LAWS(KAR)-2004-8-16

BANGALORE TURF CLUB LIMITED Vs. N SUNDARASWAMY

Decided On August 05, 2004
BANGALORE TURF CLUB LIMITED Appellant
V/S
N.SUNDARASWAMY Respondents

JUDGEMENT

(1.) CHIEF Justice the appellant-respondent has filed this appeal against the order of the learned company judge passed in Co. P. 17/1998, admitting the petition on 2. 2. 99.

(2.) THE brief relevant facts as stated by the learned counsel for the appellant are that the appellant are that the appellant is a company limited by guarantee incorporated under the provisions of the Companies Act, 1956 (for short the Act); it is carrying on its business as a license under the Karnataka Race Licensing Act. Articles of Association has been framed as per Section 29 of the Act; Article 3 (a) of the Articles of Association defines a Club Member as a Member of the Company for the purposes of the companies Act and Stand Members are not members of the Appellant for the purposes of the Companies Act. Shri Naganand, for M/s Sundaraswamy Ramdas and Anand, learned counsel appearing for the appellant-company submits that a company petition can be filed only by a contributory or a member of a company, and the respondents being stand members and not the members of the appellant-company under Article 3 (a), have no locus standi to file the petition. He submits that the learned company judge has erred in invoking the just and equitable clause, and therefore the impugned order is liable to be set aside. He also submits that Section 433 (1) of the Act for winding up of a company can be invoked on just and equitable grounds, but the same is not attracted in the facts of the given case and present set of circumstances, merely on the ground that stand members are deprived of voting rights as per the Articles of Association, which is illegal. Learned Counsel relying upon the decision in Hind Overseas Pvt. Ltd. , Vs. Jhunjhunwala (AIR 1976 SC 565), argued that the just and equitable clause can be invoked as a last resort. He submits that the respondents have not exhausted the alternative remedy under Sections 397 and 398 of the Act. He submits that the learned company judge, merely on basis of the averments, erred in observing that the contentions required a detailed consideration and adjudication and deciding whether the petition was maintainable before ordering it to be admitted. He also submits that the Articles of Association is a contract between the company and its members inter se; the members are bound by the provisions of the Articles of Association, and therefore, the respondents have no right to question the legality of the provisions of the Articles of Association. The petition invoking Section 433 (f) of the Act, cannot be entertained and the order of the learned Company Judge is liable to be set aside.

(3.) ON the other hand, Shri. P. M. Vasudev, learned counsel for the respondents submits that the learned company Judge by a detailed order has come to the conclusion and invoking the power under section 433 (f) of the Act has admitted the case, and therefore, on mere admitting the case in the absence of issuance of advertisement, the appeal is not maintainable. Learned counsel does not dispute the legal position that clause just and equitable has to be invoked in exceptional cases applying the judicious mind but submits that the cases relied on by the learned counsel for the appellant are not helpful in the facts of the present case. He also submits that when the stand members and the club members are inducted by elections and every member shall have one vote, the question of approaching the Company Law Board did not arise and more so, Sections 397 and 398 can be invoked when there is a mismanagement of company affairs. So also, there is no question of approaching the civil court when there is a violation of provisions of the Articles of Association and the jurisdiction of this court has not been taken away as there is no hard and fast rule for invoking Section 433 (f) of the Act, and therefore, the learned Company Judge can consider all the issues while finally determining whether the advertisement is necessary for winding up or not, and in view of this, the order of the learned Company Judge needs no interference. He relied on the decisions in Miland Exports Private Limited Vs. A. V. Venkatanarayana and Others [ (1995) 83 Company Cases 585], and in Anisha k. Shah V. Fostenex (p) Ltd. and others [1995) 82 Company cases 514].