IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 23-06-2008 CORAM THE HONOURABLE MRJUSTICE V.DHANAPALAN WRIT PETITION No.43643 OF 2006 The Chennai Kancheepuram Thiruvallur Districts Film Distributors Association, represented by its Secretary, No.23, Meeran Sahib Street, Chennai-600 002. ...Petitioner -vs- 1.The District Registrar, Central Madras, Office of the Registrar of Societies, Chamiers Road, Chennai-600 018. 2.Mr.S.A.Kareem, 3.Mr.C.V.Panneerselvam, 4.Mr.G.Selvam 5.Mr.M.M.Thaha 6,Mr.Rajendran 7.Mr.V.Thiyagarajan 8.Mr.P.T.Balakrishnan 9. Mr. A. Narayanan 10.Mr.Mahalaingam ll.Mr.Subbaiah 12.Mr.M.Muthukumaraiah ...Respondents Petition under Article 226 of the Constitution of India, praying for issuance of a writ of certiorari. For petitioner : Mr.T.V.Ramanujam, Senior Counsel, for M/s.Waraon & Sai Rams. For respondent 1 : Mrs.Bhavani Subbarayan, Addl.Govt.Pleader. For respondents https://hcservices.ecourts.gov.in/hcservices/ 2 to 4,7,11 and 12 : Mrs.Hema Sampath, Senior Counsel, for Mr.R.Subramaniam. For respondent 8 : Mr.B.S.Gnanadesikan For respondents 5 and 6, 9 and 10 : Mr.K.V.Sundarrajan O R D E R This Writ Petition has been filed, praying for issuance of a writ of certiorari, to call for the records of the first respondent in proceeding No.10417/E1/2004, dated 23.10.2006, and quash the same. 2. The facts, which led to the filing of this Writ Petition, are as under : 2.1. Petitioner is a society, registered under the Tamil Nadu Societies Registration Act 1975, bearing Registration No.l11/1982 and it was established in the year 1982, with an object to entertain and encourage the business of the film industry by coordination and cooperation with other similar associations established for the cine industry, particularly in respect of production, distribution and exhibition of the cinematographic film. Similarly, it is catering to the needs of the distributors by resolving the disputes between the producers, distributors and exhibitors, thereby protecting their interests to carry on a smooth and peaceful business. The Executive Committee of the petitioner association admits the members who carry on business as per clause No.10 of the Bye-laws of the association in the prescribed application form along with the entrance fee and the association, after a detailed verification, shall consider or reject such application submitted by the persons, who are desirous to join as members. The Executive Committee of the association is empowered under Clause No.54 of the Bye-laws to initiate disciplinary action and levy fine against its members for the anti-association activities or for the violation of the rules and regulations of the association or for the misconduct and shall remove such member from the basic membership. Similarly, Clause No.23 empowers the Executive Committee to recommend the removal of any members on the ground of anti-social activities or who have acted against the object of the association to the General Body, in which case the member whose name has been recommended to the General Body for removal of membership shall have no right, obligations and privileges as a member of the association and he shall not participate in the election of the office bearers and also shall not vote in the election. 2.2. The petitioner association has been managing and administering the business of the association as per the registered Bye-laws of the association and well within the scope of the https://hcservices.ecourts.gov.in/hcservices/ provisions of the Tamil Nadu Societies Registration Act, 1975. During the course of the management and administration, the association has taken action against some of the members, namely, the respondents 2 to 12 for their anti-association activities, by issuing show cause notice and giving due opportunity as per the Bye-laws of the association. Some of the members have challenged the said show cause notice and the resolution passed by the association before the Civil Court and failed to obtain orders in their favour. As per Clause 23 of the Bye-laws, some of the members have been removed from the rolls of membership. In view of the action taken against the respondents 2 to 12 by the association, the said members are continuously acting against the interests of the association and have given complaints after complaints to the first respondent. The petitioner association represented before the first respondent on various occasions and explained the facts and circumstances prevailed in the said complaints in detail to various District Registrars, who were assuming the office in the relevant period. However, those complaints were pending without passing any orders. Therefore, some of the members filed W.P.Nos.17581,17582 and 17583 of 2005, which were disposed of by this Court, directing the first respondent to dispose of the representations, after giving opportunity to both sides. The first respondent issued notice to the petitioner association and the petitioner association submitted all the relevant records, statement of accounts etc., as required by the first respondent, based on which, the first respondent has passed the impugned order, dated 23.10.2006. Aggrieved over the said order, the petitioner has filed this Writ Petition. 3. First respondent has filed a counter affidavit, denying the allegations made in the petition, and stating, inter alia, that as per Section 36 of The Tamil Nadu Societies Registration Act, the Registrar may of his own motion hold an enquiry into the constitution, working and financial condition of a registered society. Suo motu action was initiated against the petitioner as early as 02.02.2005 before the filing of the writ petition, pursuant to the direction of the Deputy Inspector General of Registration. Therefore, the contention of the petitioner that Section 36 enquiry was not maintainable is totally false and without any basis. Bye-laws 23 and 54 pertain to the disciplinary action against erring members but, they are contradictory to each other, as the Bye-law 23 says that the power of cancelling membership is vested with the General Body, whereas the Bye-law 54 says that the said power is vested with the Executive Committee. The respondent had directed the petitioner to amend certain rules of the Bye-laws, which are against the provisions of the Act, but, so far, no amendment was approved by the respondents. In view of not having certified copies of the amended Bye-laws, as the existing ones are invalid and any decision and action taken based upon the same are illegal, the removal of members is improper. Even otherwise, the members were not given opportunity to place their defence in the annual meeting, which is against the https://hcservices.ecourts.gov.in/hcservices/ principles of natural justice. Various discrepancies were found during the inspection of the records and no amendment was registered from 2003 to till-date. Amounts collected to the tune of Rs.25.00 lakhs in the name of new members' admission are not accounted properly into the account. Though percentage is fixed for service charges that too to be collected from one side, the present office bearers have been collecting huge amounts from both the disputing parties, which are not accounted. The rent of Rs.3,60,000/- for association office premises shown in the accounts to have been paid to the Trust had not been actually paid. Under Section 25 (2), no part of the funds of a registered society shall be divided by way of bonus or dividend or other amounts to members, but Pongal gift of Rs.3,000/-, gold coins, silver articles etc. more than Rs.30,00,000/- worth were given to members. For convening General Body and other meetings, expenditure is incurred lavishly, by holding such meetings outside the jurisdiction of the association and when disputes arose with the members, proper amicable settlement was not done with the parties involved in such disputes. All the above factors would prove that the association is not managed properly and is not functioning in the interest of its members. In addition, it could be seen that various activities are against the provisions of the Act, as explained in detail in the order passed by the respondent, pursuant to the enquiry. 4. It is also stated in the counter that the respondent has been directed by this Hon'ble Court by an order in W.P.Nos.17581 to 17583 of 2005 to consider the representations of the respondents 2 to 12 and pass appropriate orders, after giving them an opportunity, which was properly followed. Therefore, it is absurd on the part of the petitioner to allege that the complaints of the respondents 2 to 12 ought not to have been considered. The respondent has jurisdiction to entertain any representations even from an outsider with regard to the functioning of the petitioner society and to inspect the same. The petitioner neither followed the Bye-laws nor had acted as per the Act in the issue of removal of the complainants. Being the statutory authority nominated by the Government, this respondent has powers to direct the association to set right the wrongs committed by the association. After collecting all the particulars, records, statements and after a personal inspection of the association and a detailed enquiry, the impugned order has been passed, a perusal of which would clearly prove that proper opportunity was given to all the concerned, inclusive of the petitioner. 5. Fifth respondent has filed a counter on his behalf and also on behalf of respondents 6,9 and 10, denying the allegations made in the petition and stating that the Writ Petition is not maintainable either in law or on facts and is liable to be dismissed. The petitioner association is not functioning as per law and the functioning of the association is in contravention to the objects, for which it has been formed. Respondents 2 to 12 never involved in https://hcservices.ecourts.gov.in/hcservices/ any anti-social activities. Bye-laws 54 and 23 give different powers to different bodies for removal of the members of the association. Bye-law 54 gives power to the Executive Committee to remove the members, whereas Bye-law 23 gives power to General Body for removal of the members. Hence, Bye-laws 54 and 23 are in clear contradiction to each other. The first respondent, after conducting a detailed enquiry and by giving ample opportunity to the petitioner as well as to the respondents, has passed the speaking order. Further, as per Section 45 of The Tamil Nadu Societies Registration Act, 1975, any order passed by the Registrar is appealable before the Inspector General of Registration. The petitioner, without exhausting the appellate remedy, has come before this Hon'ble Court by way of this Writ Petition, which is, at the outset, not maintainable. Section 36 of the Act clearly spells out that the Registrar can take any action even by his own motion and, therefore, the enquiry under Section 36 by the Registrar on the complaints filed by the respondents 2 to 12 cannot be held to be not maintainable. The suo motu action can always be on complaints or while enquiring into the affairs of the association on routine procedure. Therefore, the action under Section 36 is well maintainable if the same pertains to the affairs of an association. In this case, the enquiry was conducted as per the directions of this Hon'ble High Court and the petitioner association, which has participated in the enquiry, did not raise any objection regarding maintainability of the enquiry before the District Registrar. But, as an afterthought, it is raising the issue only now. 6. The counter further goes to the effect that the very complaint of the complainants is that the petitioner is acting in most illegal and improper manner. The first respondent has clearly found out that the action against the complainants were done illegally and their removal was illegal. Being the authority empowered under the Act, the first respondent has powers to direct the association to set right the wrongs committed by it. The order passed by the first respondent is in consonance with the principles of natural justice and The Tamil Nadu Societies Registration Act. Affairs of the registered society can be enquired into by the District Registrar if there is any violation of the rules, bye-laws or the provisions of the Act. Therefore, any civil suit will not be a bar for conducting any enquiry into the affairs of the society by the District Registrar. The findings of the first respondent are not vindictive or biased. The documents filed by the petitioner association along with the Writ Petition itself would show that the documents have not been properly submitted and the same have been manipulated. Therefore, the order of the first respondent is not made to satisfy some of the disgruntled individual members as alleged by the petitioner, but only to ensure the smooth functioning of the association. The first respondent, being an authority to supervise the affairs of the association, is bound to scrutinze the account books and other affairs of the association and streamline the same. Mere submission of amended bye-laws and the acknowledgement of the https://hcservices.ecourts.gov.in/hcservices/ same cannot be construed as proper until they are duly accepted and registered by the first respondent. When any society is formed, the same has to be registered with bye-laws that are legally sustainable. Inspection, auditing and enquiring is the duty of the first respondent and terming it as interference into the internal administration of the petitioner association is frivolous. The amounts received from third parties for settlement of disputes and kept by the association cannot be brought under the head 'Sundry Creditors', but should kept under 'Fixed Deposit'. The petitioner association cannot hold General Body Meeting at any place of its choice since there are several members, who have to attend. Further, there are limits to incur expenditure on holding of meeting. 7. It is also stated in the counter that the fifth respondent, by an agreement dated 14.06.2005, got distribution rights of the cinema 'CHINNA' for five years for the areas Chengalpattu, Thiruvallur and Kancheepruam Districts. Such rights of the said picture were given to all areas with condition that T.V.rights would commence after one year from the date of release. But, the petitioner association issued a circular on 05.07.2005 that distributors shall accept films with a clause to the effect that T.V.Rights would be for three years from the first release. Already, 15 theatres were booked. As the petitioner threatened the theatres not to exhibit the picture, only four theatres exhibited the picture as per schedule and on request by other theatres, the association allowed other theatre to release the picture and instructed all other distributors not to release any new picture in the said four theatres. From three out of four theatres, the association collected amounts as fine and only then they were allowed to exhibit the pictures. The association redlisted restraining second release in whole areas of these districts. The respondent sent a letter dated 01.08.2005 to remove the redlisting but it was not done. However, the association sent a vague notice dated 04.08.2005 calling upon the respondent to show cause why he should not be removed from the membership of the association and in spite of his correspondence, he was expelled. The Koyambedu theatres, who suffered, gave police complaint. The association, instead of providing help and assistance to the members, is acting to show power and to collect amounts in the name of fine. The respondent is an affected person, incurring a huge loss of more than Rs.25.00 lakhs, due to the restriction in releasing the picture 'CHINNA'. The main complaints enumerated against the petitioner are (i) the petitioner is not acting legally and has not got the Bye-laws properly registered; (ii) the Bye-laws, which are found improper, have been directed to be amended by the first respondent for a long time, but till-date, there is no action; (iii) the petitioner is acting as 'Panchayat', doing only 'Katta Panchayat' among its members and, under threat, is collecting huge amounts, which are not actually even accounted for; (iv) the petitioner had auctioned the movie 'Thiruda Thirudi' for about Rs. 1,10,54,000/-, for which the petitioner collected a commission of lakhs of rupees, but nothing of https://hcservices.ecourts.gov.in/hcservices/ such collection had been accounted for; (v) the petitioner is not following Bye-law No.80, wherein it has been specifically stated that he would act as directed by the first respondent from time to time; (vi) as per Bye-law, the term of the office bearers is only for one year, but the present office bearers continue for another year and on questioning, it is informed that they had already sent the amended Bye-law that the term is enhanced to two years, factually, no such amendment was accepted by the Registrar and (vii) a police complaint was lodged by Rohini Theatre, when they were threatened from running the theatre unless a huge amount was paid to the association and the police have also made out an F.I.R. against the office bearers of the association. 8. In the counter, it is also stated that the Registrar, in his order, has clearly pointed out that the statements given by the office bearers and others would clearly show that the office bearers of the association have misused the funds of the association, amounting to misappropriation. Accordingly, the respondents have prayed for dismissal of the Writ Petition. 9. Eighth respondent has filed a separate counter, stating that the activities of the petitioner association were always arbitrary and even without the acceptance of the bye-laws by the first respondent, the petitioner association used to take action against the members on flimsy grounds and also extend the term of office suo motu from one year to two years. More than 30 members have been removed during the period of the present office bearers of the petitioner association which shows all is not well within the petitioner association and action has been taken to remove the existing members on flimsy grounds and admit new members in order to keep themselves in office for ever. The petitioner association is not managed properly and its functioning is not in the interest of the members. Several allegations of mismanagement, financial irregularities in maintaining the amounts received by the petitioner association, not keeping the accounts properly, not submitting the returns to the District Registrar and several other infirmities have been found in the enquiry conducted by the District Registrar. It is the paramount duty of the first respondent to see that all the registered societies, which have been registered under him, function properly and he has the power to interfere and even to cancel the registration, winding up of registration etc., which power has been conferred on the Registrar only to see the purpose and object of the society. Any amendment of the bye-laws has to be approved by the Registrar and the Registrar has power to refuse to register if it is contrary to the provisions of the Act. Under Section 16 of the Act, it is the duty of the registered societies to keep proper books of accounts and after following the procedure contemplated in the section, have to file an authenticated copy of such receipts, expenditure account, balance sheet, report etc. Under Section 35, the Registrar or any other person authorised by him has power to inspect https://hcservices.ecourts.gov.in/hcservices/ the records of every registered society and under Section 36, he has power to enquire into the constitution, working and financial condition of the registered society. In the present case, the Registrar has exercised the power vested with him under Section 36 and passed the impugned order, which is justified and necessary in the interest of the society itself and he has given directions under sub-clause 9 of Section 36 and it is the duty of the society to carry out the said directions favourably. 10. It is also stated in the counter that the petitioner has approached this Court without exhausting the alternative remedy of appeal under Section 45 of the Act. Any order passed under Section sub-clause (4) of Section 36 shall be questioned only before the Inspector General of Registration and, therefore, this Writ Petition is liable to be dismissed on that ground as well. Many members have been removed by the Executive Committee by invoking Clause 54 of the Bye-laws. Bye-laws 23 and 54 are contradictory in nature, which should be amended and, as directed, those who have been removed by contravening these bye-laws, should be readmitted. Further, several complaints have been given by several members against the President and others for acting in arbitrary manner and contrary to the objects of the society and indulging in giving illegal directions by prohibiting the theatre owners not to release the films, thereby causing losses to several lakhs. When there cannot be any dividend from the funds of the society among the members under the guise of mementoes, gift vouchers and gold coins were given to the members. To cite one more financial irregularity, the Madras City Changai Anna District Films Distributors Association Trust intimated the petitioner herein that the petitioner has not paid the rent in the Trust account, whereas in the balance sheet of the petitioner association, it has been shown that the rent has been paid. Not only the present impugned order has been passed by the first respondent but even his predecessors have passed several orders on various occasions on the basis of the complaints given not only by the members of the petitioner association but also by the Exhibitors Association. Based on the said complaints, enquiries were conducted and orders passed. The Bye-law 23 contemplates that only the General Body, on the recommendation of the Executive Committee, after giving an opportunity, can remove the members. This shows that in the process of removal of members from the petitioner society, no basic principles of natural justice have been followed and bye-laws are disobeyed. The President and others responded to the notice of the enquiry before the first respondent and answered the questions and sufficient opportunity was given to them to participate in the enquiry effectively. As such, there is no illegality in the order passed by the first respondent. 11. Mr.T.V.Ramanujam, learned Senior Counsel for the petitioner, would contend that the first respondent cannot inquire into the constitution. working and financial condition of a https://hcservices.ecourts.gov.in/hcservices/ registered society, unless the requirements under Section 36 (1) are complied with, which are absent in this case and the first respondent has failed to conduct a detailed enquiry by giving due opportunity to the petitioner association and recording the evidence of witnesses. Further, the complaints were given by the individual members, some of whom had already been removed from the membership of the petitioner association as per Clause Nos.54 and 23 of the Bye- laws and, therefore, the aggrieved members can only agitate their rights before the Court of Law. The complainants have failed to obtain orders in their favour from Civil Court and when the said proceedings are pending before the Civil Court, the same matter cannot be re-agitated before the first respondent. The learned Senior Counsel also would contend that the first respondent, without appreciating the said facts, has reopened the issue and passed the impugned order, directing the petitioner association to admit those members, against whom the proceedings are pending before the Civil Court of Law, which is nothing but a clear interference of administration of justice and abuse of process of Court. According to the learned Senior Counsel, Bye-laws 54 and 23 have to be read together and the petitioner association has taken action against its members in consonance with the said Bye-laws and recommended the issue to the General Body, which is the ultimate authority to decide any issue pertaining to the administration and management of the association and, therefore, the same cannot be questioned or challenged by some of the individual members, who had already agitated the same issue before the Civil Court. The Senior Counsel would strenuously argue that the first respondent passed the interim order mechanically without applying his mind properly and without perusing the material particulars, records and statement of accounts and the registered amendment of the Bye-laws available with the first respondent pertaining to the petitioner association. In addition, the collection of entrance fee from the new members had been properly accounted for as per the registered amendments duly certified and approved by the first respondent on 02.03.2001 and hence the conclusion of the first respondent that the association has received the entrance fee from the new members @ Rs.50,000/- without any approved bye-laws is vindictive, arbitrary and biased. The petitioner has properly submitted Form-VII and