Madras High Court
D.Jayaraj vs The Property Association Of
C.S.No.124 of 1994
IN THE HIGH COURT OF JUDICATURE AT MADRAS
RESERVED ON PRONOUNCED ON
20.09.2024 19.12.2024
CORAM :
THE HON`BLE MR.JUSTICE K.KUMARESH BABU
C.S.No.124 of 1994 &
A.No.3863 of 2024, 5144 & 7395 of 2018 and 5753 & 5755 of 2001
1.D.Jayaraj
2.Ch.Yesuratnam(Died)
3.Rev.V.S.Moses (Died on 26.08.1997)
4.K.Paul (Died on 13.07.2016)
5.G.Vandanam (Died on 29.07.2021)
6.D.Anil Raju
7.D.Sunil Raju ... Plaintiffs
Plaintiffs 6 & 7 substituted as plaintiffs in place of deceased 1 Plaintiff as per
order dated 01.11.2019 in Appl.No.8227 of 2019
vs.
1.The Property Association of
Baptist Churches Private Ltd.,
by its Executive Director
2.The Samavesam of Telugu Baptist
Churches by its General Secretary
3.Y.Shankar Rao
4.Y.Geetha
5.Y.Ashok
6.Y.Gopi
7.Y.Anitha
8.Y.Lalitha
9.J.Vijayalakshmi
10.Smt.S.Maniamma
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C.S.No.124 of 1994
11.G.Devadanam
12.K.Prabu Doss
13.G.D.D.Diwakar
14.Sri Kasi Malleswar Rao
15.Bolla Brahma Naidu
16.Battini Nageswara Rao
17.Danda Brahmanandam
18.Nalabotu Venkata Rao
19.Kolli Raghavendra
20.Indlamuri Mastan Rao
21.Akula Krishna
22.Akula Srinivasa Rao
23.Mandla Anthony Peter
24.Rev.D.Joseph
25.Rev.Dr.I.Charles
26.Mr.B.Joseph
27.Mr.P.JayachandraRao
28.Mr.B.A.Vijayam
29.Mr.Ch.Dass
30.Mr.K.Krupanandam
31.Mr.K.Deenadayal
32.Mr.K.Nagabhushanam
33.Dr.V.Prasanthkumar
34.Rev.B.Charles
35.Rev.M.Venkataiah
36.Rev.B.M.Sudheer
37.Mr.P.Victor Abraham
38.Mr.A.Selvaraj
39.Mr.Sailendrakumar Sen
40.Mr.Jonathan Mahapatro
41.Rev.Dr.K.I.Aier
42.M.Kondaiah
43.M.Surendra Babu
44.American Foreign Baptist Mission Society
a Corporation duly established and organized in
the USA having its main office at Valley forge,
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C.S.No.124 of 1994
county of Montgomery, Pennsylvania, U.S.A.,
rep., by it Power of Attorney Rev.K.Imotemjen Aier,
S/o Kariondang Aier Langcheng, Impur, Mokochung Nagaland
45.Ms.Lohi Constructions (P) Ltd.,
Rep., by its Managing Director L.Jagan Mohan Reddy
S/o Mr.L.Ylla Reddy, 78 Methodist Colony
Kundanbag, Begumpet, Hyderabad
46.Komaravelly Venkatasham
47.Mr.Puvvadha Hanumayamma
48.Sri Kande Udyabhaskar
49.Sri Bhimavarapu Srinivasa Reddy
50.Sri Bandi RaghupathiRao
51.Sri Kolla Venkatnarayana
52.Sri Mannem Ramprasad
53.Sri Motati Prabhakara Reddy
54.Sri Boppudi Venkateswarlu
55.Sri Bhumireddy Srinivasareddy
56.Sri Kakumanu Nageswara Rao
57.Sri Nare Sri Hari
58.Mr.Doneti Venkateswara Reddy
59.Mr.Mothukuri Lakshman Kumar
60.Sri Yeruva Venkata Subba Reddy
61.Sri Gadamsetty Krishna Roa
62.Sri Ganji Lakshmi Reddy
63.Sri Nidamanuri Rama Krishna Rao
64.Sri Yerramreddy Ananta Lakshmi
65.Sri Gollapalli Hemalatha
66.Sri Puvvada Veera Vankata Srinivasa Rao
67.Sri Puvvada Narasimha Rao
68.Smt.Javvaji Narasimha Rao
69.Sri.Javvaji Pavan Kumar
70.Sri Somu Guruvaiah
71.Mrs.Potti Padmavathi
72.Sri Bommisetty Lakshminarayana
73.Sri Bommisetty Sambasiva Rao
74.Sri.Bayyna Bangaru Babu
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C.S.No.124 of 1994
75.Sri Mudda Ramesh
76.Mrs.Busa Padma Naga Lakshmi
77.Potti Venkata Srinivasarao
78.M.Srinivasa Reddy ... Defendants
3rd defendant impleaded as per order dated 10.10.2002 in Appl.No.5752
of 2001
Defendants 4 to 10 are impleaded as per order dated 10.10.2002 in
Appl.No.5754 of 2001
Defendants 11 to 23 are impleaded as per order dated 10.11.2003 in
Appl.No.427 of 2003
Defendant No.44 impleaded as per order dated 05.04.2005 against order
dated 10.12.2004 made in Appl.No.4749 of 2004
Defendant No.45 impleaded as per order dated 20.07.2010 in
Appl.No.3519 of 2010
Defendant No.46 impleaded as per order dated 20.07.2010 in
Appl.No.3518 of 2010
47th defendant impleaded as per order dated 22.01.2019 in A.No.78 of
2019
48th defendant impleaded as per order dated 22.01.2019 in A.No.79 of
2019
Defendants 49 to 56 impleaded as per Order dated 22.01.2019 in
A.No.81 of 2019
Defendants 57 to 59 impleaded as per order dated 22.01.2019 in A.No.83
of 2019
Defendants 60 to 64 impleaded as per order dated 22.01.2019 in A.No.85
of 2019
6th defendant impleaded as per order dated 22.01.2019 in A.No.87 of
2019
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C.S.No.124 of 1994
Defendants 66 to 75 impleaded as per order dated 22.01.2019 in A.No.89
of 2019
76th defendant impleaded as per order dated 22.01.2019 in A.No.90 of
2019
77th defendant impleaded as per order dated 22.01.2019 in A.No.92 of
2019
78th defendant impleaded as per order dated 19.08.2019 in A.No.3009 of
2019
Prayer : Civil Suit filed under Order VII Rule 1 CPC read with Order IV Rule
(I) of Original Side Rules U/O 31 R 1 of CPC for the following reliefs:-
(a) removing the first defendant company from the Trusteeship of
the properties mentioned in Schedule – I hereunder;
(b) prohibiting the 2nd defendant from associating itself with
administration of the Trust.
(c) enquiring into the affairs of the trustee company as to its income
expenditure and outgoings for the period from 1980 onwards and to
issue directions to recover loss if any, from such persons may be
responsible.
(d)enquiring into several transfers of immovable properties
belonging to the trust effected by or on behalf of the trustee company
made after 1979 to find out as to whether the transfers were void and
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C.S.No.124 of 1994
to retrieve to trustees such of those properties, the transfers in
respect of which is found to be void.
(e) to appoint a receiver to take charge of the properties of the trust
and in particular to take charge of the land and building of the
Clough Memorial Hospital ABM Junior and MCM Junior college at
Ongole and C.A.High School and ABM Girls High School as
Nellore, Coles Junior College, S.T.B.C., Degree College,
Roackwood High School, E.C.M.High School in Kurnool, other
property at Hanumakonda, A.B.M.Junior College Kavali and
Nalagonda and enquire into the requirement of land for the college
and the availability of the lands for the colleges and to submit a
report forthwith;
(f) framing a scheme for the Management of trust and the properties
as set out in the first schedule hereunder;
(g) granting such further or other reliefs as may be in the nature of
this case.
For Plaintiffs : Mr.N.Krishnakumar for P1, P2, & P3
For defendants : Mr.S.Dharmakkan for D1
Mr.S.R.Rajagopal Sr. counsel for
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C.S.No.124 of 1994
Mr.S.R.Raghunathan for D3 to D10
Mr.A.S.Balaji for D 21, 22, 47 to 77
Mr.S.S.Rajesh for D44
Mr.A.K.Sriram Sr. counsel for
M/s.A.S.Kailasam & Associates for D78
Mr.P.Subba Reddy for D45 & D46
Mr.J.Srinivasa Mohan (Amicus Curiae)
JUDGMENT
This Civil Suit filed under Order VII Rule 1 CPC read with Order IV Rule (I) of Original Side Rules U/O 31 R 1 of CPC for the following reliefs:-
(i) removal of the first defendant (Property Association of Baptist Churches – PABC) from the trusteeship.
(ii) prohibiting the 2nd defendant (Samavesam of Telugu Baptist Churuches – STBC) from associating itself with administration of the Trust.
(iii) enquiring into the affairs of the trustee company onwards and to issue direction to recover loss from such persons as may be found responsible.
(iv)enquiring into several transfers of immovable properties of 7/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 the suit trust made after 1979 to find out as to whether such transfers were void and to retrieve such of those properties, the transfer in respect of which is found to be void.
(v) appointing a receiver and to take charge of the Trust properties and enquire into the requirements of the lands for colleges and
(vi) frame a scheme for management of trust and its properties.
Deserve to be allowed.
2. The plaintiffs claim that the large extent of the properties were originally belonged to one American Baptist Foreign Mission Society. Due to the advent of Foreign Exchange Management Act, 1973 and Foreign Exchange Regulation Act, 1973, the said Society had formed the first defendant under the Provisions of Section 25 of the Companies Act to be a custodian of the properties mentioned in the schedule. The second defendant was a creator of the first defendant for management of the first defendant properties. It is claimed that an incoherent claim of the amalgamation was granted by the Company Court in C.P.Nos.109 & 110 of 1973 on 03.05.1973. But, however, the said amalgamation proceedings were not complete as the proceedings were not terminated by the Company Court. In the interregnum various disputes 8/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 arose between the first defendant within itself and also with the second defendant which led to the appointment of the administrator for conducting of elections. Two petitions in C.P.Nos.89 of 1985 and 31 of 1986 were also filed under Sections 397 & 398 of the Companies Act.
3. These Company Petitions were closed recording a compromise entered between the parties wherein, the parties agreed to appoint an Arbitrator to resolve their disputes and till such time the the Arbitrator is appointed, there will be no alienation of the property belonging to the first defendant. Since there was violation of the terms of the compromise, a Contempt Application in Cont. Appln. No.319 of 1988 was instituted in which on 21.06.1989 an order was made in Sub.Appl.No.105 of 1988, appointing a retired Judge of the Andhra Pradesh High Court as an Arbitrator as agreed between the parties in the terms of the compromise. The terms of the reference was as follows:-
“1. to conduct investigation into the affairs of the company from 01.01.1980 to 21.06.1989 (i.e. till the date of the order of the High Court)
2. to find out the nature of the transaction of the sale and other proceedings of immovable properties of the Company.
3.and give findings as to which of the transactions 9/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 are void.
4.and suggest further directions in that regard for the recovery of such of those items.”
4. Thereafter, the Arbitrator had given a detailed Report, wherein, he had also found that various transactions as void and has also suggested remedial measures for recovery of such items. In spite of the said Report which was agreed to be acted upon by the parties in the Company Petition no proceedings were initiated, but, on the other hand, the persons in-charge of the affairs of the first and second defendant continued to alienate the properties of the Trust. Hence, a suit had been filed for various reliefs including the framing of the Scheme to the first defendant Trust. He would wholly place reliance on the Report of the Arbitrator appointed by the Court to drive home his contentions that the entire Scheme have to be framed under Section 92 of the CPC for the first defendant trust.
5.Countering his arguments, Mr.S.Dharmakkan, learned counsel appearing for the first defendant would submit that the various allegations made in the plaint are all false and the affairs of the first defendant had been carried out with reference to the Memorandum of Association and the Articles 10/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 of the Association of the first defendant Company. He would submit that the first defendant is being administered as per the Resolution of the Board of Directors and had been regularly filing the returns with the Registrar of Companies and the Income Tax Authorities from time to time. He would also challenge the locus standi of the plaintiff to challenge the administration of the affairs of the first defendant company. A written submissions has also been filed on behalf of the first defendant wherein a contention had been raised that the first defendant also concedes to a scheme to be framed to administer the first defendant and its properties. For better understanding, the relevant portions of the written submissions are extracted hereunder:-
“10.The following submissions for the kind perusal of this Hon'ble Court to frame a Scheme or appoint a Committee if this Hon'ble Court deems fit and proper.
a)That the properties transferred to the first defendant company as per the order of amalgamation in C.P.No.109 and 110 of 1973 dated 03.05.1974 on the file of the Hon'ble High Court of judicature at Madras is legal and the first defendant is the absolute owner in possession of the schedule properties annexed to the order of amalgamation.11/40
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b)That the transactions executed by any parties in respect of the suit schedule properties after the order of Hon'ble Division Bench Madras dated 05.07.2000 without permission of the Court are void transactions and they may be cancelled as per law.
c)That any transaction executed by the Court under the specific performance of the agreement of sale prior to the date of order of the Division Bench dated 25.07.2000 are valid. Further any agreement executed by the first defendant and if they are pending for execution of sale deed the purchaser are at liberty as per law to approach the competent civil court for the reliefs.
d) That any transactions executed through Court decrees under specific performance of the agreements and if the purchaser fails to pay the guideline value as on the date of agreement of sale that first defendant is at liberty to claim the same through legal process. If the purchaser refuses to pay the differential amount of sale consideration the sales shall be cancelled. The first defendant is at liberty to recover the property through legal process by cancellation of sale deed.
e) The following are the 5 regional associations and totally 30 field associations of the second defendant i.e. the 12/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 Samavesam of Telugu Baptist Churches a.Southern Region:
● Ramapatnam Field Association ● Kavali Field Association ● Athmakur Field Association ● Udayagiri Field Association ● Allur Field Association ● Nellore Field Association ● Madras Field Association b.Central Region:
● Ongole Field Association
● Kandukur Field Association
● Kanigiri Field Association
● Donakonda Field Association
● Addanki Field Association
● Podili Field Association
c.Northern Region:
● Madhira Field Association
● Narasaraopet Field Association
● Sattanapalli Field Association
● Gurazala Field Association
● Guntur Field Association
● Vinukonda Field Association
● Bapatala Field Association
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C.S.No.124 of 1994
● Vijayawada Field Association
d.Western Region:
● Markapur Field Association
● Nandiyal Field Association
● Cumban Field Association
● Kurnool Field Association
e.Deccan Region
● Secunderabad Field Association
● Hanamakonda Field Association
● Jangaon Field Association
● Nalgonda Field Association
● Suriyapat Field Association
11. The Scheme shall be framed to administer the 1st defendant and its property and taking into consideration and interest of the second defendant i.e., Samavesam of Telugu Baptist Churches.”
6. The contentions of the second defendant is that the Board of Directors of the first defendant are being appointed from the Members of the second defendant and that the Board of Directors are efficiently managing the affairs of the Company. He would submit that the benefits of the income derived from the properties held by the first defendant are to be only for benefit of the second defendant. He would submit that there is no necessity to frame a 14/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 Scheme as the Memorandum of Association and Articles of Association are clear in their terms.
7. Mr.S.S.Rajesh, learned counsel appearing on behalf of the 44th defendant would submit that the present suit under Section 92 of the C.P.C is not at all maintainable. The first defendant had proceeded on the basis that in view of the amalgamation, the properties belonging to the 44th defendant had vested in them. He would submit that the amalgamation was no approved and therefore, there is no vesting of the properties belonging to the 44 th defendant with the first defendant. The same had been affirmed by the Division Bench of this Court, wherein it had held that the Scheme of amalgamation even though sanctioned had not become complete and therefore, does not have a legal force as put forth by the first defendant. Therefore, he would contend that all the transaction that had been made in respect of the properties in the schedule by the first and second defendants are bad in law as the first defendant did not have any legal right or title or interest. Therefore, he would contend that the properties in the schedule continue to vest with the 44th defendant and there is no necessity to frame a Scheme as the properties can only be administered by the 44th defendant and not the first or second defendants. 15/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994
8. Defendants 11, 12 & 13 had adopted the written statement filed by the first defendant and other defendants are purchasers. The other defendants are all claiming title to the properties based upon the sale deed, agreement of sale executed by the first, second and 44th defendants. They had claimed that the execution of their deeds of documents have been made with the proper authority by such executants.
9. The learned Amicus Curiae at the outset would submit that the malfeasance and misfeasance committed by the persons in incharge of the first defendant Trust is clearly exhibited in the Report filed by the learned Arbitrator appointed by this Court who was also a retired Judge of the Andhra Pradesh High Court. The said Report only supplants of the various allegations made in the plaint. He would further submit that the defendants 11 to 13 who are the persons mainly responsible for the malfeasance and misfeasance had not independently filed any written statement, but had adopted the written statement filed by the first defendant. Similarly, he would take this Court to the written statement filed by the 14th defendant, who had executed sale deeds in favour of defendants 15 to 20. The 14th defendant in his written statement had 16/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 clearly stated that he was not the authorised Sales Officer and the letters created for the purpose of the said transactions and the said sale was effected due to the inducement of the 13th defendant. The defendants 15 to 20 have also filed their written statement indicating that the 13th defendant using the name of the first defendant had created fabricated records and Resolutions. Similarly, the defendants 24 to 43 who had also supported the prayer for framing a Scheme had clearly spelt that there was a deliberate suppression of facts, manipulation of records, misappropriation of funds, fabrication of documents and various other illegal acts committed by the 11 & 13 defendants. He would further submit that the 44th defendant had also indicated that there was illegal alienation and mal-administration at the hands of the first defendant. Hence, he would submit that the said allegations made by the various other defendants have not been refuted or rebutted by defendants 1, 2, 11 & 13 in any manner. Therefore, he would submit that the Scheme ought to be framed by this Court.
10. The learned Amicus Curiae has also given the list of institutions managed by the first defendant and also the manner in which the second defendant performs its functions. The said Report indicates that there are 700 Churches under 30 Field Associations divided into 5 Regions under the second 17/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 defendant from whom the Directors of the first defendant had been appointed. In fact, he had also placed on record a draft Scheme.
11. I have considered the rival submissions made by the learned counsels appearing for their respective parties and perused the materials available on record.
12. Based upon the pleadings made by the respective parties issues have been framed by five separate orders, the following issues were framed by this Court:
Framed on 06.06.2001:
1.Whether the plaintiffs have got locus standi to file the suit?
2.Whether the suit is maintainable?
3.Whether the suit is barred in view of the compromise order passed by this Court in C.P.No.89/85 Dt.11.09.1987?
4.Whether the 1st defendant is a trust as alleged by the plaintiff?
5.Whether the 1st defendant is liable to be removed from the trusteeship of properties mentioned in the plaint schedule?
6.Whether the 1st defendant can be made as a subordinate division of the second defendant?18/40
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7.Whether a scheme has to be framed by this Court, if so, what is the Scheme to be framed?
8.To what reliefs, if any, the plaintiffs are entitled? Framed on 07.11.2003:
1.Whether the 3rd defendant is entitled to confirmation of sale & registration of deed of conveyance in favour of 3rd defendant in so far as the Schedule “A”property to the written statement of the 3rd defendant on payment of the balance sale consideration?
2.Whether the 4 to 10 defendants are entitled to confirmation of lease in respect of properties in Schedule A to D of the written statement of 4th to 10th defendant?
3.To what other reliefs the plaintiffs are entitled to?
Framed on 17.12.2004:
1.Whether the 2nd defendant can be called as a subordinate to the 1st defendant?
2.Whether the 3rd defendant is entitled to confirmation of sale & registration of deed of conveyance in favour of 3rd defendant in so far as the schedule “A”property to be written statement of the 3rd defendant on payment of the balance sale 19/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 consideration?
3.As reframed on 07.11.2003.
Framed on 01.04.2010:
1.Whether the transfer of immovable properties effected by the trustees after 1979 are void and whether those properties are to be retrieved?
2.Whether a receiver to be appointed in respect of the properties of the trust, particularly by the land and building of the clough memorial hosptial, ABM Junior and MCM Junior College at Ongole and C.A.M. High School and ABM Girls High School, E.C.M.High School at Kurnool, other property at Hanumakonda, A.B.M. Junior College Kavali and Nalagonda and enquire into the requirement of the land for the college and the availability of the lands for the colleges?
3.Whether the claim set up by the 44th defendant that there was no amalgamation on CP Nos.109 to 110 of 1979 is valid in the eye of law, especially in a suit of this nature.
Framed on 27.07.2010:
1.Whether the defendants are bonafide purchasers for value and consideration?” 20/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994
13. The first, second and 44th defendants are the only parties who had opposed the framing of Scheme claiming right and interest over the property shown in the schedule. The other defendants are defendants 11 to 13 who were in management of the first defendant Trust at the given point of time. All the other defendants claim to have been vested with the interest in the properties to the schedule of the suit either through the 1, 2, 11, 12, 13 & 44 defendants.
Since, the primordial object of the present suit is to arrive at a finding as to the mismanagement of the first defendant Trust by its erstwhile administrators who belong to the second defendant, this Court is of the view that the contentions raised by the plaintiff and 1, 2, 11 to 13 & 44 defendants would have to be gone into and if it is necessary based upon the said pleadings and arguments made by them to see whether a Scheme is to be framed. As regards to the claim of other defendants and their right over the property, this Court is of the view that the it need not be gone into in the present suit and the same shall be addressed appropriately by this Court after any findings and reasoning is arrived at as regards to the necessity to frame the Scheme. Group No.1 Issue Nos.1, 2, 3, 4, 5 & 7 framed on 16.06.2001 21/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994
14. An issue of maintainability had been framed, as the first defendant is a company incorporated under Section 25 of the Companies Act, 1956. It is a well settled law that Section 92 proceedings can also be initiated against a company, if the company was formed with the sole object of holding properties in Trust for Religious and Charitable Institution. In the present case, even the first defendant had categorically admitted that the immovable properties of the 44th defendant was transferred to the first defendant for administering the same and the income generated out of the properties held by the first defendant to be utilized for the management of the second defendant. It is to be noted that the second defendant is a Society registered under the Societies Registration Act, and managing schools, colleges orphanages and other institutions which are charitable in nature. For better appreciation, the relevant paragraphs from the written statement filed by the first defendant are extracted hereunder:-
4. Regarding the averments made in para 6 it is submitted that the first defendant is a Company registered under the Companies Act. Originally the Baptist Churches in India were managed by ABFMS consisting of Foreigners.
When the Foreigners left India the first defendant company was formed in order to transfer the immovable property of the ABFMS to the first Defendant Company and to administer the same. The second Defendant is a Registered 22/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 Society which manages the churches, Schools, Colleges, Orphanages and other institutions. The income generated out of the properties of the first defendant company is utilised for the management of the second defendant. In other words the second defendant is a beneficiary of the first defendant.
5.Regarding the averment made in para 7 it is submitted that the Samavesam of the Telugu Baptist Churches herein after referred to as S.T.B.C., is a Society Registered under the Societies Registration Act. It is managing the Schools, Colleges, Orphanages and Institutions.
15.The disputes with regard to the functioning of the first defendant had surfaced as early as in the year 1985 which led to the filing of Company Petitions under Sections 397 & 398 of the Companies Act (1956). Pending the Company Petitions, a compromise had been struck between the parties to resolve the dispute by appointing an Arbitrator and also various undertaking given by the respective parties and based upon such compromise arrived at between the parties, further proceedings in the Company Petitions were closed. Since, there was violation of the terms of the compromise, a Contempt Petition was filed, in which a Sub Application in Sub.Appl.No.105 of 1988 was initiated. In the said Sub Application, this Court appointed Mr. Justice Punnayya, retired Judge of the High Court of Andhra Pradesh to be an 23/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 Arbitrator and directed the Arbitrator to file a report on his findings to this Court. Pursuant to the said order, the learned Arbitrator had filed a detailed Report and had given various suggestions. A reading of the said Report would clearly indicae that nothing was well in the functioning of the first defendant. In fact, the learned Arbitrator in his Report had indicated that various transactions made by the first defendant were all void and had suggested that necessary action ought to have to be initiated for recovery of various properties alienated by it. This Report was filed in the year 1991. No action had been initiated by the first defendant to implement the suggestions made by the learned Arbitrator. At this juncture, the present suit had been filed making various allegations of misfeasances, malfeasances and misappropriation against the activites of the first defendant. All the allegations made in the plaint are also substantiated by various findings given by the learned Arbitrator. None of the defendants have choose to file any objections to the said Report which had been placed on record before this Court in the present suit. Therefore, I am of the prima facie view that the first defendant had been mismanaged by the persons in incharge and have misused and misappropriated the properties of the first defendant. Further even though the scheme of an amalgamation had not been completed as held by the Division Bench of this 24/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 Court considering the fact that the first defendant company was incorporated as early as in the year 1973 and that almost for three decades, the 44 th defendant had not raised its little finger over title of the property. This conduct of the 44th defendant would only mean that it has acquiesced it as to the title of the property with the first defendant company. Therefore, the claim of the 44 th defendant that the property belongs to it, is a fallacy. In such an event, I am of the view that the Scheme ought to be framed for the better management of the first defendant and its properties.
16. Since, the Trust is registered as a Company under Section 25 of the Companies Act, I do not propose to modify the Memorandum of Association in which, the object of the Trust was incorporated. However, I would proceed to intredict manner in which the Members of the Board of Directors of the Company namely the first defendant will have to be appointed. For that purpose alone, the present Scheme is framed.
“1. COMPOSITION OF THE BOARD OF
TRUSTEES:
a.The Trust shall be managed and administered by a Board of Trustees comprising of 9 persons, one of whom shall be the Chairperson and another, the Secretary. 25/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 b.There will be one Trustee each from the 5 Regions namely North, South West, Central and Deccan.
c.The remaining 3 will be under the category of Chartered Accountant, Academician and Legal Professional.
d.One will be the Senior most consenting Member of the Baptist Women Association.
e.The Chairperson & Secretary of the Trust shall be elected from amongst the 9 members by majority.
2.GENERAL QUALIFICATIONS:
a. No person who is a minor or of unsound mind or one who is adjudged as an insolvent under the Insolvency Act, 1920, or has been convicted of any offence by a Criminal Court shall be eligible to be elected or nominated as a Trustee.
b. Only a Baptist who has worked in the Mission for minimum 25 years can stand for election from/ for each Region.
c. The senior most member, in terms of Ministry, of the Baptist Women Association will be nominated/ appointed/ co- opted as Trustee without election.26/40
https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 d. For the category Chartered Accountants, Legal Professionals and Academicians, applications will be invited by the 5 Regional Elected Representatives from willing persons. The 5 Regional Representatives together will finalize a name on the basis of majority opinion and appoint the said person as Trustee.
e. Only Telugu Baptist are eligible to apply under the above 3 categories.
f. As fas as Legal Professional is concered, preference may be given to Retired High Court, Judge, failing which to a Retired District Judge, failing which a Lawyer who has completed a minimum of 25 – 30 years in the BAR.
g. The Chartered Accountant should have atleast 20 years of experience.
h. Retired Professors/ Principals etc., shall be given preference under academician category.
3. TENURE OF OFFICE:
a. Every Trustee appointed to the Trust Board shall hold office for a period of 2 years from the date of his appointment.27/40
https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 b. No one will be entitled to seek re-election/ appointed/ co-opted for the next terms. They are eligible to contest/ be appointed/ co-opted only after one year of their current term ie., there will be a break of one year after holding office.
4. INITIAL ELECTION The first election to the Trustees from the 5 Regions, under this Scheme., shall be conducted by person appointed by the High Court.
The defendants will have no role in the conduct of this election, They shall not in anyway interfere with the conduct of the elections.
5. SUBSEQUENT ELECTIONS:
a. The subsequent election for Trustees for the 5 Regions shall be conducted by the outgoing Board. The election process shall be commenced 3 months prior to the last date of the current tenure of the Trustees.
b. After the election the 5 elected trustees from the region shall select the trustee from the 3 categories of Chargered Accountant, Legal Professional and Academician atleast one month prior to the last date of the current tenure of Trustees.28/40
https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 c. The above will ensure that the new set of trustees are ready to take charge, when the term of the earlier set of trustees ends.”
6.Meetings:-
a. A meeting of the Board shall be conducted ordinarily twice in a month and more often, if necessary. The meeting shall be convened by the Secretary,only on the direction or approval of the Chairperson. In the case of absence of the Secretary or on his refusal to convene the meeting, the Chairperson may convene the meeting.
b. On requisition by at least two or more Trustee, an emergency meeting shall be convened by the Secretary or by the Chairperson in the absence of or refusal by the Secretary.
c. In the absence of both the Chairperson and the Secretary, a meeting may be convened on the requisition of four Trustees.
d. The meetings shall be held at the office of the Trust Board or at a place convenient for the majority of the Trustees, depending upon their places of residence.
e. Notice of any ordinary meeting, with the copy of the 29/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 agenda shall be sent by the Secretary, to the Trustees at least three days prior to the date fixed for the meeting. The agenda shall be prepared by the Secretary in consultation with the Chairperson and with his/her approval. The notice shall specify the date, time and venue of the meeting.
f. The notice of the meeting may be served personally on the individual Trustees and if it is not possible, be sent by Registered Post or Courier with acknowledgement and such notice shall be deeme dto be sufficient notice.
g. In case of any emergency, the Secretary or in his absence or refusal the Chairperson may convene a Special Meeting by giving 24 hours notice to the Trustees. Notice of such Special Meeting shall be served on the Trustees either personally or on any member of their family.
h. The Chairperson or the Secretary shall convene a special or urgent meeting on the requisition in writing by three or more Trustees to convene a meeting of the Trust Board, specifying the purpose of the meeting and giving notice to the other Trustees.
i. Any member can give notice of a resolution to be moved at the meeting, which sahll be delivered to the Secretary at least 3 days prior to the date of the meeting and 30/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 upon such delivery, the same shall be circulated to the other members at least one day prior to the date of the meeting.
j. All papers relating to the agenda shall be made available to the Trustees for inspection at the place of meeting at the time or before the commencement of the meeting.
k. 2/3rd members of the Board shall form the minimum Quorum necessary for a meeting of the Board. No business shall be transacted at any meeting unless there is Quorum. If immediately after 30 minutes from the time appointed for the meeting, the Quorum is not present, the meeting if called on the requisition of the members, shall be dissolved. In any other case, the meeting shall stand adjourned to a date which may be agreed to by the members present and if at the adjourned meeting, there is no Quorum within half-an hour from the time appointed for the meeting, the members present shall form the Quorum.
l. Every meeting of the Board of Trustees shall be presided over by the Chairperson and in his absence, by a Trustee chosen by the Trustees present at the meeting to preside over the meeting.31/40
https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 m. Any question or issue which may come up before any meeting shall be decided by a majority of the votes of the members present and when the votes are equally divided, the Chairperson shall have the power to exercise a casting vote.
n. The Board of Trustees shall maintain Minutes of the proceedings of each of the meetins by recording the same ina book kept for that purpose. It shall be signed by the Chairperson or the Trustee who presided over such meeting. The Minutes book shall be kept in the office of the Trust in the custody of the Secretary or the Chairperson. The Minutes shall be recorded in English or in Tamil.
o. The Chairperson or the presiding Trustee shall maintain order and decorum at the meetings. The subjects on the agenda shall be taken for consideration inthe order in which they appear in the Agenda, unless it is decided at the meeting that they be considered otherwise.
p. All major decisions shall be taken only in the meetings of the Board and shall not be taken by way of resolutions passed by circulation unless agreed to by all the members. Any such decision taken in circulation shall be placed in the next meeting for confirmation. The question whether a particular decision is major or not, shall be decided by the Chairperson.32/40
https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994
7.POWERS OF THE BOARD OF TRUSTEES:
The Trust Board shall have the following powers:-
a. To frame Rules and Regulations, Bye-laws as may be necessary for implementing this Scheme, including by not limited to maintaining educational institutions, Hospitals/ PHC, orphanages etc., b. To frame Rules and Regulations with reference to the service conditions of the staff and prescribing proper Code of Conduct and discipline.
c. To frame a Budge of Expenditure relating to the management, account and for the efficient maintenance of the institutions and properties belonging to the Trust.
d. To raise funds, if necessary, by borrowing or overdrafts as may be necessary, to receive grants, donations, gifts and such other sources for improving the infrastructure of the institutions.
e. To enter into contracts and to execute documents for the development of the Trust and such documents shall be executed by the Chairperson and another Trustee as may be nominated by the Board.33/40
https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 f. The very purpose of the Trust is to protect the property and hold it for the benefit of various Churches/ fields and the members of the community. Therefore neither Trust nor the Trustees or any member for that matter will have any power whatsoever to alienate the property held by the Trust.
g. The lease of property, on market rates, can be only for a period of 2 years at a time and not more.
8.DISQUALIFICATION AND REMOVAL OF TRUSTEES:
a. In the event of any of the Trustees becoming disqualified in any manner as provided in this Scheme, he shall cease to be a Trustee.
b. A Trustee is also liable to be removed if found to be unfit to continue as a Trustee as a resulf of any activity prejudicial to the interest of the Trust or if found guilty of any criminal offence by a competent Court.
c. The removal of a Trustee under Sub-clauses (1) and (2) shall be subject to the following conditions:-
(i) Any proposal for such removal shall be 34/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 forwarded to that Trustee concerned giving liberty to the Trustee to show cause against the proposal, within a reasonable time.
(ii) The reply of the Trustee shall be considered by the Board of Trustees in a property convened meeting and on passing a resolution for such removal at least by 2/3rd majority of the remaining members in the said meeting.
9. MANAGEMENT OF FINANCE:
a.Budget:
The Board of Trustees shall, every year on or before the 31st of May evey year, present the Budget for the institution under the management of the Trust, for the year commencing from 1st of April and coming to an end on 31 st March. The budgetary provisions shall as far as possible be adhered to and no expenditure not provided for any particular purpose shall be allowed or sanctioned by the Board of Trustees except for reasons to be recorded by them in writing.
b.Operation of Bank Accounts:
All the accounts in all the banks shall be operated and the cheques signed jointly by the Secretary and the Treasurer. It is open to the Secretary to delegate this power to any other Trustee or Trustees.35/40
https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 c.Audit:
The Income and Expenditure of the Trust and of the institutions run by the Trust, shall be placed every month before the Board. The accounts of the Trust and of the institutions run by the Trust shall be placed every month before the Board. The accounts of the Trust shall be audited every year at the close of the year by Auditors appointed by the Board. The remuneration of the Auditors shall be fixed and paid by the Board of Trustees from the Trust funds.
10. AMENDMENT TO THE SCHEME:
Any amendment to or modification of this Scheme can be effected only by the High Court of Madras, upon filing an appropriate petition with notice to all the Trustees and no amendment can be carried out without following the said procedure and the High Court approving such amendment or modification.
17. It is made clear that the persons against whom the allegations have been made for inappropriately dealing with the properties of the Trust would not be entitled to contest the elections at any point of time.
Group No.2 Issues No.1 & 2 framed on 07.11.2003, Issue No.2 framed on 17.12.2004, 36/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 Issue No.1 framed on 01.04.2010 & Issue framed on 27.07.2010.
18. Since, a Report was given by the learned Arbitrator in the year 1991 and the suit had been instituted in the year 1994 and the same had been kept pending under one pretext or the other for almost three decades and the Report of the Arbitrator had suggested various modalities, hence, I am of the view that with regard to the claim of various defendants, who are the purchasers of the various properties of the Trust, anterior to the Report and even thereafter, shall all be taken up by the newly elected Board of the Trustees and shall leave it to the wisdom of the newly elected Board, pursuant to the Scheme framed supra and the respective purchasers shall place their claims before the newly elected Board of Trustees seeking for ratification of the sale transactions and as this Court under Section 92 of the CPC need not traverse into the various disputes that had been raised by the third parties even against each other. It is also pertinent to note that the properties had been sold in favour of two or three persons by the defendants 11 to 14 & 44 claiming to be the persons, who would be entitled to deal with the properties representing the first defendant. Group No.3 Issue No.3 framed on 01.04.2010 The said issue need not be gone in detail, as the Division Bench of this 37/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 Court in OSA No.296 of 2004, had given a categorical finding that the amalgamation does not have a legal force. Hence, the said issue is covered by the Division Bench of this Court and need not be specifically answered by this Court.
Group No.4 Issue No.2 framed on 01.04.2010.
In view of the reasonings and findings to the issue decided under Group No.1, there is no necessity to appoint a Receiver in respect of the properties belonging to the first defendant.
Group No.5 Issue No.6 framed on 06.06.2001 & Issue No.1 framed on 17.12.2024. The first defendant is the company incorporated under Section 25 for the purpose of Management of properties. The second defendant is an independent body that manages various churches through its Field Association divided into five regions. Considering the object of the first and second defendants, they cannot be said to be a subordinate division of one another. Hence, the said issues are answered negative.
38/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994
19. In view of the findings and reasonings arrived at by this Court supra, the Suit is decreed in respect of the prayers (a) & (f) and the Suit is dismissed in respect of prayers (b) & (e) and the Suit is decreed in terms of findings to the issue under Group No.2. Accordingly, this Suit is disposed of. Consequently, connected applications are also closed. No costs.
19.12.2024 Index : Yes / No Internet :Yes / No Gba 39/40 https://www.mhc.tn.gov.in/judis C.S.No.124 of 1994 K.KUMARESH BABU.J., Gba Pre-Delivery Judgment in C.S.(Com.Div)No.124 of 1994 19.12.2024 40/40 https://www.mhc.tn.gov.in/judis