Mr. P.B. Amolik & Ors vs The Bombay Diocesan Trust Association ...

Mr. P.B. Amolik & Ors. Appellants Vs The Bombay Diocesan Trust Association Private Limited & Ors. espondents.

For the Appellants: Mr Karan Adik with Mr Javaid uzaffar, Advocates For the Respondents:- 'aijeet Singh Bhatia, Mr Harinder Toor and Ms Vanshika Chandra, Advocates.

JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

The question involved in this appeal is whether in view of the

decision of the Charity Commissioner, Bombay, removing the

Appellants as Trustees under Section 41D of the Bombay Public

Trusts Act, 1950, (hereinafter referred to as BPT Act, 1950) the

petition preferred by the Appellants under Section 397 and 398 of

1 the Companies Act, 1956 against alleged removal as directors of

the company can be held to be "res-judicatapro-veritate accipitw".

2. The relevant facts of the case for disposal of the appeal are

as follows:

The 1st Respondent company was incorporated on 7th

January 1929, limited by guarantee and not having share capital

under Section 26 of the Companies Act, 1913. According to

Respondents they are registered as a company under Section 25 of

the Companies Act, 1956

The 1st Respondent company is an association formed as

limited company for promoting jon in India and

under the provisions of the said Act, is also a public charitable

trust registered under the provisions of Bombay Public Trusts Act,

1950, bearing re on no. E-923 (BOM). The 1st Respondent

company • is involved in charitable activities and is a trust

registered with the Charity Commissioner.

It appears that in compliance with the provisions of

•Companies Act, 1956 and Articles of Association of the company,

the Annual General Meeting (hereinafter referred to as AGM) of the

company is held every year and the office bearers/ directors are

elected every year after holding elections; Annual Report along with

audited accounts is filed by the company with the Registrar of

2 Companies, Income Tax authorities and Charity Commissioner,

Bombay. Based on the result of the election held, the names of

duly elected office bearers/ directors are entered in the record of

Registrar of Companies and records of Charity Commissioner,

Bombay and based on the charge report, Schedule 3 of the Articles

of Association of the company is amended from time to time

showing the names of directors/ office bearers of the company.

3. Further, before the Tribunal, case of ellants was that the

persons elected as directors of 1s1 I Respondent company are

nominated as Trustees.

elected Trustees for public companies.

4. It appe dfpi that first Appellant was arrested. After his arrest

a notice dated 15th January 2010 was issued for a Special

Requisition meeting of the Board of Directors/Trustees calling for

review of the situation arising out of filing of T.R. No. 104 / 2009

leading to the arrest of the 1st Appellant.

5. Minutes of the Special Requisitioned meeting of Board of

Directors/Trustees to take necessary action in the interest of 1st

Respondent company was issued. A Resolution was passed by.

Board of Directors to remove the 1st and 2nd Appellant from the

post of directors and trustee.

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6. A notice dated 30th January 2010 was issued to 1St Appellant

giving opportunity of representation before the Board of

Directors/Trustees on 4th February 2010. By minutes of meeting

held on 4th February 2010, the Board of Directors/Trustees of 1St

Respondent company after giving opportunity to the 1st and 2nd

Appellants, removed them as directors. They were given

opportunity before their removal. The minutes of the meeting

dated 19th January, 2010 were confirmed.4riC the meeting held on

4th February, 2010 and only after giving opportunity to 1St and 2nd

Appellant to make a representation before

7. According to Respondents, the 1st and 2h1d Appellant

immediately reinstated themselves as the directors of the company

by using digital signatures of Appellant no. 3 and filed Form 32. It

is alleged that an illegal meeting Board of Directors/Trustees

was held on 9th July 2011 by some of the Appellants which was

subsequently signed on 23rd July 2012 Further, according to

Respondents, illegal notice dated 1St December 2011 was issued by ,

Appellants for calling for illegal Annual General Meeting to be held

on 8th December 2011 'without giving 21 days' notice. Illegal

minutes of Annual General Meeting by Appellants held on 8th

December, 2011 where, inter-alia, they resolved to extend their

term.

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8. The 1st Appellant filed a change report on 23.12.2011 before

the Office of the Charity Commissioner, Bombay. In the said

Report the 1st Appellant stated the reason for change is the election

held in the meeting dated 8.12.2011 and enclosed notice dated

1. 12.2011 along with the minutes dated 8.12.2011.

9. The 8th and 9th Respondents filed objection on 27.4.2012

before the Charity Commissioner against the change report dated

23.12.2011. They prayed to declare the purported notice dated

1. 12.2011 as illegal and void for want of proper, notice period as

contemplated under Clause 17 of ,the Articles of Association. It

was further alleged that the purported Annual General Meeting

was convened on 8.12.2012 and the same meting may be declared

as illegal, unlawful and void ab initio for want of proper notice,

proper aut proper quorum.

10. Another notice for.. .A11,Ll General Meeting was called for by

the parties A notice dated 16 6 2012 for meeting of Board of

Directors /Trustees was issued for meeting to be held on

23.6.2012. In the said meeting it was resolved that all illegal

resolutions passed in the illegal meeting held on 9.7.2011 and

AGM held on 8.12.2011 by the Appellants as illegal and null and

void. The Charity Commissioner on hearing the parties, by order

dated 17.12.2012 under Section 41-D of the BPT Act allowed the

application of Respondents and dismissed 1St Appellant from the. trusteeship of 1st Respondent company forthwith forever, 3rd to 7th

9th and 10th Appellants for a period of six months and 8th

Respondent for a period of five years from the date of passing the

order. It further directed the Deputy Charity Commissioner to

dispose of all pending change reports before him in respect of

Respondent company within a period of six months and further

directed Assistant Charity Commissioners to take over the charge

of Respondent company and to look after the day to day

management and administration of the Trust and conduct election

without taking any poli ecision. The order also directed the

Assistant Charity Commissioner (II) to hold cnquiry in respect Of

the property of Trust in regard to sale of its properties and other

related issues The said order also directed him to assess the loss

caused to e misappropriation, negligence in duties,

breach of trust at the ham of Appellant trustees.

11. The Charity Commissioner, Mumbai on hearing the parties

•by order dated 17th December, 2012 passed an order under Section

41D of the BPT Act., 1950. In the said case the Appellants

challenged the authority of the Charity Commissioner to remove

the Appellants as trustees under the said Act. According to the

Appellants, they are elected Directors first and then the Trustees

of the Trust. The issue of maintainability was rejected by the

Charity Commissioner on 17th December, 2012 which was not

6 entertained by the Bombay High Court in Writ Petition No. 8422 of

2012.

12. The 1St and 2nd Appellants challenged the order of the

Charity Commissioner before the City Civil Court, Bombay but

failed to get any interim order. The Appellants prayed for the

following reliefs: -

i. Restraining Respondent Nos. 2 to 12 from posing as the

directors/ members/ trustees of the company.

ii. Appellants to have represetion nta in the board of the

company.

iii. Special Requisition Meeting conducted by the Respondents

on 19th January 2010 to be declared null and void

iv. Form 32 filed with the Registrar of Companies, Mumbai for

cessation of the Petitioners 1 & 2 as directors of the company

pursuant to resolution passed at the illegal meeting held on

19th January 2010, and also to declare null and void the.

meeting of Board of Directors/Trustees conducted by the

Respondents on 4th February, 2010 and Board meeting

conducted by Respondent Nos. 8 or 9 or 10 on 23rd June

2012.

v. Petitioners be reinstated on the Board of Directors of the

company forthwith and status quo ante be restored and

7 vi. the Register of Directors and members be forthwith rectified

as may be necessary to give effect to such direction.

13. However, no relief having been granted by the City Civil

Court, Bombay, the Appellants preferred the petition under

Section 397 and 398 of the Companies Act, 1956 against their

removal as director which has been rejected by the Tribunal by

impugned judgment dated 19th December 2016 with following

observation: -

"When the subject matter has jurisdiction before two competent forums, the order" earlierpassed will be governed by a doctrine called 'res-judicata pro-veritate accipitur' (a thing adjudicated is received"",the truth. A judicial decision is conclusive until reversed, and its verity cannot be contradicted.) It need not be said in many words that the issue already decided cannot be retried from a different angle on the same point."

for the Appellant submitted that the Tribunal:

wrongly held that by or .ed 19th December, 2016 the 1st and

2nd Appellants had created third party rights on the trust, profits

and syphoned money of the trust. It is not based on record except

the order dated 17th December 2012 passed by the Joint Charity

Commissioner.

15. It appears that the order of Joint Charity Commissioner,

Bombay was appealed to the City Civil Court, Mumbai. by

Appellants. The City Civil Court, Mumbai set aside order dated

8 17th December 2012 passed by the Ld. Charity Commissioner.

Thereafter, the 7th Respondent preferred an appeal before the

Bombay High Court which set aside the order of the lower court

and remitted back the matter to the City Civil Court, Mumbai.

Thereafter, the City Civil Court vide its judgment and order dated

30th December 2012 dismissed both the applications filed by rival

groups.

16. From the aforesaid fact we find that the order passed by the

Charity Commissioner reached finality.

17. Ld. Counsel appcaring on behalf of the Appellants contended

that the relief as prayed for under the Companies Act emanate

from fraudulent acts committed by respondents by holding of

alleged meeting dated 231 c1 May 2012 The Appellants, as a result

doubt the"',,'a hen ''.'

18. Ld. Counsel for the Appellants further submitted that

unilateral act of removal of the appellants in one go at the

purported meeting, especially after 81st Annual General Meeting is

illegal and fabricated minutes dated 23'' June 2012 have been

prepared.

19. From the record we find that Appellant No. 1 and 2 were

arrested as they were indulging in criminal activities and had

committed breach of trust and specially since the Joint Charity

9 Commissioner held against these two Appellants. The Appellants

accept that the criminal case is pending.

20. The petitioner under Section 397 and 398 of the Companies

Act, 1956 has to some extent discretionary jurisdiction. Even if it

is found by the Tribunal that there is some oppression and

mismanagement, the Tribunal is well within its jurisdiction to

decide as to what relief should be granted. The relief is granted

taking into consideration the interest of the company

21. Admittedly, the istRespon mpany is.,not a profit-

oriented company but is a are of the people.

Therefore, it is legally prudent to hold that Board of Directors and

Trustees are inseparable and one and,,'Same ftr the purposes of

performing its duties.

22. The Articles of Association and Memorandum of Association

of the company also mandate land permit other activities that are

not strictly charitable However, in a case where admittedly the

criminal cases are pending and the Appellants have been removed

from Trusteeship and other trustees have been appointed for that

if no relief is granted, the impugned order cannot be held to be

illegal.

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23. We find no merit in this appeal. It is accordingly dismissed.

However, in the facts and circumstances of the case, there shall be

no order as to cost.

Sd/- sd/- (Mr. Balvinder Singh) (Justice S.J. Mukhopadhaya) Member (Technical) Chairperson

NEW DELHI 1st May, 2017

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