TaxTMI 
TaxTMI 
2018 (1) TMI 1619
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....led by the Delhi Gymkhana Club Limited (Appellant in FAO No. 90/2017), (hereinafter referred to as 'the Club') and petitioner in CM (M) No.603/2017 and has allowed the application under Order XXXIX Rules 1 & 2 CPC filed by the respondents - Alok Mehndiratta & Others (Plaintiffs in the subject Suit), (hereinafter referred to as 'the Plaintiffs). FAO 103/2017 has been filed by some members of the Club who, though not parties to the Suit, are aggrieved by the directions issued, by the impugned order, on the application under Order XXXIX Rules 1 & 2 CPC. 2. The Plaintiffs - Alok Mehndiratta & Others had filed the subject Suit against the Club seeking the following reliefs: - "(a) Pass a decree of declaration, declaring the grant of permanent memberships of those UCPs/Green Card Holders who were granted permanent memberships in precedence to prior regular applicants in NG category as contrary to the AOA and, therefore, void; (b) Pass a decree of mandatory injunction, directing the Defendant Club to terminate the membership of those UCPs/Green Card Holders who were granted permanent memberships in precedence to prior regular applicants in NG category as contrary to the A....
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...., the membership is much sought after. It is contended by the Plaintiffs that the waiting period for membership in the NG category is now several decades. As per the Plaintiffs, they became aware in the year 2012 that in violation of the Articles of Association, the Management of the Club was granting permanent membership to the children of the existing Members, who were granted 'User of Club Premises Pending Election' Status (hereinafter referred to as the UCP Status) and had applied for membership much after the date of the application by an applicant in the NG category. It is contended that the children of the existing Members were given priority in accord of permanent membership over the pending applications in the Non-Governmental category. 6. It is contended that the Plaintiffs became aware of the out of turn preference being given to the children of the existing Members, who had the UCP status in the beginning of the year 2012. It is contended that until the year 1971 - 72, the waiting time for a person in the NG category for permanent membership was about 10 to 12 years, which subsequently increased to 10 to 15 years and has kept on increasing. It is contended that....
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.... over and above the applications of the General applicants in the NG Category. However, in practice, contrary to the Articles of Association, the Management has been giving precedence to the Green Card Holders/UCPs and granting them permanent membership in the NG category over and above the General applicants in the NG category entered in the Candidate's Book. The consequence of which is that the General applicants in the NG category are illegally superseded for membership. As an example, it is contended that a General applicant in the NG category entered in the Candidate's Book, as far back as in 1977, has been superseded by a Green Card Holder/UCP, who applied much later in the year 1992. 9. It is submitted that in September 2005, as many as 49 UCPs superseded the General applicants in the NG category and in August 2012, 5 UCPs were also inducted out of turn. It is contended the said preference being given to the UCPs is contrary to the Articles of Association and is illegal. 10. It is submitted that the dependent child of a Member, who has availed the facilities of the Club as a dependent child between the ages of 13 and 21, is granted the status of Green Card Holders/....
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....of the Club in a very transparent manner. 15. It is contended that Club is governed by the Memorandum and Articles of Association and the Byelaws, as made by the General Committee from time to time. Further, it is submitted that grant of membership is an internal affair of any private Club and is governed by its Rules and Byelaws. It is submitted that the General Committee, in its Meetings held on 22.05.1984 and 04.06.1984, took a decision to grant membership to sons and daughters-in-laws of members under the non-Government category in the ratio of 20% of vacancies, which was further increased to 25% by the General Committee by a decision taken in its Meeting held on 14.11.2005 and the said decision has been duly implemented. 16. It is submitted that grant of permanent membership to UCPs is in accordance with the decision taken by the General Committee and the defendant, being a private Club of its Member, is well within its right to regulate and manage its affairs in the interest of its existing members. It is contended that the names and particulars of the UCPs are entered into a Candidate's Book separately maintained for this category in terms of the decisions taken by the....
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.... to be seen is as to whether the plaint read as a whole, discloses such facts as are necessary to establish that cause of action accrues in favour of the Plaintiff. Neither is the veracity of the averments in the Plaint to be examined nor is the strength of the case of the Plaintiff to be tested at the time of consideration of the application under Order 7 rule 11. The Plaint has to be read with a demurrer. 20. The objections taken by the Club are that the Suit is ex-facie barred by limitation, does not disclose any cause of action and bad for non-joinder of necessary parties. 21. As noticed above, the Plaintiff inter alia seeks a declaration thereby declaring the grant of permanent memberships of those UCPs/Green Card Holders who were granted permanent memberships in precedence to prior general applicants in NG category as contrary to the AOA and therefore, void and further seeks consequential termination of their membership and a permanent injunction restraining the Defendant Club from granting permanent memberships to UCPs/Green Card Holders before prior general Applicants in the NG category and a further direction to the Club to grant permanent memberships strictly in accorda....
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....or example, a general applicant in the NG category entered into the Candidate Book in 1977 has been illegally superseded for membership by Green Card Holders / UCPs who have applied for permanent membership much later in the year 1992. A few instances of the aforesaid illegal practices of the management of the Defendant Club are enlisted below: ***** ***** 12. The general applicants in the NG category suffer double jeopardy. On one hand they are being granted membership, if at all, only after awaiting period of 35 to 40 years leaving hardly any time for them to enjoy the facilities of the Club, and on the other hand their children, who would by that time have already crossed the age of 21, lose the opportunity to continue to use the facilities of the Club as dependent members/Green Card Holders / UCPs, pending confirmation of their membership. Such prejudice and discrimination towards the general applicants in the NG category is not permitted, justified or warranted. ***** ***** ***** 16. On 17.10.2013, in the meeting of the Membership and Disciplinary Sub Committee of the Defendant cub, it has been recorded in the Minutes of the said meeting that practice of maintaining sepa....
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.... illegal violation of the AOA in regard to the grant of permanent memberships in the NG category. In this regard, besides other dates, the cause of action arose on 6.8,2012, 1,12.2012, 6.1.2012, 28.6.2012, 2.7.2012, 24,7,2012, 29,7.2012, 7.8.2012, 25.8.2012, 2.9.2012 and ,13.9.2012, The cause of action further arose on 4.4.2013 when the Plaintiffs sent a legal notice through their advocates to the. Defendant Club, raising all the issues stated in the present Plaint,' and on 18.5.2013, when the Defendant Club issued an evasive response, to the above legal notice, failing to address the issues raised in the legal notice. The cause of action also arose on 17.10.2013 and finally the cause of action arose on 27.12.2013, when the Plaintiffs sent their Final Legal Notice based on the two meetings dated-17.10.2013 and 13.11.2013 of the Membership and Disciplinary Sub Committee, wherein the Committee acknowledged the various illegal practices being carried out in grant of permanent membership, Finally, the cause of action arose on 27.12,2013, when the Plaintiffs sent their Final Legal Notice, Moreover, in the present case the cause of action is a continuing cause of action, as the affai....
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....uses of the Articles of Association, restrained the Club from granting out of turn permanent membership to the Green Card Holders/UCPs and directed that the permanent membership granted after institution of the Suit would be subject to the outcome of the Suit. With regard to the prayer of the Plaintiffs that their children be granted the status of the UCPs/Green Card Holders, the learned Judge rejected the same. 27. For resolving the said controversy, it may, at this juncture, be expedient to refer the relevant Articles of Association as well as the Minutes of the Meetings, referred to by the parties. It may be noticed that none of the clauses of the Articles of Association are impugned by the Plaintiffs. 28. Article 4 enumerates the Classes of Members as:- (a) Permanent members (b) Garrison members (c) Temporary members (d) Casual members (e) &nbs....
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...., the unmarried daughter of a member may use the Club under Article 13 (3a) during such time as she lives with her parents............" 33. Article 16 reads as under:- "No member other than a permanent member shall have the right of attending meetings of the Club, or of voting on any matter affecting the interests or management of the Club." 34. Minutes of the Meeting of the General Committee dated 31.03.1978 inter alia read as under:- "6. Special Meeting of the General Committee : Minutes of the Special Meeting of the General Committee held on 15th March, 1978, were confirmed, subject to the following:- ***** ***** Item-2 MEMBERS‟ SONS - AUTOMATIC USER OF THE CLUB- As regards Members‟ sons being extended automatic use of the Club, the following decisions were taken:- (a) The automatic use of the Club will be given to an applicant (Member‟s son), who after attaining the age of 21 makes an application for this purpose and m....
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....ed, the son-in-law will be given UCP in case by that time the daughter has not become a Lady Subscriber in her own right. He would, however, have to apply within one year of his marriage and on applying his seniority will reckon from the date his wife applied for lady subscribership. Note: In the case of a member‟s son, daughter and son- in-law while they will be put in the separate list being maintained for this category, their name will also be put in the category to which they belong and they will be called up for membership in their turn, whichever comes earlier." 36. Circular dated 22.05.1984 reads as under:- "NOTICE SUBJECT : Accelerated Conversion of sons/son-in-law UCPs as Permanent Members 1. The General Committee has decided to liberalise the existing procedure to accelerate, in a phased manner the conversion of present UCP Sons and Sons-in-law in the Non-Government category as Permanent Members of the Club. 2. Starting with the February, 1984 "At Home", 20% of the new Permanent Members elected at every "At Home will be determined as the number of existing UCPs Sons/Sons-in-law to be converted as Permanent Members. 3. The Club Office has already started u....
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....p on the basis of date of their application. 41. Article 4, lists out the five classes of members, one of which is Permanent members, with which the parties are concerned. Article 7 requires every application for membership to be entered in a Candidate's Book. As per the Club, initially there was only on Candidates Book. Subsequently a separate Candidate's Book was maintained for general applicants in NG category and the UCPs/Green Card Holder applicants. On an objection by some members, once again, a common Candidate's Book is being maintained but a different colour ink is used for entering the details of a general applicant and the UCPs/Green Card Holders (reference drawn to Minutes of meeting dated 17.10.2013). 42. Article 8 (7) stipulates that the General Committee shall maintain the distinctive character of the Club and regulate the balloting in a manner that the proportion of the members in the Government Category continues to be about half. 43. Articles 12 and 13 provide for permitting inter alia Candidates whose names are up for election, dependents of members and son of a member who has applied for permanent membership, the use of facilities of the Club. 44....
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....Ps has its own cascading effect because these members would attain permanency at a very young age, therefore, their off-springs would also in-turn get similar benefits. This kind of bye-law/rule will one day turn AOA otiose and are against the interest of public at large as well as Plaintiffs......... 49. I do not find any infirmity in the prima facie view taken by the learned judge and in the exercise of discretion in passing an ad- interim order injunction order. Admittedly, the Articles do not create a separate class of members or accord priority to any special class of individuals in getting membership, the same has been done only through various meetings. 50. Further, as noticed above, the Green Card Holders / UCPs enjoy virtually all facilities of the Club, except voting rights on any matter affecting the interests or management of the Club. No irreparable loss and injury would be caused to the Green Card Holders / UCPs in case their permanent membership is deferred pending disposal of the Suit. On the other hand, if permanent membership is granted to Green Card Holders / UCPs out of turn then irreparable loss is likely to be caused to the general applicants in the NG categ....