CHIRANJAN JADAVJI PADIA Vs. BHUPESH CHANDRA DUTT

JUDGEMENT

(1.) This suit has been instituted by the plaintiff who carries on business under the name and style of Chiranjan & Co. as the Foreign Exchange and Finance Broker. The plaintiff states that the plaintiff in his said firm name is a member of the Exchange and Bullion Brokers' Association. Calcutta, being the defendant No. 10 herein. There are several defendants in this suit namely, eleven of which defendants Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, are said to be members of the Association defendant No. 10 Exchange and Bullion Brokers' Association which has its office at No. 23A, Nelaji Subhas Road, Calcutta. Defendant No. 11 is the Foreign Exchange Dealers' Association of India hrivmg its office at No. 4, Netaji Suhhas Road, Calcutta. Originally the defendant No. 3 was sued in his capacity only as the Secretary of the defendant No. 10 Association. By an order made by me during the course of the hearing of this suit on the application of the plaintiff on the 20th of June, 1978 the said defendant No. 3 has been sued as Secretary of the said Association for self and on behalf of the members of the Exchange Brokers' Association. By the aforesaid order referred to hereinbefore I had also granted the plaintiff lea\e to include a prayer for leave under Order 1. Rule 8 of the Civil P. C. In this suit the plaintiff has claimed, inter alia, the declaration that the purported decision of the Executive Committee nf the defendant No. 10 Association rejecting the application of the plaintiff for taking in and admitting one Sri S. K. Chopra as a partner in the plaintiff's said business of Chiranjan & Co. is null and void, illegal and not binding on the plaintiff and should be cancelled and/or set aside. The plaintiff has, further, asked for a mandatory injunction directing the members of the said Association to set aside, recall and withdraw the said decision as communicated by the letter mentioned in the plaint dated 8th of March, 1978. The plaintiff has also claimed a mandatory injunction directing the defendants Nos. 1 to 10 to forthwith accord sanction to enable the plaintiff to take in or admit the said Sri S K. Chopra as a partner of the plaintiff's business of Chiranjan & Co. The plaintiff has also asked for a mandatory injunction directing the defendants Nos. 1 to 10 and each of them, their successors in office to forthwith accord recommendation of Sri S. K. Chopra as the authorised person to act and call on the banks on behalf of the plaintiff's firm Chiranjan & Co. The plaintiff has also sought a perpetual injunction restraining defendants Nos. 1 to 10 and each of them, their successors in office from acting upon the said purported decision of the Executive Committee of the Exchange and Bullion Brokers' Association as communicated to the plaintiff by the said letter dated 8th of March. 1978. The plaintiff has also sought perpetual injunction restraining the defendants Nos. 1 to 10 from hindering or interferring with the business of the plaintiff In any manner and there are certain other incidental reliefs claimed by the plaintiff. In order to appreciate the claim of the plaintiff it is necessary to refer to certain facts. The defendant No. 10 is an Association of Foreign Exchange and Finance Brokers belonging to Calcutta. In conducting its affairs, the defendant Association and its members are governed by the rules and regulations of the said Association. One of the aims and objects of the said Association is to work as a body for the benefit and protection of its members and to watch as a safeguard the interests of its members both individually and collectively. Rule 5 of the rules of the Association indicates what will be the composition of the Executive Committee. Rule 13 of the rules indicates that all decisions of the Executive Committee shall be taken by majority vote. In case of any equality of votes the Chairman shall have the casting vote in addition to his own vote. Rule 20 is as follows :--

(2.) The defendant No. 10 Association is the Association recognised by the defendant. No. 11, the Foreign Exchange Dealers' Association of India. The said defendant No. 11 has been formed and was constituted of several banks being the authorised dealers in Foreign Exchange as the members thereof. The defendant No. 11 and its members are governed by its own rules and regulations. Rule 3 thereof deals with the business through Exchange Brokers and one of the important conditions of the Rule 3 of the said rules of the defendant No. 11 stipulates that when banks make contracts in respect of foreign exchange transactions such contracts shall oniy be made through the exchange brokers and be paid only to accredited exchange brokers. No direct business is permitted. The rule further recommends certain Associations in Calcutta, Bombay and Madras, members of which are only recognised as accredited brokers and the defendant No. 10 is the recognised Association in so far as Calcutta is concerned. The other portion of the said rule is not relevant for our present purpose.

(3.) The plaintiff was originally a partner of Messrs. Lakhi Narain Misra and Co., of 12A, Netaji Subhas Road, Calcutta which was an original member of the defendant No. 10 Association. Under the Instrument dated 30th of March, 1968 the name of the partnership was changed to "Padia & Co." of which the plaintiff continued to be a partner until the time mentioned hereinafter. The said firm of Padia & Co., had 9 seats having the entitlement to act through 9 several authorised persons. Under the terms and conditions recorded in the Instrument dated 1st of Aug., 1977 duly executed by all the 9 persons constituting the said partnership, the plaintiff retired from the said firm with effect from 1st of April, 1977 having been allotted 3 seats out of 9 seats thereby acquiring the entitlement to do business as broker in Foreign Exchange through 3 authorised persons. The plaintiff further states that the factum of the said retirement of the plaintiff from the said firm of Padia & Co., which was and is a member of the defendant No. 10 Association was brought to the notice of the said Association by a letter dated 1st of Aug., 1977 addressed to the Hony. Secretary of the said Association. It is further the case of the plaintiff and it is undisputed in this case that the defendant No. 10 recognised the plaintiff and its said firm as a separate and distinct member of the defendant No. 10 Association. The said recognition was intimated by or on behalf of the defendant No. 10 Association to that effect to the plaintiff by a letter dated 26th of Aug., 1977 and also to the Chairman of the defendant No. 11 Association by a separate letter of that date. A.s required by the rules of the defendant No. 11 Association the plaintiff duly deposited with the Chartered Bank a sum of Rs. 10,000/- on 29th of Aug., 1977 against appropriate receipt. The said deposit is required to be made by the accredited brokers in Calcutta recognised by the defendant No. 10 Association under Clause II of Rule 3 of the defendant No. 11 Association. The name of the plaintiff was duly circulated amongst its members and it was further intimated that the plaintiff had by virtue of its position 3 seats allotted to him. According to the plaintiff the plaintiff required some assistance and therefore sought to take an authorised person by the name of one Ashim Roy Chowdhury. Formal approval of the defendant No. 10 Association was sought but was refused. The plaintiff has set out all the various steps taken for inclusion of said Sri Ashim Roy Chowdhury as an assistant in the firm of the plaintiff. But for the present purpose it is not necessary to refer to the same in detail because the plaintiff is not insisting on his right to have said Ashim Roy Chowdhury as an assistant any longer. Thereupon, it is the case of the plaintiff that the plaintiff wanted and conceived the idea of taking one Sri S. K. Chopra formerly of Normans' Ross & Co., a foreign exchange broker a member of the Calcutta Exchange Brokers' Association recognised by the defendant No. 11, as a partner in the said firm of the plaintiff and the plaintiff by a letter dated 16th of Feb., 1978 duly applied to that effect for recognition of said S. K. Chopra as an authorised person and forwarded therewith a cheque for Rs. 100/- being the requisite entrance fee. The plaintiff also forwarded a no objection certificate dated 17th of Feb., 1978 from the Normans' Ross & Co. But the defendant No. 10 by its letter dated 8th of March, 1978 communicated to the plaintiff that both the applications of the plaintiff namely, the application to take in Ashim Roy Chowdhury as an assistant as well as to take Sri S. K. Chopra as a partner of the plaintiff firm have been rejected. The plaintiff contends, the said action is mala fide and wrongful and the said action has been taken without assigning any reason whatsoever. The plaintiff further asserts that there is no plausible reason whatsoever for the refusal of the desired recognition and/or sanction. The plaintiff asserts that at the same sitting of the Executive Committee held on the 4th of March, 1978 the applications of Messrs. Poddar Saraogi & Co. and Shew-bux Bagri & Co. for recognition of authorised persons have been sanctioned. According to the plaintiff the decision of the Executive Committee was not in good faith and was taken arbitrarily and there could not be any plausible ground for rejection. The plaintiff asserts that by the wrongful conduct the plaintiff had been deprived of the assistance which the plaintiff is entitled to by the fact that the plaintiff has 3 seats and the choice of nomination of the authorised person of the firm rested with the plaintiff and by the wrongful and arbitrary conduct of the defendant No. 10 there has been interference with the business of the plaintiff. In those circumstances, the plaintiff has sought the reliefs mentioned hereinbefore. Originally a written statement had been filed on behalf of the defendants Nos. 1, 3, 7 and 10 and another written statement was filed on behalf of the defendants Nos. 5, 6 and 9 and the third one on behalf of the defendant No. 4. More or less identical points of defence had been taken in all these written statements. The original contention on behalf of the defendants was, that the suit as framed was not maintainable. Defendants have further asserted that the defendant No. 10 Association and its members were nf the view that the attempt of the plaintiff was to induct some persons of Batliboi & Karam of Bombay and induction of such persons would unfavourably affect the interest of the brokers who are doing foreign exchange brokerage business in Calcutta and, therefore in the best interest of the members of the Association, and for the protection of their legitimate rights the Executive Committee after considering all aspects of the matter had rejected the said applications made by the plaintiff. The defendants, further, asserted that the enquiry had revealed that by bringing in said S. K. Chopra the plaintiff had contemplated induction of the proprietor or partners of Batliboi & Karani in an indirect way and therefore the defendants acting in good faith had rejected the application of the plaintiff. It was, further, asserted that plaintiff had no cause for complaint and all applications were duly considered and the plaintiff had no absolute right to claim the right to induct either a partner or an assistant. The relevant claims by the plaintiff, which were denied by the defendants were not open to the plaintiff and as such the plaintiff has no cause of action. Furthermore, the defendant No. 10 being an unregistered association no suit was maintainable against the defendants. It was further asserted that the defendant No. 4 was improperly impleaded; Asoke Kumar Roy was not a member of the defendant No. 10 but one Ashim Kumar Roy was a member.