ORDER

1. We have heard both Mr Soli J. Sorabjee, learned Senior Counsel for the appellant and Mr R. F. Nariman, learned Senior Counsel for the respondents. The appellant is a non-trading company registered under the Travanc ore Companies Regulations Act, 1092 ME. The affairs of the company are administered in accordance with the provision contained in its memorandum of association and articles of association. There are also various bye-laws which govern the appellant society.

2. There are locality-based Nair community associations known as Karayogam throughout the State of Kerala which is a congregation of members of the Nair community of that area. A Karayogam on application gets affiliated to the Nair Service Society. Once such affiliation is effected then the society exercises supervisory control over the Karayogam. As per the bye-laws the administration of the Karayogam and its assets can be taken over by the Registrar for the proper maintenance.

3. It is also further provided in the said bye-laws that in order to remove the said deadlock the Registrar may take over the administration for a limited period.

4. The appellant owns two aided schools, namely, Parippu High School and the Parippu Lower Primary School. The first respondent was selected as President of the N. S. S. Karayogam Parippu in the year 1989 for a period of three years. As such President of the Karayogam from the year 1989, he became ex officio manager of the said schools. It appears that the first respondent indulged in mismanagement of the affairs of the Karayogam and the school. There were also allegations of misappropriation of funds. The three years term of the first respondent as President expired on 26-11 - 1991. Even though the bye- laws of the Karayogam directed elections to take place, enjoining the general body for every month, but no meetings were held.

5. The Registrar of Karayogam who was having supervisory jurisdiction deputed an Assistant Registrar to conduct an enquiry into the allegations against the first respondent and submit a report. The Assistant Registrar as an Inquiry Officer, after giving due notice to all the parties, conducted the enquiry. He submitted a report to the Registrar in which he had stated that there was gross mismanagement of Karayogam as well as misappropriation of Karayogam funds. The first respondent was called upon to offer explanation to this report. He submitted his explanation on 28-7-1989. During discussion which took place at the instance of Taluka Union on 25-9-1989 the first respondent admitted his liability to the tune of Rs I 53,300. He agreed to pay a portion on or before 3-10-1989 and the remaining before a July 1990. However, even as late as 15-6-1989 he did not keep up his promise and he wrote a letter to the Secretary, N. S. S. Union that he will do so soon. Under these circumstances, the Registrar by his proceedings dated 20-5-1992 appointed an ad hoc Committee comprising of five persons for the management of the affairs of the Karayogam and its assets including the schools. The President N. S. S. Union Kottayam was appointed as Chairman. The Secretary Karayogam handed over charge to this ad hoc Committee on the basis of these proceedings. Three members of the Karayogam filed suit OS No. 374 of 1992 in the learned Munsiff Court, Kottayam for an injunction. However, injunction was not granted. As per Chapter III Rule 4 of Kerala Education Rules, the change of management is necessary, therefore, the Director of Public Instruction by his proceedings dated 4-6-1992 passed the following order :

Order No. 66804/92/FT 3/DPI dt. 4-6-J992 "The Chairman, Ad hoc Committee and School Manager Parippu HS & LPS has requested approval to the change of Management of the School from the Parippu N. S. S. Karayogam No. 633 to the Ad hoc Committee with the President of the N. S. S. Union Kottayam as Chairman Secretary N. S. S. Union Kottayam as Convenor and 3 others, as members. In the circumstances reported by the Ad h