The main legal point established in the judgment is that regulations creating a membership classification must comply with the Exim Policy and should not be unreasonable or violative of constitutional rights.

RAJIV SAHAI ENDLAW, J.

1. This intra-Court appeal impugns the judgment dated 18th January, 2011 allowing W.P.(C) No. 5093/1998 preferred by the respondents no.1 to 3 herein and quashing the “Regulations of Membership” of the appellant to the extent the same were held to be inconsistent with the Exim Policy; the appellant has also been restrained from making any amendments to its Articles of Association creating a classification of exporters into “Member Exporters” and “Registered Exporters”. Notice of this appeal was issued and vide interim order dated 8th April, 2011 the operation of the judgment of the learned Single Judge stayed. A counter affidavit has been filed by the respondents no.1&2/writ petitioners and by the respondent no.4 Union of India. Additional documents as well as additional affidavit have also been filed by the respondents no.1&2/writ petitioners. The counsels have been heard. Written submissions have also been filed and perused.

2. The crux of the controversy is whether the appellant which is a Company incorporated under Section 25 of the Companies Act, 1956 is entitled to have two kinds of memberships as aforesaid. The only difference in the rights of the two kinds of members is that while the “Member Exporters" have a right to elect and to be elected as office bearers of the appellant, the “Registered Exporters” have no such right.

3. The respondent no.1/writ petitioner is a Body/Association of Exporters, though members of the appellant but having neither voting rights nor right to be elected. They are hereinafter called non-voting members. Their grievance in the writ petition was that they were being deprived of occupying the position of office bearers of the appellant or of electing the office bearers of the appellant and which right was confined to only approximately 10% of the members of the appellant, who are herein after called the voting members.

4. The Learned Single Judge allowed the writ petition having the effect of removing such classification of membership and vesting the right of voting and hence of being in management in all the members of the appellant. As per the “Regulations of Membership” of the appellant, struck down by the learned Single Judge, to become a voting member of the appellant, the exporter was required to have exports of the minimum value of `20 lacs for the previous three years. Needless to state that the respondents/writ petitioners are exporters who do not fulfill the said criteria. Their contention was/is that laying down such a criteria to become a voting member creates a small caucus which has appropriated the management of the affairs of the appellant unto itself.

5. The learned Single Judge has allowed the writ petition holding/on the ground:-

A. that Clause 5(a) of the Articles of Association (AOA) of the appellant permits any person who is an exporter of garments whether manufacturer exporter or merchant exporter or otherwise interested in the actual export of garments to become a member of the appellant and thus does not permit classification of members into voting members and non-voting members; B. that appellant owes its existence to the Exim Policy which provides for formation of Export Promotion Council (EPC); appellant is recognized by the Government as the EPC for garments; the Exim Policy also requires all exporters to become members of such EPC and the appellant thus has to abide by the Exim Policy and the Rules & Regulations of the appellant have to be in accordance with the Exim Policy; the said Policy does not envisage two kinds of members, voting and non-voting, of EPC; C. that para 13.7 of the Exim Policy requires an EPC to ensure democratization of its members and democratic elections of its office bearers. Restriction by the appellant of the right of participation in election to 10% only of its members is not democratic; D. Regulations of the appellant creating such classification were thus held ultra vires the Exim Policy, unr