The judgment established the importance of compliance with bye-laws, the availability of remedies provided, and the impact of timing on the maintainability of a suit.

JUDGMENT :

Sreenivas Harish Kumar, J.

Defendant No.1 in O.S.3678/2018 on the file of LXIII Additional City Civil & Sessions Judge, Bengaluru, has preferred this appeal challenging the order dated 25.08.2018 passed on application, I.A.I filed under Order 39 Rules 1 and 2 CPC.

2. The first respondent in this appeal became institution member of the appellant on 20.5.2010. The respondents 2 to 5 were nominated by the first respondent for using the facilities available to an institution member. The period of institutional membership was twenty years and membership was subject to fulfilling certain conditions of the bye-laws of the appellant club. One of the conditions was that the institution must be functional and in this regard member has to provide or furnish annual report certified by a chartered accountant to show that the company is in existence and it is carrying on its business. It was brought to the notice of the appellant that the first respondent became non-functional by closing its oil industry. It also owed a huge amount of money to the State Bank of Mysuru. Therefore the Executive Committee of the appellant on the basis of the information provided to it, kept the membership of the first respondent under suspension by issuing a notice on 21.3.2018. The respondents came to know about this when the notice of suspension was displayed on the notice board of the appellant. Challenging this suspension order, the respondent instituted a suit seeking declaration that the institution membership accorded to the plaintiff with effect from 15.6.2010 is operative and binding on the appellant club and the order of suspension dated 21.3.2018 is null and void and for permanent injunction restraining the appellant from interfering with using the facilities of the club by its nominees. Along with the plaint the respondents made an application for grant of temporary injunction restraining the club from preventing the nominees of the club from using the facilities of the club.

3. The learned trial judge upon assessing the materials placed before it, came to conclusion that keeping the first respondent's membership under suspension was not in accordance with the bye-laws. The documents placed by the first respondent show that the company is in existence. The oil unit of the company might have been closed, but its other units namely, wind power generation and leasing of the warehouses have not been closed. The company has not become defunct. Just because the oil industry was closed, it cannot be said that the company closed all its business activities. The Executive Committee of the club proceeded on a misconception. The membership was kept under suspension without affording opportunity to the member to show that its company is still functioning. There is violation of principles of natural justice. Prima facie case is thus made out. Balance of convenience also lies in favour of the plaintiff company. The order of suspension causes great hardship in the sense that right of a member of the club has been violated and therefore the plaintiff is entitled to an order of temporary injunction.

4. The learned counsel for the appellant argues that the first respondent was accorded with institution membership on certain terms and conditions. The membership was for a period of twenty years. As long as institution membership is in force, the company or the institution must be functional and in order to show that it is functional and profitably engaged in a business, it must produce annual report certified by a chartered accountant. The first respondent closed down the oil industry. It was brought to the notice of the appellant. The first respondent also owed huge sum of money to the State Bank of Mysuru. The first respondent was called upon to submit documents to show that it has not become defunct. It failed to produce materials before the committee. The first respondent flouted the bye-laws and therefore the first respondent had to be kept under suspension