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High Court Of Calcutta
SABYASACHI MUKHERJI
CHIRANJAN JADAVJI PADIA - Appellant
Versus
BHUPESH CHANDRA DUTT - Respondent
Suit 203 Of 1978
Decided On : 11/07/1978
FOREIGN EXCHANGE BROKERS - ASSOCIATION - MEMBERSHIP - RULES - INTERPRETATION - VALIDITY - NATURAL JUSTICE - ASSOCIATION'S DECISION TO REJECT APPLICATION FOR ADMISSION OF PARTNER - VALIDITY - JUDICIAL REVIEW.
Fact of the Case:
The plaintiff, a foreign exchange and finance broker, filed a suit against the defendant association of foreign exchange and finance brokers, challenging the association's decision to reject the plaintiff's application for admitting a new partner in the plaintiff's firm. The plaintiff claimed that the decision was mala fide, wrongful, and taken without any reason. The association defended the decision, asserting that it was taken in good faith and in the best interests of the association's members, as the induction of the proposed partner would adversely affect the interests of other brokers.
Finding of the Court:
The court held that the association's decision to reject the plaintiff's application was not mala fide or wrongful. The court found that the association had acted in good faith and in the best interests of its members, as there was evidence that the proposed partner had connections with a firm that had a bad reputation in the Calcutta foreign exchange market. The court also held that the association was not obliged to assign reasons for rejecting the application, as there was no such requirement in the association's rules or in the law.
Issues: 1. Whether the association's decision to reject the plaintiff's application was mala fide or wrongful. 2. Whether the association was obliged to assign reasons for rejecting the application.
Ratio Decidendi: 1. The court held that the association's decision was not mala fide or wrongful, as there was evidence that the proposed partner had connections with a firm that had a bad reputation in the Calcutta foreign exchange market. The court found that the association had acted in good faith and in the best interests of its members. 2. The court held that the association was not obliged to assign reasons for rejecting the application, as there was no such requirement in the association's rules or in the law.
Final Decision: The court dismissed the plaintiff's suit, holding that the association's decision to reject the plaintiff's application was not mala fide or wrongful, and that the association was not obliged to assign reasons for rejecting the application.
( 1 ) THIS suit has been instituted by the plaintiff who carries on business under the name and style of Chiranjan and Co. as the Foreign Exchange and Finance Broker. The plaintiff states that the plaintiff in his said firm name is a member of the Exchange and Bullion Brokers' Association. Calcutta, being the defendant No. 10 herein. There are several defendants in this suit namely, eleven of which defendants Nos. 1, 2, 3, 4, 5, 6, 7, 8, 9, are said to be members of the Association defendant No. 10 Exchange and Bullion Brokers' Association which has its office at No. 23a, Nelaji Subhas Road, Calcutta. Defendant No. 11 is the Foreign Exchange Dealers' Association of India hrivmg its office at No. 4, Netaji Suhhas Road, Calcutta. Originally the defendant No. 3 was sued in his capacity only as the Secretary of the defendant No. 10 Association. By an order made by me during the course of the hearing of this suit on the application of the plaintiff on the 20th of June, 1978 the said defendant No. 3 has been sued as Secretary of the said Association for self and on behalf of the members of the Exchange Brokers' Association. By the aforesaid order referred to hereinbefore I had also granted the plaintiff lea\e to include a prayer for leave under Order 1. Rule 8 of the Civil P. C. In this suit the plaintiff has claimed, inter alia, the declaration that the purported decision of the Executive Committee nf the defendant No. 10 Association rejecting the application of the plaintiff for taking in and admitting one Sri S. K. Chopra as a partner in the plaintiff's said business of Chiranjan and Co. is null and void, illegal and not binding on the plaintiff and should be cancelled and/or set aside. The plaintiff has, further, asked for a mandatory injunction directing the members of the said Association to set aside, recall and withdraw the said decision as communicated by the letter mentioned in the plaint dated 8th of March, 1978. The plaintiff has also claimed a mandatory injunction directing the defendants Nos. 1 to 10 to forthwith accord sanction to enable the plaintiff to take in or admit the said Sri S K. Chopra as a partner of the plaintiff's business of Chiranjan and Co. The plaintiff has also asked for a mandatory injunction directing the defendants Nos. 1 to 10 and each of them, their successors in office to forthwith accord recommendation of Sri S. K. Chopra as the authorised person to act and call on the banks on behalf of the plaintiff's firm Chiranjan and Co. The plaintiff has also sought a perpetual injunction restraining defendants Nos. 1 to 10 and each of them, their successors in office from acting upon the said purported decision of the Executive Committee of the Exchange and Bullion Brokers' Association as
communicated to the plaintiff by the said letter dated 8th of March. 1978. The plaintiff has also sought perpetual injunction restraining the defendants Nos. 1 to 10 from hindering or interferring with the business of the plaintiff In any manner and there are certain other incidental reliefs claimed by the plaintiff. In order to appreciate the claim of the plaintiff it is necessary to refer to certain facts. The defendant No. 10 is an Association of Foreign Exchange and Finance Brokers belonging to Calcutta. In conducting its affairs, the defendant Association and its members are governed by the rules and regulations of the said Association. One of the aims and objects of the said Association is to work as a body for the benefit and protection of its members and to watch as a safeguard the interests of its members both individually and collectively. Rule 5 of the rules of the Association indicates what will be the composition of the Executive Committee. Rule 13 of the rules indicates that all decisions of the Executive Committee shall be taken by majority vote. In case of any equality of votes the Chairman shall have the casting vote in addition to his own vote. Rule 20 is as follows :--"20. A
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