In the High Court of Judicature at Madras Dated: 09/07/2003 Coram The Honourable Mr.Justice R.Jayasimha Babu and The Honourable Mr.Justice N.V.Balasubramanian Original Side Appeal No.7 of 2003 and O.S.A.No. 8 of 2003 and O.As.No.840, 5056 and 5057 of 2002 in C.S.No.848 of 2002 Dr. K.M.Cherian ... Appellant in appeals/ Applicant in Applns. -Vs- K.V.George ... Respondent in Appeals/ Respondent in Applns. Original Side Appeals filed under Order XXXVI Rules 11 of the Original Side Rules read with Clause 15 of Letters Patent against the order made on 23.09.2002 in Original Applications No.329 and 1852 of 2002 in C.S. No.322 of 2002 by a learned single Judge of this Court. Application No.840 of 2002 is filed seeking for an order of injunction restraining the respondent or his agent or servant or subordinate or anybody claiming under him from interfering in any manner whatsoever with the functioning of the applicant as Chairman of Pondicherry Institute of Medical Sciences (Society), Ganapathychettykulam, Kalathumedu Salai, Pondicherry 605 014 a unit of Madras Medical Mission till the disposal of the suit. Application No.5056 of 2002 is filed seeking for an interim order to stay the operation of the resolution dated 26.10.2002 of the defendant/respondent communicated vide letter dated 05.11.2002 to the plaintiff/applicant pending disposal of the suit. Application No.5057 of 2002 is filed seeking for an interim order directing the defendant/respondent to deposit all moneys that were received from the PIMS candidates into an account with a nationalised bank and render to the plaintiff full accounts concerning the receipt of the funds pending disposal of the suit. !For Appellant/Applicant : Mr.C.Ramakrishna, Senior Counsel for Mr.Vishnu Mohan ^For Respondent/Respondent: Mr.Sriram Panchu, Senior Counsel, for Mr.V.Achuthan :JUDGMENT R. Jayasimha Babu, J. Appellant is aggrieved by his suspension on 16.04.2002 and subsequent removal on 26.10.2002 from the position of Chairman, Pondicherry Institute of Medical Sciences established, owned and run by the Madras Medical Mission (MMM), a registered society open only to the members of the Orthodox Syrian Church and which presently has hundred and thirty five members. The patron of MMM is the Catholics of the East, and it's President the Bishop of that Church at Madras. 2. The MMM which was registered on 12.01.1982 was initially dependent upon donations, but after it established an Institute of Cardio Vascular Diseases (ICVD) at Chennai in 1987 with the appellant, Dr.K.M. Cherian, a reputed Cardio Thoracic Surgeon, as it's lifetime Director, it was able to generate significant surpluses over the years which together with borrowed funds enabled it to acquire assets worth about Rs.55.00 crores by the year 2000. The total receipts of ICVD from 198 7-88 to 2000-01 was Rs.316.12 crores. The appellant claims the lion's share of the credit for the success of MMM. According to him his professional skills, international reputation, his ability to win friends and influence people and his commitment and constant striving for MMM enabled it to reach it's present level of prestige and affluence. 3. MMM has also established an Institute of Reproductive Medicine and Women's Health despite the appellant's opposition. A Transplant Center was added later. 4. Appellant has been involved with MMM from it's inception. He is a signatory to the Memorandum of Association, was it's first Vice President, and has been a member of it's Governing Board almost continuously and is even now on the Board. He left his position of Medical Superintendent of the reputed Railway Hospital at Perambur in 1987 to become the first and till date the only Director of ICVD. Earlier on 31.03.1985 at the Annual General Meeting of MMM a resolution had been passed in the following terms: "This Annual General Meeting of the Madras Medical Mission held on 3 1.03.1985 resolves that in consideration of Dr.K.M.Cherian's service in promoting the activities of the Madras Medical Mission ( especially The Institute of Cardio Vascular Diseases) and in consideration of leaving his services in the Railway Hospital, Perambur, so that he may engage himself wholly in the service of this Medical Mission Dr. K. M.Cherian is hereby appointed for life as the head of The Institute of Cardio Vascular Diseases, with a suitable designation to be decided by the Medical Mission's Governing Board. The Governing Board is also hereby authorised to finalise other terms and conditions of his appointment." 5. His emoluments as Director have undergone dramatic growth from Rs.45,000/- per month in 1995-96 to Rs.4.00 lakhs per month in the year 1997-98 and to Rs.12.90 lakhs per month in 2002-03. With the contribution of about Rs.1.54 lakh per month by MMM to his provident fund, his total emoluments now are are over Rs.1.73 crores per annum. Numerous perquisites of substantial value including unlimited foreign travel are also provided. The salary paid to appellant alone amounts to about eighteen per cent of the total monthly wage bill for the 794 employees of MMM. The salary paid to the appellant is about seven times the salary paid to the next highest paid doctor in MMM. According to the appellant, this high level of remuneration is less than the prevailing market rate for a highly skilled surgeon, and is considered by the appellant to be fully justified having regard also to scale of daily fee charged by top end lawyers, high salaries paid to executives at higher levels in large companies, and the huge incomes earned by many of those engaged in business. 5a) Though MMM is registered as a charitable society, and the dedication of it's staff has been praised by visitors, it's concern for the poor appears to be only marginal. The amount set apart for transfer to the fund for poor patients out of net surplus of Rs.182.00 lakhs from the total receipts of Rs.47.61 crores in the year 2001-02, was only Rs.1.3 lakhs. No part of the accumulated fund of about Rs.30.00 lakhs meant for poor patients was utilised during that year. 6. Consistent with MMM's focus on high value activities in the medical field having potential for generating large revenues, it conceived the idea of setting up a self financing medical college as a Christian minority institution sometime in the year 1999. According to the appellant, one of the members of the Governing Board had informed the Board about the possibility of obtaining the requisite consent of the Government for setting up the college in the Union Territory of Pondicherry which is about one hundred and sixty kilometers from Chennai, by spending Rupees one crore on brokers. The appellant asserts that he then took it on himself to secure such consent without incurring expenditure of that kind and magnitude. 7. Pondicherry Institute of Medical Sciences (PIMS) was the name chosen for the Medical college and the Hospital that had necessarily to be set up as part of that project under the applicable regulations, the location of the project being outside Pondicherry town at Ganapathychettypalayam, Kalapet. The estimated cost of the project was Rupees eighty crores, of which about Rs.45.00 crores was to be invested before the college could start functioning. About one fourth of that amount was to come from the surplus revenues of MMM and the balance amount from the Banks in the form of loans. Further investment was apparently to come out of the revenues of the newly established medical college and hospital, the surpluses of MMM, and additional borrowings. Rupees twenty lakhs was to be collected as interest free deposit from each student with certain exceptions. PIMS was to employ many more doctors and staff than all the existing divisions of MMM put together. According to the appellant, the aim was to create a teaching institution and hospital which would meet the highest international standards. 8. The appellant as a member of the Governing Board of MMM was, on 05.02.2000 nominated by the Governing Board of MMM as Chairman of PIMS. The Board's decision in this regard as communicated to the appellant was in the following terms: "The last Governing Board Meeting was held on 5th February 2000 and it has been decided to appoint Dr.K.M.Cherian as Chairman of the Pondicherry Medical College Managing Committee and constituted 4 Committees from the Board Members to expedite the establishment of the college." 9. On 07.12.2000 the Government of Pondicherry granted the Essentiality certificate required under the Admission to Medical College Regulations 1999 framed by the Medical Council of India under Section 33 of Indian Medical Council Act, 1950, to MMC for establishing a medical college with 100 seats. That Essentiality Certificate, inter alia, reads thus : "The Madras Medical Mission, Chennai has applied for establishment of medical college at Pondicherry. On careful consideration of the proposal, the Government of Pondicherry has decided to issue an essentiality certificate to the applicant for the establishment of a Medical College with 100 seats." That certificate also contains a certification by the Pondicherry government, as under: "(a) The applicant has stated to have purchased 26 acres of land. They have also stated that the 300 bed hospital with all facilities is expected to be completed by July 2001. This would be verified as and when the work is completed. (b) It is desirable to establish a medical college in the public interest. (c) Establishment of a medical college at Pondicherry by the Madras Medical Mission is feasible. " 10. The foundation stone for the ten storey PIMS building was laid by the Union Home Minister on 29.07.2000. 11. The Pondicherry University, on 14.08.2001 gave it's consent in principle for affiliating the proposed medical college, namely PIMS to the Pondicherry University. 12. Without informing, consulting, or obtaining the consent of MMM the appellant, his wife, their son and four of his friends signed at Pondicherry on 14.09.2001 the Memorandum and Rules and Regulations of a new society named Pondicherry Institute of Medical Sciences and registered it on the same day. The appellant was to be the Chairman and Chief Executive of that society for life. The contents of the Memorandum as also factum of registration of that society were not revealed to the members of MMM till about seven months later. 13. The Annual General Meeting of the MMC was held on 15.09.2001. The appellant in his address, inter alia, stated, "I happened to be in Pondicherry on 8th September 2001, when the Chief Minister was being heckled about undue support being given to an organisation, which has its roots in Madras, as against supporting a local body. After the Assembly Session, he mentioned to me that his hands will be strengthened considerably, in case the Pondicherry Institute of Medical Sciences is governed by a separate Society registered in Pondicherry. A letter to this effect from the Health Ministry of Pondicherry has already been sent to us which was received here in my absence. I assured the Chief Minister that the Government directive to form a society at Pondicherry to run the PIMS will be honoured by us. As the Chairman of the Pondicherry Institute of Medical Sciences, I have initiated the necessary formalities. With the Present government including the bureaucrats inclined favourably towards us, we should not lose the opportunity of utilising their help for our cause............." 14. That letter of the Pondicherry Government to which appellant referred, and which was signed by the Under Secretary (Health) dated 07 .08.2001, stated, inter alia: "Government of Pondicherry is of the view that it would be appropriate if a separate Society is registered in Pondicherry for the proposed Medical College in Pondicherry instead of keeping it as a part of the Madras Medical Mission." 15. The appellant however did not inform the Governing Board of MMM of this communication, did not seek any permission from the Board for committing MMM to form a separate society for PIMS or for ratifying his alleged commitment allegedly given orally, and had neither informed nor had obtained the permission from the Board of MMM for " initiating necessary formalities" for constituting a separate society for PIMS. 16. MMM obtained a certificate regarding minority status of MMM from the Tahsildar, Ambattur, within whose jurisdiction MMM is located, on 10.12.2001 which read as under: " CERTIFICATE Certified that M/s Madras Medical Mission which is functioning at No.4A, Dr.J.Jayalalitha Nagar, Mogappair, Chennai-50 is a society registered under the Societies Registration Act, 1975 (Tamilnadu Act - 27 of 1975) and as per the memorandum and rules and regulations of the society, membership of the society is restricted too members of the Orthodox Syrian Church, which is a minority community. As such Madras Medical Mission enjoys a minority status. Note: This certificate is issued in connection with getting recognition from medical council of India only. Sd/- Tahsildar, Ambattur" 17. On 01.03.2002 the Government of India issued a letter of intent to MMC for establishing the medical college at Pondicherry. 18. In response to letters sent by appellant seeking a declaration of it's minority status, the Pondicherry Government wrote to him on 04.03.2002, as under: "No.1240/114/Health/99 GOVERNMENT OF PONDICHERRY CHIEF SECRETARIAT (HEALTH) ------ Pondicherry, dated 4.3.2002 To The Chairman, Pondicherry Institute of Medical Sciences, 4-A, Dr.J.Jayalalitha Nagar, Mugappair, Chennai 600 050. Sir, Sub : Health - Pondicherry Institute of Medical Sciences,Pondicherry run by Pondicherry Institute of Medical Sciences Society. Pondicherry - Declaration as Minority Institution - Reg. Ref : Your letters dated 19.10.2001 and 17.11.2001. Approval of the Government of Pondicherry granting the status of religious Minority (Christian) Institution to the Pondicherry Institute of Medical Sciences, Pondicherry run by Pondicherry Institute of Medical Sciences Society, Pondicherry is hereby conveyed. Consequently the said college can admit students belonging to the religious Minority (Christians) Community to which the society belongs. .........................." 19. The letter from the Government states that PIMS is 'run' by the PIMS Society, though the essentiality certificate had been granted by the Government not to that society, but to MMM. The Government's letter of 04.03.2002 had not been disclosed to the Board of MMM, and came to light only after 08.04.2002 when the appellant sent a circular letter to the members of MMM. 20. The appellant sent a letter on 08.04.2002 to all the members o MMM the relevant portions of which read thus: "During the last General Body Meeting of our Society, I had mentioned to you about the request of Pondicherry Government to have a society registered in Pondicherry for running of our institute. A letter was received from the Secretary, Department of Health, Government of Pondicherry on 7th August 2001 to this effect (copy enclosed). Subsequently, during my meeting with the successive Chief Ministers, they have also asked me about the progress of registering a society in Pondicherry. I had reported this to you during the last General Body meeting. A Society by the name, Pondicherry Institute of Medical Sciences was registered as a non-profit society on 14th September 20 01 to fulfil our commitment to the Pondicherry Government ( Memorandum enclosed). When the Medical Council of India had asked for a Certificate showing the Minority Status for our organisation, Madras Medical Mission could not get this certificate from Tamilnadu Government immediately. We, therefore approached the Pondicherry Government for such a certificate and this was given to us on the basis of the Pondicherry Institute of Medical Sciences's Society registered at Pondicherry on a permanent basis (Certificate No.1240/H4/Health/99, which is enclosed. I am enclosing a copy of the Articles of Association of Pondicherry Institute of Medical Sciences' Society, which was registered in Pondicherry. All the objectives mentioned in the Articles of Association of Madras Medical Mission are also mentioned in the Articles of Association of the Pondicherry Institute of Medical Sciences. Two important variations in the Articles of Association of Pondicherry Institute of Medical Sciences from that of Madras Medical Mission are : 1)Membership of Pondicherry Institute of Medical Sciences is open to all denominations of Christians. 2) Total membership is restricted to 200 as against 140 of Madras Medical Mission. These two changes were considered necessary for the following reasons:- a) It was necessary to take some additional members from Pondicherry State and if we had restricted the membership to Malankara Orthodox Christians only, we would not have adequate representation from Pondicherry. b) It was felt that the membership should be enlarged to get some influential NRIs, especially from the medical community as members to get technical and financial support and also to attract some NRI students later, which are our main source of financial support. The membership fee was also fixed at Rs.25,000/- as it was felt that a non-profit society which is promoting a project costing about Rs.10 0 crores should show that its members have some financial stability and involvement. ALL THE MEMBERS OF MADRAS MEDICAL MISSION ARE ELIGIBLE TO BECOME MEMBERS OF THE NEW SOCIETY. Since this Society was formed urgently to satisfy Pondicherry Government, it was registered with the minimum required number of 7 members with provision for enlarging the membership and the Governing Board. The 7 members who promoted this society are all people who are willing to step down from the Governing Board so that more members of a representative character can be co-opted to the Governing Board after the enrollment of membership is completed. I am writing this letter to request all of you to enroll as members to Pondicherry Institute of Medical Sciences' Society immediately, so that the new society can duly constitute a full fledged Governing Board to run the society. As per the desire of Pondicherry Government, the Management of the Pondicherry Institute of Medical Sciences has to be entrusted to the Pondicherry Institute of Medical Sciences' Society. So far, all our investments in Pondicherry Institute of Medical Sciences were done by Madras Medical Mission. All the loans from financial institutions have also been taken in the name of Madras Medical Mission. The question of evolving a system by which the management of Pondicherry Institute of Medical Sciences can be done by the Society registered in Pondicherry has been under consideration with financial and legal experts. Their considered view is that to avoid additional outflow of money in transferring of assets, it will be better, if the Pondicherry Institute of Medical Sciences is continued to be owned by Madras Medical Mission, but its management is transferred by Madras Medical Mission to the society of PIMS registered at Pondicherry. It will be like a Managing Agency System where the PIMS society will run the Institute on behalf of MMM. This should not be a problem, since PIMS Society will be run by the members of the MMM. The surplus amount generated by PIMS will be credited to Madras Medical Mission. Similarly, the duration for which the management of the institute should be given to the PIMS society can also be decided based on discussions. My own feeling is that the Management may be given for a period of at least 30 years, so that PIMS can develop long term policies for the management of the institute. With the proposals to set up a Nursing College and a Basic Sciences faculty in the offing, the chances of PIMS becoming a deemed university are extremely bright, if this status is beneficial to us. Hence, a long term perspective is vital. For the services rendered, the PIMS Society could be suitably compensated. ............" 21. It is evident from this letter that appellant did not at any time inform, consult, or obtain the consent of Governing Board of MMM for such an important matter as the formation of a new society for owning or running MMM's most ambitious project till date involving a huge outlay of eighty crores. The society was claimed to have been formed in order to satisfy an alleged 'requirement' of the Pondicherry Government in a letter which had not been disclosed to the Board of MMM. There was no compelling necessity to form such a society as there was no such requirement in law. The apparent reason for the ' urgency' was the Annual General Meeting of 15.09.2001 of MMM at which the appellant wanted to be in a position claim to have informed the members of MMM about the society, the formation and composition of which in fact was not disclosed at the AGM, and remained undisclosed till 0 8.04.2001. The pre-planned move of the appellant was evident in the consultation with the financial and legal experts that he had undertaken on his own with a view to take over the management of PIMS exclusively by the members of his family and his close friends. The concept of managing agency referred to in the letter could only have been based on legal advice obtained without informing MMM although the object of the consultation was to deprive MMM of control over the PIMS. 22. The Rules registered along with Memorandum of Soceity registered by the appellant were specifically designed to ensure the complete control of that society by the appellant: "Office Bearers: 39. Chairman: Dr.K.M. Cherian shall be the permanent Chairman and Chief Executive and shall hold office till his life or until he resigns whichever is earlier. After his life time or if he resigns, the Governing Board shall elect a Chairman and/or Chief Executive among themselves preferably from the field of medicine and he/she will hold office for a period of 3 years initially." Rule 33. Constitution of the Governing Board: The Board shall have a maximum of 9 (Nine) elected members apart from the Chairman and two members nominated by the Chairman. The members who are nominated by the Chairman will be people of eminence whose expertise and experience will be of great value to the society. The Chairman will also be the Chief Executive in addition to holding the post of Chairman. Nominated members are not eligible for any powers including voting. The total number of members at any point of time shall be a maximum of 12 all inclusive. Rule 24. The Board has the power to refuse membership or to refuse renewal of membership to any one without assigning any reason. The Board is vested with the powers to expel any life member or any other member for improper conduct or for not abiding by the Rules and Regulations of the Society after giving proper notice in writing." The Rules contemplate only life membership and requires that sum of Rs.25,000/- be paid as admission fee, the membership being confined to "any Christian". 23. After the receipt of this letter, as was only to be expected, a meeting of the Governing Board of MMM, was hurriedly convened. The meeting was held on 16.04.2002 to consider the contents of the appellant's letter. The meeting was attended by seventeen of the twenty members of the Board. The appellant who was also member of the Governing Board was away at Seoul, South Korea where he stayed till 20.04.2 002 His hotel bill for approximately 900 U.S. $ and the bill for the air tickets in the sum of about Rs.90,000/- all of which was paid for by MMM have been filed by the respondents. Appellant was not given notice of this meeting on the ground that he was not in India and could not have attended that meeting even if notice had been given. The Governing Board's decisions at that meeting as contained in the documents filed by the respondents read us under: "Following are the decisions taken at the extraordinary meeting of the Governing Board of the Madras Medical Mission held on 16th April 20 02, at 8.00 am. 1.The members expressed the view that it was illegal to form a society by the name of Pondicherry Institute of Medical Sciences and registering the same at Pondicherry by Dr. K.M. Cherian and others, without the knowledge and express permission of the Madras Medical Mission or its Governing Board when Dr. K.M. Cherian himself is the Chairman of the Pondicherry Institute of Medical Sciences, a unit of Madras Medical Mission. 2.The members also expressed the view that (a) Dr.K.M. Cherian should not be allowed to hold the position of Chairman of Pondicherry Institute of Medical Sciences (of the MMM) for a period