Societies Registration Act | Defaulting Members Not Entitled To Notice For Meeting Of Election Even If Their Membership Was Not Terminated Or Ceased: Supreme Court
The Supreme Court held that under Section 15 of the Societies Registration Act, 1860 (Registration Act), defaulting members of a society,even if their membership was not terminated or ceased, are not entitled to receive notice for meeting of election.
The Court allowed an Appeal challenging the affirmation by the Bombay High Court of the dismissal of a previous appeal regarding leadership changes in the charitable society Shikshan Prasarak Mandal, Mul.
The Court noted that although the society's bye-laws lack automatic termination for defaulting members, the proviso to Section 15 designates objectors as suspended members, rendering them ineligible for notice without voting rights or member status.
The Bench comprising Justice Vikram Nath and Justice Ahsanuddin Amanullah observed, “a clear reading and interpretation of the proviso to Section 15 of the Registration Act would disentitle such defaulting members from being given any notice even if their membership was not terminated or ceased”.
Senior Advocate Shekhar Naphade appeared for the Appellants and Senior Advocate Narender Hooda appeared for the Respondents.
After key office bearers' deaths, Appellant No.1 was designated as Working President in 1997, and the 2002 elections led to a new Executive Committee. Objections were raised against the election process and certain members were initially rejected by the Assistant Charity Commissioner. The Joint Charity Commissioner approved the Change Report in 2016, but District Judge-IV, Chandrapur, overturned this decision. The Bombay High Court dismissed the first appeal.
Undisputed facts include objectors' default in payment, making them ineligible to vote, the absence of elected office bearers before 2002, Appellant No.1's continuous role as Working President, and the objectors' demise during the appeal. The legal disputes revolve around leadership changes and objections to the appellants' control of the society and trust for over two decades. The appeal was filed before the Supreme Court challenging the affirmation by the Bombay High Court of the dismissal of a previous appeal regarding leadership changes in the charitable society Shikshan Prasarak Mandal, Mul.
The Court framed the following issues:
“i) Whether the Working President Mr Wasade could have convened the election meeting for 08.09.2002 as according to the Objectors, it was only the Secretary or in the alternative the President who could have convened the meeting under the bye laws?
ii) Whether the 7 Objectors were entitled to a notice for the meeting of 08.09.2002 in view of their disqualification under Section 15 of the Registration Act?
iii) Whether lack of notice to the said Objectors would vitiate the entire election meeting of 08.09.2002?
iv) Whether invalid members had signed the requisition dated 20.08.2002 and had been elected to the Executive Committee?
v) Whether the private respondents had the locus to be heard before any forum or to file an appeal/petition against the order of the Joint Charity Commissioner?”
The Court, noting the Executive Body meeting on July 01, 1997, unanimously appointed Mr. Wasade as Working President due to the then President's health. Before August 20, 2002, key office bearers had passed away, leaving the Working President responsible for convening a meeting.
Recognizing the doctrine of necessity, the Court emphasized its use in extraordinary situations, justifying actions deviating from the norm. In this case, the Working President played a crucial role in preventing a deadlock, responding to explicit requests from 16 surviving members.
The Court observed the 'Working President's' duties per Byelaws Clause 11, noting his obligation to follow directives. The legitimacy of the surviving members' request to convene a meeting was deemed appropriate, with 16 formal requests. Given the circumstances, the Bench justified the Working President's decision to convene the meeting on September 08, 2002, deeming it unimpeachable. Issue No.1 was answered in favour of the Appellants.
The Court acknowledged that all Objectors were in arrears of their membership fees for over three months, a fact affirmed by the High Court and all three authorities. The Objectors' refusal to receive notices raised concerns about the implications of non-payment under Section 15 of the Registration Act.
According to the Bench, members in default of fees are ineligible to vote and not considered society members, making the non-issuance of notices futile. The bye-laws lacked automatic termination for defaulters, leaving their names in the Society's Roll. Reinstatement involved an application expressing readiness to settle dues, subject to the Society's evaluation.
Legal recourse involved show cause notices to defaulters, giving them a chance to retain membership by fulfilling obligations. The failure led to termination following due process. Drawing parallels with a similar case, the Court emphasized the validity of such provisions in conjunction with relevant governing act sections.
The Bench referred to the case of Hyderabad Karnataka Education Society v Registrar of Societies and Others [(2000) 1 SCC 566] and noted that in the absence of automatic cessation in the Society's bye-laws, the proviso to Section 15 of the Registration Act categorized Objectors as suspended members. This precluded them from receiving notices due to their lack of voting rights or member status.
Addressing concerns about invalid members participating in requisitions and executive elections, the appellants argued that signatories were duly admitted in a previous meeting, and objections related to retired members were deferred due to a lack of clarity and essential facts.
During the appeal, the Court noted that all seven objectors passed away, leading the Commissioner to rule in favour of the Appellants and accept the Change Report. The contesting respondent, claiming to be the Vice-President, lacked standing, having not been an objector before the Assistant Charity Commissioner nor a valid society member. The District Judge dismissed the respondent's petition due to insufficient evidence.
The Court noted an unexplained aspect: four retired Employee Members continued to pay subscriptions and maintain their membership. The Court questioned the legitimacy of their continued membership in the Employee Members category post-retirement without proper resolution. Given the prolonged deadlock in the Society, fresh elections for a new Executive Committee within six months were deemed necessary. The Charity Commissioner was tasked with thoroughly investigating the matter, resolving membership issues based on existing records, and ensuring a fair and transparent election process.
Accordingly, the Court allowed the Appeal, set aside the impugned judgment and order of the High Court, affirmed the Change Report and directed for fresh elections for the new Executive Committee of the Society by the Charity Commissioner per law within six months.
Cause Title: Adv Babasaheb Wasade & Ors v Manohar Gangadhar Muddeshwar & Ors. (2024 INSC 52)
Appearance:
Appellant: Advocates Gagan Sanghi, Farah Hashmi, Aishwarya Dash, Prashant Pratap and Rameshwar Prasad Goyal.
Respondent: Advocate Manju Jetley.
