E. Veda Bagath Singh & Ors vs The Madras Race Club & Anr

For Appellants: Mr. S.N. Jha, Senior Advocate assisted by Mr. T. Mohan, Mr. Suresh Kumar and Mr. Mayank Kshivsagar, Advocates

For 1st Respondent: Mr. Mohan Parasaran, Mr. R. Murari, Senior Advocates assisted by Mr. Anil Kaushik, Mr. Alok Kumar, Mr. Abhishek Mishra and Ms. Pavitra Venkateswaru, Advocates

Company Appeal (AT) No. 87 of 2018

IN THE MATTER OF:

K. Narayanan & Ors. ...Appellants

Versus

The Madras Race Club & Anr. ...Respondents

Present:

For Appellants: Mr. T. Mohan, Mr. Suresh Kumar and Mr. Mayank Kshivsagar, Advocates

For 1st Respondent: Mr. Dhruv Mehta, Senior Advocate assisted by Mr. Anil Kaushik, Mr. Rajinder Singh and Mr. Abhishek Mishra, Advocates

For 2nd Respondent: Mr. Shyamal and Mr. Dhruv Pande, Advocates 2

ORDER

03.04.2018 One Mr. M. Muthukaruppan, petitioner (2nd Respondent

herein) preferred a petition under Section 97 of the Companies Act, 2013 read

with Rule 74 of the National Company Law Tribunal Rules, 2016 for obtaining

the directions of the Tribunal to call of an Annual General Meeting of 'Madras

Race Club' (1st Respondent herein) for the Financial Year 2015-16. The following

prayer were made therein:

"5. RELIEF(S) SOUGHT:

In view of the facts mentioned above, the Petitioner prays for

the following:

5.1 That directions be issued by the Hon'ble Tribunal for calling

of the Annual General Meeting of MRC in accordance with

Section 97 of the Companies Act, 2013, for consideration of

financial statements, appointment of members of the

Committee of Management, appointment of statutory auditors

and other matters as required in terms of the Act and the

Articles of Association of MRC; and

5.2 That any other ancillary or consequential directions be made

as the Hon'ble Tribunal may deem fit and appropriate in the

facts and circumstances of the case."

2. In the said petition no interim relief was sought for by the petitioner (2nd

Respondent). However, when the matter was taken up on 29th August, 2017,

the Tribunal after taking into consideration the affidavit filed by the 1st

Company Appeal (AT) No. 71 & 87 of 2018 3

respondent with regard to the individual notices sent to 640 persons whose

names appeared against one or other categories viz. (i) Not having submitted an

application form to be admitted to the member of the club and (ii) not having

paid the requisite entrance fees, the Tribunal passed the following order :

"Counsel for Petitioner present. Counsel for Respondent also

present. An affidavit on behalf of the Respondent is filed with

regard to the individual notices sent to 640 persons whose

names appear against one or both of the categories viz., 1) Not

having submitted an application form to be admitted to the

member of the club, 2) Not having paid the requisite entrance

fees. The affidavit is placed on record. During course of

arguments, the counsel for Respondent suggested that, in the

circumstances, there is a requirement of an independent

person to scrutinize the record and to decide the issue in

relation to the genuineness of members of the Club to whom

the notice may be issued for the purpose of AGM. The

suggestion has been accepted by the Petitioner subject to the

condition that the independent person should not be the

member of the Club and a time limit should be fixed for taking

the decision on the issue under reference. The Counsel for

Respondent has suggested the name of the Retired Hon'ble

Justice Mr. K.P. Sivasubramaniam and submitted that he has

already sought the consent of the Hon'ble Justice.

Accordingly, we appoint Retired Hon'ble Justice Mr. K.P.

Company Appeal (AT) No. 71 & 87 of 2018 4

Sivasubramaniam for determining the genuineness of

members of the club and decide the genuineness of the

membership whose names could find place in the register of

members for the purpose of giving notice for AGM. This

exercise shall be undertaken within four weeks subject to the

convenience of the Retired Hon'ble Justice Mr. K.P.

Sivasubramaniam.

Counsel for Respondent is directed to obtain a copy of this

order and send it to the Retired Hon'ble Justice Mr. K.P.

Sivasubramaniam for carrying out the assignment mentioned

in the order. The fees of the Hon'ble Justice (Retd.) has to be

decided mutually on agreed terms and the Club shall pay the

same. The report shall be submitted within six weeks i.e. on

or before 17.10.2017. Put up on 17.10.2017 at 10.30 A.M."

3. The Madras Race Club (1st Respondent), thereafter filed a memo, enclosing

the report submitted by the Hon'ble Retired Judge of the Madras High Court.

The Tribunal taking into consideration the aforesaid report, passed the

impugned order dated 13th December, 2017, which reads as follows :

"Counsel for both the parties are present. Counsel for the

Respondent submitted memo giving details about the

Members who have not been in a position to make compliance

with the requirements necessary for consideration as

Members of the Club. Therefore, they have to be necessarily

excluded by the Club and the notice for AGM shall only be

Company Appeal (AT) No. 71 & 87 of 2018 5

sent to the Members who have already complied with the

requirements necessary to be considered as Members of the

Club. The name of Mr. R. Ramakrishnan is proposed for

appointment as Chairman of the AGM. The time and venue is

also given in the memo. Counsel for the Petitioner has raised

an issue that there requires an Independent Chairman. But,

his submission is based on apprehensions, which is not worth

of consideration at this point of time. However, an

Independent Observer needs to be appointed. Accordingly,

the order is as follows :

The AGM shall be convened on 26.02.2018 (Monday) or

on 19.03.2018 (Monday). The venue will be at Madras Race

Club, Race Course Road, Guindy, Chennai. Mr. R.

Ramakrishnan is appointed as Chairman of the AGM.

Hon'ble Retired Chief Justice Mr. K.P. Sivasubramaniam is

appointed Independent Observer.

The Chairman is directed to convene the AGM strictly in

accordance with Law and Articles of Association of the Club.

The Chairman and the Independent Observer shall file the

reports after one week of the AGM to this Bench. The

Respondents are directed to follow the procedure prescribed

under Articles of Association in its letter and spirit. The

remuneration of the Chairman and Independent Observer will

Company Appeal (AT) No. 71 & 87 of 2018 6

be decided as per the mutually agreed terms, which shall be

paid by the Club."

4. We have heard the learned counsel appearing on behalf of the appellants

and respondents. Parties have not disputed that the company petition has been

filed with the prayer to direct the 1st Respondent to hold the Annual General

Meeting for the Financial Year 2015-16 and the petition is pending for

consideration before the Tribunal. The Tribunal has not deliberated on the

issues on merit including the question as to which member is eligible or ineligible

to take part in the AGM of The Madras Race Club (1st Respondent). Without

deliberating on the issue aforesaid, based on the report submitted by an Hon'ble

Retired Judge of the Madras High Court the impugned order has been passed

without notice to the parties who will be affected. No objection was called by the

Tribunal for by the Tribunal against the report of retired Hon'ble Judge about

ineligibility of one or other person/member. One of the issue required to be

considered is whether the report about the defaulted members is to be accepted

on its face value without calling for objection from the aggrieved members.

Without discussing the aforesaid issue, the impugned order has been passed by

the Tribunal directing The Madras Race Club to convene the AGM in absence of

640 persons/members, which amounts to grant of final relief as has been sought

for in the main petition.

5. It is a settled law that the Court or the Tribunal cannot pass an interim

order, which amounts to grant of final relief without deciding the main case on

merit. In this case as the interim order dated 13th December, 2017 passed by

Company Appeal (AT) No. 71 & 87 of 2018 7

Tribunal amounts to grant of final relief, we set aside the said order. In the effect

all consequential order(s) passed by Tribunal are declared illegal.

6. The case is remitted to the Tribunal to decide the case on merit after notice

to the parties who may be affected. If the report submitted by the Hon'ble Retired

Judge of the Madras High Court is accepted, in such case the persons, who have

been shown to have not complied with the requirements and if are debarred from

taking part in the AGM be given notice if necessary by paper publication. The

appeal stands disposed of with aforesaid observations and directions. No cost.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice Bansi Lal Bhat ] Member (Judicial)

/ns/gc

Company Appeal (AT) No. 71 & 87 of 2018