K LEELA KUMAR Vs. GOVERNMENT OF INDIA

JUDGEMENT

(1.) THE above writ appeals are directed against the common order of T. Somasundaram J., dated July 30, 1991, in W.P. Nos. 667 and 769 of 1989, dismissing both the writ petitions filed by the appellants holding that Circular No. 32 of 1975, dated November 1, 1975, issued by the first respondent is not a statutory circular, that it is only an administrative instruction given at department level and that the appellants, who are third parties, cannot seek to enforce the same. THE appellants are members of the third respondent club, which is a company registered under the provisions of the Indian Companies Act (hereinafter referred to as the Act). THE secretary of the third respondent on January 3, 1989, issued a notice to the appellants stating that the appellants in their letter to the members had commented about the functioning of the committee of the third respondent, that the same was not conclusive to the interest of the third respondent and that therefore, the appellant should show cause why appropriate action as the committee of the third respondent thinks fit should not be taken against them for such prejudicial conduct. Both the sent replies to the show-cause notice. On January 9, 1989, the third respondent issued orders suspending the appellants from the membership of the third respondent, viz., the appellant K. Leela Kumar for a period of 45 days from January 11, 1989, to February 24, 1989 and the appellant M. Subbiah for a period of thirty days from January 11, 1989, to February 9, 1989, in exercise of the power conferred on the management under article 28 of the articles of association of the third respondent club.

(2.) AGGRIEVED by the order of suspension, the appellants filed W.P. Nos. 667 and 769 of 1989 to issue a writ of mandamus directing respondents Nos. 1 and 2 to take appropriate action to enforce Circular No. 32 of 1975 dated November 1, 1975, issued by the first respondent for deletion of article 28 from the articles of association of the third respondent without any further delay. According to the appellants, respondents Nos. 1 and 2, who are the authorities empowered under the Act to regulate the affairs of the companies registered with the statutory authorities, have failed to discharge the duties ordained on them under the Act in so far as the third respondent is concerned. It is submitted that when the articles of association contravene the provisions of the Act, as per section 9 of the Act, the provisions of the Act shall have the effect of overriding the memorandum and articles of association of the registered company and that the second respondent is not taking appropriate steps to correct the anomaly especially when the instructions of the first respondent are specific. It is also submitted that if the articles of association of the company or the resolutions passed at the meeting or by the board of directors are repugnant to the provisions of the Act as envisaged under section 111 of the Act, the authority constituted under the Act can refuse registration of the articles of association or the resolution.Our attention was drawn to Circular No. 32 of 1975, dated November 1, 1975, issued by the first respondent which contains specific instructions. Placing reliance on the above circular, it is submitted that the specific instructions contained therein have to be strictly enforced by the jurisdictional authorities empowered under the Act. The said circular reads thus :

(3.) MR. N. S. Sivam, learned counsel for the appellants, while reiterating the contentions raised in the writ petitions and of the arguments advanced before the learned single judge, invited our attention to certain passages and sections in the Companies Act by A. Ramaiya, Eleventh Edition. Our attention was drawn to the definition of "Registrar" occurring in section 2(4) of the Act and also to sections 25 , 25(5) , 31 , 33 , 41 u nder which Circular No. 32 of 1975, has been issued, 609 and 637A of the Act and also the Companies Regulations, 1956, particularly to condition No. 6 in annexure I and condition No. 7 in annexure III and also as regards the Department's instructions in regard to the procedure for grant of licence.