SRI. KAMALA KRISHNAN NAIR v. NAIR SERVICE SOCIETY

W.P.(C) NO.11461/2004 7. UNION OF INDIA, REPRESENTED BY THE SECRETARY TO THE COMPANY AFFAIRS MINISTRY OF COMMERCE, GOVERNMENT OF INDIA, NEW DELHI. BY MR.M.PATHROSE MATTHAI, SENIOR ADVOCATE FOR R1 MR.P.GOPAL. FOR R1 GOVERNMENT PLEADER MR.I.V.PRAMOD FOR R4 & 5 MR.JOHN VARGHESE, ASSISTANT SG FOR R3,4&7 MR.M.GOPIKRISHNAN NAMBIAR FOR R2 MR.P.PARAMESWARAN NAIR,ASST.SOLICITOR FOR R3, R4 & 7 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23/05/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.11461/2004APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE CERTIFICATE OF INCORPORATION (NO.12 OF 1100) OF NAIRSERVICE SOCIETY ISSUED BY ACTING REGISTRAR OF JOINT STOCK COMPANIES.P2:- COPY OF THE NAIR SERVICE SOCIETY MEMBER CERTIFICATE NO.2116 DT. 1.4.07BY THE GENERAL SECRETARY, N.S.S. TO THE PETITIONER.P3:- COPY OF THE LETTER DT. 4.1.2003 FROM P.K.NARAYANA PANICKER GENERALSECRETARY N.S.S. ADDRESSED TO THE PETITIONER.P4:- COPY OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF NAIR SERVICESOCIETY INCORPORATED ON 30.6.1924.P5:- COPY OF THE LETTER DT. 10.9.03 ADDRESSED TO THE REGISTRAR OF COMPANIESVANCHIYOOR , THIRUVANANTHAPURAM FROM THE PETITIONER.P6:- COPY OF THE LETTER DT. 10.9.03 ADDRESS TO THE INSPECTOR GENERAL OFREGISTRATION GOVERNMENT OF KERALA, THIRUVANANTHAPURAM.RESPONDENT'S EXHIBITS R1(a):- COPY OF THE ORDER NO.33002/E1/77/ID DT. 14TH OCTOBER 1977 PUBLISHED INTHE KERALA GOVERNMENT GAZETTE.R1(b):- COPY OF THE JUDGMENT OF THE SUB COURT, KOTTAYAM IN OS. NO.217/1977DT. 17.7.79.R1(c):- COPY OF THE STATEMENT SHOWING THE PARTICULARS OF EDUCATIONALINSTITUTIONS, HOSPITALS, WORKING WOMEN'S HOSTELS, BALABHAVAN, OTHERINSTITUTIONS, PLANTATIONS ECT.R1(d):- COPY OF THE PROCEEDINGS OF THE MEETING HELD ON 27.6.58 ATCHANGANACHERRY.R1(e):- COPY OF THE ACKNOWLEDGMENT OF THE SPECIAL RESOLUTION RELATING TOAMENDMENT OF THE ARTICLES.TRUE COPY P.S. TO JUDGETSS ANTONY DOMINIC,J.---------------------W.P.(C).No.11461 OF 2004------------------------Dated this the 23rd day of May, 2009.JUDGMENT Of the various prayers made in this writ petition,arguments were raised, only in support of the prayer No.2,which reads as under.“(ii) to declare that clause 1(i)&(n), clause 21 &clause 90 of the Articles of Association of the Istrespondent Nair Service Society (Ext.P4) is ultravires of the companies Act 1956 and be pleasedto quash the same.”2. The facts of the case are that, petitioner is a memberof the first respondent, the Nair Service Society, a Companyinitially incorporated under the Travancore CompaniesRegulation-I of 1092 (M.E). Ext.P1, is the certificate ofincorporation which shows that the company is one, limited byguarantee. WP(c).No.11461/0423. It is stated that on 1.4.1967, after a series oflitigations, the petitioner was issued Ext.P2 certificate, ofmembership duly signed by the General Secretary of the firstrespondent. In so far as this writ petition is concerned, thepetitioner's main grievance is regarding clause-I (i)(n) and clause(90) of Ext.P4, the Memorandum and Articles of Association ofthe first respondent. Clause(1)(i) and clause(n), reads as under.“Electoral Roll” means the Taluq wise register ofindividuals and institutions who have en trolled asmembers of the Society, maintained for electingmembers to the N.S.S General body meeting.`Delegate` or `Prathinidhi' means a member elected tothe society in a meeting of the persons included in theElectoral Roll. Each Taluq on the basis of one out ofevery 5 individuals and one out of every 5 institutionsin the Electoral Rolls subject however to the restrictionsof Clause I(n). Instituton means Karayogam, Karayoga-Union and other institutions which have becomemembers of the Society.(n) General Body means a meetingn of the members(delegate or Prathinidhi) elected as per the provisions of WP(c).No.11461/043Clause 1(i).But the total membership of the General Bodyshall not exceed 300 on any account and if the totalnumber of representatives exceeds 300 when elected inthe proportion of one for every five, this proportion ofone for every five will be so attend as too ensure thetotal number of 300, and the Election Commissionappointed under Clause 90 shall have authority to refixthe proportion and number of the members in eachtaluq.”Clause 90 referred to above provides that, the election of thePrathinidhies shall be conducted according to the election rulesframed by the NSS Board of Directors under the responsibility ofthe Election Commission appointed by the NSS executive counciland that the election shall have to be approved by the council. 4. Petitioner submits that the first respondentcompany is an existing company in terms of the provisionscontained under Section 3(f)(i) of the Companies Act, 1956. Itis stated that the company was governed by the provisions of theCompanies Act, 1956 till 1.3.1962, when the Kerala Non Trading WP(c).No.11461/044Companies Act 1961(Act 42 of 1961) was introduced. Accordingto the petitioner, in view of the provisions contained in Section 3and Section 4 of the Act (Act 42 of 1961), the provisions of theCompanies Act, 1956, except as modified as per the schedule toAct 42 to 1961 and exempted by notifications issued by theGovernment of Kerala, are applicable to the Ist respondent. It isthe conceded position that by Ext.R1(a) notification, sections172 to 186(both inclusive) and Section 433 to 483(bothinclusive) of the Companies Act, 1956 have been exempted in sofar as the first respondent is concerned. 5. The case set up by the petitioner is that clause(1)(i) and(n) and also clause 90 runs counter to the provisions containedin section 87, 167 and 257 of the Companies Act, 1956, in asmuch as it places fetters on the right of the members of the Istrespondent company to exercise their rights as members. It isstated that Section 9(a) and (b) to 1956 Act provides that theprovisions of the Companies Act will override any memorandumor articles etc, Therefore, the counsel for the petitioner contendsthat since clause (1)(i), (n) and clause 90 of Ext.P4 areinconsistent with Sections 87 to 167 and 47 and that in view ofSection 9, those provisions of the Companies Act, 1956 will WP(c).No.11461/045prevail over the aforesaid provisions of the Memorandum and allmembers of the company are entitled to exercise their rightsirrespective of the objectionable provisions of Ext.P4. It is on thisbasis, petitioner seeks a declaration, as per prayer No.2extracted above. 6. On behalf of the respondents, the prayer sought for bythe petitioner is resisted. It was contended that thesecontentions were raised and were examined by the civil court,while considering O.S.No.217/1977, filed by the petitioner andthat suit was dismissed on the ground of limitation and thereforethis writ petition is not maintainable and is hit by the principlesof resjudicata. It is further contended that validity of theprovisions of the Articles and Memorandum of a Company, cannotbe challenged in a proceedings under Article 226 of theConstitution of India. It is contended that Section 9 of theCompanies Act 1956 is not relevant in so far as the company inquestion is concerned. It is stated that the company wasincorporated under the Regulation 1 of 1092 which was replacedby the Travancore Companies Act, 1114. It is stated that it waswhen the company was covered by the provisions of theTravancore Companies Act, that the impugned amendments were WP(c).No.11461/046introduced to Ext.P4 in 1958. It is stated that until the Act 421961 was introduced the company continued to be covered bythe Travancore Companies Act 1140 and that by virtue of theprovisions contained in Section 4 of the Interpretation andGeneral Clause Act 1125, Section 9 is irrelevant in so far as thecompany is concerned. Yet another contention that is raised isthat in view of Ext.R1(a) notification and also various otherprovisions of the Companies Act, 1956, Sections 87, 166 and257 relied on by the counsel for the petitioner have norelevance.7. Although various contentions have been raised by bothsides, I feel it is only appropriate that I should examine themaintainability of the writ petition, having regard to the impactof Ext.R1(b) judgment rendered by the Civil Court. This is for thereason that if my finding on this issue is against the petitioner, itwill not be necessary for me to examine the other contentionsraised by both parties.8. Ext.R1(b) is the judgment rendered by the Sub Court,Kottayam in O.S. No.216/1977 in which the petitioner was theplaintiff. It is seen from the facts narrated in the judgment thatthe prayer sought in the suit was a declaration that the budget WP(c).No.11461/047placed in the general body meeting in which all the members arenot allowed to participate should not be allowed to be passed.On that basis, petitioner, being the plaintiff therein, also soughtan injunction restraining the defendants therein, including thefirst respondent herein, which was defendant No.1 in that suit,from placing and passing the budget for the year 1977-78. IssueNos. 3 to 5 framed in that suit, being relevant, reads as under.“3. Whether the amendments of the articles ofassociation valid?4. Whether the rights of a permanentmember can be abridged by such amendment?5. Whether the plaintiff is entitled to thedeclaration and injunction sought for.” 9. The prayers in that suit could not have been unlessthe validity of amendments were considered. Therefore, in thatjudgment, the court examined the validity of various provisionsof the memorandum and articles including clause(2)(1) and (n)and held it in favour of the petitioner. Dealing with the contentionraised by the defendants in that suit that the suit was timebarred, the court dealt with the issue in the following manner. “It has come out in evidence that the plaintiffinstituted suit for registering himself as a memberof the NSS in 1963. At least from that date towards WP(c).No.11461/048he must be deemed to have been conversant withthe Memorandum and Articles of association of theNSS. In 1967 he became a permanent member. It isidle for him to contend that even in 1967 he wasnot aware of the contents of the articles ofassociation. I have quoted above the relevantprovisions relating to the Memorandum and articlesof association. Ext.B5 is a nomination papersubmitted by the present plaintiff on 7.4.1971. Thenomination was for the purpose of election to thePrathinidi Sabha. The election was to be held by anelectoral college. That election was held under theprovisions of the amended articles of association.Ext.B6 is another nomination submitted by thepresent plaintiff on 12.4.1974. That was also underthe provisions of the amended articles ofassociation. He must definitely be fastened with theknowledge regarding the amendments at least onthe date of Ext.B5 10.4.1971. Learned counselappearing for the Ist defendant contended that thissuit is governed by Article 58 of the Limitation Act. WP(c).No.11461/049Learned counsel for the plaintiff argued it that thiscase is governed by Sec.22 of the Limitation Act.According to the learned counsel this is a case of acontinuing breach of contract and therefore, a freshperiod of limitation begin to run at every moment oftime during which the breach continues. Thedefendant's case is that this is a suit for declarationand the period of limitation is 3 years from themoment when the right to sue first accrues. To meit appears that it is article 58 that governs thiscase. The real grievance of the plaintiff has its originin the amendment of the Articles of Association. Byvirtue of that the right of the plaintiff to vote in thegeneral meeting was taken away. Year after year heis denied the voting right. But that is not acontinuous breach of contract; but is the effect ofthe breach that was committed in 1958. The rightof the plaintiff is not the question to be decidedwhile examining the plea of limitation. It is theremedy that is barred. The right to sue accrued tothe plaintiff when he got information regarding the WP(c).No.11461/0410amendment to the Articles of Association which tookaway his voting right. When he contested in 1971for election to the State of Kerala. It can be seenthat it was so treated by the Company LawAdministration. Ext.B1 is a letter sent by theRegistrar of Companies to the Inspector General ofRegistration, Kerala, wherein it is stated that therecords of the Nair Service Society are beingtransferred to the latter. Such transfer is underSection 6 of the on-Trading companies Act.Therefore, the State of Kerala is competent to issueExt.B11 notification.”10. A reading of paragraph 15 of the judgment extractedabove would thus show that the court accepted the contentionsof the defendants in the suit that the case was covered by Article58 of the Limitation Act and on that basis held the suit to betime barred and relief was declined and suit was dismissed.Against this judgment there was no appeal and the judgment hasbecome final. Thus it is obvious that the contentions now urgedbefore this court were urged before the civil court and relief wasdeclined on the ground of limitation. It was despite this WP(c).No.11461/0411judgment of the civil court, that the petitioner filed this writpetition canvassing the invalidity of the very same provisions ofthe Memorandum and Articles of Association of the Istrespondent. In my considered view, the parties are bound by thefindings of the civil court as contained in Ext.R1(a) judgmentrendered by the civil court and petitioner cannot resort tosuccessive litigations before different forums. Therefore I holdthat principles of resjudicata applies and for that reason, writpetition is not maintainable. In view of this finding I do not thinkit necessary for me to deal with the other contentions raised inthe writ petition.Writ petition fails and is dismissed. (ANTONY DOMINIC) JUDGEvi/ WP(c).No.11461/0412