IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Appeal From Order No. 259 of 2010 Mahadevi Kanya Pathshala College and another …Appellants Versus Dr. Y.S. Bhatnagar and others …Respondents With Appeal From Order No. 260 of 2010 Mahadevi Kanya Pathshala College and another …Appellants Versus Dr. Y.S. Bhatnagar and others …Respondents And Appeal From Order No. 261 of 2010 Jitendra Singh Negi and others …Appellants Versus Dr. Y.S. Bhatnagar and others …Respondents And Appeal From Order No. 262 of 2010 Jitendra Singh Negi and others …Appellants Versus Dr. Y.S. Bhatnagar and others …Respondents Hon’ble Tarun Agarwala, J. The aforesaid appeals have been filed under Order 43 Rule 1 (r) of the Code of Civil Procedure against the grant of an injunction as well as under Order 43 Rule 1 (s) of the Code of Civil Procedure against the appointment of a receiver. 2 The facts leading to the filing of the aforesaid appeals is, that late Pandit Jyoti Swarup Bhatnagar and his wife Mahadevi started an educational institution in the year 1906 to promote education for girls. A society by the name of Mahadevi Kanya Pathshala was registered under the Societies Registration Act. Amongst other things, the Constitution of the Society provided that one member from the family of Jyoti Swarup Bhatnagar and his wife Mahadevi, who were the Founder members, would be inducted as a member of the Managing Committee. Over a period of time, the Society grew and managed an Inter College, a Post Graduate College and a Technology Institute. The Constitution of the Society underwent many changes over the passage of time, but the clause relating to the induction of a member from the family of the Founder member in the Managing Committee remained unchanged. The wife of Sri Jyoti Swarup Bhatnagar died in the year 1914 and he himself passed away in the year 1920 and, since then, till date, a member of the Founders’ family was inducted as a member of the Managing Committee. In the year 2007, one Sri N.S. Bhatnagar, who is defendant no. 20 in the present appeal, was the Secretary of the Managing Committee, and who alleged himself to be a family member of the Founders’ member of the Society. The Constitution of the Society was amended in 2007 with regard to the induction of a member from the Founders’ 3 family. The new amendments which were incorporated in clause 5.8 and 7.1 (iv), are being extracted hereunder: 5.8 - Blood relations of the Founders Shri Jyoti Swarup Bhatnagar & his wife Smt. Mahadevi Bhatnagar, who are in a position to take active interest in the affairs of the Society, shall fill up a Personal Information From (PIF), which shall also give their relationship with the Founders. A list of such active relations shall be maintained by the representative of the Founders family and the Secretary of the Society. Founder’s family representative on the Managing Committee shall invite, before the election of the Managing Committee the active blood relations of the founders to choose two members to the Governing Body and one of them to the Managing Committee for the tenure of the Managing Committee, and will convey their names and details of address, contact numbers etc. to the Secretary of the Managing Committee. 7.1 (iv) - One Representative of Founders’ Family to be chosen by the blood relations of the Founders. In short, the said provision provided that a blood relation of the Founders’ family shall be inducted as a member in the Managing Committee as well as in the Governing Body. The election of the Committee of Management took place in the year 2007 and Sri N.S. Bhatnagar alleged that he was the representative of the Founders’ family and was also elected as the President of the Committee of Management. It is alleged that the style and working of Sri N.S. Bhatnagar was not suiting the other members of the Committee of Management, and consequently, it is alleged that defendant nos. 1 to 4 10 conspired to remove Sri N.S. Bhatnagar from the Presidentship of the Committee of Management. It is alleged that on 16th August, 2009, an illegal resolution was passed by the Committee of Management that the Managing Committee of the educational institutions would be reconstituted since it was alleged that Sri N.S. Bhatnagar was not a blood relation of the Founders’ family. By another resolution dated 25th August, 2009, the Committee of Management ceased the powers of Sri N.S. Bhatnagar to act as the President till such time he furnished a certificate indicating therein that he was a blood relation of the Founders’ family. By virtue of this resolution, Sri N.S. Bhatnagar was restrained to act as the President of the Committee of Management, and, being aggrieved by this resolution, Sri N.S. Bhatnagar filed suit no. 604 of 2009 before the Civil Judge (S.D.), Dehradun, against the members of the Committee of Management and against the three educational institutions, alleging therein that the Committee of Management had no power to pass any resolution restraining him from functioning as the President. Sri N.S. Bhatnagar, who had filed the suit along with the Society, prayed that the members of the Committee of Management and other defendants be restrained from interfering in his functioning as the President and managing the Society. An application for grant of temporary injunction was also filed and the trial court, after considering the matter, by an order dated 23rd January, 2010, rejected the injunction application holding that Sri N.S. 5 Bhatnagar was not authorized to file the suit on behalf of the Society since there was no such resolution on his behalf, and that, the plaintiff Sri N.S. Bhatnagar could raise a dispute before the Registrar under Section 25 of the Societies Registration Act. The trial court further held that no such injunction could be granted in view of Section 41 of the Specific Relief Act. Sri N.S. Bhatnagar, being aggrieved by the said order, filed a Misc. Appeal before the District Judge, which is pending consideration. In March, 2010, a second suit no. 108 of 2010 was instituted by Sri Y.S. Bhatnagar and others against the members of the Committee of Management as well as against the Society, in which, Sri N.S. Bhatnagar was arrayed as a proforma defendant. This suit was for declaration and for permanent injunction. In this suit, the plaintiffs alleged that they are the active representatives of the Founders’ family, and that, they had authorized Sri N.S. Bhatnagar to represent them in the Committee of Management. It was alleged that the members of the Committee of Management had passed wholly illegal resolutions from 16th August, 2009 onwards, and, had illegally removed Sri N.S. Bhatnagar not only as the President of the Committee of Management but had also removed him from being a member of the Society. The plaintiffs contended that the Society was functioning illegally after 16th August, 2009, and that, it had become defunct, and had no power to call a meeting of the Committee of Management, 6 or to pass any resolution therein. The plaintiffs alleged that on 3rd September, 2009, the Committee of Management illegally passed a resolution to constitute an enquiry committee in order to find out as to who are the blood relations of the Founders’ family, and, based on this resolution, an enquiry report was submitted, in which, it was held that there was no blood relation of the Founders’ family existing, and that, Sri N.S. Bhatnagar was also not a blood relation of the Founders’ family. The plaintiffs alleged that based on the said enquiry report, a resolution dated 30th September, 2009 was passed accepting the said enquiry report, and simultaneously, terminating the membership of Sri N.S. Bhatnagar as a member of the Society. The plaintiffs alleged that under the Constitution of the Society, it was essential and imperative that a representative of the Founders’ family is on the Governing Body of the Society and is also a member in the Committee of Management and since the resolution dated 30th November, 2009, was wholly illegal and the stand adopted by the Committee of Management holding that there was no blood relation of the Founders’ family, the functioning of the Committee of Management had become illegal, and had become defunct, and that, all such resolutions passed by the Committee of Management was void. The plaintiffs further contended that the functioning of the Committee of Management was bringing loss to the educational institutions, and, therefore, prayed that defendant nos. 1 to 10, namely, the members of the Committee of Management be restrained from interfering in the 7 functioning of the educational institutions of the Society, and that, the management be given to a representative of Founders’ family, who is a blood relation. Along with the said suit, the plaintiffs also filed an application for grant of temporary injunction, in which, initially a notice was issued to the defendants. The plaintiffs, being aggrieved by the issuance of the said notice, filed writ petition no. 409 of 2010, which was disposed of by an order dated 26th March, 2010, directing the trial court to decide the injunction application within a week. The order of the writ court was not complied with by the trial court since the defendants appeared and filed an application under Order 7 Rule 11 of the Code of Civil Procedure read with Section 10 of the Code of Civil Procedure. This application was allowed by an order of the trial court dated 5th April, 2010, under Section 10 of the Code of Civil Procedure. The trial court held that the subject matter of both the suits, namely, the suit filed by Sri N.S. Bhatnagar, and the present suit filed by the representative of the family members, was the same, and consequently, stayed the second suit till the disposal of the first suit, i.e. suit no. 604 of 2009. The plaintiffs, being aggrieved by the said order, filed writ petition no. 533 of 2010, which was allowed by an order dated 21st May, 2010. The writ court set aside the order of the trial court dated 5th April, 2010, holding that the two suits are totally different, and the cause of action and the subject matter of the suits are distinct and different. The writ court directed the trial court once again to 8 decide the injunction application within a week. It transpires that again, the order of the writ court could not be complied with as the Presiding Officer went on leave. This led the plaintiffs to file another writ petition no. 852 of 2010, which was disposed of by an order dated 17th June, 2010, directing the District Judge to nominate another Judge to decide the injunction application. Based on the said order, a Judge was nominated, who, after hearing the parties, decided the injunction application. Before the trial court, the defendants, who are the members of the Committee of Management, filed their objections and contended that the suit was malafide, and, was instituted in collusion with Sri N.S. Bhatnagar, and that, the second suit was barred by the principle of res judicata. It was further alleged that the relevant facts had been concealed, and that, the plaintiff nos. 1 and 2 as well as Sri N.S. Bhatnagar had approved the resolution of 2007, by which, amendments in clause 5.8 and 7.1 (iv) of the constitution of the society were made. The defendants contended that the plaintiffs did not fill up any form as contemplated under clause 5.8 of the Constitution, and that, they are not the blood relations or the legal representatives of the Founders’ family, and that, Sri N.S. Bhatnagar illegally made himself a representative of the Founders’ family. It was contended that when these facts were brought to the knowledge of the members of the Committee of Management, an enquiry committee was constituted, which revealed that there are no blood 9 relations of the Founders’ family, and that, Sri N.S. Bhatnagar was not a member of the Founders’ family nor was he a representative, and consequently, he was removed as the President of the Committee of Management as well as from a member of the Society. The trial court, after considering the material evidence brought on record, and after considering the submissions raised by the counsel for the rival parties, held that the plaintiffs had an individual right to file a suit, and that, the said suit was not collusive. The trial court held that after the removal of the President, the Committee of Management took no steps to appoint another member of the Founders’ family as a representative, and that, the provision of clause 5.8 of the Constitution was not being adhered to. The trial court further held that clause 14, which provides for a No-Confidence Motion, was not invoked, and that, Sri N.S. Bhatnagar had been arbitrarily removed as the President of the Committee of Management. The trial court held that both the suits are different having a different cause of action and different reliefs, and that, the plaintiffs in the present suit, has not questioned the resolution of 25th August, 2009, and have, in fact, questioned the resolution dated 30th November, 2009, which has an impact not only in the removal of Sri N.S. Bhatnagar as a member of the Society, but also reflects upon the plaintiffs being the representatives of the Founders’ family. The trail court further held that the enquiry report submitted by the enquiry committee was not 10 correct, and the analysis made by it with regard to the blood relations of the Founders’ family, was not in accordance with law. The trial court, accordingly, held that a prima facie case was made out. In furtherance to that, the trial court held that several irregularities were being committed by the Committee of Management, and that, the charge of realization of fees, which was in the hands of the Principal and the Manager of the institution, had now been taken over by the Secretary. Not only that, the Committee of Management appointed one Sri N.S. Sharma as Director in Mahadevi Institute of Technology, whose appointment was earlier disapproved by the Governing Body, and consequently, on account of such irregularities, balance of convenience was also in favour of the plaintiffs. The trial court further found that since the representatives of the Founders’ family are not being represented in the Committee of Management or in the Governing Body, the Committee of Management had become defunct. Further, irreparable injury was being caused to the plaintiffs, and therefore, the trial court found it fit to grant an interim injunction. The trial court, accordingly, restrained the members of the Committee of Management not to function or manage the educational institutions. The trial court further held that till such time as the application for appointment of the receiver was not decided by the regular court, as an interim measure, the educational authorities would act as the receiver and manage the institute. 11 Pursuant to the said order, the file of the case went before the regular court and the application for appointment of the receiver came up for consideration. The trial court held that since a receiver had already been appointed by an earlier order, there was no point in hearing the matter de novo or to act as an appellate authority, and consequently, reiterated the order of 29th June, 2010, and disposed of the application for appointment of the receiver. The Society and the Secretary, being aggrieved by the aforesaid two orders, have filed two separate appeals, and other members of the Committee of Management have also filed two sets of appeals, which have been clubbed together and are being decided finally. Heard Sri Neeraj Garg, the learned counsel for the defendant/appellant, Sri Sharad Sharma, the learned senior counsel assisted by Sri C.K. Sharma, the learned counsel for the plaintiff/opposite party and Sri B.P. Nautiyal, the learned counsel for Sri N.S. Bhatnagar and other defendants/opposite parties. The learned counsel for the appellant contended that the plaintiffs are only the members of the Society and have no individual right to institute a suit against the Society or the members of the Committee of Management or apply for injunction against the educational institutions, and that, if any member is aggrieved, it is open to the said member to institute a case under Section 25 of the Societies Registration Act before the Registrar 12 concerned. In support of his submission, the learned counsel placed reliance on the decisions in Harbans Singh & Others Vs. Sant Hari Singh and others, 2009 (1) Scale 729 and Bhagwan Kaushik Vs. State of U.P. and others, 2006 (5) AWC 4997. The learned counsel submitted that the findings on prima facie case, balance of convenience, and irreparable injury, are perverse, and based on no evidence, and are liable to be set aside. The learned counsel submitted that the suit was barred by the principle of res judicata as well as by Section 25 of the Societies Registration Act. The learned counsel further submitted that the plaintiffs were representatives to the Society in the first suit, and consequently, could not file the second suit. The learned counsel also submitted that the trial court while granting the injunction had virtually decreed the suit, which could not be allowed. The learned counsel consequently submitted that the order of the trial court granting the injunction was liable to be set aside. Not only that, the order of appointment of receiver was manifestly erroneous in law, and also was liable to be set aside since no cause arose to appoint a receiver to manage the institute. The learned counsel for the appellant further submitted that on account of the removal of the President, the representative of the blood relations of Founders’ family does not come to an end nor clause 5.8 of the Constitution has been rendered otiose. The learned counsel submitted that the court should be reluctant in interfering in the internal affairs of the educational institutions, and that, 13 receiver should be appointed only in a rare case where it is found to be just to appoint a receiver. In support of his submission, the learned counsel placed reliance on the decisions in 1977 SC 615, 2004 (22) LCD 215, 2004 (7) SCC 478, 2003 (6) SCC 65 and 2009 (11) SCC 127. On the other hand, Sri Sharad Sharma, the learned senior counsel submitted that the members of the Committee of Management had formed a caucus and were bent upon to oust Sri N.S. Bhatnagar since Sri N.S. Bhatnagar was not approving the high-handedness of certain members of the Committee of Management. Sri Sharad Sharma, the learned senior counsel submitted that resolutions dated 16th August, 2009, 25th August, 2009, 3rd September, 2009 and 30th November, 2009, indicated a definite pattern to oust Sri N.S. Bhatnagar, and the representatives of the Founders’ family, so that, the defendants, who are the members of the Committee of Management, could run the educational institution in an autocratic manner. The learned senior counsel submitted that all these resolutions were ex facie illegal and Sri N.S. Bhatnagar could not be removed in the manner suggested by the Committee of Management, nor did the Committee of Management had any power to appoint a enquiry committee to enquire as to whether any blood relation of the Founders’ family was existing or not, nor had any power to pass a resolution holding Sri N.S. Bhatnagar was not a blood relation of the Founders’ family. The learned counsel submitted that on account of the resolution 14 dated 30th November, 2009, there is no representative of any member of the Founders’ family, and consequently, the functioning of the Committee of Management was against the provision of clause 5.8 of the Constitution, and consequently, the Society had become defunct, and that, the trial court, after finding that a prima case existed, rightly held that balance of convenience and irreparable injury was in favour of the plaintiff and had rightly injuncted the defendants from managing the Committee of Management. The learned senior counsel submitted that the irregularities committed by the defendant nos. 1 to 10, after ceasing the powers of the President, indicates balance of convenience in favour of the plaintiffs and if the members were allowed to continue, irreparable injury and loss would not only be caused to the educational institutions, but also to the plaintiffs. The learned senior counsel consequently submitted that the order of the trial court did not suffer from any error of law, and that, the appeal was liable to be dismissed. Sri B.P. Nautiyal, the learned counsel for defendant nos. 15 to 17 and defendant no. 20, submitted that the Committee of Management could not take a decision to remove Sri N.S. Bhatnagar either as the President of the Committee of Management or as a member of the Society, nor had any power to question the blood relationship of Sri N.S. Bhatnagar with that of the Founders’ family. The learned counsel submitted that such dispute could only be raised by the Committee of 15 Management under Section 25 of the Societies Registration Act before the Registrar concerned. The learned counsel supported the submission made by the learned counsel for the plaintiffs, and further submitted that since the term of the Committee of Management had come to an end on 30th June, 2010, the question of allowing these members of the Committee of Management to continue and manage the affairs of the Society and its educational institutions after the expiry of the term, did not arise. Educational institutions are managed under the scheme of administration. The Society which manages the educational institutions, has its own Constitution or bye-laws and the functioning of the Society vis-à-vis its Governing Body or the Committee of Management is governed by the terms and conditions spelt out in the Constitution or the bye laws. The crux of the grievance of the plaintiffs in the present suit revolves around the resolution dated 30th November, 2009. In this suit, the resolution of 2007 or the resolution of 25th August, 2009, is not under challenge. By the resolution of 2007, the Constitution of the Society was amended and the present clause 5.8 and 7.1 (iv) was amended which is ruling the roost with regard to one representative of the Founders’ family to be chosen by the blood relations of the Founders family as a member of the Committee of Management and as a member of the Governing Body. The plaintiffs allege themselves to be the representatives of the Founders’ family and are taking an active interest in 16 the affairs of the Society. The plaintiffs allege that they had chosen Sri N.S. Bhatnagar as their representative to represent them in the Committee of Management and in the Governing Body, and that the ouster of Sri N.S. Bhatnagar from the Committee of Management and from being a member of the Society has adversely affected their rights. In the light of these admitted facts, the Court is of the opinion that the suit filed at the hands of the plaintiffs alleging themselves to be the representative of the Founders’ family, was maintainable, and that, the plaintiffs had an individual right to file a suit. The contention that the suit was not maintainable, and that the plaintiffs had an efficacious remedy to approach the Registrar under Section 25 of the Societies Registration Act, is not tenable in the facts and circumstances of the present case. A dispute regarding the election or continuance in office of an officer bearer of the Society can be filed under Section 25 of the Societies Registration Act before the Registrar by at least 1/4th members of the Society. The plaintiffs do not have the requisite strength to represent 1/4th members of the Society, and consequently, by necessary implication, they could not file an application u/S 25 of the Act. The only remedy available to them was to file a suit. Even otherwise, the Court is of the opinion that Section 25 of