TMI Blog2023 (7) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of the writ petition and that the rule which requires a party to pursue the alternative remedy provided by the statute is a rule of policy for convenience and discretion rather than a rule of law. Undoubtedly, entertainability and maintainability of the writ petition are two distinct concepts. If the objection to maintainability is sustained then the Courts are rendered incapable of receiving the lis for adjudication. However, on the other hand, the question of entertainability is entirely within the discretion of the High Courts and writ remedy is a discretionary remedy. A writ petition, despite being maintainable may not be entertained by High Courts for many reasons or relief could be refused to the Petitioner despite setting up a sound legal point. Chapter 16 of the Companies Act deals with prevention of oppression and mismanagement. Section 241 of the Companies Act provides that any member of a company who complaints that the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or to any other member or members or in a manner prejudicial to the interests of the company may ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent Through: Mr. Rajeev Nayyar, Sr. Advocate; Mr. Sandeep Sethi, Sr. Advocate; Mr. Mohit Mathur, Sr. Advocate; Mr. Rajshekhar Rao, Sr. Advocate; Ms. Aishwarya Bhati, ASG; Mr. Shyam Sharma, Mr. Manik Dogra, Mr. T. Singhdev, Ms. Ramanpreet Kaur, Mr. Rohit Bhagat, Ms. Ameya V. Thanvi, Mr. Abhijit Chakrabarty, Mr. Aabhas Sukhramani, Mr. Tanishq Srivastava, Ms. Anum Hussain, Mr. Vikram Singh, Ms. Shreya Sethi, Ms. Tanvi Tewari and Mr. Bhanu Gulati, Mr. Saurabh Chadda, Advocates. JUDGMENT SUBRAMONIUM PRASAD, J 1. Petitioner herein, who is the Secretary of the Delhi and District Cricket Association (hereinafter referred to as the DDCA ) has approached this Court by filing the present Writ Petition under Article 226 of the Constitution of India challenging the notice dated 10.06.2023, issued by the Apex Council of DDCA, for convening the Extra-Ordinary General Meeting (hereinafter referred to as the EGM ) of the Members of the DDCA on 05.07.2023 at 09:00 AM at the registered office of the DDCA at the Arun Jaitley Stadium, Ferozshah Kotla Ground, New Delhi. 2. Shorn of unnecessary details, the facts, leading to the present Writ Petition are as under: a. DDCA is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as AoA ) defines the Apex Council as the principal body of the DDCA tasked with the governance of the DDCA as set out in Article 17 of the AoA. He then takes this Court through Article 10 of the AoA which lays down the rules regarding conduct of the Annual General Meeting of the General Body of the Apex Council. Article 10(1) of the AoA stipulates that the Annual General Meeting of the General Body shall be held every year, not later than 30th September, at such place and time as the President may fix. Mr. Mehra then draws the attention of this Court to Article 10(5) of the AoA which stipulates the businesses that have to be transacted only at the Annual General Meeting of the General Body of the DDCA. He states that Article 10(5)(f) of the AoA provides that the Ombudsman cum Ethics Officer of the DDCA can be appointed only at the Annual General Meeting of the General Body of the Apex Council which is held annually. He then takes this Court to Article 17(2) of the AoA which deals with the composition of the Apex Council of the DDCA. He states that Article 17(2) of the AoA stipulates that the Apex Council shall consist of a total of 18 Directors including the Secretary of the DDCA. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the maintainability of the present Writ Petition. He states that the DDCA is a company incorporated under Section 8 of the Companies Act, 2013 and, therefore, the remedy for the Petitioner is to move an appropriate application before the National Company Law Tribunal (hereinafter referred to as the NCLT ) for redressal of his grievances. Mr. Nayyar has taken this Court to Section 242(2)(a) of the Companies Act to state that the NCLT has the power to regulate the conduct of affairs of the company. He, thereafter, took this Court to Section 242(4) of the Companies Act to contend that the NCLT has the power to make any interim order which it thinks fit for regulating the conduct of the company s affairs upon such terms and conditions as the NCLT feels to be just and equitable. Mr. Nayyar also takes this Court through Section 245(1) of the Companies Act to contend that the NCLT can pass orders restraining a company from committing breach of any provision of the company s memorandum or articles as well as to restrain the company and its directors from acting on such resolution which it thinks are prejudicial to the interests of the company or its members. He further submits that Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. It is well settled that the jurisdiction of a High Court under Article 226 of the Constitution of India is couched in wide terms and the exercise thereof is not subject to any restrictions except the territorial restrictions which are expressly provided in the Articles but the exercise of the jurisdiction is discretionary and it is not exercised merely because it is lawful to do so. The very amplitude of the jurisdiction demands that it will ordinarily be exercised subject to certain self-imposed limitations and the resort to that jurisdiction is not intended as an alternative remedy for relief which may be obtained in a suit or other mode prescribed by statute. 9. In Thansingh Nathmal v. Supdt. of Taxes, (1964) 6 SCR 654 , the Apex Court has observed as under: 7. ..... Ordinarily the Court will not entertain a petition for a writ under Article 226, where the petitioner has an alternative remedy, which without being unduly onerous, provides an equally efficacious remedy......... .....Where it is open to the aggrieved petitioner to move another tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... absolutely discretionary in character. If the High Court is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction. The Court, in extraordinary circumstances, may exercise the power if it comes to the conclusion that there has been a breach of the principles of natural justice or the procedure required for decision has not been adopted. [See N.T. Veluswami Thevar v. G. Raja Nainar [AIR 1959 SC 422], MunicipalCouncil, Khurai v. Kamal Kumar [AIR 1965 SC 1321 : (1965) 2 SCR 653] , Siliguri Municipality v. Amalendu Das [(1984) 2 SCC 436 : 1984 SCC (Tax) 133] , S.T. Muthusami v. K. Natarajan [(1988) 1 SCC 572] , Rajasthan SRTC v. Krishna Kant [(1995) 5 SCC 75 : 1995 SCC (L S) 1207 : (1995) 31 ATC 110] , Kerala SEB v. Kurien E. Kalathil [(2000) 6 SCC 293] , A. Venkatasubbiah Naidu v. S. Chellappan [(2000) 7 SCC 695] , L.L. Sudhakar Reddy v. State of A.P. [(2001) 6 SCC 634] , Shri Sant Sadguru Janardan Swami (Moingiri Maharaj) Sahakari Dugdha Utpadak Sanstha v. State of Maharashtra [(2001) 8 SCC 509] , Pratap Singh v. State of Haryana [(2002) 7 SCC 484 : 2002 SCC (L S) 1075] and GKN Driveshafts (India) Ltd. v. ITO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd adhered to. The rule laid down in this passage was approved by the House of Lords in Neville v. London Express Newspaper Ltd. [1919 AC 368 : (1918-19) All ER Rep 61 (HL)] and has been reaffirmed by the Privy Council in Attorney General of Trinidad and Tobago v. Gordon Grant and Co. Ltd. [1935 AC 532 (PC)] and Secy. of State v. Mask and Co. [(1939-40) 67 IA 222 : (1940) 52 LW 1 : AIR 1940 PC 105] It has also been held to be equally applicable to enforcement of rights, and has been followed by this Court throughout. The High Court was therefore justified in dismissing the writ petitions in limine. 14. In Mafatlal Industries Ltd. v. Union of India [(1997) 5 SCC 536] B.P. Jeevan Reddy, J. (speaking for the majority of the larger Bench) observed: (SCC p. 607, para 77) 77. So far as the jurisdiction of the High Court under Article 226 or for that matter, the jurisdiction of this Court under Article 32 is concerned, it is obvious that the provisions of the Act cannot bar and curtail these remedies. It is, however, equally obvious that while exercising the power under Article 226/Article 32, the Court would certainly take note of the legislative intent manife ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s laid to the very incorporation of the Board and its constitution. A challenge was also laid to the proceedings of the Charity Commissioner. These decisions which were impugned could not have been adjudicated by the Tribunal under Section 6 of the Act. The second aspect which we cannot ignore is that as held by this Court, Article 226 confers a jurisdiction or a power on the High Courts. It is a power under the Constitution. While it may be true that a statute may provide for an alternate forum to which the High Court may relegate the party in an appropriate case, the existence of an alternate remedy by itself cannot exclude the jurisdiction of the High Court under the Constitution. No doubt, it has been a self-imposed restraint which is fairly faithfully adhered to by the High Courts and it is largely a matter of discretion. We find that there are dicta which has held that on the basis of an alternate remedy, a writ petition is not maintainable. We would understand that the position to be that a constitutional remedy cannot be barred or excluded as when the High Court exercises its power under Article 226, it cannot be a case of lack of inherent jurisdiction. No doubt, when High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnate remedy and its judicial exposition. In Whirlpool Corpn. v. Registrar of Trade Marks, (1998) 8 SCC 1, a two-Judge Bench of this Court after reviewing the case law on this point, noted : (SCC pp. 9-10, paras 14-15) 14. The power to issue prerogative writs under Article 226 of the Constitution is plenary in nature and is not limited by any other provision of the Constitution. This power can be exercised by the High Court not only for issuing writs in the nature of habeas corpus, mandamus, prohibition, quo warranto and certiorari for the enforcement of any of the Fundamental Rights contained in Part III of the Constitution but also for any other purpose . 15. Under Article 226 of the Constitution, the High Court, having regard to the facts of the case, has a discretion to entertain or not to entertain a writ petition. But the High Court has imposed upon itself certain restrictions one of which is that if an effective and efficacious remedy is available, the High Court would not normally exercise its jurisdiction. But the alternative remedy has been consistently held by this Court not to operate as a bar in at least three contingencies, namely, where the writ p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he restrictions placed on the power of the High Court is where an effective alternate remedy is available to the aggrieved person. 27.3. Exceptions to the rule of alternate remedy arise where : (a) the writ petition has been filed for the enforcement of a fundamental right protected by Part III of the Constitution; (b) there has been a violation of the principles of natural justice; (c) the order or proceedings are wholly without jurisdiction; or (d) the vires of a legislation is challenged. 27.4. An alternate remedy by itself does not divest the High Court of its powers under Article 226 of the Constitution in an appropriate case though ordinarily, a writ petition should not be entertained when an efficacious alternate remedy is provided by law. 27.5. When a right is created by a statute, which itself prescribes the remedy or procedure for enforcing the right or liability, resort must be had to that particular statutory remedy before invoking the discretionary remedy under Article 226 of the Constitution. This rule of exhaustion of statutory remedies is a rule of policy, convenience and discretion. 27.6. In cases where there are dispute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thics Officer of the DDCA on the ground that the said EGM is contrary to the procedures laid down in the AoA. 15. Chapter 16 of the Companies Act deals with prevention of oppression and mismanagement. Section 241 of the Companies Act provides that any member of a company who complaints that the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or to any other member or members or in a manner prejudicial to the interests of the company may approach the NCLT. Section 241 of the Companies Act reads as under: 241. Application to Tribunal for relief in cases of oppression, etc. (1) Any member of a company who complains that (a) the affairs of the company have been or are being conducted in a manner prejudicial to public interest or in a manner prejudicial or oppressive to him or any other member or members or in a manner prejudicial to the interests of the company; or (b) the material change, not being a change brought about by, or in the interests of, any creditors, including debenture holders or any class of shareholders of the company, has taken place in the manag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any by other members thereof or by the company; (c) in the case of a purchase of its shares by the company as aforesaid, the consequent reduction of its share capital; (d) restrictions on the transfer or allotment of the shares of the company; (e) the termination, setting aside or modification, of any agreement, howsoever arrived at, between the company and the managing director, any other director or manager, upon such terms and conditions as may, in the opinion of the Tribunal, be just and equitable in the circumstances of the case; (f) the termination, setting aside or modification of any agreement between the company and any person other than those referred to in clause (e): Provided that no such agreement shall be terminated, set aside or modified except after due notice and after obtaining the consent of the party concerned; (g) the setting aside of any transfer, delivery of goods, payment, execution or other act relating to property made or done by or against the company within three months before the date of the application under this section, which would, if made or done by or against an individual, be deemed in his insolvency to be a fra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame. (8) If a company contravenes the provisions of sub-section (5), the company shall be punishable with fine which shall not be less than one lakh rupees but which may extend to twenty-five lakh rupees and every officer of the company who is in default shall be punishable with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees, or with both. (emphasis supplied) 17. Section 244 of the Companies Act which stipulates the rights of a member of the company to file an application under Section 241 of the Companies Act reads as under: Section 244. Right to apply under section 241. (1) The following members of a company shall have the right to apply under section 241, namely:-- (a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less, or any member or members holding not less than one-tenth of the issued share capital of the company, subject to the condition that the applicant or applicants has or have paid all calls and other sums due on his or their shares; (b) in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors from acting on such resolution;...... 19. A perusal of the abovementioned Sections shows that NCLT has the power to redress the grievances of the Petitioner and the prayers sought in the present Writ Petition before this Court, especially the prayer for quashing the notice dated 10.06.2023 calling for an EGM of the Members of the DDCA on 05.07.2023 at 09:00 AM at the registered office of the DDCA for ratifying its resolution dated 10.04.2023. 20. Though Section 244(1)(b) of the Companies Act provides that an application under Section 241 of the Companies Act can be entertained only if it is supported by one-fifth of the total number of members of the company but the NCLT has power to waive of this requirement. The Petitioner, therefore, ought to have approached the NCLT and if the NCLT would have refused to waive off the stipulated requirement of support of one-fifth members of the company then it was always open for the Petitioner to approach this Court by contending that no equally efficacious alternative remedy is left to him. It cannot be said that if this Court does not exercise its jurisdiction under Article 226 of the Constitution of India an irreversible da ..... X X X X Extracts X X X X X X X X Extracts X X X X
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