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Judgment
M. Jeyapaul, J.—These applications are filed by the lawn members and rowing members of the Madras Boat Club seeking an order of interim injunction restraining the respondent-club from conducting any general body meeting before registration of the respondent-club and also to appoint a receiver to take charge of the affairs of the respondent-club and manage the same till the process of registration of the respondent is complete.
As the aforesaid applications are connected with each other, all these applications are taken up for common disposal.
The applicants/plaintiffs would contend that the respondent/defendant Madras Boat Club was established in the year 1867 with an object to promote and encourage the sport of rowing. Apart from encouraging the sport of rowing, the club is involved in other activities such as social, cultural, entertainment, recreation, etc. Taking advantage of the fact that the respondent-club was not registered and therefore, it is not accountable to any statutory authority, there is a total mismanagement and misappropriation of funds by some office bearers in the recent past. The enquiry committee was appointed. It submitted a report that the former captain who headed the club misused his position. The committee, in fact, suggested that the amount should be recovered from him.
On March 26, 1999, a resolution was passed in the extraordinary general body meeting of the respondent-club to register the club under the Societies Registration Act instead of the Companies Act. The respondent-club notified an extraordinary general body meeting on August 14, 2007 and it was adjourned to March 11, 2008, due to some untoward incident. Seven past presidents have now taken over the managing committee. The lawn members were discriminated by the act of the managing committee. The managing committee has not so far implemented the resolution to register the club. The funds of the respondent-club are being wasted and several crores of rupees are allowed to be spent on building without any sanctioned plan. Hence, the relief as sought for.
In the common counter affidavit filed by the respondent/defendant, it is contended that registration of the club which has the main object of promoting sports is only optional and not compulsory. The applicants opted to become a member of the respondent-club only after agreeing to act as per the bye-laws. The rights and privileges of the members are governed by the bye-laws. If the lawn members want to claim equal rights as rowing members, it is only the general body that has to decide such issues. The bye-laws is a contract between the members. The lawn members, having accepted to become a member as per the bye-laws, cannot now attempt to question the bye-laws. As there was lack of understanding between the committee members in the year 2006, the general body decided to put the past presidents to be in charge of the affairs of the club and to set things right. They have co-opted five more members. The major complaint has been made only against the former captain M.R. Ravindran. The managing committee has taken steps and recovered amounts from the said M.R. Ravindran.
The present managing committee called for an open house meeting of the members on April 6, 2008, to discuss about the issue whether the registration of the club under the Tamil Nadu Societies Registration Act, 1975, would be better than the registration of the club u/s 25 of the Companies Act. The open house expressed a consensus in favour of registration of the club u/s 25 of the Companies Act. Various members of the managing committee opposed the registration of the club. The applicants have come out with per se defamatory charge that the managing committee is enrolling members at their own whims and fancies and collecting huge amount as entrance fee. The present managing committee is prepared to register the club u/s 25 of the Companies Act subject to the approval of the general body. The prayer for appointment of a receiver is not sustainable inasmuch as the managing committee consisting of seven past presidents and five co-opted senior members as per the decision of the general body in August, 2007, is functioning well. Therefore, the respondents pray for dismissal of these applications.
Learned senior counsel appearing for the applicants in O. A. Nos. 421 and 422 of 2008 and learned Counsel appearing for the applicant in O. A. Nos. 289 and 290 of 2008 would submit that there was no election from the year 1996. Serious allegation of misappropriation has been levelled against the past president of the club. Though the strength of the lawn members is more compared to the strength of the rowing members in the respondent-club, an injustice is being committed in the matter of enforcing voting rights of the lawn members. The entire management rests with the rowing members. Though annual election was contemplated, no election was conducted even by the managing committee which has now taken charge of the affairs of the respondent-club. As a decision was already taken, the respondent-club may be directed to straightway register the respondent-club under the Societies Registration Act. But, at any rate, they do not have any objection for registering the club u/s 25 of the Companies Act. There is no necessity to convene a general body meeting to discuss about the registration of the respondent-club as such a decision was already taken in the extraordinary general body meeting.
Learned senior counsel appearing for the respondent-club would submit that the respondent-club was recognised as one of the best rowing clubs in the country. There is virtually no allegation as against the present managing committee headed by the past presidents and the co-opted members. The irregularities committed by the erstwhile set of office bearers are being set right by the present managing committee. The lawn members cannot complain of inequality in the matter of exercising voting right against the spirit of the bye-laws which was accepted at the time of entering into the club as members. Further, such a plea can be raised only in a Us wherein challenge has been made as to the inequality practised with regard to exercising voting rights by the lawn members. As the open house meeting has come out with a consensus to go in for registration of the club u/s 25 of the Companies Act, the earlier resolution passed in the year 1999 requires reconsideration. But, at any rate, the respondent has taken a decision, though it is not mandatory, to register the club either under the Societies Registration Act or under the Companies Act. The question of appointing any receiver does not arise as no serious allegation has been made as against the present managing committee members who are none other than the past presidents and co-opted members.
As rightly pointed out by learned senior counsel appearing for the respondent, very serious allegation of mismanagement has been alleged only as against the past president and office bearers of the respondent-club. The present managing committee consisting of seven past presidents and co-opted members have taken charge of the affairs of the club only to set right the misdeeds alleged to have been committed by the past office bearers. When the activities of the club are carried on smoothly by the past presidents, appointing a receiver by the court to take charge of the affairs of the club does not arise for consideration.
Learned senior counsel appearing for the applicants would submit that the respondent club is compulsorily registrable u/s 3 of the Tamil Nadu Societies Registration Act. But, on the other hand, learned senior counsel appearing for the respondent would contend that as per Section 4(1) of the Tamil Nadu Societies Registration Act, 1975, the respondent-club which has its primary object of promoting sports falls outside the purview of Section 4 of the aforesaid Act.
As per Section 3 of the Tamil Nadu Societies Registration Act, 1975, a society which has, for its object, the promotion of education, literature, science, religion, charity, social reform, art, crafts, cottage industries, athletics, sports (including indoor games), recreation, public health, social service, cultural activities or such other useful object may be registered under the Tamil Nadu Societies Registration Act. Section 4(1) of the said Act states that if such a society consists of not less than 20 members or such a society has annual gross income or expenditure in any financial year not less than Rs. 10,000 it shall be registered compulsorily under the Act. But, Section 4(3) specifically states that the aforesaid provision u/s 4(1) will not apply to any society which has, for its object, the promotion of religion, athletics or sports (including indoor games). The bye-laws of the first respondent would read that the object of the respondent-club is only to promote sports activities. Therefore, it is held that it is not mandatory that the respondent-club should be registered as per the Tamil Nadu Societies Registration Act, 1975. But, the wisdom had dawned on the respondent-club to go in for registration of the club in order to make the club more accountable and also to avoid mismanagement of its financial matters.
The applicants as well as the respondent have agreed for registration of the club either under the Societies Registration Act or u/s 25 of the Companies Act. It is contended by learned senior counsel appearing for the appellants that no more resolution by an extraordinary general body is required inasmuch as a competent resolution had already been passed by the general body and the resolution is at the stage of execution.
Whereas, learned senior counsel appearing for the respondent would contend that taking into account the interest of the club, the present managing committee thought it fit to generate an open house discussion as to whether the respondent-club should be registered under the Societies Registration Act or u/s 25 of the Companies Act. A consensus has emerged to go in for registration of the respondent-club u/s 25 of the Companies Act. Such an opinion will have to be placed for the sanction of the extraordinary general body, it is submitted.
It is true that a resolution has been passed in the year 1999 itself in an extraordinary general body meeting that the respondent-club should be registered under the Tamil Nadu Societies Registration Act. But, the club members, in the open house discussion, has opined that it is better the respondent-club is registered under the Companies Act. It is also submitted that the other major clubs in the city of Chennai have been registered only under the Companies Act and not under the Societies Registration Act. Therefore, the court finds that in the interest of the club, an extraordinary general body meeting will have to be convened to take a decision whether the respondent-Club should be registered under the Tamil Nadu Societies Registration Act or under the Companies Act. There is nothing wrong in conducting an extraordinary general body meeting in the background of the development over the past nine years, despite the fact that a resolution was already passed to register the respondent-club way back in the year 1999.
Coming to the grievance of the lawn members that they have been completely discriminated in exercising their voting rights and consequently in participating in the management of the respondent-club, it is found that the lawn members, having accepted the provisions in the bye-laws which provided for differential treatment for the rowing members and the lawn members, entered into the club. Further, it is found that the main object is only for promotion sports in the field of rowing. The recreation activity is found to be the latest development in the club.
A Bench of this Court in Chennai Kanchi Tiruvelore District Film Distributor Association v. Chinthamani S. Murugesan [2001] 3 CTC 349, has held that a voluntary association is entitled to carry on its affairs in accordance with its own rules. A person, becoming a member of such a body contracts to be bound by its rules. In the instant case, the members of the respondent-club will have to be abide by the provisions under the bye-laws which was accepted for strict adherence. Any radical change in the bye-laws can be done only by the members of the club in the extraordinary general body meeting. It is also found that the alleged discrimination practised as against the lawn members can be canvassed only in a competent lis laid by the applicants challenging the very bye-laws which allegedly encourages discrimination as against the lawn members and not in the present suit.
In view of the above, the respondent is directed to convene an extraordinary general body meeting within one month from the date of this order for the specific purpose of discussing the subject as to whether the respondent shall be registered under the Societies Registration Act or u/s 25 of the Companies Act. On passing such a resolution, the respondent shall take steps to register the respondent-club either under the Societies Registration Act or under the Companies Act in deference to the resolution passed in the said extraordinary general body meeting within two months thereafter.
Applications Nos. 422 and 290 of 2008 seeking appointment of receiver stand dismissed and O. A. Nos. 421 and 289 of 2008 seeking interim injunction are allowed in part. No order as to costs.