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2012 Supreme(Del) 2104
IN THE HIGH COURT OF DELHI AT NEW DELHI
SUNIL GAUR, J.
N.C. BAKSHI AND ANR. - Petitioners
versus
UNION OF INDIA & ORS. - Respondents
W.P.(C) No. 6260/2010, CM No.12384/2010 & 435/2012
Decided On : December 06, 2012
Mr. Harish Malhotra, Sr. Advocate with Mr. Tanuj Khurana, Advocate.
Mr. P.K. Mittal, Advocate for respondents No.1 & 2. Mr. Sudhir Nandrajog, Sr. Advocate with Mr. J.S. Bakshi and Mr. A.S. Bakshi, Advocates for respondent No.3.
The main legal point established in the judgment is the importance of post decisional hearing and the principles of Natural Justice in cases involving the alteration of Articles of Association under the Companies Act, 1956.
Headnote:
Companies Act - Alteration of Articles of Association - Section 25(8) - Section 255 and 256 - Summary of the acts and sections referenced and discussed by the court: The court discussed the alteration of Articles of Association of respondent No. 3 under Section 25(8) of the Companies Act, 1956, and the mandate of Sections 255 and 256 of the Companies Act. It considered the plea of delay, laches, and acquiescence raised by the respondents and the implications of the impugned alterations being in contravention of the provisions of the Companies Act, 1956.
Fact of the Case:
The petitioners sought quashing of Approval under Section 25(8) of Companies Act, 1956 for alteration of Articles of Association of respondent No. 3 and a mandamus to grant fair hearing to petitioners. The delay and laches in approaching the court, the alleged non-grant of hearing prior to the approval, and the continuing wrong of the alteration in the Articles of Association were contested.
Finding of the Court:
The court held that the delay and laches would not stand in the way of petitioners to question the altered Articles of Association. It repelled the respondent's plea of delay, laches, and acquiescence. The court directed the second respondent to provide a post decisional hearing to petitioners on their Representation and to pass a speaking order on the same.
Issues: The issues included the delay and laches in approaching the court, the alleged non-grant of hearing prior to the approval, and the continuing wrong of the alteration in the Articles of Association.
Ratio Decidendi: The court ruled that the delay and laches would not prevent the petitioners from questioning the altered Articles of Association. It emphasized the importance of post decisional hearing and the principles of Natural Justice.
Final Decision: The court directed the second respondent to provide a post decisional hearing to petitioners on their Representation and to pass a speaking order on the same. It left the question of the impugned Approval being in contravention of the provisions of the Companies Act, 1956 open to be considered by the second respondent.
1. The petitioners who are two in number, claiming to be members of respondent No. 3 – Cricket Association, seek quashing of Approval under Section 25(8) of Companies Act, 1956 for alteration of Articles of Association of respondent No. 3 granted on 17th November, 2009 (Annexure-N) and a mandamus to first two respondents to grant fair hearing to petitioners and to dispose of their Representation of 16th April, 2009 (Annexure-E Colly) alleging that alteration in the Articles of Association is contrary to provisions of the Companies Act, 1956.
2. Petitioners assert that respondent No. 3 – Association is a company incorporated under the Companies Act, 1956 and was granted a license under Section 25 of the Companies Act, 1956 in the year 1985 and as per the license condition, no alteration can be made in Memorandum of Association or in Articles of Association unless the alteration has been previously submitted to and approved by the Central Government.
3. Though the alterations made in Articles of Association through a special Resolution in the Annual General Meeting of 20th March, 2009, has been accorded Approval vide impugned Communication (Annexure-N) by the Competent Authority, i.e., second respondent but the grievance of petitioners herein is that the impugned Approval has been granted without considering petitioners’ detailed Representation (Annexure-E). To substantiate it, attention of this Court has been drawn to Information of 6th May, 2009 (Annexure-G) obtained under The Right to Information Act, 2005, (hereinafter referred to as „RTI Act?) disclosing no application under Section 25(8) of Companies Act, 1956 had been received from respondent No. 3 till date and another Information of 8th September, 2009 (Annexure-I), obtained under „RTI Act?, disclosing that application under Section 25(8) of Companies Act, 1956 of respondent No. 3 is pending and through Information of 24th November, 2009 (Annexure-M) obtained under „RTI Act? petitioner had learnt about the grant of approval to the alteration made in the Articles of Association by third respondent.
4. While entertaining this writ petition filed in the year 2010, petitioners were called upon to explain the delay and laches in approaching this Court. Though the delay was of ten months or so, but first petitioner had actively participated in the elections of respondent No. 3 – Association in December, 2009 which were held in accordance with altered Articles of Association and the candidate proposed and nominated by first petitioner, had been elected in the elections held in November, 2009 and September, 2010 and so, plea of acquiescence is sought to be raised against petitioners by respondents.
5. Learned senior counsel for petitioners had urged that the delay and laches would not stand in the way of petitioners because Representation of petitioners was still pending which was not considered while granting the impugned approval and because the illegality in alterations made in the Articles of Association is a continuing wrong.
6. Learned senior counsel for petitioners relies upon decisions in „Vaishanava Dass & ors. Vs. Faqir Chand & ors.? AIR 1968 Delhi 6 (V55C3); „Pramod Chopra & ors. Vs. Apparels Export Promotion Council?, ILR (1984) I Delhi 717; „Rahul Mehra & Anr. Vs. Union of India & ors.? 114 (2004) DLT 323 (DB); „C.P. Singhania & ors. Vs. Garware Club House & ors.? 2005 (124) Com.Cases 561 (Bombay) & „Ashok Kumar Vs. State of Bihar & ors.? AIR 2008 SC 2723; order of 3rd April, 1987, passed by learned Sub Judge, Delhi in Suit No. 100/87 tilted as Shri N.C. Bakshi vs.DDCA; order of 1st June, 1987 passed by learned Senior Sub Judge in MCA No.108/87; and order of 15th September, 1987 passed by coordinate Bench of this Court in C.R.No.499 of 1987, in support of the aforesaid stand taken.
7. Learned senior counsel for respondent No.3 relies upon decisions in „DLF Universal Limited Vs. Greater Kailash-II Welfare Association? 127 (2006) DLT 131 (DB); „Oswal Fats an
