N SUNDARASWAMY Vs. BANGALORE TURF CLUB LIMITED

JUDGEMENT

(1.) THIS case raises certain interesting facets of law which to a very large extent are unprecedented. Briefly stated, the petitioners who are categorised as Stand Members of the Bangalore Turf Club Limited, which I shall hereinafter refer to as the Club, have presented this petition under S. 433 (f) of the Companies Act wherein they have contended that the respondent Company is liable to be wound up on a very unusual ground namely that it has been their charge the functioning of the respondent-company does not pass legal scrutiny. Effectively, the grievance of the petitioners is that they have been granted Stand Membership which according to them necessarily implies that they must be afforded the right to participate in the decision making and managerial process of the Company but that through a certain application of the Articles of Association, the petrs. are deprived of this right. The allegation is that the attitude of the respondents bristles with mala fides in so far as the petrs. allege that the affairs of the Company are being conducted by the restricted body of persons who come under the category of Members and according to them the petitioners and others similarly situated Stand Members are totally precluded from having any say particularly if it comes to corrective action. They have sought to argue that the grievance is very real and very genuine and the thrust of the argument is that what has happened is far higher than mere mismanagement; that it is basically illegal action and that if the respondents persist in carrying on with this state of affairs that the petitioners are entitled to demand that the Company be wound up under S. 433 (f ).

(2.) ). At first blush, I do concede that it would appear rather strange, even assuming that the petitioners have some ground for complaint, that they have sought the winding up remedy as a solution to the grievances. The case made out however is that in depriving a whole category of class of members voting rights, that the action is grossly discriminating and to this extent, the petitioners learned advocate has alluded to the overtones that flow from constitutional provisions. I do not dispute that this is a Limited Company which effectively functions as a Club and that the petitioners are not dealing with an institution that comes under the definition of state or instrumentality of state but the fact remains that the respondents will have to subscribe to basic constitutional tenets in so far as the type of activity or business carried on by them does involve various sanctions and indirect state control. I have alluded to this position of law only to illustrate that this is an angle which the Court must necessarily take cognizance of particularly since the defence pleaded on behalf of the respondents is that even if they are a body corporate that they essentially bear the character of a club and that it is well settled law that a self-governing body is entitled to its own rules, regulations and bye-laws and persons who decide to opt for Membership necessarily subject themselves to these sets of regulations which thereafter bind them and that consequently, the petitioners, if they had become members of the Club are estopped from calling into question anything that is contained in the Articles of Association.

(3.) IT may be a little difficult to uphold the plea that a bar of estoppel exists in such cases, particularly in the present case, because I am of the opinion that it is well settled law that there can be no bar of estoppel in the face of an illegality. Whether an illegality exists or not is required to be examined but to my mind it would be incorrect to contend that the petitioners should be thrown out at the threshold on the ground that they are precluded from complaining about something which in their opinion constitutes an illegality.