1 IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY IN THE HIGH COURT OF JUDICATURE OF BOMBAY CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION CIVIL APPELLATE JURISDICTION APPEAL FROM ORDER NO.192 OF 2006 WITH CIVIL APPLICATION NO.269 OF 2006 ALONGWITH APPEAL FROM ORDER NO.193 OF 2006 WITH CIVIL APPLICATION NO.270 OF 2006 Garware Club House. ..Appellants. V/s. Jagdish Maneklal Mehta & Ors. ..Respondents. (Orig.Plaintiff Nos.1 to 3) And Dharamsi Morarji Chemicals & Ors. ..Respondents. (Orig.Defendant Nos.2 to 4) ALONGWITH APPEAL FROM ORDER ST.NO.8402 OF 2006 WITH CIVIL APPLICATION ST.NO.8407 OF 2006 Dharamsi Morarji Chemicals Ltd. & Anr. ..Appellants. (Orig.Defendant Nos.2 and 3) V/s. Jagdish Maneklal Mehta & Ors. ..Respondents. (Orig.Plaintiff Nos.1 to 3) And Garware Club House & Anr. ..Respondents. (Orig.Defendant Nos.1 & 4) Mr.Ravi Kadam, Sr.Counsel with C.D.Mehta & V. Dhond i/b. M/s.Dhruve Liladhar & Co. for appellants. Mr.H.J. Thakkar, Sr.Counsel i/b. M/s.Bhaishankar 2 Kanga and Girdharilal for respondent Nos.1 to 3. Mr.M.R.Phal for respondent Nos.4 and 5. Mr.Vikas Warerkar i/b.Warerkar & Warerkar for respondent No.6. CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J CORAM: A.M.KHANWILKAR,J DATE : JULY 3, 2006. DATE : JULY 3, 2006. DATE : JULY 3, 2006. JUDGMENT : JUDGMENT : JUDGMENT : 1. Heard counsel for the parties. Admit. Counsel for the Respondents in the respective appeals waive service. Matter is heard finally in terms of order dated March 21, 2006. All parties have agreed for final disposal of the appeals in view of the urgency. Perused the pleadings and relevant documents on record. 2. These appeals can be disposed of by a common Judgment as the same are directed against the common Judgment passed by the Trial Court on the two separate Notice of Motions filed by the respondents/plaintiffs in the same suit. These appeals are directed against the Judgment and order passed by the City Civil Court, Mumbai dated February 22, 2006 on Notice of Motion No.4439 of 2005 and Notice of Motion No.152 of 2006. Both the motions are filed by the respondents/plaintiffs in S.C.Suit No.5154 of 2005. 3 3. Briefly stated, it is the case of the Plaintiffs that the plaintiff No.1 was admitted as Founder Member of the Appellant No.1/defendant No.1 club on the recommendation of defendant No.3 club. Defendant No.3 club is a member of Defendant No.4 Association. As per Article 5(h) of the Articles of Association of Defendant No.1 Club, the Member Clubs were entitled to recommend six persons to be the members of the Club House. Article No.5(h) is to be read with Clause (b) and (c) of the Resolution recorded in the Preamble of the Regulations formulated for management of the Defendant No.1, which was governed by Regulation adopted originally in August, 1971 subsequently amended on 12th September, 1973 and further amended on 18th September, 1974. As per the regulations of the Defendant No.1, as it prevailed at the relevant time when the plaintiff No.1 was admitted as a founder member, it provided that the clubs affiliated to defendant No.4 prior to 30th September, 1968 shall recommend only six persons to be members of the defendant No.1 club House. It further provided that clubs affiliated thereafter, but prior to 28th October, 1971 shall recommend only two persons to be the members of the club house. Clause (c) of the 4 Resolution as adopted further provided that out of six names recommended by the clubs affiliated to defendant No.4 Association prior to September 30, 1968, three persons shall be recommended as "founder members" who shall pay entrance fee in full and that the other three persons may pay the entrance fee in suitable instalments within a period of twelve months. It is then provided that two persons recommended by the clubs after 30th September, 1968 but prior to 28th October, 1971 shall pay entrance fee in full. 4. In so far as the Plaintiff No.1 is concerned, he was admitted as member on the recommendation of defendant No.3 club sometime in August, 1973. Since then the plaintiff No.1 has been enjoying the status of "founder member" of the defendant No.1 club. The defendant No.1 club was subsequently registered as a Company under the provisions of the Companies Act. Certificate of incorporation issued in favour of the defendant No.1 club as Company by the registrar of Company under section 25 of the Companies Act is dated 6th April, 1993. The Memorandum of Association of defendant No.1 as adopted, in particular clause III, subclause A-1, which is relevant for our purpose would read thus: 5 "To acquire, and take over as a going concern the effects, assets and liabilities of the present unincorporated Club known as B.C.A. Garware Club House at Wankhede Stadium, D-Road, Churchgate, Bombay -400 020, including its outstanding debts if any and to accept and enroll its present members of all categories as its members, and to run and manage the said B.C.A.Garware Club House with its applicable resolutions and resolutions effective immediately prior to the incorporation of the Company with the same effect and applicability as hitherto." (emphasis supplied) It is thus seen that the defendant No.1, as a consequence to its registration as Company under the provisions of Companies Act, accepted and enrolled the members of the former club house of all categories as its members and to run and manage the B.C.A.Garware Club House with its applicable Resolutions and resolutions effective immediately prior to incorporation of the Company with the same effect and applicability as is referred in the Memorandum of Association and its Articles of Association. So far as the Articles of Association of the defendant No.1 Club after registered as Company under the provisions of Companies Act, it provides similar provision as was in existence in earlier point of time regarding six nominees of the clubs affiliated to Bombay Cricket Association prior to 30th September, 1968 and two nominees of the clubs 6 affiliated to the Bombay Cricket Association after 30th September, 1968 and prior to 28th October, 1971 admitted to the membership on the recommendation of the respective clubs to be enrolled as Founder Members(see Article 14). Suffice it to observe that since the date of admission of the plaintiff No.1 as founder Member of the Defendant No.1 club he was availing all the facilities and privileges as member of the defendant No.1 club. As the plaintiff No.1 was member of defendant No.1 club for more than 8 years as per the regulations governing eligibility of sons and daughters of such members on payment of 50% of the entrance fee for ordinary member, application for enrollment of plaintiff Nos. 2 and 3 to be admitted as members of the defendant No.1 club was made. The said applications were duly entertained and scrutinized by the defendant No.1 club. By communication dated 30th March, 2000, the plaintiff Nos. 2 and 3 were duly informed that their applications for enrollment as member and allotment of membership of the club has been scrutinised and found to be eligible for enrollment as Ordinary member. However, their names were to be processed for allotment of membership subject to availability of vacancy. Till such time, their names were to be treated as permanent wait list, which entitled the 7 plaintiff Nos. 2 and 3 to utilise the Club house facility pending allotment of membership. The plaintiff Nos. 2 and 3 were also called upon to make payment of Rs.1200/- as their annual subscription so that their family members could also avail the facilities of the club house. Accordingly, the plaintiff Nos. 2 and 3 paid annual subscription as also the amount of Rs.16,250/- for each of the said plaintiffs towards advance deposit as Permanent wait list members, to be adjusted against the allotment of regular ordinary membership, out of the total amount of entrance fee Rs.66,000/-. In other words, the Plaintiff Nos. 2 and 3 came to be enrolled on the list of permanent wait list members and allowed to enjoy facilities of Club House since year 2000. In August, 2005, plaintiffs were given to understand that the plaintiff Nos. 2 and 3 were not entitled to use the Club House facilities as their names have been wrongly included in the permanent wait list maintained by the Club House on erroneous assumption that the sons and daughters of the "Founder Members" are also eligible for being taken as Ordinary Members of Club. It appears that the Club took a policy decision that the sons and daughters of the "Founder Members" were not eligible for such admission as ordinary members. Communication in this behalf dated 8 July 27, 2005 was received by plaintiff Nos. 2 and 3, which mentions that as per the Articles of Club House the sons/daughters of the founder members are not eligible for ordinary membership under membership of son and daughter category. Therefore, wait list numbers allotted to plaintiff Nos. 2 and 3 were cancelled with immediate effect. The plaintiff Nos. 2 and 3 were also called upon to surrender their identity cards issued to them as well as their family members by the Club House under the respective wait list number. By the said communication, the defendant No.1 returned the cheques to the respective plaintiff Nos.2 and 3 towards refund of advance entrance fee paid by them as wait list candidates. Plaintiff No.1 immediately raised issue with the defendant No.1 by sending a detailed communication dated September 19, 2005 and called upon the defendant No.1 to provide certain information referred to in the said communication. The plaintiff No.1 called upon the defendant No.1 to place the issue before the Annual General Meeting of the Club, which was scheduled to be held on 30th September, 2005. According to the plaintiff No.1, the issue ordinarily ought to have been discussed in the General Body. However, the same was not allowed to proceed on the basis of incorrect representation made 9 by Mr. Ravi Ganguli, Vice President of defendant No.1. Be that as it may, subsequently even the membership of plaintiff No.1 came to be recalled. This has happened purportedly at the instance of defendant No.3 club, who in turn informed the defendant No.1 by communication dated 11th November, 2005 mentioning that they were withdrawing the names of four nominated members sent at their instance, who were enrolled as Founder Members of the defendant No.1 club. The name of plaintiff No.1 is mentioned in this communication, Acting on this communication, defendant No.1 in its Managing Committee Meeting held on 14th November, 2005 at 5.30 p.m., deliberated on the subject vide Agenda Item No.2 and recorded that defendant No.3 has withdrawn nomination of four founder members of defendant No.1. Accordingly, it was unanimously resolved to withdraw the nomination of the said four founder members and called upon them to settle the outstanding dues. Communication in this behalf was sent to the plaintiff No.1 on 20th December, 2005. In the light of the above developments the plaintiffs rushed to the City Civil Court, Bombay by way of S.C. Suit No.5154 of 2005 on November 28, 2005 for declaration that the decision of the defendant No.2 dated 27th October, 2005 Exh.J and also decision dated 14th November, 2005 Exh.L and 10 decision dated 27th July, 2005 of defendant No.1 Exh. D and C and decision of defendant No.3 at Exh. A are bad, illegal and contrary to the Association, malafide and are liable to be set aside. During the pendency of this suit the plaintiff took out Notice of Motion No.4439 of 2005 for the following relief: "Pending the hearing and final disposal of the suit, the Defendants, their servants and agents be restrained by an order and injunction of this Hon’ble Court from acting upon or implementing the said decision dated 27th October, 2005 at Exh.J and the said decisions dated 27th July, 2005 at Exh. B and C respectively." At the relevant time the decision of removing the plaintiff No.1 was not communicated, however, at the hearing of this Notice of Motion, as the counsel appearing for defendant No.1 informed the court that communication has already been sent to plaintiff No.1 recording the decision taken by the Managing Committee in its meeting held on 14th November, 2005, the plaintiffs were required to amend the pleadings and ask for further reliefs in that context. The plaintiffs accordingly, amended the pleadings and asked for further reliefs. The amended reliefs claimed by the plaintiffs are as follows: "The Plaintiffs therefore pray:- (a) it may be declared that the decision 11 dated 27th October 2005 of the Defendant No.2 at Exhibit "J" and also decision dated 14th November, 2005 at Exhibit "L" and the decisions dated 27th July 2005 of the Defendant No.1 at Exhibits "B" and "C", and the decision of the defendant No.3 at Exhibit ‘K’ are bad, illegal, contrary to the articles of association, motivated, discriminatory malafide and are liable to be set aside; (ai) it may be declared that the actions of the defendant No.3 by letters dated 11th November 2005 and 30th November 2005 at Exhibit "K" and "M" respectively are bad and illegal and the same be set aside. (aii) it may be declared that the actions of the 1st defendant by its letter dated 20th December 2005 at Exhibit -"N" and by its meeting dated 16th December 2005 referred to therein are bad and illegal and the same be set aside. (b) pending the hearing and final disposal of the suit, the Defendants, their servants and agents be restrained by an order and injunction of this Hon’ble Court from acting upon or implementing the said decision dated 27th October 2005 at Exhibit "J" and also decision dated 14th November, 2005 at Exhibit "L" and the said decision dated 27th July 2005 at Exhibits "B" and "C" and the decision on the defendant No.3 at Exhibit ‘K’ are respectively. (bi) that pending the hearing and final disposal of the suit, the Defendant No.3 its servants and agents be restrained by an order and injunction of this Hon’ble Court from acting upon or implementing their actions by their letter dated 11th November, 2005 and 30th November 2005 at Exhibit -"K" and "M" hereto respectively. (bii) that pending the hearing and final disposal of the suit, the Defendant No.1 its servants and agents be restrained by an order and injunction of this Hon’ble Court from acting upon or implementing their actions by their dated 20th December 2005 at Exhibit 12 -"N" and by its said meeting dated 18th December 2005 referred to therein. (c) for ad interim reliefs in terms of prayer (b) above. (d) for such further and other reliefs as the circumstances of the case may require. (e) for costs of this suit." The plaintiffs also took out additional notice of motion being Notice of Motion No.152 of 2006 and asked for further interim relief as follows: "a) Pending the hearing and final disposal of the Suit, the Defendants, their servants and agents by themselves or through someone else be restrained by an order and injunction of this Hon’ble Court from acting upon, implementing or doing any further acts or omissions in pursuance or furtherance of the following decision/actions. (i) decision of the 1st Defendant contained in the minutes of the urgent meeting of the managing committee held on 14th November, 2005 at Exhibit "L" to the Plaint; (ii) Actions of the Defendant No.3 by their letter dated 11th November 2005 and 30th November 2005 at Exhibits "K" and "M" respectively to the Plaint; (iii) Decisions of the 1st Defendant by its letter dated 20th December 2005 at Exhibit "N" to the Plaint and by its meeting dated 16th December 2005 referred to therein and thereby or otherwise preventing the Plaintiffs from availing of the facilities of the Club House of the 1st Defendants. b) That ad-interim injunction in terms of prayers (a) and (b) above be granted. c) For costs of this Notice of Motion; 13 and d) For such other and further as this Honourable Court may grant in the circumstances of the case." 5. The parties exchanged pleadings before the lower Court. On the basis of material on record, the lower Court by the impugned Judgment and order dated 22nd February, 2006 disposed of both the Notice of Motions preferred by the plaintiffs. Both the Notice of Motions have been made absolute by the Lower Court. The reasons, which have weighed with the lower Court to record opinion in favour of the plaintiffs can be discerned from paragraph-33 onwards of the impugned Judgment. The appellant/ original defendant No.1 has questioned the correctness of the view taken by the trial Court in the impugned Judgment by filing two separate appeals being Appeal from order No.193 of 2006, which is directed against the order passed on Notice of Motion No.4439 of 2005; and Appeal From Order No.192 of 2006, which is directed against the order passed on Notice of Motion No.152 of 2006. The third Appeal being Appeal from Order No.... of 2006(arising from Appeal From Order St.No.8402 of 2006) is filed by Defendant Nos. 2 and 3 against the order passed on Notice of Motion No.152 of 2006. Ordinarily, I would have adverted to the 14 findings recorded by the trial Court in the impugned Judgment to consider whether the view so taken by the court below is appropriate and can be sustained. However, in the present case, it is noticed that the Judgment of the lower Court is of no assistance. Ordinarily, in such a situation I would have set aside the impugned Judgment and order and relegated the parties before the lower court for reconsideration of the entire matter afresh. However, the counsel appearing for both the parties before this Court insisted that this court may consider the entire matter afresh on merits instead of relegating the parties before the lower Court, which will delay the matter further. In the circumstances, it has become necessary for me to advert to the relevant aspects of the matter and to record the findings afresh on merits. 6. The first question that needs to be addressed on the basis of pleadings of the parties is what is the status of the plaintiff No.1. According to the plaintiffs, though the Plaintiff No.1 is a "founder member", it is not open to withdraw his candidature, save and except, the conditions specified in the Articles of Association, of the Defendant No.1 Club, by which the parties are governed. It is contended 15 on behalf of the plaintiffs that the plaintiff No.1 could be removed as "founder Member" on the ground of non-payment of dues in terms of Article 22 or if were to resign in terms of article 23 or he would cease to be member of the club in terms of Article 24. In absence of any of the situations covered by abovesaid clauses, contends plaintiff No.1, the club was not authorised to withdraw the nomination of the plaintiff No.1, assuming that it is a case of nomination and not recommendation. In the first place the plaintiffs contend that as per the original regulation by which the club and the plaintiff was bound it only permitted "recommendation" of persons to be admitted as founder Member, in terms of the resolution noted in the Preamble of the regulation of 1974 r/w clause 5(h) thereof. There was no provision for "nomination" of persons to be admitted as founder member. Even the new Articles of Association after the defendant No.1 has been incorporated as Company, it has not changed that position. So far as Articles of Association, which have come into force after April, 1993, Article 14 thereof deals with the Founder Members. There is nothing in the Articles to authorise the club affiliated to Bombay Cricket Association who had recommended the name of persons to be enrolled as founder member to withdraw the said 16 candidature or for that matter defendant No.1 to act on such withdrawal. In as much as, so far as defendant No.1 and plaintiffs are concerned they will be governed by Articles of Association, which is in the nature of contract between the two parties. It is further contended that there are nothing in this Articles of Association to enable the defendant No.1 to remove the name of any Founder Member, merely because the club who had recommended the name of such member has withdrawn the recommendation. On this basis, it is contended that removal of plaintiff No.1 is without authority of law. 7. In so far as the decision concerning plaintiff Nos.2 and 3, it is contended that they have been allotted permanent wait list number in terms of the extant regulation. This regulation not only covers the sons and daughters of the ordinary members but also other category of members. In all there are six categories of members as is noted in Article-8 of the Articles. Founder member is one of such categories. Indeed, Article 16 of the Articles deals with the Ordinary Member, but the same is in two parts. The first part relates to issue of subscription or entrance fee to be paid by person to be admitted as Ordinary member. The later part of 17 Article 16 provides for sons and daughters of "members" who can get admitted as members on payment of 50% of the entrance fee for ordinary members. In other words, there are two sources, from which persons are admitted as ordinary members. Firstly, who has directly applied for Ordinary Membership and second is the sons and daughters of the existing members. It is therefore, contended that sons and daughters of the "founder members" who are also members within the sweep of expression "membership" defined in Article 8 read with Article 4(e); are entitled to be enrolled as ordinary member subject to the qualification specified in Article 16. Accordingly, there is no basis to deny benefit of this provision to sons and daughters of the "founder members". It is then contended that in fact the applications preferred by the plaintiff Nos. 2 and 3 were duly scrutinized and accepted by the defendant No.1. Defendant No.1, in turn, informed the plaintiff Nos. 2 and 3 in writing that their applications have been scrutinized and they have been found eligible for enrollment as ordinary member, but that formality was to be completed in due course subject to availability of vacancy. In the mean time, the plaintiff Nos. 2 and 3 were allowed to enjoy all the facilities of the club on payment of 18 annual subscription. Besides, advance of entrance fee payable by plaintiff Nos. 2 and 3 in terms of Article 16 of the Articles, being 50% of the entrance fee for ordinary member, was also demanded from plaintiff Nos.2 and 3 and which amount was offered by them and and accepted by defendant No.1. It is therefore, contended on behalf of the plaintiff Nos. 2 and 3 that it was not open to the defendant No.1 to unilaterally discontinue or remove their names from the permanent wait list member on the erroneous assumption that sons and daughters of the Founder Members were not eligible for being admitted as members of the club on payment of 50% of the entrance fee of ordinary member. 8. According to the appellants original Defendants, however, the claim set up by the plaintiffs either of plaintiff No.1 or plaintiff Nos.2 and 3 is without any basis. It is contended that the plaintiff No.1 is concerned, his case is one of withdrawal of nomination by defendant No.3. The plaintiff No.1 being a nominated member by the defendant No.3 was subject to the pleasure of defendant No.3. The defendant No.3 having decided to withdraw the nomination of plaintiff No.1, the defendant No.1 had no option but to accept the said 19 request and also allow the defendant No.3 to nominate some other person as founder member as replacement. It is contended that the founder member does not enjoy the same rights and privileges as other members of the club. He can enjoy the facilities of the club subject to