Holding

The appellants were not validly inducted as Promoter‑Members because the required Rs 1 lakh payment was not made, and therefore the lower courts correctly refused the interim injunction.

Summary

The appellants claimed that they had been validly inducted as Promoter‑Members of Chaitnya Bharathi Educational Society by a Board of Governors resolution in 2000 and a General Body approval in 2006, which they said entitled them to vote in the Society’s Board elections. The Society contended that under Clause 4(b) of its Articles of Association a person must pay Rs 1 lakh before being admitted as a Promoter‑Member, which the appellants had not done at the relevant times; the payment was made only in October 2006 after the resolutions. The appellants sought an interim injunction under Order 39 Rules 1‑2 read with Section 151 of the CPC to restrain the Society from holding elections without them, but the trial court dismissed the application for lack of a prima facie case and the High Court affirmed. The Supreme Court examined the statutory provisions and the Society’s Articles and held that the appellants were not legally inducted because the requisite payment was absent, so no right to vote arose. Consequently, there was no prima facie case for interim relief and the lower courts were correct in refusing the injunction. The Court also held that principles of natural justice did not apply because the dispute was not about expulsion of a member. The appeals were therefore dismissed.

Issues considered

Whether the appellants were legally inducted as Promoter‑Members under the Society’s Articles of Association.
Whether the trial court and High Court erred in refusing an interim injunction under Order 39 Rules 1‑2 read with Section 151 CPC.
Whether principles of natural justice requiring notice and hearing were applicable in this context.

Legislation cited

Code of Civil Procedure, 1908s. Order 39 Rule 1, s. Order 39 Rule 2, s. Section 151

Subjects

interim injunctionprima facie caseSociety membershipPromoter‑Membernatural justicemutual mistakeArticles of AssociationCode of Civil ProcedureSocieties Act

Judgment

D. DWARAKANANTHA REDDY A
v.
CHAilNYA BHARATHI EDUCATIONAL SOCIETY AND ORS.

APRIL 27, 2007

[C.K. THAKKER AND ALTAMAS KABIR, JJ.) B

Code of Civil Procedure, 1908-0rder 39, Rules 1 und 2-Jnterim
injunction-Grant of-Prima facie case-Registered Society-Persons
inducted as Promoter-Members into General Body allegedly by resolution C
of Board of Governors and subsequently approved by General Body-Society
claiming that induction was null and void as resolution ofBoard ofGovernors
was merely a 'proposal' and subsequent approval of General Body of Society
from holding election of Governing Body authority-Interim injunction to
restraint Society from holding election of Governing Body without giving
them opportunity of participation-Rejected by Courts below on lack of D
prima facie case-Correctne~s of-Held-Resolution of Board of Governors
merely stated that nine persons will be inducted into General Body as per
Constitution of Society-As per Articles of Association of Society an amount
had to be paid by a person before his admission, and that was not paid either
at the time of meeting of Board of Governors or General Body meeting ; it
was paid only after impugned resolution was passed and that too without E
informing Society-Even if there was a mistake, it was not a mutal mistake-
Notice calling for explanation and opportunity of hearing was not required
as controversy did not re/ate to expulsion of member and issue whether
induction into General Body was legal, was yet to be decided-Jn absence
• of any particulars, it cannot be said that action of Society was mala fide or F
co/ourable exercise of power-Photographs, reports etc. showing that all
throughout they were treated as Promoter~Members and worked as such,
were immaterial, if admission in Society was illegal.

Respondent is a registered Society. Its Founding Members Constituted
General Body as well as Governing Council/Executive Body. It is the case of G
the appellants that they were inducted as Promoter-Members into the General
Body of the Society by a unanimous resolution of the Board of Governors dated
January 27, 2000, in exercise of their power under Clause ll(i) of the Articles
of Association, and this was subsequently approved by the General Body of
775 H
776 SUPREME COURT REPORTS [2007] 5 S.C.R.

A the respondent on March 22, 2006. They were therefore entitled to participate
in the election of Board of Governors as per the Memorandum and Articles
of Association. They received a caveat from the respondent stating that their
claim as Promoter-Members of the society and calling for General Body
Meeting was not tenable because their admission as Promoter-Members was
B null and void. It stated that the resolution dated January 27, 2000 was merely
a 'proposal' with a condition that nine persons would be admitted as members
at an appropriate time, and the resolution dated March 22, 2006 passed by
the General Body of the Society admitting them as Promoter-Members was
without authority and null and void.

C Aggrieved by the above, the appellants filed Original Petitions in the
City Civil Court for a declaration that they were legally inducted members
and were entitled to participate in the management and administration of the
respondent. A prayer was also made for permanent injunction, along with
application for interim injunction under Order 39, Rules 1 and 2 read with
Section 151 of the Code of Civil Procedure, 1908, to restrain the respondent
D from holding election of the Governing Body without including them and
without giving them opportunity of participating in the election process. The
City Civil Court dismissed the application for interim injunction inter alia
observing that no prima facie case had been made out Aggrieved by this order,
the appellants preferred Revision Petitions. The High Court dismissed all
E Revision Petitions, and directed the trial Court to dispose of Original
Petitions. This is challenged by all the appellants in the present appeals.

Appellants contended that (i) neither the Memorandum of Association
n9r Articles of Association imposed a condition precedent for payment of Rs.I
lakh for becoming a Promoter-Member, and its non-payment cannot be made
F a ground to expel or rem9ve them; even otherwise, they had never refused to
pay the said amount; (ii) apart from the fact that Articles of Association
prescribed no time limit within which a payment of Rs.l lakh was to be made,
even respondents were of the same opinion; it was thus a case of mutual
mistake for which they cannot be blamed; (iii) the payment has already been
made and that fact ought to have been considered by the Courts and relief
G ought to have been granted in their favour; (iv) no notice was issued by the
respondent to show cause why their Membership should not be terminated or
discontinued, nor an opportunity of hearing was afforded, nor principles of
natural justice were observed; (v) they were always treated as Promoter-
Members which fact is proved from various photographs and reports (vi) the
H action of respondent was mala fide and has been taken in colourrable exercise
D. DWARAKANANTHA REDDY'· CHAITNYA BHARATHI EDUCATIONAL SOCIETY
777
of power with a view to deprive them from participating in election. A
Respondents contended that (i) Article 4(i)(b) provides clearly that an
applicant who 'pays' Rs.1 lakh would become a Promoter Member; (ii) no such
payment was made in March, 2006 when the so-called approval was granted
by the General Body; (iii) the said amount was deposited by the appellants
directly in the Bank without even informing them; (iv) it was not a case of B
mutual mistake; the relevant clauses of Articles of Association were
unambi~uous and since no payment was made as required, no right accrued
in favour of the appellants and the action of the Society was legal and lawful;
(v) it was not a case of removal, termination or expulsion of a Member and
hence there was no question of issuing notice, calling for explanation or C
affording opportunity of hearing or observance of principles of natural justice
or fair play.

Dismissing the appeal, the Court

HELD: 1. Neither the trial Court nor the High Court had committed D
any illegality in refusing interim relief. [Para 18) (784-C)

2. Reading of the Minutes of85th meeting of the Board of Governors of
the Society makes it clear that nine persons were selected and as stated in
the minutes, they "will be inducted" into General Body as per the Constitution
of the Society. [Para 20 and 21) (786-A-B; F-G) E
3.1. Prima facie, the contention of the Society is well founded that an
amount ought to have been paid by a person before he is admitted as Patron
Member in the light of the phraseology used in Clause 4 (b) of the Articles of
the Association. [Para 22) (787-C-D)
F
3.2. It is not even the case of the appellants that they had paid. an amount
ofRs.1 lakh before or on January 27, 2000. (Para 21] (786-F-G]

3.3. Even if there was a mistake, it was not a 'mutual mistake'.
[Para 28) [789-B-C]
G
3.4. So-called payment was made only after the impugned resolution was
passed and that too without informing the Society. [Para 28] (789-B-C)

3.5. It is also pertinent to note that the payment was made by the
appellants on October 26, 2006 and a petition was filed in the Court on October
H
778 SUPREME COURT REPORTS [2007) 5 S.C.R.

A 29, 2006 along with an application for the interim relief. But even in the
application for interim relief, the factum of payment of amount after the
resolution was passed, was not disclosed by the applicants.
(Para 281 (789-C-D)

4. The controversy does not relate to expulsion of a member. The question
B is whether the appellants can be said to have been legally admitted as Promoter-
Members. Once it is held that the appellants were properly inducted and had
become Promoter-Members of the Society, principles of natural justice l
required issuance of notice, calling for explanation and affording reasonable
opportunity of being heard. The caSt: of the Society, however, is that appellants
C were never legally inducted as Promoter-Members and their so called induction
was not in consonance with law. The said issue is yet to be decided.
[Para 241 (788-A-C)

Board ofControl for Cricket in India and Anr. v. Netaji Cricket Club &
Ors., (200514 SCC 741, referred to.
D
T.P. Daver v. Lodge Victoria, No. 363, S.C. Belgaum, (196411SCR1,
distinguished.

Halsbury's Laws ofEngland, Fourth Edition, Vol. 19(1), p 143, para 201,
referred to.
E
5. No particulars, much less sufficient particulars, have been placed on
record to show that the action taken by the Society was malajide or had been
taken in colourable exercise of power. [Para 31) (790-D-EI

6. The plea that the appellants were all throughout treated by the Society
p as Promoter-Members and they had worked for all these years which is
established from various photographs, reports etc., is of no consequence. If
.the appellants had not been legally admitted as Patron Members, they could
not be treated as such and cannot get benefit on the basis of photographs,
reports, functions, etc. [Para 27) (788-G-H; 789-A-BI

G CIVIL APPELLATE JURISDICTION: Civil Appeal No. 2197 of2007.

From the Final Judgment and Order dated 02.01.2007 of the High Court
of A.P. at Hyderabad in CRP No. 6301 of2006.

WITH
H C.A. Nos. 2196 of2198 of2007.
D. DWARAKANANTHA REDDY v. CHAITNYA BHARATIIl EDUCATIONAL SOCIETY [[C.K. TIIAKKER, I.] 779

K.K. Venugopal, Soli J Sorabjee and Ravindra Shrivastava, Dr. S.K. A
Venna, Kuna! Venna, Ramakanth Reddy, Ranbir Singh Yadav, Arjun Garg,
Ardhendunauli KR. Prasad, M. Mannam and Raju! Shrivastava for the
Appellant.

K. Rajendra Chowdhary, K. Swami, Prabha Swami, Rakesh K. Sharma,
Bina Madhavan, S. Udaya Kumar Sagar, Venayagam and Mishi Choudhari (for B
Mis. Lawyers' Knit & CO.) for the Respondents.

The Judgment of the Court was delivered by

C.K. THAKKER, J. 1. Leave granted.
c
2. All these appeals arise out of a common judgment and order passed
by the High Court of Judicature, Andhra Pradesh at Hyderabad on January
2, 2007 in Civil Revision Petition Nos. 6269, 6353 and 6301 of2006. By the said
order, all the Revision Petitions were dismissed by the High Court and the
order passed by the Court of Ilnd Additional Chief Judge, City Civil Court,
Hyderabad on December I, 2006 in I.A. Nos. 4192 and 4194 of2006 in O.P. D
Nos. 20070 of 2006 and 2146 of 2006 is confinned.

3. Short facts giving rise to the present litigation are that Mis Chaitanya
Bharathi Educational Society ('Society' for short) was registered in the year
1979 under the Andhra Pradesh (Talengana Area) Public Societies Registration E
Act, 1350 Fasli, vide Registration No. 964 of 1979. Its objects as specified in
the Memorandum of Association are-

(a) To establish, manage, aid and maintain educational and other
institutions, to impart education and training at all stages for the
promotion of Engineering, Medicine, Phannacy, Agriculture, F
Commerce, Literature, Arts and Sciences and Management and
other subjects and allied activities for diffusion of useful
knowledge and training, specially to instill self-confidence, creative
thinking and entrepreneurship in the students and trainees.
(b) To devise ways and means and accord facilities for candidates G
to specialize in all or any of the above subjects (i.e.) to develop
Centres of excellence for research in the above subjects with
Industrial Orientation.
(c) To act as a Trust Board to accept endowments, bequests,
donations, subscription, grants from institutions, both Private H
780 SUPREME COURT REPORTS [2007] 5 S.C.R. .,
,,&:'-
A and Public, Corporate bodies, and Government and other
transferee of property made to the Society and administer them
on the terms agreed to.
(d) To try to offer medical and clinical facilities to the needy by
opening the necessary hospitals, aid clinical laboratories or X-
B Ray Institutions, and to run, maintain Homes, Residential Houses
etc., for the needy either by purchasing the necessary equipment
or by approaching such institutions or the Governments including
r
those of other Countries, for donation of such equipment and the
land and buildings necessary for locating such equipments and
Institutions.
c (e) To offer consultancy services in any area directly or through the
Institutions owned and managed by the Society.
(t) To carry on activities for any other charitable purposes and
activities of General Public Utility.
D 4. There were 13 Founding Members who then constituted General
Body as well as Governing Council/Executive Body who were distinguished
persons from various professions. The Articles of Association of the first
respondent-society enumerate categories of membership in Clause 4 as (i)
Patron, (ii) Promoter, (iii) Donor; and (iv) Member (ordinary member). Clause
E 5 provides for termination of membership. Whereas functions of the General
Body have been specified in Clause 7, functions of the Board of Governors
have been dealt with in Clause 11. Sub-clause (i) thereof enacts that the Board
of Governors 'have the power to admit new members of the Society on a
proposal sponsored by at least two members of the Board of Governors'.

F
Clause 12 relates to meetings of the Board of Governors. ..
5. It is the case of the appellants that in exercise of power under Clause
11 (i) of the Articles of Association, the Board of Governors on January 20,
2000 resolved to induct nine persons as Promoter-Members into the General
Body of the Society. It was unanimous decision of the Board. It was also their
case that the resolution was subsequently accepted and approved by the
G General Body of the first respondent-society in its meeting dated March 22, )...

2006. Thus, the appellants had become and continued to remain as Promoter-
Members of the society. They are, therefore, entitled to participate in the
election of Board of Governors as per the Memorandum and Articles of
Association. The i:ppellants stated that they received a caveat from the first
H respondent-society on October 23, 2006 stating therein that their claim as
D. DWARAKANANTHA REDDY v. CHAITNY A BHARATHI EDUCATIONAL SOCIETY [[C.K. THAKKER, J.f78 l

Promoter-Members of the society and insisting and calling for General Body A
Meeting was not tenable because the very admissien of the appellants as
Promoter-Members was null and void. It was further stated by the appellants
that on October 24, 2006, I 18th Meeting of the Board of Governors of first
respondent-society was convened. Under Item No. 4 (any other item), induction
of admission of nine persons was questioned. It was resolved that the
appellants could not be said to be legally inducted members and their induction B
was totally illegal and unlawful. The resolution dated January 27, 2000 was
merely a 'proposal' with a condition that nine persons would be admitted as
members at an appropriate time. The resolution dated March 22, 2006 passed
by the General Body of the Society admitting them as Promoter-Members was
without authority and null and void. A consequential letter was written by C
the Secretary of the Society that the admission of the appellants as Promoter-
Members was invalid and illegal and they were not eligible to be members...Gf
the society.

6. Being aggrieved by the above resolution, the appellants filed Original
Petition in the Court of Chief Judge, City Civil Court, Hyderabad for a declaration D
that they were legally inducted membm and were entitled to participate in
the management and administration of the Society. A prayer was also made
to grant permanent injunction from conducting election to the Governing
Body without including the appellants. The appellants also filed application
for interim injunction under Order 39, Rules I and 2 read with Section 151 of E
the Code of Civil Procedure, 1908 (hereinafter referred to as 'the Code')
restraining the first respondent from holding election of the Governing Body
of the first respondent-society without including Promoter-Members and
without giving them opportunity of participating the election process.

7. The learned llnd Additional Chief Judge, City Civil Court vi de an p
order dated December I, 2006 dismissed the application inter alia observing
that no prima facie case had been made out by the petitioners-appellants
herein and they could not be granted interim relief as sought. Ad interim relief
of status quo which was granted on October 30, 2006 was vacated.

8. Being aggrieved by the order passed by. the trial Court, the appellants G
preferred Revision Petitions. The High Court, as observed earlier, dismissed
all Revision Petitions holding that the trial Court was right in dismissing the
application as no prima facie case had been made out. The High Court also
directed the trial Court to dispose of Original Petitions within a period. of three
months from the date of receipt of the copy of the order. The above order
H·
782 SUPREME COURT REPORTS {2007] 5 S.C.R.
>-
A has been challenged by all the appellants in this Court.
9. On January IO, 2007, this Court stayed operation of the impugned
order passed by the High Court till January 19, 2007 which was the date
, fixed
for admission-hearing. On January 19, 2007, notice was issued and parties
were directed to file affidavits and further affidavits. On March 2, 2007, the
B matter was ordered to be placed for hearing. We have accordingly heard
learned counsel for the parties.

I0. The learned counsel for the appellants contended that the Board of ..
Governors admitted the appellants as Promoter-Members as early as in the
year 2000. In an Emergency Meeting of the General Body held on March 22,
c 2006, the action was approved by the General Body. Neither the Memorandum
of Association nor Articles of Association had imposed a condition precedent
for payment ofRs.l lakh for becoming a Promoter-Member. Non-payment of
an amount of Rs. I lakh, therefore, cannot be made a ground to expel or
remove the appellants as Promoter-Members. Even otherwise, appellants had
D never refused to pay the said amount.

11. It was also submitted that no notice was issued by the Society to
show cause why the Membership of the appellants should not be terminated
or discontinued, nor an opportunity of hearing was afforded, nor principles
of natural justice were observed. The impugned action taken by the respondents
E on October 24, 2006 treating the membership of the appellants as void was
non-est. The action was also bad in law inasmuch as the resolution admitting
the appellants as Promoter-Members was taken by the Board of Governors
and accepted by the General Body. Resolution dated October 24, 2006 was
passed by the Board of Governors which is a body subordinate to the General
Body. It, therefore, could not have interfered with the action of the General
F Body.
'- f

12. It was also submitted that there were amendments in the Articles of
Association in the year 1981 which provided induction of eminent persons
as Promoter-Members without payment of any amount. All the appellants are
G 'eminent' in their respective fields and they are entitled to contirwe as
Promoter-Members. .
13. It was also contended that apart from the fact that Articles of
Association prescribed no time limit within which a payment of Rs. I lakh was
to· be made, even respondents were of the same opinion. It was thus a case
H of mutual mistake for which appellants cannot be blamed. The appellants were
0. OWARAKANANTHA REDDY v. CHAJTNYA OHARA1111 EDUCATIONAL SOCIETY [[C.K. TIIAKKER , I.] 783
• 1.
always treated as Promoter-Members which fact is proved from various A
photographs and reports. It was alleged that the action was mala fide and has
been taken in colourable exercise of power with a view to deprive the appellants
from participating in the next election. The counsel further stated that in any
case, the payment has already been made by the appellants and that fact
ought to have been considered by the Courts and relief ought to have been B
granted in their favour. On all these grounds, the appeals deserve to be
allowed by setting aside the order passed by the trial Court and confirmed
by the High Court by continuing the appellants as Promoter-Members.

14. The learned counsel for the respondents supported the action taken
by the Society and the orders passed by the Courts below. It was submitted C
that the appellants were never appointed as Promoter-Members and the action
which was taken by the Board of Governors in its 85th Meeting dated January
27, 2000 was in the nature of mere proposal to induct the appellants as
Promoter-Members. Formal decision admitting them as Members had never
been taken. It was also submitted that the language of Article 4 (i)(b) is
explicitly clear and provides that an applicant who 'pays' Rs.I lakh would D
become a Promoter Member. It is thus clear that a person, before he can
become Promoter-Member, must 'pay' an amount ofRs.1 lakh. Admittedly, no
such payment was made in 2000 nor in March, 2006 when the so-called
approval was granted by the General Body. Even on October 26, 2006, the
amount was deposited by the appellants directly in the Bank without even E
informing the Society and that was done after the resolution was passed on
October 24, 2006.

15. According to the learned counsel, it was not a case of removal,

- )
termination or expulsion of a Member and hence there was no question of
issuing notice, calling for explanation or affording opportunity of hearing or F
observance of principles of natural justice or fair play. Since the appellants
had never become Promoter-Members, what was done on October 24, 2006
was to make it clear that their so called membership was void and of no effect.
Reliance was placed on Hyderabad Karnataka education Society v. Registrar
of Societies & Ors., [2000] l SCC 566: AIR (2000) SC 301 : JT (1999) 9 SC G
482.

16. According to the learned counsel, it was not a case of mutual
mistake. The relevant clauses of Articles of Association were unambiguous
and since no payment was made as required, no right accrued in favour of
the appeUants and the action of the Society was legal and lawful. H
784 SUPREME COURT REPORTS (2007] 5 S.C.R.
; .
A 17. As to amendment of 1981, it was submitted that no such amendment
was made nor it was brought into force. It was, therefore, submitted that the
action of the Society was strictly in consonance with law. The main matter
is pending before the City Civil Court and it will be decided on its own merits,
but, taking into account admitted facts and documentary evidence, if the trial
B Court had not granted interim relief and the said order was confirmed by the
High Court, it cannot be said that any illegality has been committed which
deserves interference under Article 136 of the Constitution. It was, therefore,
prayed that the appeals deserve to be dismissed. ~-

18. Having heard learned counsel for the parties, in our opinion, neither
C the trial Court nor the High Court had committed any illegality in refusing
interim relief. So far as the action taken by the respondent-Society is concerned,
our attention has been invited by the counsel for the parties to the
Memorandum of Association as also to the Articles of Association. We have
already extracted the objects for which the Society has been set up. Clause
4 of the Articles of Association provides for Membership of Society and
D reads thus:

4. MEMBERSHIP
The Society shall consist of the following Classes of membership.
(iXa) PAlRON
E
Any person, who pays a sum of Rs.5 lakhs or more in one lump
sum or Rs.3 lakhs in one instalment and the balance in two equal
yearly instalments, shall be called 'Patron' of the Society with
hereditary rights under th.e Laws of Primogeniture. Any person

F
who fails to pay the subsequent instalments within the specified
time, i.e., second instalment of Rs.one lakh before the end of first
year, third instalment of Rs.one lakh before the end of second
year, from the <late of the payment of the first instalment of Rs.3
lakhs, they will not be entitled for privileges of Patron Member
-
and shall be treated as a Promoter Member only from the date of
default in payment.
G
(b) PROMOTER ·
Any person who pays a sum of Rs. one lakh or more but less
than Rs.5 lakhs shall be called 'Promoter' with hereditary rights
under the Laws of Primogeniture.
H
D. DW ARAKANANTHA REDDY'- CHAITNYA BHARATHI EDUCATIONAL SOCIETY ([C.K. THAKKER ,J.] 785
• "i
(c) DONOR A
Any person who pays a sum of Rs.50,000/- or more but less than
Rs. one lakh shall be called 'Donor' and their membership in the
Society is for a period of twelve years only.
(d) MEMBER
B
(0 Any person who pays Rs.20,000/- or more but less than Rs.30,000/
- shall be called 'Member' and is to be treated as Member for a
period of twelve years. This class of membership shall be restricted
to only two hundred members.
(ii) Any change in the scale of fee or qualification of membership
made in these presents shall take effect only from the date of
c
adoption of these Articles as amended and shall not affect the
Status or scale of fee paid by members enrolled previously unless
such member ceases to be the Member of the Society for any
reason whatsoever.
D
(iiiXa) Firms, Institutions, Associations or Groups of Persons are also
entitled for the membership to any of the classes mentioned
above and shall be entitled to nominate one representative on
their behalf to the General Body and such person once nominated
shall represent in the General Body during the tenure of the
membership of such Firm, Institution, Association or Group of E
Persons.
(b) Any such nomination shall be valid for a minimum period of three
years in the case of a member of Body of Governors and in any
other case for a minimum period of one year.
.... )
(iv) GENERAL F
The name of the Chief Patron, Patrons and Promoters and Donors
will be exhibited at the appropriate places of the Institutions as
decided by the Board of Governors.

19. Clause 5 relates to 'Termination of Membership'. Clauses 6, 7 and G
8 c'ie~l with General Body, its functions and meetings to .be convened. Clause
9 declares that management is vested in the Board of Governors constituted
under Clause 10. Functions of the Board of Governors have been mentioned
in Clause 11. Sub-clause (i) of Clause 11 empowers the Board to admit new
members of the Society on a proposal sponsored by at least two members of
H
786 SUPREME COURT REPORTS [2007] 5 S.C.R.
I'" •
A the Board of Governors.
20. Reading of the Minutes of 85th meeting of the Board of Governors
of the Society makes it clear that certain matters were taken up for consideration.
Item No.2 related to proposals sponsoring Promoters-Members. The relevant
part thereof reads thus:
B
ITEM N0.2 The Board members gave eleven proposals sponsoring
promoters to Chaitanya Bharathi Educational Society as per the
clause 4 (i) (b) and 11 (i) of Articles of Association out of whom
nine promoters were unanimously chosen as listed below:
C (I) Dr. H. Prabhakar Reddy
(2) Dr. D. Dwarakanath Reddy
(3) Sri N. Sub hash
(4) Sri B. Chandrasekhar Reddy
D (5) Dr. B. Avanendra Reddy
(6) Sri D. Praveen Reddy
(7) Sri P. Chandradhar Reddy
(8) Sri V. V. Sridhar Rao
E (9) Sri Konda Viswaswara Reddy
The above candidates constitute a panel of promoters selected
and will be inducted into General Body as per the constitution
of Chai tanya Bharathi Educational Society.

p 21. It is thus clear that nine persons were selected and as stated in the ( .
.... -
minutes, they "will be inducted" into General Body as per the Constitution
of the Society. It is not even the case of the appellants that they had paid
an amount of Rs.I lakh before or on January 27, 2000. In fact, from the record
it is clear that in 2006 when a meeting of the General Board was convened
on March 22, 2006 and the action of the Governing Board was accepted, such
G amount was not paid by tile appellants. Even on October 24, 2006, when I 18th
meeting of the Board of Governors of the Society was convened, it was stated
that the appellants had not paid an amount of rupees one lakh for becoming
a Promoter-Member and hence a resolution passed by the Board of Governors
of the Society on January 27, 2000 inducting them as 'Promoter Members' and
H also a resolution, dated March 22, 2006 passed by the General Body could
D. OW ARAKANANTHA REDDY •. CHAITNYA BHARATHI EDUCATIONAL SOCIETY [[C.K. THAKKER, J.] 787

not be said to be legal and the action was nullity. It was also observed that A
the so-called Resolution No. 3 dated October 3, 1981 amending the Articles
of Association was neither passed by the Board of Governors nor approved
by the General Body either on that day or at any later date. The Articles of
Association of 1979, therefore, were in force. For the qualification for
membership as 'Promoter' of the Society, rupees one lakh had to be paid.
Since no such payment was made by the persons claiming Promoter-Members, B
their membership was 'void'. It was only thereafter that the appellants directly
deposited the amount in the bank in the name of the Society without even
infonning the Society about such payment.

22. Prima facie, we are of the view that the contention of the Society C
is well founded that such an amount ought to have been paid by a person
before he is admitted as Patron Member in the light of the phraseology used
in Clause 4 (b) of the Articles of the Association. We are, however, conscious
of the fact that the main matter is pending before the trial Court. We may,
therefore, hasten to add that we are dealing with the contention of the
appellants and the arguments of the respondents only for a limited purpose D
of deciding the appeal which has been filed against an interlocutory order
refusing interim relief. In our opinion, it cannot be said that by not granting
interim relief, the Courts below had committed an error of law or of jurisdiction.

23. As to issuance of show cause notice calling for explanation and
giving an opportunity of hearing as also observance of natural justice, the E
learned counsel drew our attention to a decision of this Court in T.P. Daver
v. Lodge Victoria No.363, S.C. Belgaum, [1964] l SCR 1 : AIR (1963) SC 1144.
After considering various cases, the Court made the following observations;

) "The following principles may be gathered from the above discussion. F
(1) A member of a masonic lodge is bound to abide by the rules of
the lodge; and if the rules provide for expulsion, he shall be expelled
only in the manner provided by the rules. (2) The lodge is bound to
act stri~tly according to the rules, whether a particular rule is mandatory
or directory falls to be decided in each case, having regard to the well
settled rules of construction in that regard. (3) The jurisdiction of a G
civil court is rather limited; it cannot obviously sit as a court of appeal
from decisions of such a body; it can set aside the order of such a
body, if the said body acts without jurisdiction or does not act in
good faith or acts in violation of the principles of natural justice as
explained in the decisions cited supra".
H
788 SUPREME COURT REPORTS [2007] 5 S.C.R.
,.. ;

A 24. We are afraid the ratio laid down in Daver does not apply to the
facts of the case. In the instant case, the controversy does not relate to
expulsion of a member. The question is whether the appellants can be said
to have been legally admitted as Promoter-Members. Once it is held that the
appellants were properly inducted and had become Promoter-Members of the
Society, principles of natural justice required issuance of notice, calling for
B explanation and affording reasonable opportunity of bcing heard. The case
of the Society, however, is that appellants were never legally inducted as
Promoter-Members and their so called induction was not in consonance with
law. The said issue is yet to be decided. In our opinion, therefore, Daver is
of no assistance to the appellants at this stage. [See also Board of Control
c for Cricket in India & Anr. v. Netaji Cricket Club & Ors., [2005] 4 SCC 741
: JT (2005) I SC 235]. ;.

25. The learned counsel for the appellants also relied upon Halsbury's
Laws of England, Fourth Edition, Vol. 19(1), p 143, para 201, in which it was
stated:
D
201. Expulsion. As a Society is founded on a written contract
expressing the terms on which the members associate together, there
is no inherent power to expel a member, and a member may not
therefore be expelled unless the rules provide that power. Any power
of expulsion must be exercised in good faith, for the benefit of the
E society and strictly in accordance with the rules. If rules give the
committee or some other authority power to expel a member for some
act of disobedience or misconduct on his part, its decision cannot be
questioned, provided the decision is arrived at after the member's
defence has been heard or he has been given an opportunity of being
F heard. If a member is not given the opportunity the decision will be
null and void. If the rules have been strictly observed, and the member
{
...
has had due notice and full opportunity of answering the charges
made against him and the power of expulsion has been exercised in
good faith and for a reason which is not manifestly absurd, no tribunal
can interfere to prevent the expulsion.
G
26. In view of the fact that the appellants had not been expelled or
removed from Membership, in our considered opinion, the observations in
Halsbury's Laws of England have no application to the case on hand.

27. The plea that the appellants were all throughout treated by the
H Society as Promoter-Members and they had worked for all these years which
D. DWARAKANANTHA REDDY v. CHAITNYA BHARATHI EDUCATIONAL SOCIEn' [[C.K. THAKKER, l.] 789

is established from various photographs, reports etc., is of no consequence. A
If the appellants had not been legally admitted as Patron Members, they could
not be treated as such and cannot get benefit on the basis of photographs,
reports, functions, etc.

28. To us, this is not a case of mutual mistake as contended by the
appellants. According to the appellants, when no period is prescribed for B
payment of rupees one lakh, such amount can be paid at any time or in any
1 case, within a 'reasonable period'. Prima facie, it appears to us that the
amount ought to be paid before or at the time of becoming Member. Hence,
even if there was a mistake, it was not a 'mutual mistake' as sought to be
argued by the appellants. So-called payment was made only after the impugned C
resolution was passed and that too without informing the Society. It is also
pertinent to note that the payment was made by the appellants on October
26, 2006 and a petition was filed in the Court under Section 23 of the Act on
October 29, 2006 along with an application for the interim relief. But even in
the application for interim relief, the factum of payment of amount after the
resolution was passed was not disclosed by the applicants. D
29. Regarding amendment of 1981, the counsel stated that Clause 4 of
Articles of Association was amended by Resolution No.3, dated October 3,
1981 by the Society. The amended Clause 4 of the Articles of the Association
reads thus:
E
4. MEMBERSHIP

The Society shall consist of the following Classes of membership.

(iXa) PAIR.ON
)
Firms, Institutions, Associations or Groups of Persons who can p
contribute substantially for the objectives of the Society are
entitled for this membership and shall be entitled to nominate one
representative on their behalf to the General Body and such
person once nominated shall represent in the General Body during
the tenure of the membership of such Firm, Institution, Association
or Group of Persons. G
(b) PROMOTER
Any person who is eminent in any walk of life and who can
contribute financially or otherwise to the objectives of the Society
might be chosen by the Board of Governors as 'Promoters'. H
790 SUPREME COURT REPORTS [2007] 5 S.C.R.

A (iv) GENERAL
The name of the Chief Patron, Patrons and Promoters and Donors
will be exhibited at the appropriate places of the Institutions as
decided by the Board of Governors. Any change in the scale of
fee or qualification of membership made in these presents shall
B take effect only from the date of adoption of these Articles as
amended and shall not affect the status or scale of fee paid by
members enrolled previously unless such members ceases to be
the member of the Society for any reason whatsoever.

30. No such contention had been taken by the appellants before High
C Court. But even otherwise, in our opinion, the learned counsel for the
respondents is right in contending that it was the case of the respondent-
Society that no such amendment had been made and brought into force,
which is clear from the Minutes of I I 8th Meeting of the Board of Governors.

31. In our opinion, no particulars, much less sufficient particulars, have
D been placed on record to show that the action taken by the Society was mala
fide or had been taken in colourable exercise of power. A question of law
which arises for the consideration of the Court is as to whether the appellants
had become Promoter-Members. If the answer is in the affirmative, they are
entitled to certain rights. But if the answer is in the negative, they cannot be
E treated as Promoter-Members. Considering the facts and documentary evidence
on record, the trial Court found that no prima facie case has been made out.
It, therefore, did not grant interim relief. The said order had been confirmed
by the High Court. The High Court, in our opinion, rightly observed in the
operative part of the order that jt was a fit case to decide the main matter and
accordingly a direction was issued to decide the Original Petition within three
F months.
32. For the foregoing reasons, in our opinion, the orders passed by the
Courts below cannot be said to be illegal or unlawful. The appeals deserve
to be dismissed and are accordingly dismissed. In the facts and circumstances
of the case, however, there shall be no order as to costs.
G
33. Before parting with the matter, we may clarify that we have not 1..
entered into correctness or otherwise of the allegations and counter-allegations
made by the parties and have decided the controversy on a limited issue as
to legality and sustainability of the order refusing interim relief in an application
H filed by the appellants under Order 39, Rules 1 and 2 read with Section 151
D. DWA!tAXANANTHAREDDYv. CHAITNYABHARATiilEDUCATIONALSOCIETY[[C.K. THAKKER,J.J 79}

of the Code and we may not be understood to have expressed any opinion A
on the merits of the matter. As and when the matters will be taken up by the
trial Court for hearing, they will be decided on their own merits without being
influenced by the observations made in this judgment. ·

34. The appeals are accordingly dismissed, however, with no order as
to costs. B
Appeal dismissed.
.. VS.

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