Bombay High Court
Khar Gymkhana And 5 Ors vs Shyam G. Shroff And 28 Ors on 25 August, 2022
Author: R. I. Chagla
Bench: R.I. Chagla
1-IAL-28477-2021.DOC
Digitally signed
by JITENDRA
JITENDRA SHANKAR
SHANKAR NIJASURE
Date:
NIJASURE 2022.08.25
17:32:42 +0530
Jsn
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INTERIM APPLICATION (L) NO.28477 OF 2021
IN
SUIT (L) NO.28463 OF 2021
Khar Gymkhana & Ors. ...Applicants /
Plaintiffs
V/s.
Shyam G. Shroff & Ors. ...Defendants
Mr. Mukesh Vashi, Senior Counsel, Mr. Vishal Kanade, Mr. Virendra
Periera, Mr. Jimish Shah, Abraham Fernandes i/b. M/s.
Divya Shah Associates for the Applicants / Plaintiffs.
Mr. Vibhav Krishna with Mr. Anmol B., Tahir Prande, i/b. Juris
Consillis for Defendant No.1.
Mr. Navroz Seervai, Senior Advocate with Mr. Malcolm Siganporia,
Mr. Hormuz Mehta and Mr. Ahsan Allana i/b. M/s. J. Sagar
Associates for the Defendant Nos.2 to 11 and 13 to 29.
Rohit Gupta, i/b. Glenn A.F. Mendonca for Defendant No.12.
Mr. Karl Tamboly with Declan Fernandez, i/b. Purazar Fouzdar for
Respondents / Defendant Nos.30 to 32.
CORAM: R.I. CHAGLA, J.
ORDER RESERVED ON 7th JUNE, 2022.
ORDER PRONOUNCED ON 25TH AUGUST, 2022
O R A L O R D E R (Per R.I. Chagla, J.)
1. The present Interim Application was initially filed to inter alia restrain the Defendant Nos.2 to 29 and / or future 1/70 1-IAL-28477-2021.DOC Managing Committee members by an order of temporary injunction from acting in furtherance to resolutions proposed by Managing Committee for consideration under item No.6 of notice / agenda dated 16th November, 2021 and from holding second Annual General Meeting ("the said meeting") on 19 th December, 2021. The Interim Application was moved for ad-interim relief. By an ad-interim order dated 17th December, 2021, this Court was of the view that the Interim Application would require to be heard finally and at the ad-interim stage it was not possible to grant any ad-interim relief by suspending the said meeting requisitioned by the 180 members under the Rules of the Khar Gymkhana. This Court had provided safeguards in paragraph 17 of the ad-interim order dated 17th December, 2021 upon considering that there is a challenge to the proposed resolution for removal of Co-Trustees and appointment of new Co-Trustees at the meeting requisitioned by 180 members. Paragraph 17 of the said order dated 17th December, 2021 reads thus:-
17. However, in view of the challenge to the proposed resolution for removal of the Co-Trustees and appointment of new Co-Trustees at the meeting requisitioned by 180 members, the following order is passed:-2/70
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(i) The Annual General Meeting of the members of the Applicant / Plaintiff No.1 - Khar Gymkhana shall be held on 19th December, 2021 at 10.30 a.m.
(ii) In the event that the members present and entitled to vote at the Annual General Meeting, vote for removal of all Co-Trustees and appointment of new Co-Trustees in their place, the new Co-Trustees appointed shall restrict themselves to the following:-
(a) Meeting with the members of the Applicant / Plaintiff No.1 - Khar Gymkhana, who have any grievances, in routine course;
(b) The new Co-Trustees can respond to the requisitions or demand from authorities that may be addressed to the new Co-Trustees.
(c) The new Co-Trustees are at liberty to approach this Court in case there is a requirement for payments to be made.
(iii) The Interim Application shall be placed on 24th January, 2022 at 2.30 p.m. for hearing.
(iv) The Defendants shall file their Affidavit in Reply within a period of three weeks i.e. on or before 7th January, 2022. The Applicants / Plaintiffs are at liberty to file Affidavit in Rejoinder in the Interim Application on or before 18th January, 2022.
2. The Interim Application was thereafter placed for hearing.
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3. The said meeting of the members of the Applicant / Plaintiff No.2 was held on 19th December, 2021 and the erstwhile Co-Trustees were removed and new Co-Trustees were appointed in there place. Accordingly, the Applicant / Plaintiff sought amended prayers in the Interim Application. These amended prayers were allowed to be carried out and which amended prayers reads thus:-
(j1) pending hearing and final disposal of the present Suit, the effect and implementation of the purported resolution with respect to removal of all Co-Trustees passed in said Meeting dated 19th December, 2021 be stayed;
(j2) pending hearing and final disposal of the present Suit, the effect and implementation of the purported resolution with respect to an appointment of Defendants Nos.3, 24 and 30 to 32 passed in the said meeting dated 19th December, 2021 be stayed;
(j3) pending the hearing and final disposal of the present Suit, the Defendant Nos.2 to 11 and 13 to 32, their servants, agents or any person acting on their behalf or through them, be restrained from interfering with the management of the Plaintiff No.1 Trust through the Plaintiff Nos.3, 4, 5 6 and Defendant No.12.
(j4) pending hearing and final disposal of the present Suit, the effect and implementation of the purported resolutions passed in said Meeting dated 19th December, 2021 with respect to the extent of amendment of Rules 46(a) and 46(b), be stayed;4/70
1-IAL-28477-2021.DOC (j5) pending hearing and final disposal of the present Suit, the effect and implementation of the purported resolutions in respect of the proposed / suggested mechanism for appointment of New Trustees and their tenure passed in the said Meeting dated 19th December, 2021, be stayed;
4. The relief now pressed by the Applicants / Plaintiffs are the above amended prayers. The erstwhile Co-Trustees having been removed in the said meeting dated 19th December, 2021, sought a stay of the resolution passed at the said meeting by which they had been removed and further stay of the resolution appointing Defendant No.3 and 24 and 30 to 32 as new Co- Trustees passed at the said meeting dated 19th December, 2021.
A brief background of facts is necessary.
5. The Plaintiff No.1 is a Gymkhana and also a private Trust. The Plaintiff Nos.2 to 6 were erstwhile Trustees of Plaintiff No.1 and were the Trustees on the date of filing of the captioned Suit. The Plaintiff Nos.5 and 6 were appointed Trustees of Plaintiff No.1 after issuance of Requisition by the members of Gymkhana. The Defendant No.12 was also appointed Trustee of the Gymkhana during the pendency of these proceedings and prior to the said 5/70 1-IAL-28477-2021.DOC meeting held on 19th December, 2021. Defendant No.1 is the Ex- President of Plaintiff No.1 and Defendant No.2 is the current President of Plaintiff No.1. Defendant Nos. 4 to 23 and 25 to 29 are the elected / Ex-Officio Managing Committee members of Plaintiff No.1. Defendant Nos.3, 24 and 30 to 32 are the newly appointed Trustees of Plaintiff No.1 who were appointed at the said meeting held on 19th December, 2021.
6. By Indenture of Lease dated 21st June, 1934 made by Secretary of State for India in Council of the one part and the Khar Gymkhana, (other part), the Gymkhana was demised 10350 square yards of land in Khar scheme for a term of 7 years. On 4 th October, 1934 registered Trust Deed was executed recording the names of Vinayak Ganpatrao Rao, Madhavlal Makanji Bhat, Gajanan Sakaharam Gupte, Popatlal Govindlal Shah and Shavaksha Hormusji Mehta as the Trustees. It was further recorded that sum of Rs.500/- (Khar Gymkhana Fund) was raised from the residents of Khar for erecting a pavilion on a portion of the said demised premises as well as for preparing a Cricket pitch, Tennis Courts, Badminton Courts and a library. Certain clause of the Trust 6/70 1-IAL-28477-2021.DOC Deed are relevant which are Clauses 4, 5 and 7 and which will later adverted to.
7. In year 1975, the Constitution and Rules of the Khar Gymkhana were revised Rule 39 referred to the first Trustees. Rule 40 and 41 (f) provided that each Trustee shall hold office for life subject to Rule 41 which provides that a Trustee shall be deemed to have vacated his office and shall cease to act as a Trustee, if he.... in General Meeting of the Members of the Gymkhana by a majority of three-fourth of the members present and entitled to vote, resolve to remove him. Rule 43 provided for vacancy of Trustees Rules 45 to 46 provided for Trust Funds / Reserve Funds and in that context it is necessary to note Rule 3(b) which provided for collection and receiving funds for achieving the objects and the purpose of the Gymkhana in such manner as the Managing Committee may deem fit. Rules 50 to 74 provided for general meetings. Rule 62 which is relevant for the present case recorded that a special general body meeting may be convened at any time on the orders of the President or on a resolution of the Managing Committee or on a Requisition signed by 100 members eligible to 7/70 1-IAL-28477-2021.DOC vote. Rule 124 provided for Revision of Rules, which allows for Rules to be repealed, altered, added or amended.
8. It is necessary to note that for the year 2019-2020, the AGM which is usually held in September 2020 could not be held due to the pandemic and the same had to be deferred. Similarly, the Special General Meeting scheduled to be held on 15 th March, 2020 could not take place.
9. On 22nd July, 2021, an Agenda / Notice was issued for holding the 88th AGM of the Khar Gymkhana for the year 2019- 2020 on 15th August, 2021. The Agenda include items to inter alia discuss and approve amendments to Rules 40, 41(f), 46, 91(i) and 91(ii).
10. There were certain dispute with regard to items Nos.4, 6 and 7 of the said Agenda / Notice for holding the 88th Annual General Meeting of Khar Gymkhana and a letter dated 9th August, 2021 was addressed by the Trustees to the Managing Committee to drop these items on the ground that they were unconstitutional, illegal and void. Item 4 was for election of 8/70 1-IAL-28477-2021.DOC Trustee, if not nominated by the Trustees under Rule 82. Item 6 was to consider any resolutions of the Managing Committee and item no.7 was to consider any proposal of change of rules in respect of which a Notice has been given by a member before 30 th June of the relevant calendar year.
11. On 15th August, 2021, the Annual General Meeting was held and attended by 195 members of the Khar Gymkhana which included Plaintiff Nos. 2 to 6. Plaintiff Nos.3 to 5 selectively objected to items forming part of the agenda. The proposed resolutions were passed.
12. There was correspondence addressed by Plaintiff No.3 which was purported to be on behalf of the Trustees with regard to manner in which Annual General Meeting was conducted and the resolutions passed. Correspondence was exchanged in this context in September, 2021. In view thereof dissatisfaction was shown by the certain members as to the functioning of the erstwhile Trustees.
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13. On 1st November, 2021, 180 members of the Khar Gymkhana issued Requisition to the erstwhile Trustees of Khar Gymkhana raising concerns over the manner in which the erstwhile Trustees have been conducting their affairs. The Requisition was received by the office of the erstwhile Trustees of the Khar Gymkhana on 11th November, 2021.
14. This was responded to by Plaintiff No.3 addressing a letter dated 2nd November, 2020 which is stated to be on behalf of the erstwhile Trustees addressing an appeal to the members, alleging wrongdoings of the Managing Committee as well as raising issues qua Income Tax Demand of over Rs.90 Crores, use of capital funds and blockage by office bearers in renewal of lease.
15. Three of the members of the Khar Gymkhana who were party to the Requisition issued to the office of the erstwhile Trustees retracted their consent / signatures to the Requisition dated 1st November, 2021.
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16. On 16th November, 2021, notice of 89th Annual General Meeting to be held on 19 th December, 2021 for the year 2020 - 2021 was circulated. What is relevant to note is the Agenda Item No.6 which mentioned "to consider the matter requisitioned by 180 members pursuant their letter dated 1 st November, 2021 namely, the removal of all Co-Trustees and consequently appointment of new Co-Trustees in their place."
17. On 25th November, 2021, the Khar Gymkhana's 89th annual report which enclosed the notice of the 89th Annual General Meeting was issued. On the same day, a letter was written by one of the erstwhile Trustees, namely Bomi Mehta, to the Board of Trustees, to be treated as his resignation. This was according to the Defendants disclosed only in the Affidavit in Rejoinder of the Plaintiff dated 20th January, 2022.
18. Similarly, on 29th November, 2021, a letter was addressed by one of the erstwhile Trustees, namely Suresh Prabhu, to the Board of Trustees, to be treated as his resignation. The Defendants have likewise claimed that this letter 11/70 1-IAL-28477-2021.DOC was only produced by the Plaintiffs in their Affidavit in Rejoinder dated 20th January, 2022.
19. Plaintiff No.3 addressed a letter dated 1 st December, 2022 to the Plaintiff No.5 informing him that at a meeting held on that date, Plaintiff No.5 was appointed as a Trustee. On the next date, i.e. 2nd December, 2021, Plaintiff No.3 addressed letter to Plaintiff No.6 informing him that at a meeting held on 2nd December, 2021, Plaintiff No.6 was appointed as a Trustee. The Defendants have again contended that these letters were only produced by the Plaintiffs in their Affidavit in Rejoinder dated 20th January, 2022. However, letters dated 3rd December, 2021 were addressed by the office of the erstwhile Trustees to Defendant Nos.1 on 3rd December, 2021 informing him about the appointment of Plaintiff Nos.5 and 6 as Trustees.
20. The Defendants had in a letter dated 6 th December, 2021, highlighted the fact that the Requisition having been sent well in advance, it was understood that the erstwhile Trustees Bomi Mehta and Suresh Prabhu had resigned as Trustees. Copies of resignation letters were asked to be shared with the 12/70 1-IAL-28477-2021.DOC Managing Committee. Further, the copies of Due Diligence Reports of Defendant Nos.5 and 6 were also sought.
21. On 6th December, 2021, the present suit was filed and the present Interim Application (L) No.28477 of 2021 was taken out therein.
22. One day after the Suit was filed, the Plaintiff No.2 tendered his resignation as Trustee of Khar Gymkhana. The letter dated 7th December, 2021 is stated by the Defendants to have only been provided by the Plaintiffs in their Affidavit in Rejoinder dated 20th January, 2022.
23. An Affidavit in Reply was filed by Defendant No.2 to 29, referred to as limited Reply to the Interim Application, on 15th December, 2021. Plaintiff No.3 addressed a letter to Defendant No.12 informing him that at the meeting of the Trustees of Khar Gymkhana held on 14th December, 2021, Defendant No.12 had been elected as a Trustee of the Khar Gymkhana under the provisions of the Trust Deed. The Defendants 13/70 1-IAL-28477-2021.DOC have again contended that this letter was only provided by the Plaintiffs in their Affidavit in Rejoinder dated 20th January, 2022.
24. On 17th December, 2021, the ad-interim order came to be passed by this Court which has been referred to above.
25. It was only then that the office of the erstwhile Trustees vide letter dated 18th December, 2021 informed the Managing Committee that Plaintiff No.2 was replaced by Defendant No.12 as Trustee.
26. On 19th December, 2021, the said meeting of the Khar Gymkhana was held at which meeting Plaintiff Nos.3 to 6 and Defendant No.12 were removed as Trustees and five new Trustees were appointed.
27. An Interim Application (L) No.30336 of 2021 was filed by the Plaintiffs inter alia seeking an order and direction that Defendant Nos.2 to 11 and 13 to 29 and the Respondents who are the new Co-Trustees be sent to Civil Prison for contempt of order dated 12th December, 2021. On 23rd 14/70 1-IAL-28477-2021.DOC December, 2021, this Court allowed the Respondents - new Co- Trustees of the Khar Gymkhana to operate the Gymkhana's SBI Bank account and restricted the operation for making payment to the MCGM. (on the basis of the Notice dated 1st September, 2021)
28. The Plaintiffs have filed an Appeal being Appeal No.14 of 2022 before the Appellate Bench of this Court challenging the said orders dated 17th December, 2021 and 23rd December, 2021. The Appeal was disposed of by an order dated 5 th January, 2022 which had requested the Single Judge to finally hear the Interim Application and recorded that there was no need to interfere with the said orders.
29. Mr. Vashi learned Senior Counsel appearing for the Plaintiffs has submitted that the alleged removal of all Co-Trustees and consequential appointment of new Co- Trustees is illegal and bad in law. The Defendants on the basis of the Requisition letter dated 1st November, 2021 did not have the power to remove Plaintiff Nos.5 and 6 and Defendant No.12 as Plaintiff Nos.5 and 6 and Defendant No.12 were newly appointed 15/70 1-IAL-28477-2021.DOC as Trustees subsequent to the Requisition letter dated 1st November, 2021.
30. Mr. Vashi has submitted that the Trustees and Managing Committee have been in existence since 1934. At no point of time either the Trustees or the Managing Committee have the right to overlap or act on behalf of the other. The Trust Deeds and Rules and the Constitution provided for separate responsibilities of Trustees and Managing Committee. However, the Managing Committee through their acts in the said meeting dated 19th December, 2021 have sought to supersede the Trustees and thereby acted in a manner contrary to the intentions of The Trust Deed.
31. Mr. Vashi has drawn reference to the Clauses 4 and 7 of the Trust Deed. He has submitted that Clause 4, essentially deals with the term or tenure of the Trustees. Thereafter, Clause 5 sets out the duties of the Trustees and Clause 6 deals with a provision of indemnity for the acts of Trustees performed under Clause 5. The Clauses of Trust Deeds, are sequential in nature, viz. term of Trustees, their duties, and 16/70 1-IAL-28477-2021.DOC indemnity from all expenses and liabilities in the operation of the Trust Deed. Clause 7 is inter linked with Clause 4, and provides for the manner in which position of the Trustee is to be filled after his term expires in the contingencies provided in Clause 4.
32. Mr. Vashi has drawn comparison between Clauses 4 and 7 of the Trust Deed. He has submitted that Clause 7 provides that the seat of the Trustee that lies vacant can be filled by the Continuing or Surviving Trustee. Thus, the Trust Deed itself contemplates that when a Trustee seat falls vacant, it shall be filled by Continuing or Surviving Trustees. It is provided, however, that the number of Trustees shall not at any time be less than three or more than five. There is a further proviso that after the number of Surviving Trustees has dwindled down to two or less and the Surviving Trustee or Trustees have failed to fill in the vacancy or vacancies within a period of three months from the date of the last vacancy, such vacancy or vacancies as shall being the total number of Trustees to a minimum of three, shall be filled up by the Khar Gymkhana by a resolution passed at a General Meeting of the Gymkhana.
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33. Mr. Vashi has accordingly submitted that the Trust Deed itself provides the manner in which the Trustees can be appointed in a General Meeting. When the Trust Deed itself provides for the term or tenure of a Trustee and the circumstances in which the appointment can be made in a General Meeting, there is no occasion to refer to Rule 62 of the Khar Gymkhana Constitution. When a specific provision in engrafted in the Trust Deed by the settlor, for appointment of Trustee, it cannot be that a general provision such as Rule 62 can be invoked for removal of Trustees, especially when such general provision is not found in the Settlor's Trust Deed.
34. Mr. Vashi has submitted that on a plain and general reading, Clauses 4 and 7 are required to be read together. They cannot read in isolation. It is submitted that the Trust Deed has not contemplated a situation where, the General Body can remove all the 5 Trustees, since that will violate the salutary intention of the Trust and the Gymkhana through the Trustees and Managing Committee members respectively, being two independent bodies, such that one ought not to control the other.
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35. Mr. Vashi has submitted that the right to appoint the new Co-Trustees can only arise in the event that the number of Trustees fall below three and if the surviving Trustee/s fail to fill the vacancy within a period of three months. Since Plaintiff Nos.5 and 6 and Defendant No.12 were appointed subsequent to the Requisition letter dated 1st November, 2021, the purported Resolution and Requisition letter does not provide for their removal. The number of Trustees of Plaintiff No.1 never dwindled down to two. Hence, the Defendants or the members of the Khar Gymkhana do not have any power under the Trust Deed or the Trust Act to appoint new Trustees being Defendant Nos.3, 24 and 30 to 32. The Requisitionists themselves have in the Requisition letter dated 1st November, 2021 referred to to Clause Nos. 4 and 7 of the Trust Deed and have called upon for resignation of the Trustees and have further interpreted the clause by stating that the members of the Khar Gymkhana have the right to appoint a Trustee only in the event that the number of Trustees fall below three. Thus, the Requisitionists themselves admit that Clauses 4 and 7 operate in consonance and operation of Clause 4 automatically triggers operation of Clause 7. 19/70
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36. Mr. Vashi has thereafter submitted that in the event all five Trustees cease to exist or are removed, then Section 74 of the Trust Act, 1882 ("the said Act") comes into operation and power to appoint Trustees is vested with Principal Civil Court and not the beneficiaries by themselves. He has submitted that item 6 of the Agenda which was voted on at the said meeting held on 19th December, 2021 did not contemplate removal of Plaintiff Nos.5, 6 and Defendant No.12 as they were appointed subsequent thereto. It is an admitted fact that there is no resolution on record with respect to removal of all Co-Trustees or consequent appointment of new Co-Trustees. Item 6 of the Agenda is in pursuance of the Requisition Letter. It is also an admitted position that a fresh resolution was proposed and seconded for the alleged removal and appointment of Trustees. Thus, item 6 of Agenda was not voted on.
37. Mr. Vashi has thereafter submitted that the said meeting dated 19th December, 2021 is a meeting held pursuant to requisition of more than 100 members. It has been contended that the said meeting was held as Annual General Meeting, whereas the meeting pursuant to requisition of more than 20/70 1-IAL-28477-2021.DOC 100 members ought to be a Special General Body Meeting. Thus, the said meeting dated 19th December, 2021 is contrary to Rule 62, 63 and 65 of the Constitution and Rules of Plaintiff No.1.
38. Mr. Vashi has submitted that in the event the Rules of a Club are violated then the Court has the power to interfere. The Defendants in the present case are in violation of Clause 4 and Clause 7 of the Trust Deed, Rule 46 read with Rule 30 read with Rule 6 to 13D, Rule 62, Rule 63, Rule 65, Rule 73 and Rule 74 of the Constitution and Rules and Section 71 to 74 of the said Act.
39. Mr. Vashi has submitted that once the language of the Trust Deed is clear, even a Court cannot pass an order contrary to the language of the Trust Deed. He has in this context relied upon the decision of the Supreme Court in Official Trustee, West Bengal and Ors. Vs. Sachindra Nath Chatterjee and Anr.1 at Paragraphs 3, 4, 16, 27 and 25. He has taken this Court through the provisions of the said Act and in particular Sections 31 to 45 thereof which provides that the Trust property vests in the 1 AIR 1969 SC 823.
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1-IAL-28477-2021.DOC Trustees and management of Trust is to be carried out by the Trustees, whilst the rights and liabilities of the beneficiaries are set out in Chapter VI of the said Act. Section 59 does not permit the beneficiaries to directly remove Trustees or deal with the property of the Trust. Further, Chapter VII of the said Act provides for vacating the office of the Trustees. On perusal of Sections 70, 71
(e), 73 and 74, it is clear that the beneficiaries have to apply by a Petition to the Principal Civil Court of Original Jurisdiction for appointment of Trustees or a New Trustee. The Defendants and members in the present case at the said meeting have acted in a manner squarely contrary to the said Act.
40. Mr Vashi has submitted that the Requisition letter dated 1st November, 2021 addressed by alleged 180 members to the Plaintiff Nos.1 to 4, Mr. Suresh Prabhu and Mr. Bomi Mehta raised alleged serious concerns regarding the functioning of the office of the Trustees of Khar Gymkhana being
(i) failure of Trustees to renew lease of land, (ii) Receipt of notice from Income Tax Department for an amount of more than Rs.90 Crores, (iii) Concealment of material information from members and (iv) Ongoing actions of Plaintiff No.3 and lack of due diligence 22/70 1-IAL-28477-2021.DOC while appointing Trustees. These allegations have been sufficiently dealt with by the letter dated 2nd November, 2021. The grievance in the Requisition Letter dated 1st November, 2021 was against the then Trustees which includes Bomi Mehta and Suresh Prabhu and Plaintiff No.2 who resigned before the said meeting. The Requisition Letter provides that the then Trustees should confirm their willingness to tender their resignation and only on their failure to tender resignation should the Managing Committee convene a General Meeting for their removal. It is submitted that upon the resignation of Mr. Bomi Mehta and Mr. Suresh Prabhu and Mr. Ashok Gowarikar, the Requisition Letter was complied with. The Plaintiff Nos.5, 6 and Defendant No.12 were thereafter appointed as Trustees before the said meeting and accordingly as on 1st November, 2021 i.e. the date of the Requisition Letter and as on 16th November, 2021, i.e. the date of Agenda, Plaintiff Nos.5, 6 and Defendant No.12 were not holding the post of Trustees. The argument that the Requisition Letter was addressed to the office of the Trustees and it is independent of the individual Trustees is incorrect and against the provisions of the Trust Deed and the said Act.
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41. The Requisitionists themselves have referred to Clauses 4 and 7 of the Trust Deed and called upon for resignation of the Trustees. Thus admitting that these Clauses operate in consonance and operation of Clause 4 automatically triggers operation of Clause 7. He has submitted that the grievance raised in the said Requisition Letter is in respect of the then Trustees and not the office of the Trustees and the said argument is an afterthought as it is not pleaded by the said Defendants.
42. Mr. Vashi has submitted that the Managing Committee under the guise of the Requisitionists have sought to have their own set of Trustees being Defendant Nos.3, 24 and 30 to 32 appointed and thereby seeking to control the affairs of Plaintiff No.1 and ensure that their own individuals self perpetuate. The names of the new Trustees were never proposed to be appointed as Trustees in the said meeting and their appointment was carried out by means of a chit. The Agenda of the said meeting did not provide for appointment of new Trustees. It is pertinent to note that Defendant Nos.3 and 24 are members of the Managing Committee.
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43. Mr. Vashi has thereafter made submission on the said meeting dated 19th December, 2021 being a Special General Body Meeting and not an Annual General Meeting, as alleged by Defendants. He has referred to Rule 62 which provides for Special General Body Meeting, which as the present case can be convened by a Requisition signed by 100 members eligible to vote and the same will be deposited with Hon. General Secretaries. Rule 63 provides that on receipt of Requisition under Rule 62, the Managing Committee shall convene a Special General Body Meeting within 21 days from the date of Requisition being deposited with Hon. General Secretaries. The Defendants themselves have admitted that the said meeting held on 19 th December, 2021 is as per Rule 62(i) and hence is a General Body Meeting convened by Requisition signed by 100 members eligible to vote.
44. Mr. Vashi has submitted that in view of the Requisition Letter having been deposited on 11 th November, 2021 which is evidenced by acknowledgment on the front page of the letter, the Managing Committee or the Requisitionists ought to have scheduled and held the Special General Body Meeting on or 25/70 1-IAL-28477-2021.DOC before 29th November, 2021. However, the said meeting was held on 19th December, 2021. Rule 65 provides that at any Special General Body Meeting or any adjournment thereof no member shall be at liberty to discuss any subject other than that for which it was called. The Agenda for the said meeting clearly specifies 10 items of business to be transacted in the said meeting of which one of the items is the said meeting pursuant to the Requisition Letter. The said meeting requisitioned by the alleged 180 members which is a Special General Body Meeting has been conducted contrary to the provisions of Rule 62, 63 and 65 of the said Rules. The said meeting cannot be construed as an AGM as contended by the Defendants. The Defendants though themselves have admitted that the said meeting was called under Rule 62 and thus was a Special General Body Meeting have belatedly sought to call the said meeting an Annual General Meeting.
45. Mr. Vashi has thereafter referred to the one of the Resolutions proposed by the Managing Committee at the said meeting for consideration under item No.6 of the Agenda and which Resolution is in furtherance of the Requisition received from over 100 members of the Gymkhana eligible to vote by way 26/70 1-IAL-28477-2021.DOC of Requisition Letter dated 1st November, 2021 in accordance with Rule 63, 64, 41 and 43 and other applicable provision of the Gymkhana's Constitution read together with Article 4, 7 and other applicable provisions of the Trust Deed for which the General Meeting of the members of the Gymkhana is convened to consider the removal of all Co-Trustees who have been named and which include Bomi Mehta and Suresh Prabhu and Ashok Gowarikar, the erstwhile Trustees who had resigned prior to the said meeting held on 19th December, 2021. At the said meeting, the resolution was passed and in view thereof at the highest, Plaintiff Nos.3 and 4 could have been removed. In any case, Plaintiff Nos.5 and 6 and Defendant No.12 are not Trustees against whom the Requisition was addressed nor are they named in the Resolution passed, thereby it is submitted that Plaintiff Nos.5 and 6 and Defendant No.12 have not been removed as Trustees and hence the number of Trustees at any point of time did not fall below three. Accordingly, appointment of Defendant Nos.3 and 24 and 30 to 32 is non-est and bad in law and contrary to the Trust Deed. The Resolution passed at the said meeting is also not in terms of Rules 61 to 65 of the said Rules.
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46. Mr. Vashi has made submissions with respect to the conducting of the said meeting held on 19 th December, 2021 which he has submitted has been conducted in a manner which is completely illegal and prejudicial to the Plaintiffs and Defendant No.12. There was no decorum maintained by the said Defendants during the said meeting. Defendant Nos.2 and 5 sought to put the purported Resolution to vote in a manner which was completely illegal. The members present were not aware of resolution being put to vote. Defendant No.2 at some instances sought votes of members who were in favour of the resolution and at some instances sought votes of members who were against the resolution. A request for voting through ballot was rejected and the said Defendants resorted to put the purported resolutions to vote by show of hands and with a view to misguide the members, the said Defendants deliberately failed to disclose the purported resolutions. The manner of voting was also illegal and inconclusive and it was observed that some members have raised both their hands. The said Defendants did not count the number of hands raised and claimed the resolution as passed. The count of votes of 500 plus members was completed in less than 30 seconds and the Resolution was claimed to have been passed. To further propound 28/70 1-IAL-28477-2021.DOC the illegalities, the Defendants then sought to appoint alleged new Trustees via a chit. He has then drawn comparison with the Requisitioned Meeting held on 14th April, 2002, which the Defendants themselves have relied upon. At that meeting it was discerned how many members voted against the resolution, how many votes were invalid and how many abstained from voting. The minutes of the said meeting fails to disclose any such particulars. Thus the said meeting was held in a manner prejudicial to the Plaintiffs and Defendant No.12.
47. Mr. Vashi has referred to the minutes of the meeting dated 19th December, 2021 to submit that the said minutes have failed to show any resolution in respect of the alleged removal of Trustees. Thus, no resolution was placed on record. Mr. Vashi has submitted that assuming without admitting that it was an Agenda item which would be voted on then there ought not to have been a resolution proposed and seconded by the members present in the said meeting as the Agenda item No.6 was already proposed pursuant to the said Requisition Letter. Thus, the Defendants' argument that it was the Agenda item which was 29/70 1-IAL-28477-2021.DOC voted on and / or the Agenda was a resolution is in itself is contrary to the record.
48. Mr. Vashi has interpreted the words in Clause 4 of the Trust Deed which provides for a Trustee to be removed from office by a Resolution in a General Body Meeting by 3/4th majority of votes. He has submitted that the words in Clause 4 cannot be interpreted as a majority of the 3/4th of members present and entitled to vote. He has drawn reference to Rule 41(f) of the Rules of Khar Gymkhana which provides a Trustee shall be deemed to have vacated this office and shall cease to act as a Trustee, if in a general meeting of the members of the Gymkhana by a majority of 3/4th of the members present and entitled to vote, resolve to remove him. Rule 41(f) of the said Rules provides that a Trustee can be removed by a General Body Resolution passed by 3/4th members present and entitled to vote. Rule 41(f) is inherently contrary to Clause 4 of the Trust Deed. Clause 4 of the Trust Deed provides that a Trustee can be removed from office by a resolution passed by the Khar Gymkhana at a General Meeting of the Gymkhana by 3/4th majority of votes. He has submitted that in order to remove a Trustee, a Resolution ought to be passed by 30/70 1-IAL-28477-2021.DOC 3/4th majority of votes of members of the Khar Gymkhana i.e. 8,013 members and not 3/4th majority of members present and entitled to vote. He has then drawn reference to Rule 73(iii) and Rule 74 (iii) of the said Rules which is provided for the definition of the expression "entitled to vote and attend at the Annual or Special General Meeting". It provides that the expression shall include Patrons, Life Members and Ordinary Members who have completed a year of their membership and yet not in any arrears. Thus it is explicitly provided that majority of 3/4th members present and entitled to vote refers to every member who has completed the above provided criteria and not just majority 3/4th of the members present at the meeting.
49. Mr. Vashi has submitted that on an average 285 members have attended an Annual General Meeting of Plaintiff No.1 in the past 13 years. Moreover, the said 285 can be measured at 3% of the total number of members of Plaintiff No.1. In 1934, the total number of members of Plaintiff No.1 were 97 members. Thus applying the above percentage (3%) to the aforementioned 97 members, three members could have been present and entitled to vote in an Annual General Meeting and had 31/70 1-IAL-28477-2021.DOC power to remove 5 Trustees. This is contrary to the intention of the Settler.
50. Mr. Vashi has submitted that the Resolution proposed and passed in the meetings dated 15th August, 2021 and 19th December, 2021 is for illegally withholding funds of Plaintiff No.1 from the Trustees. At the meeting held on 15th August, 2021, the Defendants illegally sought to amend Rule 46(a) and 46(b) in a manner that only 50% of Entrance Fees received from members will be deposited in the Reserve Fund as against the prior Rule 46 which provided all entry fees received from members and 70% subscription fees received from Patrons and Life Members of Plaintiff No.1 are to be deposited in the Reserve Fund. As per the amendment proposed, balance 50% was to be deposited in a General Sports Fund. Rule 46(b) was sought to be amended in a manner that 30% of Subscriptions will be deposited in the General Sports Funds. Further, at the said meeting dated 19th December, 2021, the Defendants proposed and passed a Resolution vide which Rule 46 is amended to allow the Defendants to allocate 100% entrance fees to the General Sports Funds for the period 1st April, 2020 to 30th September, 2021. It was also 32/70 1-IAL-28477-2021.DOC proposed that 100% of subscriptions be allocated to the General Sports Funds in the aforementioned period. The Defendants have illegally withheld 100% entrance fees to be received from New Members amounting to a sum of Rs.4,26,00,000/- as donation towards the operational funds of Khar Gymkhana. The Defendants have thereby sought to introduce new category of members being donor members. The Trust Deed clearly provides that Trust funds should vest with the Trustees and all Membership fees to be deposited in the Trust Fund. The Defendants have thereby sought to divert these funds into operational funds as they have run the Plaintiff No.1 into losses.
51. Mr. Vashi has submitted that the Defendants have illegally introduced and purportedly passed a Resolution to provide for appointment of Trustees through members which is contrary to the Trust Deed. The Resolution is patently bad in law as it is squarely against Clauses 4 and 7 of the Trust Deed as well as provisions of the Indian Trust Act. The Defendants have by the purported Resolution sought to amend the Trust Deed by setting a bar on the tenure of the Trustees which as per the Trust Deed is for life. This is contrary to Clause 7 of the 33/70 1-IAL-28477-2021.DOC Trust Deed which allows the General Body to appoint a Trustee only in the event that the number of Trustees falls below three and the surviving Trustees failed to fill the vacancies within a period of three months from the last vacancy.
52. Mr. Vashi has relied upon decision of the Supreme Court in T.P. Daver Vs. Lodge Victoria No.363 S.C. Belgaum & Ors. 2 in support of his submission that a Civil Court can interfere when the Association acts without good faith or in contravention of natural justice. Mr. Vashi in support of his submission that once a Trust is created with certain objectives, no one has power to delete any of the original objects has relied upon Sakthi Charities Vs. C.I.T.3. Mr. Vashi has also submitted that it is difficult to amend the Trust Deed, since by its inherent nature, it is irrevocable. Where there is no mention about the power to amend, the amendment cannot be done and carried out in the Trust Deed. The original intent of the Settler cannot be done away with for want of power to do so under the Trust Deed. In support of this submission, he has relied upon the decision of the Supreme Court in the case of 2 (1964) 1 SCR 1: AIR 1963 SC 1144.
3 (1984) 149 ITR 624.
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1-IAL-28477-2021.DOC Commissioner of Income Tax Vs. Palghat Shadi Mahal Trust4 Mr. Vashi has also relied upon Sri Agasthyar Trust, Madras Vs. Commissioner of Income Tax5 which holds that if there is no power given under the Trust Deed to amend, alter, vary the trust, neither the Trustees nor the founders could bring about change in the objects of the Trust. In this context he has also relied upon the decision of the Supreme Court in CIT, Kanpur, Vs. Kamla Town Trust6. The Supreme Court in this decision has held that amendment to a Trust could be done by approaching a Civil Court under Section 26 of the Specific Relief Act in case of fraud or mutual mistake. Amendment to Trust Deed should be done in a manner to reflect the intention of the Settlor.
53. Mr. Vashi has accordingly submitted that in the present case, the Defendants have acted contrary to the Trust Deed and by seeking to amend the Rules which are not in conformity with the provisions of the Trust Deed. He has submitted that in the present case, the Defendants by removing the erstwhile Trustees and thereby appointing new Co-Trustees have acted 4 (2002) 9 SCC 685.
5 (1998) 5 SCC 588.
6 (1996) SCC (7) 349.
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1-IAL-28477-2021.DOC contrary to Clause 4 read with Clause 7 of the Trust Deed and such impugned acts are required to be set aside and the erstwhile Trustees be reinstated as Trustees of the Khar Gymkhana.
54. Mr. Seervai learned Senior Counsel appearing on behalf of the Defendant Nos.2 to 11 and 13 to 29 has submitted that the Plaintiffs and Defendant No.12 to defeat the Requisition devised a self-serving mechanism which, if accepted as being legitimate, would never allow Trustees of the Khar Gymkhana to be removed. This included purporting to appoint Trustees without knowledge of the members, as well as appointing Defendant No.12 during the course of hearing of these proceedings whilst suppressing the same even from this Court at a hearing held on 17th December, 2021.
55. Mr. Seervai has submitted that prayer (h) and (i) of the Interim Application are infructuous as the said meeting dated 19th December, 2021 has taken place. The Plaintiffs have accordingly amended the Interim Application by seeking a stay of the resolutions passed at the said meeting. 36/70
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56. Mr. Seervai has submitted that the Trust Deed demonstrates that there was infact a Managing Committee in place prior to the establishment of the Trust and that the fund amounting to Rs.500/- had been raised for the purposes for applying the same for erecting a pavilion as well as for preparing pitches for sports such as Cricket, Football, Badminton. The Plaintiff No.1 is a Gymkhana formed by and for the members. There has to be interplay between the Trustees and Managing Committee, for the Gymkhana to function smoothly. Clauses 3 and 5 of the Trust Deed specifically direct the Trustees to apply the Fund and accretions thereto in such manner as the Managing Committee may determine. The Trustees can only deal with the Khar Gymkhana funds on the directions of the Managing Committee. This was the intent of the Settlors.
57. Mr. Seervai has submitted that the removal of all the Co-Trustees and the appointment of new Trustee in their place is as per the Trust Deed read with the Constitution and Rules of the Khar Gymkhana. The Requisition dated 1 st November, 2021 was addressed by 180 members of the Khar Gymkhana to the office of the Trustees as well as Plaintiff Nos.2 to 37/70 1-IAL-28477-2021.DOC 4 and Mr. Suresh Prabhu and Mr. Bomi Mehta. Rule 62(i) provides for Special General Body Meeting to be convened at any time by a Requisition signed by 100 members who are eligible to vote. The Requisition is in fact the will of the members' and was caused due to (i) non-renewal of the lease for Khar Gymkhana, (ii) Notice of payment of over Rs.90 Crores, (iii) Concealment of material information from members; (iv) Plaintiff No.3's claim to being a Managing Trustee and acting on behalf of all the Trustees and (v) lack of due diligence while appointing Trustees. The Requisition clearly records that the members have completely lost confidence and faith in the office of the Trustees of Khar Gymkhana. The Requisition further states that Requisitionist understand that Khar Gymkhana's declaration of Trust, allows the members to remove any Co-Trustee by passing a resolution by three fourths majority and allows the members to fill the vacancy (if the number of Co- Trustees fall below 3) by appointing new Co-Trustees by passing a resolution at a General Meeting. The removal of Co-Trustees while passing resolution is in consonance with Clause 4 of the Trust Deed. Allowing all members to fill vacancy if the number of Co- Trustees fall below three in consonance with Clause 7 of the Trust Deed and with Rule 62 of the Rules. The requisitionists desired to 38/70 1-IAL-28477-2021.DOC adopt, and in fact adopted the powers conferred on members under Clause 4 read with Rule 62. Further, from a reading of Clause 4 of the Trust Deed read with 41(f) of the said Rules, the power to remove all the Trustees of the Khar Gymkhana vests in the members of the Gymkhana. The power to appoint all the Trustees is seen from the reading of Rule 62. The same read with Clause 4, makes it abundantly clear that the members have the power to remove and appoint all the Trustees of the Gymkhana.
58. Mr. Seervai has submitted that the Plaintiff's contention that the Trustees cannot be removed is incorrect and a complete misreading of the Trust Deed as well as the Rules of the Gymkhana. Clause 4 clearly shows that the Trustee shall hold office for life unless removed from office by a Resolution passed by the Khar Gymkhana at a General Meeting by 3/4th majority. This is also provided in Rule 41(f). Clause 4 and Rule 41(f) cannot be read in a manner that would clearly do violence to the plain language. The same would render the Clause as well as the Rule nugatory and otiose, apart from depriving the members of a right conferred upon them both under the Trust Deed as also the Rules. Mr. Seervai has thereafter dealt with the Plaintiff's argument 39/70 1-IAL-28477-2021.DOC that there can be no removal of all Trustees and therefore there can be no appointments of all Trustees. He has submitted that this argument is misconceived and is based on a misreading and misinterpretation of both Clause 7 of the Trust Deed, and Rule 43 of the said Rules. Neither of these deal with the removal of a Trustee. The Plaintiffs have tried to conflate Clauses 4 and Rule 41(f) with Clause 7 and Rule 43. The Plaintiff's argument that Clauses 4 and 7 of the Trust Deed are one and the same and relate to the removal of Trustees is incorrect on a reading of these very clauses. If the Settlors intended to use the word 'remove' or 'removal' in reference to a Trustee of the Gymkhana, then they would have inserted the same in Clause 7. Even otherwise, the words 'or cause' can never include 'removal' and which is expressly and only dealt with in Clause 4. On a reading of the clauses of the Trust Deed and the Rules, it is also evident that words in Clause 7 apart from being read ejusdem generis, grants the power to appoint Trustees of the Gymkhana as there can never be a scenario where there is a complete void i.e. no Trustees due to their removal. The Trust Deed itself does not provide for its dissolution. In the present case, there was no vacuum as the Co- 40/70
1-IAL-28477-2021.DOC Trustees were removed and new Co-Trustees were appointed on the same day which is in terms of the Trust Deed and Rules.
59. Mr. Seervai has thereafter dealt with the Plaintiff's contention that 3/4th majority votes are to be the votes of all 10,684 members and not that of the members present at the meeting. Rule 41(f) states that, the required votes for removal of the Trustees shall be 3/4th of the votes of members present and entitled to vote. Clause 4, even if read on its own, necessarily envisages the three fourth majority votes of only those present, for the phrase "... at a General Meeting of the Gymkhana...." necessarily means those present at a meeting. Members who do not attend, obviously cannot vote. Significantly, Rule 41(f) was amended in 1975, and merely makes even more explicit, what is clear and obvious in clause 4. Rules 72 and 73 which have been relied upon by the Plaintiffs are merely enabling provisions stating which members are entitled to vote and which are not. Rule 73(iii) makes it clear that only the votes of the members present at the meeting or who attend the Annual General Meeting shall be counted. Historically, there have not been more than 523 members present at the AGM. The said meeting held on 19 th December, 2021 41/70 1-IAL-28477-2021.DOC had 523 members present which is the highest number of members present at any AGM of the Gymkhana.
60. Mr. Seervai has thereafter referred to Rule 124 of the said Rules to submit that the Rules may be repealed, altered, added to or amended by a resolution at any Annual or Special General Meeting with a majority of 2/3rd of the members present and entitled to vote at the meeting. As can be seen from the words used in Rule 124, the Resolutions put forward in the AGM which included the amendment of the Rules cannot be stated to be illegal or contrary to the Trust Deed or Rules of the Khar Gymkhana. The amendments to Rules 40, 41(f), 46, 91(i) and 91(ii) were in fact put to vote and the resolutions having been put to vote were passed with a majority in excess of the required minimum of 2/3rd of the members present and voting.
61. Mr. Seervai thereafter addressed on the said December meeting. He has also referred to the notice dated 16th November, 2021 setting out the Agenda for the said meeting and in particular item No.6 therein which read as follows:- 42/70
1-IAL-28477-2021.DOC "To consider the matter requisitioned by 180 members pursuant to their letter dated 1 st November, 2021, namely, the removal of all Co- Trustees, and consequently, the appointment of new Co-Trustees in their place."
62. He has submitted that in the said meeting held on 19th December, 2021 at 10.30 a.m., a total of 523 members were present. He has referred to the minutes of the said meeting. The eligible members were informed that they will be allowed to speak for two minutes on each topic. He has submitted that once the said meeting commenced, the Resolution Nos. 1 to 4 forming a part of the Notice were read out and members of the Gymkhana (including the Plaintiffs) spoke on these resolutions and which resolutions were thereafter passed. Pertinently, Resolution No.1 confirming the Minutes of the Meeting held on 15 th August, 2021 was unanimously passed. Defendant No.5 inadvertently missed reading Agenda item No.5 before reading out Agenda item No.6 and Defendant No.5 upon realizing the oversight announced Agenda No.5, which pertains to the routine business of appointing auditors and fixing their remuneration. When Agenda Item No.6 was announced, the President of the Khar Gymkhana invited the first signatory to the Requisition to speak and thereafter various 43/70 1-IAL-28477-2021.DOC members of the Khar Gymkhana including Plaintiff No.4 addressed the members. The Agenda item No.6 was discussed for 57 minutes. During the discussions of Agenda item No.6, the Plaintiff's relatives / friends attempted to disrupt the meeting and members, including Defendant No.12 and Plaintiff No.6, sought to mislead the members of the Gymkhana by calling upon the President and Defendant No.5 to read the Resolution. The Defendant No.5 stated that the Resolution is proposed by approximately 180 members and read out the resolution. The Resolution was to consider the matter requisitioned by 180 members pursuant to their letter dated 1st November, 2021, namely the removal of all Co-Trustees, and consequently, the appointment of new Co-Trustees in their place. The President thereafter announced that the Resolution was read and all members who are in favour of the current five Trustees and who are supporting the Trustees should raise their hands. It was at this point that the Plaintiff No.6 approached the dais and sought to misguide the members stating that the Agenda is different from the Resolution . He stated that all Trustees have been named therein whilst 3 of them have resigned. The President put the resolution to vote and asked all members who are against the resolution for removal of the 5 Trustees, to raise their hands. The President then 44/70 1-IAL-28477-2021.DOC asked members who were in favour of removal of all five Trustees to put up their hands. At each stage a count was taken, first of members who were against the resolution (approximately 30 persons) and then a show of hands of members who were supporting the resolution. Since there was an overwhelming majority, barring 30 members, it was announced that the resolution was passed with more than 75% majority. Defendant No.5 then suggested the names for appointment of the 5 new Trustees and called for a show of hands for their appointment. When Agenda item No.7 was read out and taken up, it can be seen that Defendant No.5 informed the members that actual Requisition was for removal of all Co-Trustees and appointment of new Trustees in their place had been decided. Defendant No.5 stated that "The exact resolution is which we have gone by the Requisition of the members" which was passed in Agenda Item No.6.
63. Mr. Seervai has submitted that Agenda item 6 was singular and distinct from Agenda item 7. Agenda Item No.7 was "to consider any Resolutions of the Managing Committee" contained various resolutions, which included those to 45/70 1-IAL-28477-2021.DOC amend the Rules of the Khar Gymkhana. There appears to have been a typographical error where "Under item No.6 of the Agenda' ought to have been "... Under item No.7 of the Agenda." In fact that Agenda item No.6 was also voted on and dealt with can be seen from a perusal of the record of the minutes at page 264 which states "... that this resolution has been dealt. The actual Requisition was for removal of all Co-Trustees and it has also been decided by the house. We are not taking this up. The exact resolution is which we have gone by the Requisition of the members". Mr. Seervai has submitted that though the Plaintiffs have raised the controversy that it was the Managing Committee as well as their supporters who caused disruption at the meeting, that the voting was not carried out as per secret ballot and one was not clear which Resolution was being placed for voting. This Court should not delve into this controversy. Apart from there being extremely limited scope for judicial scrutiny, interference and intervention in the internal workings of a club qua its members, the Plaintiffs have twice rejected out of hand the 'with prejudice' offer made to re-conduct Agenda item 6 of the said meeting under scrutiny of Court officer, with an external agency as scrutineers, and with the voting to be held by secret ballot. Thus this clearly 46/70 1-IAL-28477-2021.DOC reveals who was interested in suggesting that the meeting was chaotic, and who was not. Mr. Seervai has relied upon the video recording to contend that this clearly reveals that the chaos was caused by the Plaintiffs and / or their supporters / family members. There was no confusion as to what being put to vote. It was made clear that removal of Trustees was being voted on and this was passed by show of hands.
64. Mr. Seervai has submitted that a perusal of the minutes of the said meeting show that the minutes of August Annual General Meeting were confirmed unanimously. Further, all Agenda items up to Agenda item No.6 were dealt with and voted on smoothly and without any disruption. All members were present, including the Plaintiffs were allowed to speak at the said December Meeting.
65. Mr. Seervai has thereafter dealt with the decisions cited by the Plaintiffs and he has submitted that the decisions are not applicable in the facts of the present dispute. He has submitted that the decision in Sakthi Charities (Supra) is inapplicable as in the present case, there is no alteration to the 47/70 1-IAL-28477-2021.DOC objects of the Trust nor the Trust Deed at all. The Rules are being amended within the rights of the members as per Rule 124. He has submitted that likewise, CIT Vs. Palghat (Supra) is inapplicable as in the present case there is no alterations to the objects of the Trust or the Deed. The Trust Deed itself provides for removal of Trustees.
66. Mr. Seervai has also distinguished the decision in the case of Sri Agasthyar (Supra) where it has been held that no power has been given to the Trustee to amend, alter, vary or change in any manner the objects of the Trust. In the present case, there is no question that arises as to the power of a Trustee and secondly the Deed provides for removal as well as for appointment of Trustees. Also there is no change being sought to the objects of the Trust. He has also distinguished CIT, Kanpur Vs. Kamla (Supra) on facts. The facts therein are not relatable to the present case as in that case a new Trust Deed was sought to be substituted which was beyond the powers of Civil Court. The conclusion of the Court on those facts was that a Trust can only be administered in terms of an amendment directed by the Court and the Trustees were and must be deemed to have been under a legal obligation to hold properties only for the object and with the 48/70 1-IAL-28477-2021.DOC powers set out in the Trust Deed as amended. Further, it was not open to the Income Tax office to say that the Trustees could administer the Trust in accordance with the original deed and that the claim for exemption had to be dealt with on on the basis of the original deed. It is evident therefrom that a Civil Court can rectify instruments like Trust Deeds which does not arise in the present case.
67. Mr. Seervai has also distinguished the decision of Official Trustee, W.B. (Supra) that the Application in the facts of that matter was not within the scope of Section 34 of the Indian Trust Act. In the present case, there is no application pending before a civil Court. He has also distinguished the decision in T.P. Daver (Supra) which is a case where the doctrine of strict compliance with rules was considered which was held to imply that every minute deviation from the rules, whether substantial or not, would render the act of such a body void. It has been held in that case that the jurisdiction of a Civil Court is rather limited, it can set aside the order of such body if the body acts without jurisdiction or does not act in good faith or acts in violation of the principles of natural justice. In the present case no acts have been 49/70 1-IAL-28477-2021.DOC committed malafide. It is the will of electorate to remove the Trustees in line with the terms of the Trust Deed read with the Rules of the Gymkhana.
68. Mr. Seervai has accordingly submitted that apart from the Plaintiffs having made no case for grant of interim relief, the Plaintiffs have not come before this Court with clean hands and are guilty of suppressing vital documents and essential facts. For all these reasons, the Interim Application deserves to be dismissed.
69. Mr Vibhav Krishna, learned Counsel for Defendant No.1 has supported the submissions of Mr. Seervai. He has raised issues on the maintainability of the Suit. He has submitted that the Suit cannot be filed and continued to be prosecuted in the name of Khar Gymkhana as Plaintiff No.1. Plaintiff No.2 has resigned and therefore, is no longer a proper and necessary party. Mr. Sanjay Devnani who was impleaded as Defendant No.12 in his capacity as a member of the Managing Committee, has thereafter been excluded in such capacity by the Plaintiffs without any basis for such discrimination as the 50/70 1-IAL-28477-2021.DOC Defendant No.12 continues to be a Managing Committee member. The Charity Commissioner, Mumbai has jurisdiction to entertain the dispute on the subject matter and relief prayed for in the Suit and the bar under Rule 80 of the Maharashtra Public Trust Act would apply.
70. Mr. Krishna has thereafter referred to the fact that Khar Gymkhana was started in the year 1928 and the Constitution and Rules have been framed in 1929 and the Khar Gymkhana is being managed for last 93 years as per the Constitution i.e. since 1929. The Managing Committee according to the Constitution and the Rules is Sole authority for interpretation of Constitution and Rules. The affairs of Khar Gymkhana are being managed despite the Trust Deed which had been executed subsequent to the formation of the Gymkhana. The interplay of the Trust Deed and the Constitution demonstrates that the Trustees have from the year 1975 onwards acknowledged that the affairs of the Khar Gymkhana are being managed in deviation of the clauses of the Trust Deed. He has submitted that the Requisition dated 1st November, 2021 is valid and legal and consequently action of removal of Plaintiff No.2 to 6 and 51/70 1-IAL-28477-2021.DOC Defendant No.12 as Trustees is valid and legal. The Plaintiff Nos.2 to 6 have manipulated the process to frustrate the legal right of the members by attempting to appoint Plaintiff Nos.5 and 6 and Defendant No.12 as Trustees after the Requisition dated 1 st November, 2021. The Plaintiff Nos.2 to 6 have attempted to curb the rights of the members under Constitution and Rules.
71. Mr. Krishna has thereafter referred to the facts with regard to Khar Gymkhana being managed by the Constitution. There are various instances of deviation in the Constitution from the Trust Deed and the predecessors of the Plaintiff Nos.2 to 6 as Trustees had not raised any grievance to such deviation.
72. Mr. Krishna has supported the submissions of Mr. Seervai in so far as the validity of the Requisition dated 1st November, 2021 and the said meeting held on 19th December, 2021 is concerned. He has submitted that the conduct of the Plaintiff Nos.2 to 6 and Defendant No.12 is not bonafide. They have approached the Court with unclean hands and attempted to frustrate the rights of members and prevent them 52/70 1-IAL-28477-2021.DOC from exercising their rights to remove all Trustees in accordance with the Constitution and the Rules. The members have lost confidence in the Trustees and have accordingly removed the erstwhile Trustees through a valid Requisition of members under Rule 62 of the Constitution.
73. Mr. Karl Tamboly learned Counsel for the Respondents / Defendant Nos.30 to 32 - new Co-Trustees has supported the submissions of Mr. Seervai. In addition he has interpreted Clause 4 in the same manner as interpreted by Mr. Seervai. He submits that Clause 4 clearly provides that the Trustees can be removed from office by a Resolution passed by the Khar Gymkhana at a General Meeting of the Gymkhana by a three fourths majority of votes. The Plaintiffs themselves have also understood the clauses of the Trust Deed to mean the same as can be seen from prayer clause (c) to the Plaint. The language of the Trust Deed and particularly Clause 4 thereof read with Rules 41(f) and 62 makes it clear that the members of Khar Gymkhana have a right to remove Trustees. Further, Clause 7 read with Rule 43 also make it clear that the members of Khar Gymkhana have a right to appoint Trustees. He has relied upon the decision of Supreme 53/70 1-IAL-28477-2021.DOC Court in the case of Adani Power (Mundra) Ltd. Vs. Gujarat Electricity Regulatory Commission and Ors.7 at Paragraph 24. In that context he has submitted that the clauses in the Trust Deed ought to be given the plain, literal and grammatical meaning of the expression used in the same. He has accordingly submitted that there is no merit in the present Interim Application.
74. Having considered the rival submissions in my view it would be necessary to reproduce some of the relevant clauses in the Trust Deed dated 4 th October, 1934. Clauses 1, 4, 5, 6 and 7 read as under:-
"(1) the said sum of Rs.500/- (Rupees Five hundred) and any other sums which shall hereafter be received by or paid to them for the like purpose shall be called "the Khar Gymkhana Fund" and the same shall vest in the said Trustees.
(4) The Trustees shall hold office for life or until resignation or unless removed from office by a Resolution passed by the Khar Gymkhana at a General Meeting of the Gymkhana by a three fourths majority of votes.
(5) Subject as aforesaid, the Trustees shall deal with the Khar Gymkhana Fund from time to time as the Managing Committee of the said Khar Gymkhana 7 (2019) 19 Supreme Court Case 9.54/70
1-IAL-28477-2021.DOC shall direct by a Resolution duly passed and recorded in the minutes which shall be conclusive evidence of such Resolution or Resolutions.
(6) The Trustees shall be indemnified against all expenses, disbursements or liabilities made or incurred on behalf of the said Khar Gymkhana in the operation of these presents.
(7) Any vacancy among the Trustees arising by death resignation, insolvency or any other disability or cause shall be filled up by the Continuing or surviving Trustees out of persons, who have subscribed and paid in the said Fund Rs.300/-
(Rupees Three hundred) or more, provided, however that the number of Trustees shall not at any time be less than three or more than five, and provided also that after the number of surviving Trustees has dwindled down to two or less and the surviving Trustee of Trustees have failed to fill in the vacancy of vacancies within a period of three months from the date of the last vacancy, such vacancy or vacancies as shall bring the total number of Trustees to the minimum of three shall be filled up by the Khar Gymkhana by a resolution passed at a General Meeting of the Gymkhana".
75. It can be seen from clause 1 of the Trust Deed that the sum of Rs.500/- and any other sums received by or paid to Trustees for the like purpose was to be called "the Khar Gymkhana Fund" and the same vested in the Trustees. This was subject to Clause 5 of the Trust Deed which provided that the Trustees shall deal with the Khar Gymkhana Fund from time to 55/70 1-IAL-28477-2021.DOC time as the Managing Committee of the Khar Gymkhana shall direct. It is necessary to note that the Khar Gymkhana was started in 1928 and the Constitution and Rules of the Khar Gymkhana have been in operation since 1929 i.e. prior to the Trust Deed which was executed on 4th October, 1934. The recital in the Trust Deed mentions that the sum of Rs.500/- has been raised by subscription from the inhabitants of Khar for the purpose of applying the same for erecting a pavilion on a portion of the said demised premises for preparing a Cricket pitch, Tennis Courts, Badminton Courts and a library. In Clause 6 of the Trust Deed, there is an indemnity provided to the Trustees against all expenses, disbursements or liabilities made or incurred on behalf of the said Khar Gymkhana in the operation of these presents.
76. Now it would be necessary to consider the rival interpretation of Clauses 4 and 7 of the Trust Deed. This is in light of the narrow issue which arises for determination, namely whether the members of the Khar Gymkhana who were present at the General Meeting by 3/4th majority validly removed the Trustees from office by Resolution passed therein and whether they could appoint new Co-Trustees in their place. 56/70
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77. In considering clause 4 of the Trust Deed, it would be necessary to refer to Rule 41 of the said Rules of Khar Gymkhana. Rule 41 and in particular (f) thereof reads as under:-
"Rule 41: A Trustee shall be deemed to have vacated his office and shall cease to act as a Trustee, if he:-
(f) If in a General Meeting of the Members of the Gymkhana by a majority of three-fourth of the members present and entitled to vote, resolve to remove him.
78. A plain and literal reading of Clause 4 of the Trust Deed makes it clear that the Trustees shall hold office for life unless removed from office by Resolution passed by the Khar Gymkhana at a General Meeting of the Gymkhana by a 3/4th majority of votes. Thus it is clear that the members of the Khar Gymkhana have power to remove the Trustees by a Resolution passed at a General Meeting of the Gymkhana. In Rule 41(f), it is made clear that the Trustee shall be deemed to have vacated his office and shall cease to act as Trustee if in a General Meeting of the members of the Gymkhana by a majority of 3/4th members present and entitled to vote, resolved to remove it. In my prima facie view, there is consistency between clause 4 of the Trust Deed 57/70 1-IAL-28477-2021.DOC and Rule 41 (f) of the said Rules. Both contemplate removal of the Trustee by 3/4th majority of the members at a General Meeting. Both also contemplate that the Trustee shall hold office for life unless removed from office by a Resolution passed by the Khar Gymkhana at a General Meeting by 3/4th majority. This necessary would be by 3/4th members present at such General Meeting. Otherwise any other interpretation would be in violation of the plain and literal reading of Clause 4 with Rule 41(f) of the said Rules. I do not accept the interpretation placed on clause 4 of the Trust Deed by Mr. Vashi on behalf of the Plaintiffs that the 3/4th majority referred to in Clause 4 is 3/4th majority of the members entitled to vote which means votes of all members of the Gymkhana and not the members present. Clause 4 of the Trust Deed also envisages 3/4th majority of the votes of only those present at the General Meeting as the words used therein "...... at a general meeting of the Gymkhana" would necessarily mean members present at the meeting. In my prima facie view, Rule 41(f) of the said Rules which was amended in 1975 is in conformity with Clause 4 of the Trust Deed and there is no inconsistency between the said Rule and Clause 4 of the Trust Deed. I also do not find merit in the submissions of Mr. Vashi that if 58/70 1-IAL-28477-2021.DOC Clause 4 is to be read as votes of those who present in the meeting, then the clause would have the same language as set out in Rules 72 and 73. Rules 72 and 73 referred to the members who are entitled to vote and which are not. These Rules are enabling provisions and the requisite Rule for the removal of Trustees at a General Meeting is Rule 41(f). Further, Rule 73 (iii) makes it clear that only the votes of the Members present at the meeting or who attend the AGM shall be counted. Thus the Trustee can be removed by 3/4th of all members present at the yearly meeting as has been done in the present case. Reading of Clause 4 with Rule 41(f), in any other manner would render the Clause as well as the Rule nugatory and otiose, apart from depriving the members of a right conferred upon them both under the Trust Deed as also the Rules.
79. Clause 7 of the Trust Deed and Rule 43 cannot be conflated with Clause 4 and Rule 41(f) as in my prima facie view neither concern themselves with the removal of the Trustee which is clearly provided for in Clause 4 and Rule 41(f). Clause 7 of the Trust Deed and Rule 43 of the said Rules both provide for any vacancies amongst Trustees arising by death, resignation, insolvency or any other disability or cause shall be 59/70 1-IAL-28477-2021.DOC filled up by continuing or surviving Trustees provided the number of surviving Trustees have not dwindled down to two or less. This, in my prima facie view, cannot be read to include the word removal of a Trustee. Such interpretation of Clause 7 by Mr. Vashi is in my prima facie view on a misreading and misinterpretation of the said Clause 7 as well as the said Rule. There is no merit in the argument on behalf of the Plaintiffs that the Clauses 4 and 7 of the Trust Deed are one and the same as they relate to removal of the Trustees. The words "or cause" which has been interpreted by Mr. Vashi to include removal is an incorrect reading of this clause as removal is expressly dealt with in Clause 4 and would result in clause 4 being rendered nugatory. It is evident that the words in Clause 7 are required to be read ejusdem generis and grants the power to appoint Trustees by the Gymkhana as there can never be a scenario where there is a complete void i.e. no Trustees due to their removal. The Trust Deed itself does not provide for its dissolution. In my prima facie view by the removal of all Co- Trustees at the said Meeting held on 19th December, 2021, by the 3/4th of the members present at that meeting, there could not have been a vacuum and hence the new Co-Trustees were appointed on the same date under Rule 62 of the said Rules which 60/70 1-IAL-28477-2021.DOC is in terms of the Trust Deed and said Rules. In this context it would be necessary to reproduce Rules 62 and 63 which read thus:-
"62 (i) A Special General Body Meeting may be convened at any time on the orders of the President or on a resolution of the Managing Committee or on a requisition signed by 100 members eligible to vote.
(ii) Such a requisition shall state the object of the meeting proposed to be called and shall be deposited with the Hon. General Secretaries.
63: On receipt of the requisition under Rule 62, the Managing Committee shall convene a Special General Body Meeting. If the Managing Committee does not convene the Special General Body Meeting within 21 days from the date of the requisition being deposited, the requisitionists or any 12 of them may themselves convene the Special General Body Meeting by giving notice to the members and displaying it on the Notice Board of the Gymkhana.
80. Rule 62 provides for Requisition of Special Body General Meeting by 100 members who are eligible to vote. As per Rule 41(f) the members have the power to remove a Trustee or all Trustees at such meeting and in view of my finding that there cannot be a vacuum and / or no Trustees due to their removal, the new Co-Trustees have been validly appointed on the 61/70 1-IAL-28477-2021.DOC same day at the said Meeting Requisition by the members under Rule 62 of the said Rules. Thus in my prima facie view, there is no violation of either the Trust Deed or the Rules in the removal of the Co-Trustees and appointment of new Co-Trustees.
81. It is necessary to note that reliance has been placed by Mr. Vashi on the Resolution proposed in the Notice setting out the Agenda of the said Requisitioned Meeting which had been issued on 16th November, 2021. The Resolution therein had named the erstwhile Co-Trustees which included Suresh Prabhu and Bomi Mehta. However, it is necessary to note Agenda Item No.6 which reads as under:-
6. To consider the matter requisitioned by 180 members pursuant to their letter dated 1st November, 2021, namely, the removal of all Co-
Trustees, and consequently, the appointment of new Co-Trustees in their place.
82. The Agenda Item No.6 clearly envisaged the removal of all Co-Trustees and appointment of new Co-Trustees in their place. At the said meeting held on 19 th December, 2021, there were 523 members present. Item Nos.1 to 4 of the Agenda were read out and the members of the Gymkhana spoke on these 62/70 1-IAL-28477-2021.DOC resolutions and thereafter the resolutions were passed. Resolution No.1 was for confirming the minutes of the meeting held on 15 th August, 2021 which was unanimously passed. It is further necessary to note that Agenda item No.5 had not been read out before reading out Agenda Item No.6 and upon realizing this, Defendant No.5 read out Agenda item No.5 which pertained to routine business of appointing auditors and fixing their remuneration which was passed. Agenda Item No.6 which has been extracted above was thereafter read out and the President of Khar Gymkhana invited the first signatory to the Resolution to speak and thereafter various members of the Khar Gymkhana including Plaintiff No.4 addressed the members.
83. I have had the opportunity of viewing the video recording of the proceedings at the said meeting held on 19 th December, 2021. It does appear that the Agenda Item No.6 was thoroughly discussed and during the discussion there had been some disruptions at the said meeting by certain persons, who were present and who are stated by Mr. Seervai to be the Plaintiff's relatives / friends including Defendant No.12 and Plaintiff No.6. It is relevant to note that prior to voting it appears that the Plaintiff 63/70 1-IAL-28477-2021.DOC No.6 had approached the dais and claimed that the Agenda Item No.6 is different from the proposed Resolution and stated that all the then Trustees have been named in the Resolution including 3 of them who have thereafter resigned. There was some confusion and accordingly the President of the Khar Gymkhana put the resolution to vote and asked the members who are against the resolution for removal of the five Trustees to raise their hands. A count was first taken of the members against the Resolution for removal of the five Trustees and approximately 30 Members were against the resolution. Then the President of the Gymkhana asked the members who are in favour of the removal of all Co-Trustees to raise their hands. A count was taken and there was overwhelming majority and the President accordingly announced that the Resolution had been passed by more than 75% majority. Subsequently the Defendant No.5 suggested the names of five new Trustees and called a show of hands for their appointment. This was also passed by overwhelming majority.
84. There is some controversy regarding the proposed Resolution for removal of named Co-Trustees and / or whether it was considered. Agenda Item No.7 was to consider any 64/70 1-IAL-28477-2021.DOC Resolution of the Managing Committee. When it was taken up; Defendant No.5 informed the members of the Khar Gymkhana that the Resolution for removal of all Co-Trustees and appointment of new Co-Trustees in their place had already been passed and that the Resolution is as per the Requisition of the members, passed in terms of Agenda Item No.6. This is apparent from the minutes of the said meeting which recorded that "... this resolution has been dealt with. The actual Requisition was for removal of all Co- Trustees and it has also been decided by that house. We are not taking this up. The exact resolution is of which we have gone by the Requisition of members" In any event, it is well settled that there is limited scope for judicial scrutiny, interference and intervention in the internal workings of a club qua its members. Thus, this Court is not delving into this controversy at the said meeting held on 19th December, 2021 and / or the factors which weighed with the members of the Khar Gymkhana in their removal of all the Co-Trustees and appointment of new Co-Trustees in their place. Suffice it to say that by the Requisition signed by the 180 members of the Khar Gymkhana grievance was expressed against the existing Co-Trustees which include issues such as non renewal of lease, Notice of payment over Rs.90 Crores, concealment of 65/70 1-IAL-28477-2021.DOC material information from members, Plaintiff No.3 claiming to be acting as "Managing Committee" and acting on behalf of all Trustees and lack of due diligence while appointment of the Trustees. The Requisition shows total lack of confidence and faith in the erstwhile Trustees of Khar Gymkhana. Thus, their removal was Requisitioned and accordingly in my prima facie view validly passed at the said meeting held on 19th December, 2021.
85. From the minutes of the meeting held on 19th December, 2021 it is clear that the Minutes of August AGM, recording certain Resolutions passed which have been challenged by the Plaintiffs and injunction sought restraining the Managing Committee of the Khar Gymkhana from acting on those Resolutions, have been confirmed unanimously.
86. From a perusal of the minutes of the AGM held on 15th August, 2021 and the Resolutions passed therein, it is clear that the Managing Committee was authorized to initiate appropriate proceedings for amendment of the Trust Deed of the Plaintiff No.1 - Khar Gymkhana for giving effect to the proposed Resolutions. Thus, it was contemplated that the 66/70 1-IAL-28477-2021.DOC Resolutions were not to be immediately acted upon and would be effected once the Managing Authorities initiate appropriate proceedings for the amendment of the Trust Deed of Khar Gymkhana and upon the application made for amendment, being allowed. In any event, in view of the above findings it is not necessary to go into the validity of these Resolutions which were passed at the August, AGM.
87. The decisions relied upon by Mr. Vashi for the Plaintiff are inapplicable in the facts of the present case.
88. The decision of the Supreme Court in T.P. Daver (Supra), which Mr. Vashi has relied upon in support of his submission that a Civil Court can interfere when the association acts without good faith or in contravention of the principles of natural justice is not applicable to the facts of the present case. There is no lack of good faith displayed by the Managing Committee of Khar Gymkhana in removing the erstwhile Co- Trustees and appointing the new Co-Trustees. Sakthi Charities (Supra) which was relied upon by Mr. Vashi in support of his contention that once a Trust is created with certain objects, no one 67/70 1-IAL-28477-2021.DOC has the power to delete any of the original objects is also inapplicable in the present case as there is no deletion of any of the original objects of the Trust. Further, the decision relied upon by Mr. Vashi, namely CIT Vs. Palghat Shadi Mahal Trust (Supra) is inapplicable considering that it is a case where there was amendment to the Trust Deed and which this Court was of the view was an attempt to alter the object of the Trust Deed which was not contemplated as per the clauses of the Trust Deed itself and was impermissible except by means of an amendment of the Trust Deed by the Settlors. This decision also has no applicability as in the present case there is no alteration of the objects of Trust Deed contemplated. The Trust Deed provides for removal under Clause 4 read with Rule 41(f) as well as appointment (Clause 7 read with Rule 43). Sri Agasthyar Trust, Madras (Supra) relied upon by Mr. Vashi is a case where the Court had considered the power to amend by the Trustees and it was held that there is no power given under the Trust Deed to amend, alter, vary or change in any manner the objects of the Trust. In the present case as aforementioned there is no amendment, alteration or variation of the Trust contemplated and as held above, in the case of August AGM meeting, the Resolutions were subject to appropriate 68/70 1-IAL-28477-2021.DOC proceedings brought by the Managing Committee for amendment of the Trust Deed. The decision of the Supreme Court in CIT, Kanpur (Supra) is on change in Trust Deed whereby a new Trust Deed was sought to be substituted can only be done by approaching a Civil Court. This decision also has no relevance in the facts of the present case.
89. Mr. Vashi has also relied upon the decision of the Supreme Court in the case of Official Trustee, West Bengal (Supra) in support of his submission that once the language of the Trust Deed is clear, even Court cannot pass an order contrary to the language of the Trust Deed. Here, there is no question of any act done by the Managing Committee of the Gymkhana contrary to the language of the Trust Deed and in fact the acts of the Managing Committee in the said meeting held in 19th December, 2021 are in conformity with the Trust Deed. Hence this decision is also inapplicable to the facts of the present case.
90. In my view, there is no merit in the Interim Application apart from the finding that the Court cannot interfere with internal working of the Gymkhana and its members 69/70 1-IAL-28477-2021.DOC and that decisions taken by the Gymkhana and its members are required to be respected unless they are contrary to the Rules and Constitutionof the Gymkhana and / or the Trust Deed which as I have prima facie held in the present case, is not.
91. In that view of the matter, the relief sought for in the Interim Application is rejected. The Interim Application is accordingly disposed of. There shall be no order as to costs.
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