IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE ANTONY DOMINIC SATURDAY, THE 23RD MAY 2009 / 2ND JYAISHTA 1931 WP(C).No. 11461 of 2004(M) ------------------------------------------ PETITIONER(S): ------------------------ SRI. KAMALA KRISHNAN NAIR, S/O. KRISHNA PILLAI, AGED 70 YEARS, KUNNAPILLIL HOUSE, CHAMPAKKARA, CHANGANACHERRY TALUK, KOTTAYAM DISTRICT. BY ADV. MR.P.R.PADMANABHAN NAIR RESPONDENT(S): -------------------------- 1. NAIR SERVICE SOCIETY (N.S.S.) REPRESENTED BY ITS PRESIDENT N.S.S. HEAD QUARTERS, CHANGANACHERRY, KOTTAYAM DISTRICT, KERALA STATE. 2. THE ELECTION COMMISSION OF NAIR SERVICE SOCIETY, N.S.S. HEAD QUARTERS, CHANGANACHERRY. 3. REGISTRAR OF COMPANIES VANCHIYOOR, THIRUVANANTHAPURAM. 4. THE SECRETARY, COMPANY LAW BOARD, NEW DELHI. 5. THE INSPECTOR GENERAL OF REGISTRATION GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. 6. STATE OF KERALA, REPRESENTED BY ITS SECRETARY, SECRETARIAT, THIRUVANANTHAPURAM. W.P.(C) NO.11461/2004 7. UNION OF INDIA, REPRESENTED BY THE SECRETARY TO THE COMPANY AFFAIRS MINISTRY OF COMMERCE, GOVERNMENT OF INDIA, NEW DELHI. BY MR.M.PATHROSE MATTHAI, SENIOR ADVOCATE FOR R1 MR.P.GOPAL. FOR R1 GOVERNMENT PLEADER MR.I.V.PRAMOD FOR R4 & 5 MR.JOHN VARGHESE, ASSISTANT SG FOR R3,4&7 MR.M.GOPIKRISHNAN NAMBIAR FOR R2 MR.P.PARAMESWARAN NAIR,ASST.SOLICITOR FOR R3, R4 & 7 THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 23/05/2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: W.P.(C) NO.11461/2004 APPENDIX PETITIONER'S EXHIBITS P1:- COPY OF THE CERTIFICATE OF INCORPORATION (NO.12 OF 1100) OF NAIR SERVICE SOCIETY ISSUED BY ACTING REGISTRAR OF JOINT STOCK COMPANIES. P2:- COPY OF THE NAIR SERVICE SOCIETY MEMBER CERTIFICATE NO.2116 DT. 1.4.07 BY THE GENERAL SECRETARY, N.S.S. TO THE PETITIONER. P3:- COPY OF THE LETTER DT. 4.1.2003 FROM P.K.NARAYANA PANICKER GENERAL SECRETARY N.S.S. ADDRESSED TO THE PETITIONER. P4:- COPY OF THE MEMORANDUM AND ARTICLES OF ASSOCIATION OF NAIR SERVICE SOCIETY INCORPORATED ON 30.6.1924. P5:- COPY OF THE LETTER DT. 10.9.03 ADDRESSED TO THE REGISTRAR OF COMPANIES VANCHIYOOR , THIRUVANANTHAPURAM FROM THE PETITIONER. P6:- COPY OF THE LETTER DT. 10.9.03 ADDRESS TO THE INSPECTOR GENERAL OF REGISTRATION GOVERNMENT OF KERALA, THIRUVANANTHAPURAM. RESPONDENT'S EXHIBITS R1(a):- COPY OF THE ORDER NO.33002/E1/77/ID DT. 14TH OCTOBER 1977 PUBLISHED IN THE KERALA GOVERNMENT GAZETTE. R1(b):- COPY OF THE JUDGMENT OF THE SUB COURT, KOTTAYAM IN OS. NO.217/1977 DT. 17.7.79. R1(c):- COPY OF THE STATEMENT SHOWING THE PARTICULARS OF EDUCATIONAL INSTITUTIONS, HOSPITALS, WORKING WOMEN'S HOSTELS, BALABHAVAN, OTHER INSTITUTIONS, PLANTATIONS ECT. R1(d):- COPY OF THE PROCEEDINGS OF THE MEETING HELD ON 27.6.58 AT CHANGANACHERRY. R1(e):- COPY OF THE ACKNOWLEDGMENT OF THE SPECIAL RESOLUTION RELATING TO AMENDMENT OF THE ARTICLES. TRUE COPY P.S. TO JUDGE TSS ANTONY DOMINIC,J. --------------------- W.P.(C).No.11461 OF 2004 ------------------------ Dated this the 23rd day of May, 2009. JUDGMENT Of the various prayers made in this writ petition, arguments were raised, only in support of the prayer No.2, which reads as under. “(ii) to declare that clause 1(i)&(n), clause 21 & clause 90 of the Articles of Association of the Ist respondent Nair Service Society (Ext.P4) is ultra vires of the companies Act 1956 and be pleased to quash the same.” 2. The facts of the case are that, petitioner is a member of the first respondent, the Nair Service Society, a Company initially incorporated under the Travancore Companies Regulation-I of 1092 (M.E). Ext.P1, is the certificate of incorporation which shows that the company is one, limited by guarantee. WP(c).No.11461/04 2 3. It is stated that on 1.4.1967, after a series of litigations, the petitioner was issued Ext.P2 certificate, of membership duly signed by the General Secretary of the first respondent. In so far as this writ petition is concerned, the petitioner's main grievance is regarding clause-I (i)(n) and clause (90) of Ext.P4, the Memorandum and Articles of Association of the first respondent. Clause(1)(i) and clause(n), reads as under. “Electoral Roll” means the Taluq wise register of individuals and institutions who have en trolled as members of the Society, maintained for electing members to the N.S.S General body meeting. `Delegate` or `Prathinidhi' means a member elected to the society in a meeting of the persons included in the Electoral Roll. Each Taluq on the basis of one out of every 5 individuals and one out of every 5 institutions in the Electoral Rolls subject however to the restrictions of Clause I(n). Instituton means Karayogam, Karayoga- Union and other institutions which have become members of the Society. (n) General Body means a meetingn of the members (delegate or Prathinidhi) elected as per the provisions of WP(c).No.11461/04 3 Clause 1(i). But the total membership of the General Body shall not exceed 300 on any account and if the total number of representatives exceeds 300 when elected in the proportion of one for every five, this proportion of one for every five will be so attend as too ensure the total number of 300, and the Election Commission appointed under Clause 90 shall have authority to refix the proportion and number of the members in each taluq.” Clause 90 referred to above provides that, the election of the Prathinidhies shall be conducted according to the election rules framed by the NSS Board of Directors under the responsibility of the Election Commission appointed by the NSS executive council and that the election shall have to be approved by the council. 4. Petitioner submits that the first respondent company is an existing company in terms of the provisions contained under Section 3(f)(i) of the Companies Act, 1956. It is stated that the company was governed by the provisions of the Companies Act, 1956 till 1.3.1962, when the Kerala Non Trading WP(c).No.11461/04 4 Companies Act 1961(Act 42 of 1961) was introduced. According to the petitioner, in view of the provisions contained in Section 3 and Section 4 of the Act (Act 42 of 1961), the provisions of the Companies Act, 1956, except as modified as per the schedule to Act 42 to 1961 and exempted by notifications issued by the Government of Kerala, are applicable to the Ist respondent. It is the conceded position that by Ext.R1(a) notification, sections 172 to 186(both inclusive) and Section 433 to 483(both inclusive) of the Companies Act, 1956 have been exempted in so far as the first respondent is concerned. 5. The case set up by the petitioner is that clause(1)(i) and (n) and also clause 90 runs counter to the provisions contained in section 87, 167 and 257 of the Companies Act, 1956, in as much as it places fetters on the right of the members of the Ist respondent company to exercise their rights as members. It is stated that Section 9(a) and (b) to 1956 Act provides that the provisions of the Companies Act will override any memorandum or articles etc, Therefore, the counsel for the petitioner contends that since clause (1)(i), (n) and clause 90 of Ext.P4 are inconsistent with Sections 87 to 167 and 47 and that in view of Section 9, those provisions of the Companies Act, 1956 will WP(c).No.11461/04 5 prevail over the aforesaid provisions of the Memorandum and all members of the company are entitled to exercise their rights irrespective of the objectionable provisions of Ext.P4. It is on this basis, petitioner seeks a declaration, as per prayer No.2 extracted above. 6. On behalf of the respondents, the prayer sought for by the petitioner is resisted. It was contended that these contentions were raised and were examined by the civil court, while considering O.S.No.217/1977, filed by the petitioner and that suit was dismissed on the ground of limitation and therefore this writ petition is not maintainable and is hit by the principles of resjudicata. It is further contended that validity of the provisions of the Articles and Memorandum of a Company, cannot be challenged in a proceedings under Article 226 of the Constitution of India. It is contended that Section 9 of the Companies Act 1956 is not relevant in so far as the company in question is concerned. It is stated that the company was incorporated under the Regulation 1 of 1092 which was replaced by the Travancore Companies Act, 1114. It is stated that it was when the company was covered by the provisions of the Travancore Companies Act, that the impugned amendments were WP(c).No.11461/04 6 introduced to Ext.P4 in 1958. It is stated that until the Act 42 1961 was introduced the company continued to be covered by the Travancore Companies Act 1140 and that by virtue of the provisions contained in Section 4 of the Interpretation and General Clause Act 1125, Section 9 is irrelevant in so far as the company is concerned. Yet another contention that is raised is that in view of Ext.R1(a) notification and also various other provisions of the Companies Act, 1956, Sections 87, 166 and 257 relied on by the counsel for the petitioner have no relevance. 7. Although various contentions have been raised by both sides, I feel it is only appropriate that I should examine the maintainability of the writ petition, having regard to the impact of Ext.R1(b) judgment rendered by the Civil Court. This is for the reason that if my finding on this issue is against the petitioner, it will not be necessary for me to examine the other contentions raised by both parties. 8. Ext.R1(b) is the judgment rendered by the Sub Court, Kottayam in O.S. No.216/1977 in which the petitioner was the plaintiff. It is seen from the facts narrated in the judgment that the prayer sought in the suit was a declaration that the budget WP(c).No.11461/04 7 placed in the general body meeting in which all the members are not allowed to participate should not be allowed to be passed. On that basis, petitioner, being the plaintiff therein, also sought an injunction restraining the defendants therein, including the first respondent herein, which was defendant No.1 in that suit, from placing and passing the budget for the year 1977-78. Issue Nos. 3 to 5 framed in that suit, being relevant, reads as under. “3. Whether the amendments of the articles of association valid? 4. Whether the rights of a permanent member can be abridged by such amendment? 5. Whether the plaintiff is entitled to the declaration and injunction sought for.” 9. The prayers in that suit could not have been unless the validity of amendments were considered. Therefore, in that judgment, the court examined the validity of various provisions of the memorandum and articles including clause(2)(1) and (n) and held it in favour of the petitioner. Dealing with the contention raised by the defendants in that suit that the suit was time barred, the court dealt with the issue in the following manner. “It has come out in evidence that the plaintiff instituted suit for registering himself as a member of the NSS in 1963. At least from that date towards WP(c).No.11461/04 8 he must be deemed to have been conversant with the Memorandum and Articles of association of the NSS. In 1967 he became a permanent member. It is idle for him to contend that even in 1967 he was not aware of the contents of the articles of association. I have quoted above the relevant provisions relating to the Memorandum and articles of association. Ext.B5 is a nomination paper submitted by the present plaintiff on 7.4.1971. The nomination was for the purpose of election to the Prathinidi Sabha. The election was to be held by an electoral college. That election was held under the provisions of the amended articles of association. Ext.B6 is another nomination submitted by the present plaintiff on 12.4.1974. That was also under the provisions of the amended articles of association. He must definitely be fastened with the knowledge regarding the amendments at least on the date of Ext.B5 10.4.1971. Learned counsel appearing for the Ist defendant contended that this suit is governed by Article 58 of the Limitation Act. WP(c).No.11461/04 9 Learned counsel for the plaintiff argued it that this case is governed by Sec.22 of the Limitation Act. According to the learned counsel this is a case of a continuing breach of contract and therefore, a fresh period of limitation begin to run at every moment of time during which the breach continues. The defendant's case is that this is a suit for declaration and the period of limitation is 3 years from the moment when the right to sue first accrues. To me it appears that it is article 58 that governs this case. The real grievance of the plaintiff has its origin in the amendment of the Articles of Association. By virtue of that the right of the plaintiff to vote in the general meeting was taken away. Year after year he is denied the voting right. But that is not a continuous breach of contract; but is the effect of the breach that was committed in 1958. The right of the plaintiff is not the question to be decided while examining the plea of limitation. It is the remedy that is barred. The right to sue accrued to the plaintiff when he got information regarding the WP(c).No.11461/04 10 amendment to the Articles of Association which took away his voting right. When he contested in 1971 for election to the State of Kerala. It can be seen that it was so treated by the Company Law Administration. Ext.B1 is a letter sent by the Registrar of Companies to the Inspector General of Registration, Kerala, wherein it is stated that the records of the Nair Service Society are being transferred to the latter. Such transfer is under Section 6 of the on-Trading companies Act. Therefore, the State of Kerala is competent to issue Ext.B11 notification.” 10. A reading of paragraph 15 of the judgment extracted above would thus show that the court accepted the contentions of the defendants in the suit that the case was covered by Article 58 of the Limitation Act and on that basis held the suit to be time barred and relief was declined and suit was dismissed. Against this judgment there was no appeal and the judgment has become final. Thus it is obvious that the contentions now urged before this court were urged before the civil court and relief was declined on the ground of limitation. It was despite this WP(c).No.11461/04 11 judgment of the civil court, that the petitioner filed this writ petition canvassing the invalidity of the very same provisions of the Memorandum and Articles of Association of the Ist respondent. In my considered view, the parties are bound by the findings of the civil court as contained in Ext.R1(a) judgment rendered by the civil court and petitioner cannot resort to successive litigations before different forums. Therefore I hold that principles of resjudicata applies and for that reason, writ petition is not maintainable. In view of this finding I do not think it necessary for me to deal with the other contentions raised in the writ petition. Writ petition fails and is dismissed. (ANTONY DOMINIC) JUDGE vi/ WP(c).No.11461/04 12