CS(OS)1195/2008 Page 1 of 28 *IN THE HIGH COURT OF DELHI AT NEW DELHI + CS(OS)1195/2008 Date of Decision: 21st April, 2009 SHRI DEEPAK R. MEHTRA & ORS….… Plaintiff Through: Mr. Paramjit Singh Patwalia, Senior Advocate, Mr. Saurabh Suman Sinha, Mr. B.B. Gupta, Mr. Aman Preet Singh Rahi , Advocates for the Plaintiff Versus NATIONAL SPORTS CLUB OF INDIA ……Defendants &ORS. Through: Mr. V.P. Singh, Senior Advocate and Mrs. Anju Bhattacharya, Advocates for the Respondent No. 1 Mr. Vinay Bhasin and Mr. B.R. Handa, Senior Advocates and Ms Hiteshi Arora, Advocates for the Defendant No. 2 Mr. Mohan Batra, Advocate for the Defendant No. 31 Mr. D.K. Rastugi and Ms. Shawana Bari, Advocates for the Defendants No. 2, 21,32, 34, 35, 37, 40, 50 and 51 Mr. Amit Sharma, Advocate for the Defendants No. 7, 9, 29, 30, 33, 36, 39, 45, 46, 48 and 54 Ms Prerna Mehta, Advocate for the Defendants No. 55 to 59 CORAM :- HON’BLE MR. JUSTICE RAJIV SAHAI ENDLAW 1. Whether reporters of Local papers may be allowed to see the judgment? Yes 2. To be referred to the reporter or not? Yes 3. Whether the judgment should be reported in the Digest? Yes RAJIV SAHAI ENDLAW, J. 1. The suit entails interpretation of the rules & regulations of the defendant No.1 club, the power/jurisdiction of this court to do so and the reliefs if any flowing from such interpretation. The suit was accompanied with an application for interim relief being I.A.No.7420/2008. After the service of the defendants and during CS(OS)1195/2008 Page 2 of 28 the hearing on 26th September, 2008 it was agreed by the counsels for all the appearing parties that the question whether the President of the Club can be elected from amongst the members of the Central Council of the Club only or can be any other member of the Club depends on the interpretation of the rules of the Club and the parties do not need to lead any evidence for the said purposes and the decision on the said interpretation would govern the decision on the suit itself. The facts discussed hereinbelow shall thus be confined to this aspect only. The suit itself to the above extent is for disposal. 2. The five plaintiffs are the members of the Club and of which the plaintiffs No.1,2&3 are also the elected members of the Central Council of the Club. The constitution of the Club is as a society registered under the Societies Registration Act, 1860. The defendant No.2 is pleaded to have usurped the post of the President of the Central Council of the Club, in spite of not being a member of the Central Council. The defendants No.3 to 59 are the other members of the Central Council of the Club. 3. The Club has 20,000 members, of which 5,000 are in Delhi and approximately 15,000 in Mumbai; the defendant No.2 has been the President of the Central Council of the Club continuously for the last over 15 years; CS(OS) No.1243/2006 was instituted by some of the members of the Club inter-alia for directions as to the election to the Central Council of the Club; in the said suit vide order dated 25th April, 2007, Justice (Retd.) S.K. Agrawal was appointed to ensure the smooth conduct of elections and to settle any issues that any party may have with regard to the conduct of the elections, for a period of four years from 2007 to 2010; election to the 14 vacant posts of Central Council was held on 7th October, 2007 and 14th October, 2007 in Delhi & Mumbai respectively and in which the CS(OS)1195/2008 Page 3 of 28 defendant No.2 as well as the candidates stated to have been fielded by him lost the election to the Central Council; that a meeting of the AGM of the newly constituted Central Council was held on 24th October, 2007 in which objection was taken to the chairing of the same by the defendant No.2; that the said AGM was adjourned and stated to have not been held till the institution of the suit; that a meeting of the Central Council was held at Delhi on 8th December, 2007; CS(OS) No.2368/2007 was filed before this court seeking directions for conduct of the elections to the post of President and other post of Executive Committee of the Club, in this court; on 17th December, 2007 vide order in the said suit Justice (Retd.) S.K. Agrawal was appointed as an observer for the elections to the Executive Committee by the Central Council; that in the said meeting the defendant No.2 declared himself to be the President and sought to chair the meeting in such position; upon representation by certain members of the Central Council the observer appointed by this court decided that no non-member could be present at the time of elections to the Executive Committee by the Central Council and that the elections be held through secret ballot; applications in this regard were filed in CS(OS) No.2368/2007. 4. CS(OS) No.2368/2007 was disposed of by this court vide judgment dated 24th March, 2008 laying down directions for holding of the elections to the Executive Committee by the members of the Central Council. Another meeting of the Central Council was held on 17th May, 2008, in which the Secretary General of the Club produced a prepared list signed prior to the meeting by 32 members of the Central Council supporting the name of defendant No.2 as the President of the Central Council and in pursuance to which the CS(OS)1195/2008 Page 4 of 28 defendant No.2 occupied the office of the President of the Central Council. 5. This suit was filed seeking the reliefs of declaration that a non- member of the Central Council could not be an office bearer of the Central Council; declaration to the effect that the decision taken in meetings purportedly of the Central Council but in which others had participated were not the meetings of the Central Council and the decisions taken therein were not of the Central Council; for declaration of the election of the defendant No.2 as the President of the Club and the decisions taken by him as President of the Central Council, as illegal and a decree for permanent injunction debarring the defendant No.2 from attending the meetings of the Central Council or Executive Committee and Regional Committees of the Club. However, the hearing of the suit has been confined as aforesaid to the aspect of interpretation of the rules qua the President only. This judgment is thus confined to that aspect only. 6. The Club filed a written statement taking the following defences:- a. That under the rules & regulations of the Club there is nothing restricting the election of the President from amongst the members of the Central Council only. b. The role of the Central Council was like that of an electoral college which elects the office bearers and there was no restriction whatsoever on any member from contesting the elections. c. That in all the past years, the members of the Club have interpreted and applied the rules & regulations of the CS(OS)1195/2008 Page 5 of 28 Club as not limiting the office bearers to the members of the Central Council. d. All members of the Club have the right to hold, or contest the election for the post of office bearers of the Club unless specifically excluded by the rules & regulations. The rules & regulations do not provide any such exclusion. e. The rules & regulations do not confer any management power on the Central Council and save as an electoral college, all the powers are vested in different bodies and there are no residuary powers to be exercised by the Central Council. f. That the majority view is binding on all the members of the Club, the plaintiffs who are in minority are not entitled to approach this court to override the view of the majority. g. The present suit is in the nature of a challenge to the election and in an election the will of the majority prevails and cannot be overridden by the court. The Club thus supported the defendant No.2 7. The defendants No.56 to 59 filed affidavits supporting the plaintiffs. The defendant No.2 filed a separate written statement taking inter-alia the same pleas as the Club. Defendants No.32,34,35,37,40,50,&51 also filed a written statement inter-alia supporting the Club and the defendant No.2. The plaintiffs filed the replications to the aforesaid contesting written statements. The CS(OS)1195/2008 Page 6 of 28 other defendants did not file any pleadings. The senior counsels for the plaintiffs, Club and the defendant No.2 have been heard. 8. In view of the aforesaid state of proceedings, though the stage for framing of issues did not arise but in my view the adjudication has to be on the following aspects and on which the hearing also was confined:- A. Whether this court ought to interpret the rules & regulations of the Club in spite of the majority of the members of the Central Council of the Club having interpreted them to mean that even a non-member to the Central Council can be the President of the Club or this court should refrain from doing so, being an interference with the internal management of the Club. B. If the court is to exercise the jurisdiction to interpret the rules & regulations, whether the rules & regulations permit a non-member of the Central Council to be the President thereof. C. If the said interpretation is to be found in favour of the plaintiffs, what consequential reliefs are to be granted to the plaintiffs in the suit. 9. As far as the objection to the jurisdiction of this court is concerned, undoubtedly the consistent view is that the courts should refrain from interfering with the internal management of a society or a Club. The said societies/Clubs are governed by their own Charter and the court is not to sit in appeal over the decisions taken by the management or the majority in the society. However, in my view, that principle is limited to the decisions taken in accordance with the said Charter or rules & regulations. Once it is found that the CS(OS)1195/2008 Page 7 of 28 decisions have been taken by the persons authorized to take such decisions under the said Charter/rules & regulations and/or in accordance therewith, the courts will not interfere with the same, even if challenged by the persons or members aggrieved by the said decision. However, such decisions are to be distinguished from cases where the challenge is not to the decision itself but to the authority under the Charter/Rules & Regulations of the person taking the decision and/or where the dispute is as to the interpretation of the Charter or the rules & regulations, as in the present case. Such disputes having arisen, if the courts are to refrain from exercising their jurisdiction, it would tantamount to the aggrieved persons being left with no remedy at all, in as much as the management of the society or the Club could then be hijacked by persons not authorized under its Charter/Rules/Regulations to do so. 10. In the present case, it is more so in view of the Observer appointed by this court having found on the interpretation of the rules & regulations of the Club that a non-member to the Central Council could not be the President of the Club and the judgment dated 24th March, 2008 in CS(OS) NO.2368/2007 also finding so; of course the senior counsels for the Club and the defendant No.2 have urged that that part of the judgment though final is obiter. It is significant that in spite of the finding of the observer and the judgment aforesaid, in the meeting of the Central Council of the Club held on 17th May, 2008, no regard whatsoever was shown to the same. In these circumstances, in my view, the suit by the members of the Club or of the Central Council, for declaration that a non- member to the Central Council cannot be the President thereof or of the Club, lies before this court and cannot be thrown out on the doctrine of indoor management. Here no aspect of indoor CS(OS)1195/2008 Page 8 of 28 management of Club is involved, but the interpretation of the rules & regulations of the Club is for consideration. I must record that though objection in this regard is taken in the written statements but neither arguments were addressed nor any case law cited in this regard. 11. The Apex Court in T.P. Daver Vs Lodge Victoria AIR 1963 SC 1144 held that jurisdiction of a civil court in such matters is rather limited; it cannot obviously sit as a court of appeal from decisions of such body; it can set aside the order of such a body, if the body acts without jurisdiction or does not act in good faith or acts in violation of principles of natural justice. The Apex Court again in B.C.C.I. Vs Netaji Cricket Club AIR 2005 SC 592, in para 82 of the judgment held that an association or a club which has framed its rules are bound thereby. The strict implementation of such rules is imperative – Necessarily, the office bearer in terms of the Memorandum and Articles of Association must not only act within the four corners thereof but exercise their respective powers in an honest and fair manner. In Kalyan Kumar Dutta Gupta Vs B.M. Verma AIR 1995 Cal. 140 (DB), the civil court was held to have jurisdiction where allegation was that the club had followed a procedure not warranted by the Rules of the Club. 12. Rule 98 under the Chapter “President” in the rules & regulations of the Club relied upon by the senior counsel for the defendant No.1 is as under:- “If any question arises regarding in interpretation of these rules or any bye-laws or regulations of the Club the same shall be referred to the President and in his absence to the Vice-President for his decision and his decision shall be final and conclusive.” CS(OS)1195/2008 Page 9 of 28 13. The interpretation in the present case is concerned with who can be the President. Such an interpretation in my view cannot be left to the President whose election or eligibility to be the President is under challenge. It is the basic principle of natural justice that none can be a judge in his own cause. If the interpretation of the Rules and Regulations as canvassed by the plaintiffs is found to be correct, there would be no President who can interpret the said rules & regulations. In this regard Daly’s Club Law, 6th Edition cited with approval in Chiranjan Jadavji Pandia Vs Bhupesh Chandra Dutt, AIR 1979 Cal. 289 can be quoted. “The Club cannot oust the jurisdiction of the courts by making the committee the final arbiter on questions of law; and the construction of the Rules is always a question of law.” 14. I thus hold that this court ought not to refrain from adjudicating the controversy as in this suit, on the defence of the principle/doctrine of indoor management. 15. The next point of controversy is regarding the interpretation of the rules & regulations qua the election of the President of the Club. The relevant rules & regulations of the Club in this regard are mentioned herein below:- a) Rule 1(d) provides:- The “Central Council” means the Council of the Club constituted of the members for the time being of the Central Council as provided in these rules. b) Rule 1(e) is as under:- The “Executive Committee” means the Committee of the office bearers of the Club constituted of the members for the time being and from time to time CS(OS)1195/2008 Page 10 of 28 of the Executive Committee as provided in these rules. “Regional Committee” means the Committee constituted by the Executive Committee to look after the affairs of the Region as provided under the rules c) Rule 1(h) as provided under the rules:- “President” and Vice-President” unless the context indicates otherwise, shall mean the President and Vice President of the Central Council and the Executive Committee under these rules. d) Under the Chapter “General Meetings of the Club”, the following Rules are relevant. 33. A General Meeting shall be held once at least in every year at such time, not being more than 15 months after the holding of the last preceding General Meeting and at such place as may be determined by the Executive Committee. Such General Meetings are to be called the “Ordinary General Meeting” and all other General Meetings are to be called “Extraordinary General Meeting”. Rules 40,43,45 &46 are as under:- 40. Every Ordinary General Meeting shall be competent, notice having been given for the purpose for which it is convened and of the business to be transacted there at, to receive and adopt the audited accounts and the Annual Report of the Executive Committee and of the Auditors, to receive the report of the Scrutiny Committee appointed under R.55(c) and to announce the names of the members elected to the Central Council as a result of the Ballot; to appoint the auditors for the ensuing year and to fix the remuneration of the auditors and to transact any other business which under these rules ought to be transacted at an Ordinary General Meeting and any other business of which special mention shall have been made in the Notice or Notices convening the meeting PROVIDED THAT the Executive Committee may for any adequate reason extend the period of the holding of such meeting. CS(OS)1195/2008 Page 11 of 28 43. The President of the Central Council and in his absence the Vice-President shall be entitled to take the chair at every General Meeting. If there be no President or if at any meeting the President is not present within 15 minutes after the time appointed for holding of such meeting or is unwilling to act, the Vice-President shall take the chair at a General Meeting. If there be no Vice- President or if at any meeting the Vice-President is not present within fifteen minutes after the time for holding of such meeting or is unwilling to act, the members present shall choose someone of their number to be the Chairman of that meeting. 45. Every questions submitted to a General Meeting shall be decided on a show of hands and in case of equality of votes, the Chairman shall have a casting vote. No member shall be entitled to vote by proxy of attorney. On a show of hands every member present in person and entitled to vote shall have one vote. 46. A declaration by the Chairman that a resolution has been carried or carried by a particular majority and lot, or not carried by a particular majority and an entry to that effect in the books of the proceedings of the Club shall be conclusive evidence of the fact of the number or proportion of the votes recorded in favour of or against that resolution. Any member present at the meeting may request for repoll. e) Under the Chapter “Central Council”, the following rules are relevant:- 47(a) The Central Council of the Club shall consist of 60 members. Thirty members to be elected from each Region from all members of the Club so as always to have equal parity between the Bombay members and the Delhi members in the Central Council. (b) Election to Central Council of the Club shall be by members present and voting by Secret Ballot. CS(OS)1195/2008 Page 12 of 28 49. The Members of the first Central Council shall continue to hold office till the expiration of five years from the date of the Registration of the Club, and thereafter till their successor are appointed by the Club at the ensuing Ordinary General Meeting. In very subsequent year one fifth of the Members for the time being of the Central Council or if their number is not 5 or a multiple of 5 then the number nearest to the one fifth shall retire by rotation. 50. The Members to retire from the Central Council shall in every year be those who have been longest in office since their last election but as between persons who become members on the same day those to retire shall (unless they otherwise agree amongst themselves) be determined by lot. A retiring members shall retain office until the dissolution of meeting at which re-election is decided or his successor is elected at the meeting or an adjourned meeting. A retiring member shall be eligible for re-election. 51. The Club shall at any General Meeting at which any Member of the Council retires in manner aforesaid fill up the vacated office by electing a like number of persons to be members and may fill up any other vacancy. 53. The Club in General Body Meeting may subject to the provisions of these Rules from time to time reduce the number of Members of the Council, in such a manner that equal representation on the Central Council will be maintained from the each Regions. 58. The Central Council shall meet not less than once in every year for the transaction of the business. 60. Questions arising at any meeting shall be decided by a majority of votes and in case of equality of votes the President shall have a second or casting vote. CS(OS)1195/2008 Page 13 of 28 61. The President of the Central Council and in his absence the Vice-President shall preside as President of every meeting of the Central Council but if there be no President or if at any meeting the President is not present within 15 minutes of the time appointed for holding the meeting or is unwilling to act, the Vice-President shall take the Chair at a General Meeting. If there be no Vice- President or if at any meeting the Vice-President is not present within fifteen minutes after the time for holding of such meeting or is unwilling to act, the Members of the Central Council present shall choose someone of their number to be the President of the meeting. f) Under the Chapter “Powers of the Central Council”, the following rules are relevant:- 68. The Central Council may exercise all or any of the following powers: (a) Suggest ways and means for carrying out the objects of the Club. (b) Elect President, Vice-President, Secretary or Honorary Secretary and a Treasurer or Honorary Treasurer of the Club in such manner as to assure as far as possible that the posts of President, Vice-President shall be shared between the Regions. The posts of Honorary Secretary, Honorary Treasurer shall be shared between the Regions alternately every two years unless otherwise mutually agreed to. (c). Appoint and remove members of the Executive Committee so as always to maintain equal parity between members from Delhi and members from Bombay and regulate its proceedings. (d). Elect patrons-in-chief, patrons and vice-patrons of the Club. (e). Exercise all such powers as are not by these Rules or by any resolution of the Club delegated or entrusted to the Executive Committee. CS(OS)1195/2008 Page 14 of 28 70. The Central Council shall appoint all the members of the Executive Committee in equal proportion from each Region and these appointments shall be made on the recommendation of the members of the respective Region. Similarly the vacancy or vacancies shall be filled in the same manner. 71. The Secretary or Honorary secretary, and the Treasurer or Honorary Treasurer of the Club shall be the Secretary or Honorary Secretary, Treasurer or Honorary Treasurer respectively of the Executive Committee. 72. The Central Council may frame rules and regulations for the conduct of business by the Executive Committee and may vary, alter and modify the same from time to time and subject to any such rules the meetings and proceedings of the Executive Committee, shall be governed by