John S. Dorai And Ors vs Church Of South India Trust Association And Others

B.S.V. Prakash Kumar, J

It is a Company Petition filed u/s 241 of the Companies Act, 2013 (hereafter called as “the Actâ€) by a non-member of a Section - 8 Company

namely Church of South India Trust Association (Rl/CSITA) against CSITA and 10 other Respondents on the ground R - 2 to 11 mismanaging the

affairs of CSITA.

It is a Company incorporated u/s 26 of the Companies Act, 1913 (equivalent to Section 25 of the Companies Act, 1956/Section 8 of the Companies

Act, 2013) on 20.06.1947 in the name of “The Church of South India Trust Associationâ€​ having its Registered Office at Chennai to act as Trustee

for The Church of South India (herein after called as “CSI†or “Churchâ€) to deal with movable and immovable properties and to use the

income and proceeds of sale or mortgage of any of the assets of the church covering Andhra Pradesh, Karnataka, Kerala, Tamil Nadu and

Telangana.

CSI is the largest congregation of Protestant Churches in Asia spread over 5 states aforementioned, governed by its constitution consisting of 24

dioceses. Again each diocese is governed by its own constitution. Since CSI being an unregistered body owning extensive properties and has been

controlling several institutions such as schools, colleges, hospitals and orphanages, CSITA was long before floated as a non-profit company to act as

Trustee to manage all movable and immovable assets of CSI.

As per Articles of Association of this Trust, it discloses the names of first Members of the Association and they shall remain members until

replaced by members selected by the Synod of the Church and its Moderator, Deputy Moderator, General Secretary and the Treasurer shall act as

ex-officio members of CSITA.

Before knowing about the affairs of CSITA and merits of the case, it is essential to understand how the members of this Trust are elected. As to

Church, the Synod is the highest representative body of it. Diocese Bishops and part of Synod members are elected from Parish members, for each

diocese, a diocesan Council will be there, and it is presided over by its Bishop. Members of the respective churches will elect Diocesan Council and its

Bishop in the way mentioned in the by-laws of the Church. Since Synod has 20 dioceses, all dioceses bishops, assistant bishops, the General

Secretaries, the Treasurers, the Presidents and General Secretaries of Women Fellowship and two members of the order of sisters nominated by the

order of the Committee and Presbyters and lay persons representing each diocese according to the number of members of the respective church shall

become members of Synod. Moderator will be elected by all Dioceses Bishops, but that decision is to be ratified by Synod members. In this process,

these members of the Synod elect a Moderator, a Deputy Moderator, a General Secretary and Treasurer. All these four officers shall be elected by

ballot of the synod. The Moderator and the Deputy Moderator shall be elected from among the diocesan bishops of the church. All officers shall be

elected during each ordinary meeting of the Synod and shall hold office from the close of that meeting till close of the next ordinary meeting of the

Synod. Provided if any vacancy occurs; the Executive Committee shall fill up such vacancy subject to the approval of the majority of the members of

the synod. These members shall be eligible for re-election for another term of 2/3 years consecutively. The Moderator shall be presiding officer of the

Synod and the Chairman of the Executive Committee. He shall be official representative during his term of office of the Church of South India (CSI)

in all businesses with other churches and other organisations. The Deputy Moderator shall reside at the Synod and look after functions of its

Executive/Working Committee and he will perform other duties of the Moderator during his absence. If the Moderator and the Deputy Moderator are

away from country, the Moderator in consultation with the synod working Committee will appoint acting Moderator. The General Secretary keeps the

records of all actions of Synod and continues as Correspondent between the Synod and dioceses councils. The Treasure shall hold all money belonging

to the Synod and keep submitting accurate statement of accounts to Synod or to such other bodies as the Synod may direct. Synod is the supreme

governing and legislative body of CSI and final authority in all matters pertaining to Church. It has power to make rules and pass resolutions and take

executive actions as may be necessary. The Company being charitable trust association to work as an Agent to all the properties of the church, Synod

has power to elect the members of CSITA. The officers of Synod i.e. the Moderator, the Deputy Moderator, the General Secretary and the Treasurer

shall be ex-officio members of CSITA.

Though it is complex to understand about the election of members of CSITA, it is evident that the structure of it is dependent upon Synod electing

the members of CSITA. For main purpose and object of CSITA being to work as Trust/Agent to deal with the assets of CSI, it is obvious that every

time CSITA electing its members and officers follows the election of Synod officers because electorate to CSITA are members and officers of

Synod.

As to the grievance of this Petitioner, he says CSI has 45,00,000 worshipers spread all over South India and CSITA has been incorporated for the

purpose of serving the needs of these worshipers/stakeholders/beneficiaries of CSI because Church has been vested with several lacs of Crores

worth of properties to serve the needs of stakeholders.

The Petitioner says on 05.03.2002, the officers of Rl/CSITA illegally amended the Articles of Association by creating a provision unto themselves

i.e., Synod Moderator, General Secretary and Treasurer to become ex-officio Chairman, ex-officio Secretary and ex-officio Treasurer of CSITA.

As to an allegation of sale of property, the pleadings being sketchy, we summarize it to our understanding that some properties of Coimbatore

Diocese were sold away, in view thereof, RoC, Coimbatore issued notice for inspection of CSITA, over which, CSITA got stay order against the

notice for inspection issued by the RoC. Sometime later, the Hon'ble High Court of Madras vacated the stay with a direction to RoC, Chennai to

carryout detailed inspection of CSITA u/s 209 of the Companies Act, 1956 wherein the RoC pointed out 27 irregularities, whereupon, 43 criminal

cases were instituted against the Respondents before Economic Offences Court, Egmore, Chennai.

On the explanations sought by the RoC, the Petitioner says, CSITA replied that official members of it are on ordinary basis and keep changing

every two years and these committee members are religious heads, therefore they are not conversant with the provisions of the Act. The RoC not

being satisfied of such explanation, the Petitioner says, the RoC recommended action against CSITA and its office bearers through Serious Fraud

Investigation Office (SFIO). The Petitioner says, CSITA did not hold Annual General Meeting for the year 2015 and it has also not finalised its

financial statements for the Financial Year ended 31.03.2015. He says that the office bearers, without any authority heavily borrowed on the

properties of CSITA by way of creating charge on the properties.

Another allegation he has raised is that the last Synod was constituted for biennium in January, 2014 and the same had expired on 13.01.2016.

Thereafter, Synod election was not conducted and simultaneously election to the members of CSITA had also not been conducted, but whereas the

lapsed Management Committee of CSITA has still been managing the affairs of it even after expiry of the period for which they were elected. He

says that only 10 members are managing the affairs of CSITA without giving equal representation to 23 Units for several decades while more than

13,00,000 stakeholders are entitled to become members of CSITA.

The petitioner says that in the month of August, 2014, more than 40 members, who are entitled to become members of CSITA, had sent

applications showing their willingness to become members of the Trust but whereas no response came from CSITA.

For there being no response, the Petitioner says, the beneficiaries conducted a General Meeting of members by sending 40 days' notice dated

7th December, 2015 to the management stating that if no election to CSITA was conducted on the due date, the stakeholders would be constrained to

hold a meeting and elect body members to CSITA. As no reply came from CSITA, a meeting was conducted on 16.01.2016 constituting of all the

stakeholders including the Respondents through various means of communication. To that meeting, 200 stakeholders attended from all five Southern

States of India and ultimately, these stakeholders appointed 53 general members with a provision to increase the number for giving representation to all

dioceses/units i.e., up to 88. And these 53 newly elected members in turn elected 15 directors, 2 office bearers i.e., the Chairman and Treasurer

among the directors, to carry out the management of CSITA. Soon after this process was over, the list of elected general members, directors and

office bearers was communicated to CSITA on 18.01.2016, upon which, CSITA did not raise any objection or challenge the above election to CSITA

before any forum till date.

By seeing this argument, it appears to us that it is apt to mention here itself that these persons alleged to have attended the meeting dated

16.01.2016 are not members of CSITA and they are not competent to hold a meeting of that kind and elect people as members of CSITA.

By giving this factual matrix, the Petitioner sought reliefs, declaring the acts of management of CSITA shall be declared ultra vires, the

Management committee shall be restrained from managing the affairs of the company and the newly elected persons shall be declared as

Management Committee by suspending the Managing Committee which was earlier elected by Synod with a direction to CSITA, to permit the newly

appointed Management Committee to carry out the operations of CSITA or to appoint such other person to whom the Tribunal deems fit to supervise

the functions of the newly appointed Management Committee, and to alter the register of members by including the newly elected members as

members of the company, and to declare the amendment to the Article 4 of the Articles of Association dated 05.03.2002 ultra vires for authorising

unto themselves as ex officio members of CISTA.

The Petitioners present case is primarily assailing the amendment dated 05.03.2002, without consent of the Regional Director and approval of the

Central Government, the then Officer Bearers of CSITA amended the Articles of Association (Article 4) empowering themselves, i.e. the Moderator

of the Synod to act as the ex-officio Chairman of the Association, the General Secretary of the Synod the ex-officio Secretary of CSITA, the

Treasurer of the Synod to continue as ex-officio Treasure of CSITA, but this modification, according to the petitioner, was done without taking the

prior approval of the Central Government which is in violation of Rules adumbrated to Section 8 Company. As to other allegations, the company

management indulged in alienating the valuable assets of it, the Management siphoning the funds of CSITA for their luxurious tours and Management

Committee tenure of two years being over in the month Jan' 2016, whatever actions of the Management Committee after expiry of the tenure shall be

declared as null and void and then new Committee got elected after giving notice to the Management shall be allowed to continue as the new

Management committee to discharge the functions of CSITA by simultaneously suspending the Management Committee whose tenure was complete

by Jan'2016 or in the alternative, an Administrator be appointed in the place of ex-managing committee.

Looking at these averments, on filing this Company Petition, though Respondent Company has challenged the maintainability of the Company

Petition, this Bench in the order dated 18.11.2016 made various observations saying as follows as to the Petitions maintainability.

“If we look to the language used in the above mentioned definition of the term “memberâ€, then the membership of R1 company is not

falling within the purview of the definition of Section 2(55) of the Companies Act, 2013 in any manner. Because, in the Articles of

Association of R1 company, it has been provided that the members shall be such persons as shall be elected by the Synod of Church and

1/3rd of the members shall retire at each meeting of the Synod of Church but shall be eligible for re-election. The 1/3rd to retire shall be

those who have been members longest since last elected as members. The Synod shall decide at its first meeting the order of retirement of the

members elected at that meeting. The Synod of church used to be conducted once in two years. But it is alleged in para 4(g) at Page 7 of the

counter that the Articles of Association has been amended by way of insertion of new clauses to the existing clause (4) and clause (7) of

AoA, without seeking leave of the Central Government by which the tenure of the Synod has been increased from two years to three years

and the said exercise of amending constitution of CSI is sham and illegal. The tenure of the membership has expired on 14.04.2016 and the

members so elected by the Synod are continuing without any legal authority, since the membership is under challenge. Therefore, a complex

question of fact is involved in this Petition. In some of the judicial pronouncements, the courts have opined that if a complex question of fact

is involved, then the Petition is not to be thrown out at the threshold and can be heard on the merits even if the petitioner has not established

that he is a member. However, before the relief is finally granted, the petitioner should be able to establish that he is a “memberâ€. Here

in this case, on one hand, the election said to have been conducted by the Synod provide two years tenure of the said members, but the

alleged illegal amendment made in the Articles of Association provides three years tenure of the members so elected. In these circumstances,

the issue of maintainability of the petition cannot he treated as preliminary legal issue as it involves mixed questions of fact and law, which

needs to he tried along with other issues raised. This view is fortified by the ruling given by the Division Bench of the Hon'ble Madras High

Court reported in 1997 (90) Comp. Cas. 2905.â€​

In the following paras of the order, this Bench held that in the meeting dated 16.01.2016 for having more than 200 beneficiaries from 5 States

attended and appointed 53 General Members with the provisions to increase the members for giving representation to all Dioceses upto 88, and 53

new elected members elected 15 Directors, two Officer Bearers Viz. The Chairman and Treasures will carry out the management of the company. It

has been further held that the Petition is in representative character therefore the Petitioner having represented a large number of persons common

interest, the company being a Charitable Institution, this Bench felt that it is a fit case where all requirements are laid down u/s. 244(1)(b) of the

Companies Act, 2013 for filing a Petition under Sec. 241 need to be waived off. It has been further said that to give justice u/s. 244, it must be liberally

interpreted by following a well established maxim, ut res magis valeat quam pereat (it is better for a thing to have effect than to be void). It has

been further stated that the amendment extending the tenure of members for three years has already been declared that the members so elected by

the Synod are continuing without any legal authority, by declaring that the Secretary and the Treasurer have no locus standi to file C.A.12 of 2016

questioning the maintainability is dismissed in limine on the ground that they have no locus to file that. With the said reasoning, this Bench in the order

aforesaid held that this Petition could not be dismissed in threshold because it requires detailed enquiry in to the matter complained of and thus in

exercise of the powers conferred under proviso to Section 244 of the Companies Act, 2013. With this it was held “I waive all the requirements of

Sec. 244(1)(b) of the Companies Act, 2013 by treating the company petition under Order 1 Rule 8 of CPC, as a representative petition r/w.

Sec. 241 for the purpose of proceeding to inquire into the matter complained of Thus the Company Petition is held maintainable. Any of the

observations made above shall have no bearing on the merits of the caseâ€​.

Based on this discussion, by holding the petition is maintainable; this Bench had proceeded to remove all the Directors and the Managing

committee including office bearers by appointing Hon'ble Justice Shri. K. Sampath (Retd.) as the Chairman who is authorised to nominate four

suitable persons to be chosen from the Sub Units/Dioceses of the Churches and three Office Bearers by simultaneously directing the erstwhile

Management Committee to handover all the documents and books of accounts and other records of CSITA to the Registry of this Bench in a sealed

cover within a week from the date of pronouncement of the order.

But the Hon'ble Justice Shri SAMPATH having passed away even before taking up the reins of this company, for no other new Administrator has

been appointed by this Bench, that direction could not take off. In the meanwhile, for this litigation with regard to the election tenure of Synod and over

the investigation initiated against Rl had already been pending before the Hon'ble High Court of Madras and Honourable High Court of Hyderabad,

subsequent to passing the order dated 18.11.2016, the Hon'ble High Court of Hyderabad vide order dated 16.11.2017 in W.P.38814 of 2016 quashed

the order passed by the Government of India u/s. 212 giving liberty to the Government to reconsider the order. Over which, the Government again u/s.

212 on 07.05.2018 passed another order and that was stayed by the Hon'ble High Court of Madras in W.P.25236 of 2018 which is still pending. In

between, this Bench has permitted subsequently elected Office Bearers (not the officers or members shown as elected on 16.01.2016 by the

Petitioner) to administer CSITA by order dated 08.01.2019. The reason for doing so is the orders passed by Honourable High Courts and the newly

elected members are not of the same members cited in this petition. When appeals were filed by another person called Dr. Jayakaran over the orders

passed in Company Suits decided by learned Single Bench with regard to validity of extension of tenure and holding election to Synod, Learned

Division Bench of the Hon'ble High Court of Madras on 15.12.2016 passed common judgement in betweenD r. R. Jayakaran Isaac v. The Church

of South India Synod - (2017) 1 MLJ 385, holding in Para 27 as below:

“We are thus of the view that prima facie the bye-laws cannot be said to be in derogation of the Constitution and thus for the coming

election process both the amended constitution and the bye-laws as framed would applyâ€​.

For the Special Leave Petition in Appeal CC 531 to 532 before the Hon'ble Supreme Court of India was withdrawn on 13.01.2017 and reading

subsequent events in alignment with order dated 15.12.2016 passed by the Division Bench of the Hon'ble High Court of Madras, the subject matter

saying that Management Committee constituted upon election shall be treated as valid and a new management having come in the place against which

this CP has been filed, the Company Petition has to be treated, as per the Respondents, as infructuous. In the Articles of Association of CSITA, it is

being categorically mentioned that office bearers of Synod will continue until next meeting is closed, it has to be treated that erstwhile management

will be valid until next meeting is closed. Moreover when the Honourable Court in the suit itself, it has been held that changes to the constitution of

Synod and amended constitution would apply, since CSITA election follows Synod election, Synod continuing for three years would be valid. When it

was held valid in straight case, this Bench cannot take a different view now.

In addition to the above material, the Respondent counsel has filed IA252 of 2019 assailing the fake power of attorney alleged to be of the CSITA

by the Petitioner in favour of one Mr. Thyagarajan and three fake lease deeds alleged to be of CSITA by Mr. Thyagarajan in favour of the third

parties to show the extent of the impropriety and the illegality committed by this Petitioner and Mr. Thyagarajan in executing those deeds involving

valuable properties held by CSITA without any power either from Synod or from CSITA. On the acts of the Petitioner and Mr. Thyagarajan, CSITA

being aggrieved of, a complaint was filed on behalf of the CSITA to the Commissioner of Police at Chennai; the same was registered as FIR 83/2019

by the Central Crime Branch at Chennai.

The Respondents counsel submits that this Petitioner is only a communicant member of a Church under the Madras Dioceses of CSI, the total

number of members running to about 4.5 Millions and odd. The Petitioner holds no office in the Church, therefore, the Respondents submit that the

meeting conducted by him and the others and the alleged election of the Office Bearers is totally illegal. The CSI and its Dioceses there under are

controlled by the Moderator and the other Office Bearers of the Synod and the Dioceses are controlled by the respective Bishops and the Office

Bearers of the Dioceses. With these submissions, the Respondents sought for the dismissal of this Company Petition with exemplary costs.

In between, the Applicant filed another application (C.A.171 of 2019) seeking a direction for investigation of the affairs of CSITA by appointment

of an Inspector u/s. 213 (b) of the Companies Act, 2013 stating as follows:

“That this Hon'ble Tribunal may be pleased to order that the affairs of the 1st Respondent Company ought to be investigated by

appointment of an Inspector under Section 213(b) of Companies Act, 2013â€​.

The Petitioner says for the Respondents having indulged in various acts of mismanagement, misappropriation of CSITA funds by meddling with

the properties of it, in the manner beneficial to their personal interests by amending the Articles of the Association of the Company to suit their

convenience, those acts shall be investigated by taking cognisance under Section 213 of the Act.

The Petitioner/Applicant says that this Bench itself passed an order dated 18.11.2016 (in C.A.12 of 2016) holding that this Company Petition is

maintainable therefore for there being an urgent need to interfere with the affairs of CSITA, this Bench passed an order for removal of all the

Directors and the Managing Committee by appointing late Hon'ble Justice Shri. K. Sampath (Retd.) as Chairman authorizing him to nominate four

suitable persons to be chosen from the sub units/Dioceses of Churches and three office bearers.

As against this order, when CSITA moved Civil Revision Petition (CRP) before the Hon'ble High Court of Madras, it was dismissed by an order

20.12.2018 giving liberty to the Petitioner to approach the Hon'ble NCLAT. In the meanwhile, the Chairman appointed by this Bench passed away

even before taking up the assignment given to him. During this period, CSITA filed an application for conducting synod elections on 14.01.2017, upon

which, this Bench passed an order to hold that election subject to the outcome of CA49/2016 moved by the Applicant challenging the election process

of synod. This Applicant further stated that the Respondents should not hold the elections before the Synod based on the Article amended without

proper General Body Meeting therefore the Election held on 14.01.2017 shall be declared as invalid.

The Applicant has further stated that when the counsel for the Applicant was not present before the Tribunal, though the Applicant himself made

a request on 08.01.2019 for adjournment, this Tribunal heard the matter and passed orders. He has further stated that this Bench dismissed MAs 19 to

23 of 2018 filed by the supporting respondents as withdrawn, and then dismissed the Applicants/Petitioners request for the interim reliefs against the

alleged newly constituted Board to administer CSITA. The Applicant's case in this case is, no election has been held on 14.01.2017 therefore he

reserves his right on the order dated 08.01.2019 before the Hon'ble NCLAT assailing that such an order ought not to have been passed without going

into the averments made by the Applicant. As to these allegations, it is on record how these applications were dismissed.

The Applicant says that RoC, Chennai issued several show cause notices to CSITA for various irregularities committed by its management and

the Registrar has sent a report to the Central Government recommending for investigation by Serious Fraud Investigation Office and the said

investigation is under progress. The Applicant has mentioned about a company petition CP64/2017 filed by one Mr. E. Premkumar but that was

dismissed by this Bench. It is evident on record that case was dismissed with reasons. The Applicant has further submitted that synod officer shall not

be allowed to become office bearer of CSITA for there being no proper election to Synod. As to allegations and instigations against Rl officials, one -

no adjudication has so far been given, merely by seeing criminal cases against the company, anybody and everybody cannot be seen as entitled to

initiate proceedings under Section 241 of the Companies Act, 2013.

The Applicant has further submitted that one Mr. K. Thomas Oommen (R8) claims to be the present ex-officio Chairman and another person Mr.

Rathnakar Sadananda claims to be the Director, the ex-officio Hon'ble Secretary of CSITA are restrained from acting as officers of the Synod by the

Civil Court of Khammam. The Applicant alleges that CSITA properties are mortgaged when it does not require funds for its day-to-day affairs,

especially when they are getting funds much more than sufficient for running Church. The Applicant has further stated that the Respondent Company

has not submitted its Balance Sheet to the RoC and to the Income Tax Department for more than three years. The Applicant has further stated that

this Bench instead of permitting the alleged elected members to discharge their functions, this Bench should have nominated another Rtd. Judge as

new administrator as a sequel to the order dated 18.11.2016 earlier passed by this Bench.

The Applicant has further submitted that RoC Chennai by their report dated 12.01.2016 pointed out that 27 irregularities are found in the affairs of

CSITA, in pursuance thereof, 43 criminal cases were instituted against CSITA and they are pending on the files of Economic Offenses Court,

Egmore, Chennai. The case against Mr. Dyvasirvadam Govada (R5) and Mr. Samuel Sudhir (RIO) filed by CB-CID, Vijayawada and Orders of Civil

Court Khammam, Telengana restraining Mr. Thomas Oommen, Kanjirapalli (R8) from acting as moderator shall be taken into consideration. The

Applicant has further stated that the Central Govt 07.05.2018 ordered for investigation into the affairs of CSITA by SFIO under Sec. 212 of the Act.

On the order dated 13.12.2017 passed by Central Government, when R1 had preferred WP25236/2018 challenging the order dated 07.05.2018 passed

by Central Government, the Hon'ble High Court of Madras stayed the order passed by the Central Government therefore, the present application u/s.

213 of the Act will not interfere with the order of the Central Government hence sought for direction u/s. 213 (b) of the Companies Act, 2013. When

the Honourable High Court already stayed the proceedings u/s 212, how this Bench could pass a relief under section 213 of the Act. If it is assumed

the proceedings initiated under section 212 are not stayed, even then where is the question of providing the same relief taking to the logical end what

comes in section 212 of the Act.

While the Petitioner filed the above application seeking investigation, R1 has filed IA252/2019 to submit how this petitioner and one Mr.

Thyagarajan created third party interest over the assets of the Company without any right to deal with the assets of the company.

In this Application, CSITA has raised a point that since the Petitioner himself asked a relief for appointment of the office bearers allegedly elected

by the members purportedly on 16.01.2016 as managing committee of members of CSITA and permitted them to be new office bearers to take over

the office and carry out the functions as managing committee of CSITA, how this Petitioner as well as another person Mr. Thyagarajan could execute

several documents mentioned above creating lease over the properties of Rl company without having any position in R1 company.

In view thereof, he has sought for inclusion of those documents as part of the record enabling the Respondents to disclose the fraud high handedly

manifested by the Petitioner and his men.

As to IA252 referred above, the Petitioner submits that he has not denied the transactions mentioned in the Application, but his only argument is,

the person filed the above application has not been authorized to file the IA and all these alienations were done so as to pay Mysore Municipalities Tax

and as to the Lease Deed directly executed by Mr. Thyagarajan, the Petitioner says he need not rebut the allegations against Mr. Thyagarajan

because he is not a Respondent in this Application. As to other Lease Deeds executed by the Power of Attorney of the Petitioner to Mr. Thyagarajan,

he has stated that it was leased out so as to meet the urgent needs, out of Rs. 24,00,000 received as advance at a monthly rent of Rs. 15,000 he says,

a sum of Rs. 20,65,706 was paid on behalf of CSITA towards the defaulted dues and remaining income was deposited in the Bank account of the

company.

As to the Lease Deeds executed by Mr. Thyagarajan on 20.12.2017 and 29.11.2018, the Petitioner says he has not authorized Mr. Thyagarajan to

execute those Lease Deeds, except to the extent of Power of Attorney dated 22.10.2018 for execution of Lease Deed dated 13.11.2018.

On notifying the factual aspect mentioned above, now the points for consideration are as follows:

1). Whether this CP is maintainable for it has been filed by a non-member of the company.

2). Whether Sec. 241 application is maintainable with regard to the affairs of the Sec. 8 Companies:

3). Whether a person on his own holds meetings and elections thereafter seek an imprimatur of this Bench to the actions of him.

4). Whether any case has been made out u/s. 241 of the Companies Act, 2013 against the Respondents herein.

For point 1 and point 2 could be dealt with together, they have been decided as follows:

1). Whether this CP is maintainable for it has been filed by a non-member of the company.

2). Whether Sec. 241 application is maintainable with regard to the affairs of the Sec. 8 Companies:

It is a case filed by a non-member u/s. 241 of the Act by stating that though he is not a member of the CSITA, since CSITA has come into

existence for the benefit of the members of CSI, this non-member issue cannot be construed as this Petitioner is not entitled to initiate section 241

proceeding against CSITA. Moreover, the Petitioner and the consenters stated that since CSITA has come into existence to work for the good of

CSI, moreover this Petitioner having conducted General Body Meeting of the members of CSI and held an election to constitute a Managing

Committee, it shall be permitted to take over the charge of CSITA for CSITA's earlier members tenure had expired and the elections were not being

held despite notice given by the Petitioner, in view thereof, General Body meeting was held and the elected body shall run the company for it has to

cater the needs of 4.5 Million members of the Church. The defence of the Respondents to this case is:

This Petitioner is not the member of this Sec. 8 company, it is no doubt that this company has come into existence in the year 1946 u/s. 1913 with

a licence to be a Trustee to the properties of the Church of South India spread over all over Southern India with more than 20 Dioceses, a member out

of millions of Church Members cannot thwart the functioning of this company just by holding a meeting of three four hundred church members out of

4.5 million members and thereafter file a case saying that this company having not held elections within two years and having indulged in fraudulent

activities, the company's administration shall go into the hands of an Administrator pending disposal of this case and thereafter to allow this so called

body to take over the company is void ab initio in the eye of law. As there is a provision that Synod Officers will function until next meeting is closed,

the petitioner's argument that Synod officers' continuation shall be declared void has no merit, moreover for the Honourable High Court having

considered amendment as valid, it cannot be construed as tenure is over by the completion of two years.

Since this issue is limited to examining as to whether a non-member can file Petition u/s 241 of the Act, unless it is self evident that petitioner is

“a member†of the company, this petition shall not be extrapolated to say that since complexities are involved in this case, the prerequisite of being

a member can be done away.

As to maintainability is concerned, if requisite qualification is not there, if at all waiver is a requirement, it could be granted under the proviso to

Sec. 244 of the Act.

The doctrine in Oppression and Mismanagement is, the persons managing the affairs of the company shall not act unfairly so as to cause prejudice

to the members of the company. The reason for manifestation of cause of action is, at times, the actions may be legal but if such action is invented

solely to cause prejudice to the economic interest of the member because every company comes in to existence to get profits out of it, to meet the

legitimate expectations of the members as per the understanding from the Memorandum of Association and Articles of Association, by and large, the

object of incorporation of company being for earning profits, and to ensure that management remains not unfairly prejudicial to a sect of members, the

member unfairly prejudiced can proceed against the Management to arrest such kind of unfair prejudice against him or them. But to initiate such

action under Section 241, he shall have either 10% shareholding or 1/10th in number out of number of members of the Company; in this case leave

alone fulfilling either of the mandates, this petitioner is not even a member of the Company.

If at all, the persons conducting the affairs of company get involved either to have personal gain or to cause loss to the members, who cannot

control the company, that being unfair and a visible departure from fair play, member who is aggrieved of such action is given an extraordinary relief

to seek remedy against such an action. Here the concern must be, it is not an ordinary relief, it is indeed an extraordinary relief so as to curtail the

majority remaining unfair to the minority against the general expectations of these aggrieved parties when they have come into the company.

As to this company, it is a company that has come in to existence with a fiduciary duty to deal with the economic affairs of CSI. There is a multi-

layered election processes so to become members of this company. The persons acting as members of CSITA are in fact first elected by various

Parishes falling under more than 20 Dioceses. And these parishes' members will elect people to Diocesan Council and also in Synod Council. These

Synod members will in turn elect the members to this company.

The affairs of Synod i.e. Moderator, Dy. Moderator, Secretary, Treasurer will become ex-officio members along with the elected members of

CSITA. When this membership has been refined from layer to layer, how an ordinary member, one among millions of Church members can throttle

the entire process by filing an application showing an election held with some 250 members out of millions of members and take over the functioning

of the Body which has been running with the acceptance of these 4.5 Million of people through direct and indirect elections. An action which is not

directly permitted cannot be indirectly considered as valid with an excuse that the petitioner being one of the Church members along with the support

of 250 members.

The origin of this remedy has come into existence about 80 years, before advent of this remedy, whenever an aggrieved shareholder filed a case

stating that the action of the management is either fraudulent or oppressive against a member or members, wherever such action was considered as

just and equitable, companies were wound up. To get over this difficulty of winding up of companies on this just and equitable ground, this concept

was developed to ensure that the company continue with its functions by arresting or removing the wrongful action which is considered as prejudicial

to the economic interest of the members. With this being the objective, how a non-member could file application u/s. 241, if a non-member is

aggrieved, when there are other reliefs available under law.

The star argument of the Petitioner herein is that, since this Bench has already stated that this Petition is maintainable even though he is not the

member of the company, the petitioner grievance shall be considered under section 241 of the Act, instead of going in to as to whether that order is

right or wrong, as it has been left open to decide at the final hearing, this Bench is entitled to go into it.

Qualification given one to ten cannot be read as qualification zero to ten. Here this person is a non-member; “a member†u/s. 241 cannot be

read as non-member just because an application could be allowed even a short fall is there to the qualification u/s. 244 of the Companies Act, 2013.

However, this Bench ordered that the CP is maintainable owing to some complexities, therefore, it has been left open to decide this issue at the time

of final hearing.

We must also make it clear that all interim orders will be merged with main order; an interim order decided with a prima facie view can never be

treated as res judicata to the main order passed. Here in this case in the interim order, the Bench has stated complexities are there, therefore left open

to decide the issue of member qualification at the time of main hearing, in view thereof, we do not find any merit in the argument of this Petitioner

saying that since interim order has been passed in his favour, the maintainability issue cannot be examined at the time of main hearing.

Though it is not to make an observation against the interim order passed saying that this petition is maintainable, the basic standard under law is

whenever a threshold is set out in the law to initiate proceeding, first that issue shall be looked into at the time of filing, if it is slipped out at the time of

numbering, it has to be considered at the time of mentioning. The reason behind this doctrine is, the statute has not left any jurisdiction to the judiciary

to consider petition filed by a non-member. The subject matter jurisdiction comes to this Tribunal only when the petitioner crossed the test of being a

member of the company. Unless the petitioner has passed that test, the Tribunal ought not to have looked into the petition.

We would not have dealt with this issue and especially prima facie view taken at the earlier point of time, but because the petitioner counsel

himself vehemently argued that this Bench should not look into maintainability issue on the ground this Bench has already decided the maintainability

issue.

As per Wharton Law Lexicon, “prima facie evidence†means which is not being inconsistent with the falsity of hypothesis,

nevertheless raises such a degree of probability in its favor that it must prevail if it be credited by the jury, unless it be rebutted, or the

contrary proved; conclusive evidence, or at least tends to exclude, the possibility of the truth of any other hypothesis than the one attempted

to be established.

Before further elaborating this concept, we must also state that there are three steps/Rules to cross before passing any relief based on prima facie

to the party asking.

Rule: 1 - the party shall satisfy that this Tribunal has jurisdiction to entertain the petition, under Companies Act, the jurisdiction conferred upon

NCLT is section based jurisdiction, it must always be in the back of everybody's mind that NCLT has no omnibus jurisdiction to deal with the entire

Act, therefore when right of initiating action under section 241 is qualified, unless that threshold is met, petition numbering itself shall not happen, yes it

could be numbered when qualification is not met, if waiver application has been simultaneously filed showing he has no requisite shareholding or

number, then it should be examined in the perspective mentioned in Section 244.

One subtle difference to be taken cognizance while considering waiver under section 244 is, one to ten threshold discretion is left to the Tribunal

but not from zero number or non member, of course precedents are there to entertain petition when a composite petition of section 241 r/w section

58/59 comes, such as when factum of shareholding itself is in dispute, this factum of dispute shall be such that either the petitioner shall prove share

certificates ought to be issued which has not been issued or transmission ought to have taken place but has not taken place. Beyond this, when the

petitioner himself has not proclaimed himself as member, such person cannot initiate proceeding under Section 241 of the Companies Act, 2013.

This is all about jurisdiction, in view of the above legal principle, waiver entailment under section 244 cannot be construed as contra entitlement to

a non-member to file petition. If such transgression is allowed, it will become in violation of “a member†rule set out in Section 241 of the

Company Petition. Therefore “a member†principle is not in compliance, neither section 241, nor section 244 jurisdiction is open either to the

petitioner to file petition or to the Tribunal to entertain such petition. This is about Rule-1.

About Rule-2, when Rule 1 is complied with, Rule 2 could be split into three, Sub Rule-1 is as to whether petition is against the Proper and

necessary Respondents, here proper Respondents as per section 241 are persons in management of the affairs of the company, where in the

aggrieved is “a memberâ€, if it is in compliance, Sub Rule 2 is as to whether any action of the necessary Respondents is complained of, if

complained, next Sub Rule (i.e., 3) is to see as to whether such action is prejudicial to the public interest or in a manner prejudicial or oppressive to the

complaining member or members or in a manner prejudicial to the interest of CSITA or any material change has been brought in the management or

control of the company by change of Board of Directors or in the ownership of the company's share or if it has no share capital, in its membership

which is likely that the affairs of the company will be conducted in a manner prejudicial to its interest or its members or any class of members.

About Rule-3, if Rule-1 and Rule-2 compliance is present in the Company Petition then it could be said that the company petition has cause of

action to proceed against the answering Respondents. After this cause of action is ascertained from the Company Petition, then a situation will arise to

see as to whether prima facie evidence is there to pass an interim relief or to proceed further with regard to the Company Petition filed.

We must also make it clear that this Rule compliance will come stepwise; if step 1 is complied, then compliance of step 2 will arise. If Step 1 and 2

are complied with, then step 3 compliance will arise. If step-2 compliance is seemingly present, without compliance of step 1 i.e. Rule-1, that Petition

shall be dismissed for the reason the complaining party is not a member of a company. When Rule-1 and Rule-2 are accomplished, then case will pass

on from jurisdictional point to cause of action point.

If jurisdictional point as well as cause of action points are complied with, then question will arise as to whether prima facie view could be taken or

not. In the present case, this complainant failed to pass Rule-1 test itself, therefore the question of entertaining this Petition to Rule-2 as well as Rule-3

compliances will not arise. In one way, it could be said, the Petition could be dismissed at threshold itself, because, Tribunal has to always to put a test

to itself as to whether it has jurisdiction to exercise its powers under the sections specified. Ordinarily Tribunals, for that matter even Courts are also

not expected to extrapolate the jurisdiction so as to get the jurisdiction to deal with the case. Normally, determination of jurisdiction is not to be

construed as discretion available to a Judge. Exercise of jurisdiction will arise only when Court is fit in within the jurisdiction given by the Statute. In

the given case, the Applicant is admittedly not a member of the company. Who is a member of Rl Company is decided by the Articles of Association,

if membership is on a rotation basis, which alone has to be considered as criteria to decide who the member is and who the member is not. Merely

because membership is on rotation it cannot be said that anybody could be treated as member of the company. Section 241 petition itself is

representative in character, it cannot be further be made open to make a non member to canvass the assumed cause as a cause of action of a

member of the company.

In this perspective, for this Bench in the earlier order dated 18.11.2016 having categorically mentioned that the discussion in that order will not

have any bearing on the merit of the case and having left it open to decide it at the final hearing, we are of the considered opinion that the assumed

prima facie view will not have any bearing over this order for two reasons; one - an interim order always merges with the final order and two - as to

maintainability, since order dated 18.11.2016 has left it open to be decided at the time of final hearing, it cannot be called as resjudicata against this

order.

Prima facie view of consideration will come into operation when the petition under consideration is indicative of likelihood of getting a decree in

favor of it unless and until that seemingly insurmountable materials are available on record is rebutted by the answering Respondent, at times courts

grant an exparte ad interim relief looking at the material shown as sufficient to pass decree, but when other side later present and show the material

shown by the plaintiff/petitioner could not make out a case, may be on the ground itself, the interim order shall be vacated.

We must also feel it is relevant to refer a case in between Mohanratn Shastri v. Swadharma Swarajya Sangha, (1995) 83 Comp CAS 272, it

has been held that the right of the Petitioners u/s. 25 of the Act (1956) is only to ensure that the charitable objects of the company are carried out and

certainly the personal benefits of the Petitioner do not at all come in to the picture, the scope of Sec. 397 of the Act, 1956 is rather curtailed in the

case of Sec. 25 Company.

In view of the aforesaid elucidation, to some extent it could be said that the profit concept not being present, at least to the extent of academic

interest of member is concerned actions with regard to the affairs of Section 8 Company; it cannot be called as prejudicial at least to the members. As

to prejudice against the company, if such allegation is made, there must be a material specifying each action and the effect thereof. In this case,

except general and omni bus allegations, no specific allegations are made indicating x, y and z persons have indulged in specific actions with

particulars, and therefore the management of a company elected through a multi layer arrangement with approval of 4.5 million church members or

perhaps communicant members cannot be simply reversed.

The Petitioner is one of the communicant members, even if 24 Consenters are taken into consideration; they are part of 4.5 Million of the church

members. The church members at the parish level elect and send delegates to Dioceses, and Synod members. Synod members will elect members of

CSITA. This being the arrangement, there is no scope to assume that this Petitioner or 24 Consentors to this Petitioner or 200 members alleged to

have attended the alleged General Meeting on 16.01.2016 can be equated with members of CSITA who have reached to CSITA passing through two

layers of election. Therefore this Company Petition is not at all maintainable.

For the sake of completeness, we have even gone through little bit down to examine other issues assuming this Company Petition is maintainable

to find out as to whether this petition is sustainable on other grounds.

3). Whether a person on his own holds meetings and elections thereafter seek an imprimatur of this Bench to the actions of him.

Notwithstanding the outcome of maintainability, for the sake of completeness and also to avoid unending litigation, we hereby deal with other

issues also as if he is entitled to maintain this Company Petition.

It is the case of this Petitioner, that he issued a notice to Rl company on 07.12.2015 when the company did not hold General Body Meeting, the

Petitioner says, for he being entitled to hold General Body Meeting, a General Body Meeting was called and thereafter elected the body and then

sought for approval of this Bench to allow that body to take over the management of the company.

To give a requisition notice to the Board to call an Extraordinary General Body Meeting of the company, as on the date of requisition, the members

giving such requisition meeting must have one tenth of the total voting power of all the members as on the date of requisition notice, after giving such

notice, if Board does not call for meeting within 21 days from the receipt of a valid requisition, the requisitionists can proceed to call a meeting for the

consideration of that matter on a date not later than 45 days from the date of receipt of such requisition.

In this case, it is not the case of the Petitioner that either he himself or the consenters are the members of Rl company, his case is only that they

are Church Members (Parish members) therefore since they have been seeing that the company properties are being alienated for the personal gain

by committing fraud, they should be allowed to hold meeting. Another point is, since the election was not being held even after completion of two

years, the Petitioner and his consenters gave a notice for holding a meeting. Whenever such notice is given, as per the procedure, even it is not

mentioned a notice u/s. 100, it is imperative to construe that notice falls within the ambit of Sec. 100. in this case, these people are not even entitled to

give such requisition notice.

To consider that notice u/s. 100, the persons giving notice must be the members of the company and there shall not be less than one tenth of

number in members shall be there for giving requisition notice u/s. 100. Even if worse is taken into consideration that all Church members are eligible

to be members of R1 company, for the Church members being 4.5 Million even according to the Petitioner, how 250 members could give a notice or

even give a requisition notice for holding EGM so as to pass a resolution. To say that the Petitioner has followed the procedure in holding the so called

election, it shall be the duty of this Petitioner to show how many members are on the roles of R1 company, how may of them issued requisition notice

and whether such members are one tenth in number of the members of R1 company. Here nothing has been shown. Here no Register has been

shown. There is no statement that 250 members are members of the R1 Company. When the action taken by this Petitioner itself is in contravention

to the provision of law and flouting all the rules under Rule Book, how can he be considered as aggrieved before this Bench to seek an imprimatur of

this Bench to an illegal action without any basis for such approval? The Petitioner has gone to the extent of setting up letterhead of the company to

prepare a resolution showing as if a committee has been constituted to R1 Company. Basic requirement to interfere with the Indoor Management of

any company is that the person shall be either shareholder or member of the company. This Petitioner is neither of them.

In view of the reasons aforementioned, we do not find any merit in the argument of the Petitioner saying that the Managing Committee elected by

the so called 250 members as valid.

4). Whether any case has been made out u/s. 241 of the Companies Act, 2013 against the Respondents herein.

When it comes to the facts of the case, it is evident that this Petitioner is a non-member and his consenters are also non-members, it is a Sec. 8

company, the allegations in the Petitions are sweeping allegations without any particulars of that person in the management who is alleged to have

committed an act and how such an act has become prejudicial to the interests of the Petitioner or Consenters to the Petition, the Petitioners have

failed to prove that they are the members of the company, he has failed to prove that his economic interests or the consenters economic interests is

involved. And it is pertinent to mention no particulars are provided reflecting the conduct of the persons in management of CSITA caused unfair

prejudice to the interest of the company, except relying upon some cases initated by the ROC, if relied upon those cases, then also it is the petitioner's

duty to explain independently that such and such action falls within the jurisdiction section 241 of the Companies Act, which the petitioner has not

done.

He has stated that 49 Criminal cases are slapped against R1 Company but has not mentioned anywhere which case is prejudicial to him or his

consenters whether any unfair play is there, any lack of probity is there causing prejudice to the interest of them or the company.

Whether the properties set to have been alienated or mortgaged or any of the persons of the management of R1 Company and that has also not

been said. It is a fact that properties of CSI are spread all over India, the said properties are in fact are under the control of respective Dioceses. If

any fraud or siphoning has taken place at the level of Dioceses, it cannot be straight away said that it is an unfair play against these members or

against Rl Company. First it has to be ascertained how much control Rl company has over the respective assets, and whether the persons managing

the Rl company are really involved in such an action, if at all involved, whether such action is a action committed with a fraudulent intention and

whether such action has already been determined as fraudulent action by the management, if so, whether such action has caused or will be causing

prejudice either to the members or to the company. If at all any prejudice is caused, ultimately it has to be seen whether such action could be treated

as a just and equitable ground for winding up of the company. Even if action is unfair and prejudicial to any of the members, for passing a relief under

Sec. 242 of the Companies Act, 2013, second condition in the twin condition to pass reliefs i.e. just and equitable ground for winding up shall be

proved. There is not a whisper over this point in the Petition. By filing one or other application, this Petitioner has prolonged this litigation so far.

Every action that is falling under Sec. 213 or any unlawful actions falling under any of the companies act cannot be straight away considered as an

action attracting the provisions of Sec. 241 of the Companies, Act, 2013. The checklist and the measurement to bring it within the ambit of Sec. 241

are altogether different, here the Petitioner has miserably failed to establish any case u/s. 241 of the Companies Act, 2013.

Therefore, this Company petition and CA/171/2019 are hereby dismissed as misconceived. As to IA/252/2019 filed by R1, for the argument of

the petitioner is not that those documents are not executed, it is disposed of by taking the documents filed into consideration.