defendant in conducting of the election of the executive committee for the tenure 2021-2023 in contravention to the Clauses of the Article of Association and Election Conduct Rules is illegal and void ab initio. b) Decree for declaration that a meeting held by the President/ executive members on and from 06-08-2021 to till date will be declared as null and void. c) Decree for declaration that the decisions taken by the President, members of the executive committee of the tenure 2019-2021 and Secretary in contraventions to the clauses as enshrined in the Article of Association to till date will be declared as null and void. d) Decree for declaration the monetary transaction has been committed by the President or Secretary in determent to the interest of the EIMPA that will compensated from their personal earnings to the association. e) Decree for declaration that the members who had renewed their membership after 30th April, 2021 had been candidates and/or casted their voting rights in contravention to the Clause 31 and 32 of the Article of Association to be declared as void ab initio. f) Decree for declaration that the lapses condoned for the candidates by the President being an ex-officio is to be declared as null and void. g) The plaintiffs are thus entitled to decree of permanent injunction restraining the defendants being number 2, 4, 5, 6, 7, 8, 10, 11, 16, 18, 19, 20, 21, 22, 24, 25, 26, 28, 29, 30, 31 their men, agents, assigns and/or legal representatives from not only continuing as in the post of the President or executive Committee members who have been elected for the tenure 2021-2023 of the prestigious association and also to take decisions. h) A special officer may be appointed and re-election among the valid members keeping a parity with the Clauses 31 and 32 of the Article of Association and the clauses enshrined in the Election Conduct Rules. i) Cost at the Hon’ble Court may deem fit and proper. j) Any other consequential relief or reliefs as may be deem fit and proper. 8.
i) Cost at the Hon’ble Court may deem fit and proper. j) Any other consequential relief or reliefs as may be deem fit and proper. 8. The case of the respondents/plaintiffs (hereinafter plaintiffs) in the plaint is that the voters’ list for the tenure of office bearers of the association from 2021 to 2023 had been manipulated by the named appellant defendants (hereinafter defendants) so as to inter alia include members whose membership had expired but renewed illegally. It was said that the election was conducted violating the Articles of Association and Election Conduct Rules of the association. 9. The defendants tried to nip the suit in the bud. 10. They took out the said application under Order 7 Rule 11 of the Civil Procedure Code. It was argued by Mr. Karmakar learned advocate for the defendants that the association was a company limited by guarantee and registered under the Companies Act, 1956 and also under Section 8 of the Companies Act, 2013. He placed Section 430 of the 2013 Act which is as follows:- “430. Civil court not to have jurisdiction.-No civil court shall have jurisdiction to entertain any suit or proceeding in respect of any matter which the Tribunal or the Appellate Tribunal is empowered to determine by or under this Act or any other law for the time being in force and no injunction shall be granted by any court or other authority in respect of any action taken or to be taken in pursuance of any power conferred by or under this Act or any other law for the time being in force, by the Tribunal or the Appellate Tribunal.” 11. He said that the dispute in the suit was covered by Section 241(1)(a) of the said Act which provided as follows: “241(1) Any member of a company who complains that- (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or…… may apply to the Tribunal, provided such member has a right to apply under section 244, for an order under this Chapter.” 12.
This section inter alia provides that a member of a company may apply to the tribunal inter alia complaining of any affair of the company having been conducted in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company. 13. The acts of the defendants complained of in the plaint if proved amounted to acting against the interest of the company or against the shareholders, learned counsel argued. 14. Hence, this Court had no jurisdiction to entertain, try and determine the suit. 15. Mr. P.S Bhattacharya, learned senior advocate for the plaintiffs argued that Section 244(1)(b) provided as follows: “244(1). The following members of a company shall have the right to apply under section 241, namely:- (b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members: Provided that the Tribunal may, on an application made to it in this behalf, waive all or any of the requirements specified in clause (a) or clause (b) so as to enable the members to apply under section 241.” 16. This section granted the right only to one fifth of the members applying together. Here only two had applied. So, the tribunal did not and the civil court had the jurisdiction to entertain the subject matter of the suit under the said section. 17. Mr. Karmakar, argued that the tribunal had the power to waive the requirement. This High Court, as a civil court did not have the jurisdiction to entertain the disputes in the suit. The suit as framed was barred by the above provision of law and ought to have been dismissed. 18. Out of the many points canvassed before the learned trial judge in the application under Order 7 Rule 11 of the Civil Procedure Code, only one point was raised before us. The nature of disputes between the parties as disclosed in the plaint would make them fall under Section 241 of the said Act. The tribunal had exclusive jurisdiction to entertain, try and determine the complaint. 19. The learned trial judge did not decide the point whether the case as made out in the plaint would fall under the aforesaid section. His lordship went by another route.
The tribunal had exclusive jurisdiction to entertain, try and determine the complaint. 19. The learned trial judge did not decide the point whether the case as made out in the plaint would fall under the aforesaid section. His lordship went by another route. Section 244(1)(b) of the Companies Act, 2013 granted a right to approach the tribunal under Section 214 of the said Act only to a body of shareholders comprising not less than 1/5th of the total number of members of a company under Section 8 of the said Act. 20. The learned trial judge opined that since the plaintiffs were only two in number they did not possess the requisite strength to apply and had rightly approached the civil court by this suit. His lordship negated the argument based on the proviso to Section 244(1)(b) of the said Act that the tribunal had the power to waive the above eligibility requirement. His lordship commented that consideration of the application would involve consumption of time and that the civil suit was a more efficacious remedy for the plaintiffs. 21. I do not find it necessary to go into the issue whether the dispute between the parties was covered by Section 241 of the said Act. The reason given by the learned judge that the remedy sought by the plaintiffs could not be availed of by them because of their lack in number is in my opinion a plausible one. I also agree with the learned judge that availing of this remedy was conditional upon grant of an application by the tribunal to waive the eligibility requirement which would result in unnecessary consumption of time. I would like to add that if the plaintiffs approached the tribunal for dispensing with the eligibility criteria, there was no guarantee that the tribunal would allow the application. In the event the tribunal rejected the application the plaintiffs would have to approach the civil court. The plaintiffs were justified in availing of a certain remedy rather than one which did not exist but could come into existence on fulfillment of an uncertain condition. 22. In those circumstances, the plaintiffs’ decision to directly approach this court to file the civil suit was, in my opinion, a proper step. Hence I see no reason to interfere with the impugned judgment and order dated 8th February, 2023. I affirm the same. APO 4 of 2024: 23.
22. In those circumstances, the plaintiffs’ decision to directly approach this court to file the civil suit was, in my opinion, a proper step. Hence I see no reason to interfere with the impugned judgment and order dated 8th February, 2023. I affirm the same. APO 4 of 2024: 23. In the aid of the aforesaid suit an interim application was taken out by the plaintiffs (G.A 12 of 2023) asking for the following reliefs:- a) Appointing an independent officer or court appointed officer to act as an Administrator of the Association. b) Appointing an independent officer or court appointed officer for smooth running of the day to day work of the Association and also only to meet the expenses of the Association to the extent to pay the salary of the employees of the Association. c) Injuncting the present executive committee from taking any decision related to any financial matter on behalf of the Association or to spend any money. d) Any other order or Orders as Your Lordship may deem fit and proper. 24. The ground made out in that application was that the executive committee of the association for 2021-2022 became functus officio on expiry of 28th September, 2023 and that an administrator should be appointed to manage the affairs of the club. 25. At the time of hearing of the application, it was pointed out to the learned judge that the term of the Executive Committee had been extended by the Registrar of Companies, Kolkata under Section 96(1) of the said Act on 18th September, 2023, on an application made on 8th September, 2023. According to the rules of the association, the Annual General Meeting (AGM) had to be held within six months of the closing of the financial year. However in Clause 73(1) of the said Articles, read with the said Act the maximum period should not be more than 15 months between one AGM and the other. The learned judge noted that the AGM for the year 2022 had taken place in September, 2022. The 15 months’ time period had not expired. 26. Since, the tenure of the present Executive Committee had been extended by the Registrar, court did not appoint any administrator.
The learned judge noted that the AGM for the year 2022 had taken place in September, 2022. The 15 months’ time period had not expired. 26. Since, the tenure of the present Executive Committee had been extended by the Registrar, court did not appoint any administrator. At the end, of the judgment and order dated 26th September, 2003 the learned judge observed as follows:- “Under such facts and circumstances, there has to be a check and balance in the functioning of the executive committee beyond 28th September, 2023. The executive committee shall not be permitted to take any major financial decision post 27th September, 2023 save and except the money that may be required for payment of the staff and employees as also other essential financial needs occurring in course of day to day functioning of EIMPA. I am passing this order as I am not agreeable with the submissions made by the principal defendants so far as it relates to the prayers made in the application being beyond the scope of the suit. The cause of action in the suit, if any, may have been arrested as on the date of filing of the suit. It does not in any manner under the provisions of law now in force prevent the Court from looking into the subsequent facts for effective adjudication of the disputes between the parties. Even if the tenure of the executive committee for the year 2021-2023 expires by efflux of time or because of the election of the executive committee for the next period being held, then also the Court is empowered to declare the election and composition of the executive committee for the year 2021-2023 to be illegal and invalid if it is proved so. Moreover, the challenge in the suit is regarding the election of the executive committee for the year 2021-2023 and the Court retains a residual power to hold that such a committee becomes functus officio after expiry of its tenure even while adjudicating the present suit.
Moreover, the challenge in the suit is regarding the election of the executive committee for the year 2021-2023 and the Court retains a residual power to hold that such a committee becomes functus officio after expiry of its tenure even while adjudicating the present suit. Before parting I should once more make the members of EIMPA aware of the fact that though an Administrator is not appointed at this stage but there is every likelihood of such an Administrator to be appointed if the electoral list as required under Clause 40(4) of the Articles is not prepared at least 50 days prior to expiry of 15 months period from the date of the last AGM. The application is, however, kept pending to see as to when the electoral list can be finalized and the AGM for the year 2023 is held. The parties are free to use affidavits, if so advised. Let affidavit-in-opposition to this application be filed by 6th October, 2023; reply thereto, if any, be filed by 17th October, 2023. Let this application appear in the list on 20th November, 2023.” 27. Aggrieved by the said judgment and order, the association preferred this appeal together with the connected stay application GA 1 of 2023. 28. The cumulative effect is this. 29. Prima facie, plaintiffs were competent to file the suit. This suit by two members of the association is maintainable in a civil court, for the reasons advanced by me earlier. 30. The election procedure of the association conducted in the year 2021 for election of the elected executive committee of the association from 20212023 was challenged in this suit. It was said that the electoral roll was manipulated and fabricated showing membership of members whose membership had expired or wrongfully renewed. With this untrue voters’ list, the election was conducted by the defendants so as to elect executive committee members who were not eligible to be elected. 31. The purpose of all this was to run the association illegally according to the dictates of the defendants. 32. During argument it was conceded by both learned counsel that even after extension by the Registrar of companies, the term of the executive committee had come to an end and could not be continued to run the association.
31. The purpose of all this was to run the association illegally according to the dictates of the defendants. 32. During argument it was conceded by both learned counsel that even after extension by the Registrar of companies, the term of the executive committee had come to an end and could not be continued to run the association. The interest of the members of the association would be best subserved if an election of the executive members of the association was conducted under the aegis of the court through an administrator. The administrator would be first responsible for preparation of a true and correct voters’ list of eligible members and then convene and hold an Annual General Meeting of the appellant association. 33. In those circumstances, the appeal APO 3 of 2024 is disposed of by holding that the suit is maintainable before this court. The connected application GA 1 of 2023 is disposed of accordingly. 34. The appeal APO 4 of 2024 together with the connected application GA 1 of 2023 is disposed of by appointing Mr. Rajarshi Rai Choudhury, Advocate Bar Association, Room No.2, (Mob.9874879897) and Mr. Partha Sarathi Basu, Advocate Bar Association, Room No.2, (Mob.9433947070) as Joint Administrators. They would be paid remuneration of Rs.75,000/-each from the fund of the appellant association. The Joint Administrators shall by 22nd February, 2023 prepare and finalize a voters’ list of eligible members to elect the executive committee members of the association. They would also invite candidature to contest the election in accordance with the rules of the association. They shall select announce and circulate the venue and date for holding the Annual General Meeting which should not be beyond 20th March, 2024. The Annual General Meeting shall be conducted under the direct supervision of the Joint Administrators, assisted by the officials of the association. The results would have to be declared by them immediately. Thereafter, the Joint Administrators shall constitute the executive committee of the association strictly on the basis of the results of the election and immediately notify the same to all the members and any other stakeholder. Upon such declaration, the new executive committee shall forthwith assume office and discharge their duties in accordance with the articles of association and other rules of the appellant body. 35. If any further issue survives, the same may be tried in the suit.
Upon such declaration, the new executive committee shall forthwith assume office and discharge their duties in accordance with the articles of association and other rules of the appellant body. 35. If any further issue survives, the same may be tried in the suit. Otherwise an appropriate application may be made before the suit court to pass a decree declaring and directing that the suit (CS 224 of 2021) stands disposed of by this judgment and order. 36. No order as to costs. 37. Urgent certified photo copy of this judgment and order if applied for be furnished to the appearing parties on priority basis upon companies of necessary formalities. 38. I Agree.