Delhi High Court
Krishak Bharti Co-Operative Ltd. vs Iffco Tokio General Insurance Co. Ltd. ... on 28 October, 2005
Equivalent citations: 125(2005)DLT45, 2005(85)DRJ183
Author: R.C. Jain
Bench: R.C. Jain
JUDGMENT R.C. Jain, J.
Page 1879
1. The vexed question as to what can be said to be the act(s) touching the constitution, management or business of a co-operative society /multi-State cooperative society under various State Co-operative Societies Acts and Multi-State Cooperative Societies Act which has received the consideration of the Apex Court and various High Courts in several decisions is once again required to be considered in the present case which on account of the peculiarity of the facts of the present case has assumed greater importance because this time two multi-State co-operative societies e.g. defendant No. 2 (IFFCO) and the plaintiff (KRIBHCO) are pitched in a legal battle against each other.
2. A somewhat detailed background of the case which led to the filing of the present suit is necessary at the outset. Both, the plaintiff (KRIBHCO) and defendant No. 2 (IFFCO) are the Multi-State Cooperative Societies under the provisions of Multi-State Co-operative Societies Act, 1984 and were governed by the provisions of the said Act until the enactment of the new Act viz. Multi-State Co-Operative Societies Act, 2002 (Act 39 of 2002) (for short the Act). They are primarily engaged in the business of manufacture, sale and distribution of fertilizers . Government of India owns more than 60 % of the plaintiff's equity and the remaining equity is held by Co-operative Societies. IFFCO was one of its promoter members and held around 19% equity in the share capital of KRIBHCO, and similarly KRIBHCO also held equity of Rupees 5.00 lacs in the share capital of IFFCO. Defendant No. 3 (Tokio Marine and Fire Insurance Company Limited) (for short 'Tokio Marine') is a company incorporated under the laws of Japan engaged in the business of Marine, Fire and other types of non-life insurance in Japan. In the year 2000, IFFCO decided to enter general insurance business with Tokio Marine and signed a Joint Venture Agreement (JVA) on 17.11.2000 and it was agreed that IFFCO and Tokio Marine shall maintain their respective shareholding in the ratio of 76:24 either directly or through their respective Affiliates or Associates. As per the definition of 'Associate' appearing in the JVA, KRIBHCO is one of the Associates of IFFCO and its name appears at Serial No. 1 of Appendix-A of the said JVA. Pursuant to the JVA, a joint venture company by the name of IFFCO TOKIO Page 1880 General Insurance Company Limited (in short 'ITGI'), defendant No. 1 was incorporated under the Companies Act, 1956. It is the case of the plaintiff that before issuing the certificate of registration to the JVC as per the requirement of Insurance Regulatory Development Authority (IDRA), KRIBHCO was required to submit an affidavit as co promoter of ITGI which it did and only thereafter IDRA granted the certificate of registration. Pursuant to the said understanding, KRIBHCO agreed to invest a sum of Rs. 20.00 crores in the equity of the JVC for purchase of twenty million equity shares of Rs. 10/- each as an 'Associate' of IFFCO and co-promoter of the JVA representing 20% of the subscribed capital of JVC and was allotted shares with distinctive numbers. Thereafter, a Deed of Adherence (DoA) dated 22.4.2002 was executed by virtue of which KRIBHCO became an original party to the JVA dated 17.11.2000. The plaintiff also claims to have borne out the proportionate expenses of over Rs. 12.00 lacs in the preparation, negotiation, execution and registration of the JVC. Plaintiff and defendant No. 2 also signed a Memorandum of Understanding (MoU) dated 30.7.2002 containing an arbitration agreement.
3. The Multi-State Co-operative Societies Act, 2002 came into force on 19.8.2002. Section 29(a) of the said Act provides that no person shall be eligible for being a member of a multi-State cooperative society if his business is in conflict or in competition with the business of such multi-State cooperative society, while Section 43 & (k) of the Act provides that no member of a multi-State cooperative society or a nominee of a member, society or national cooperative society shall be eligible for being chosen as, or for being, a member of the board of such multi-state co-operative society or a national co-operative society, or of any other co-operative society to which the multi-State co-operative society is affiliated, if such member has interest in any business of the kind carried on by the society of which he is a member. Under Section 43(1)(k) a member who is disqualified from being a member under Section 29 of the Act is also disqualified for being a member of the Board of Directors of the multi-State cooperative society. Section 122 of the Act empowers the Central Government to issue directions to a multi-State cooperative society if the Central Government is satisfied that in the public interest or for the purpose of securing proper implementation of cooperative production and other developmental programs approved or undertaken by the Central Government or to secure proper management of the business of the specified multi-State co-operative societies generally or for preventing the affairs of the such society being conducted in manner detrimental in the interest of the members it is necessary to issue such directions. In order to give effect to the above provisions and in exercise of the powers conferred by Section 122 of the Act, the Central Government passed an order dated 28.9.2004 issued a direction to the plaintiff to suitably amend its bye- laws Nos. 6(a)(vii), 21(e), 38(iii) & 51 (a) (6-7) in line with Section 29(a) & 43(1)(f) of the Act so as to remove the nominees of their commercial/business competitors like IFFCO and others from its Board of Directors and Board Committees etc. and to repatriate their entire equity stake in KRIBHCO forthwith. Accordingly, on 4.10.2004 KRIBHCO returned IFFCO's equity contribution of Rs. 97.00 crore in the share capital of KRIBHCO. Similarly, IFFCO, as it was legally bound to do so under the provisions of the Act, Page 1881 returned to KRIBHCO equity contribution of Rs. 5.00 lacs in the share capital of IFFCO. After the return of the equity capital, IFFCO presumed that KRIBHCO had ceased to be an 'Associate' of IFFCO and denied it the status of an 'Associate' and asked KRIBHCO to transfer its shareholding in JVC back to IFFCO and sought to remit a sum of Rs. 23,17,19,000.00 towards the alleged fair market value of 20 million shares held by KRIBHCO in the JVC with a request to transfer its share holding in the JVC back to IFFCO. This act of IFFCO is stated to be unauthorized, arbitrary and contrary to the letter and spirit of the JVA, DoA and the Articles of Association of JVC. Plaintiff claims that being the original subscriber and allottee of the shares of the JVC and despite the statutory change and the direction of the Central Government issued under Section 122 of the Act, the plaintiff's status as an 'Associate' of IFFCO and that of an original promoter member of JVA remains unaffected. The plaintiff has, accordingly, filed the present suit for a declaration that it is and continues to be an 'Associate' of IFFCO for the purpose of and in terms of the JVA, the Deed of Adherence and, as such, continues to be shareholder holding 20% equity in ITGI. As a consequential relief, plaintiff has also sought to restrain ITGI from effecting the same by making any amendment or taking any step in that behalf in the JVA or Articles of Association of the JVC or by performing in that behalf any other act, action or deed of any nature in that behalf.
4. It is pertinent to note here that before filing the present suit, the plaintiff had filed an application (OMP 392/2002) under Section 9 of the Arbitration and Conciliation Act, 1996 based on the arbitration clause contained in the MoU dated 30.7.2002 between the plaintiff and defendant No. 2. Only IFFCO was imp leaded as the respondent in those proceedings. However, the said application was opposed by defendant No. 2, inter alia, on the ground that the reliefs claimed in the said petition and interim applications by the plaintiff will affect the rights of the shareholders of defendant No. 1 (ITGI), its indoor management and various other entities which were neither parties to the arbitration agreement under the MoU between IFFCO and KRIBHCO nor they could be made parties to the petition under Section 9 of the Arbitration and Conciliation Act. In their reply to the said applications, IFFCO also disclosed that by a settlement agreement dated 24.3.2003 Tokio Marine shares have been transferred to M/s Millea Holdings and/or Millea Asia (defendants No. 4 & 5) and that by means of a Supplemental Agreement No. 2 dated 6.11.2004, the name of plaintiff had been deleted and the names of NCDEX and NCMSL have been added to the list of 'Associates' in Appendix-A to the JVA. Consequently, under the above circumstances plaintiff sought withdrawal of the said petition and vide order dated 1.12.2004, the Court permitted the plaintiff to withdraw the petition with liberty to seek appropriate remedy as may be available to them. Thereafter the present suit was filed with the above averments and allegations and for the said reliefs.
5. Before filing their written statement of defense, defendants have filed two applications, one moved on behalf of the defendant No. 1 under Section 115 of the MULTI STATE CO-OPERATIVE SOCIETIES ACT, 2002 ( Act 39 of 2002) (For short 'The Act') read with Order 7 Rule 11 and Section 151 and the Page 1882 other moved by defendant No. 2 under Section 151 CPC, (should be 115 of the Act) with identical prayer to dismiss the suit of the plaintiff for non-compliance of the provisions of Section 115 of the Act by the plaintiff before filing of the present suit.
6. The applications have been made with the averments that defendant No. 2 (IFFCO) is a multi state cooperative society registered under the provisions of Bombay Cooperative Societies Act, 1925 as extended to the Union Territory of Delhi. Upon the enactment of the Multi State Cooperative Societies Act, 1984 it came to be governed by the said Act. Similarly the plaintiff is also a multi state cooperative society and is governed by the Act of 2002. It is averred that the reliefs claimed by the plaintiff in the suit relate to the acts touching the constitution, management or the business of the multi-state cooperative society i.e. defendant No. 2 and, therefore, before seeking any relief against the defendant No. 2 in the suit, the plaintiff by virtue of provisions of Section 115 of the Act was obliged to serve a mandatory notice of 90 days on the Central Registrar and as no such notice was served by the plaintiff, the plaintiff is not entitled to institute the suit or claim any relief much less the reliefs sought for in the present suit. Therefore, the suit is liable to be dismissed.
7. The applications are opposed by the plaintiff by filing separate replies raising preliminary objection that defendant Nof.1 has no locus standi to file the application under Section 115 of the Act because it is not a multi-state cooperative society governed by the provisions of the Act; the application is frivolous, wholly misconceived and not maintainable. On merits it is not denied that plaintiff and defendant No. 2 are multi-state cooperative societies within the meaning of the Act and are governed by the provisions of the said Act. However, it is explained that the acts of defendant No. 2 complained in the suit and the reliefs claimed in the suit are not relatable to either constitution, management or business of the society defendant No. 2 and, therefore, the plaintiff was not obliged to serve any notice on the Central Registrar as envisaged by Section 115 of the Act. It is further stated that although the bye-laws of IFFCO provide for its engagement in General Insurance business but the truth of the matter is that so far IFFCO has not engaged itself in General Insurance business on its own account. In any case it is explained that the general insurance business is the business of defendantNo.1 ITGI and cannot be said to be the business of IFFCO inasmuch as IFFCO is only a shareholder and participant in the equity of ITGI. It is denied that the suit of the plaintiff is in respect of any act touching the constitution, management or business of IFFCO in any manner. It is denied that the suit is liable to be dismissed for non-compliance of the provisions of Section 115 of the Act on the Central Registrar.
8. I have heard Mr. Prag Tripathi, learned Senior Counsel representing ITGI/defendant No. 1, Mr. A.S. Chandhiok, learned Senior Counsel representing defendant No. 2/IFFCO and Mr. Sunil Gupta, Advocate representing the plaintiff at great length and have bestowed my utmost consideration to their respective submissions.
9. In the present case it is not disputed that one of the defendants i.e. defendant No. 2 (IFFCO) is a Multi-State Cooperative Society and that before Page 1883 filing of the present suit, plaintiff has not served any notice on the Central Registrar as envisaged by Section 115 of the Act. The case of the plaintiff is that provisions of Section 115 are not attracted in the case in hand because the present suit is primarily against joint venture company (ITGI) defendant No. 1 which is a company registered under the Companies Act, 1956 and not a multi-State cooperative society and the claims in the suit at best relates to acts touching the constitution of the said company and not its management or business. According to Mr.Gupta, the suit does not pertain to any act(s) relating to the constitution, management or business of IFFCO. Therefore, the core question, answer of which will decide the fate of these applications is as to whether the provision of Section 115 of the Act are attracted to the present suit having regard to the true nature and character of the present suit. Section 115 of the Act reads as under:-
"115. Notice necessary in suits.-- No suit shall be instituted against a multi-State co-operative society or any of its officers in respect of any act touching the constitution, management or the business of the society until the expiration of ninety days next after notice in writing has been delivered to the Central Registrar or left at his office, stating the cause of action, the name, description and place of residence of the plaintiff and the relief which he claims, and the plaint shall contain a statement that such notice has been so delivered or left."
10. Mr.A.S.Chandhiok, learned senior counsel representing IFFCO has, in the first instance, emphasised on the mandatory nature of the provision of Section 115 of the Act and for that purpose he sought to draw a parity between this provision and Section 80 CPC as it existed before the amendment of the Code of Civil Procedure (Amendment) Act 1976. According to him, the two provisions are parimateria and their compliance is mandatory before filing of a suit. In this connection he has placed reliance on decisions of Andhra Pradesh and Patna High Court. In the case of Union of India v. Eastern Match Co. Tirumangalam the Court had the occasion to consider the scope of Section 80 of the CPC and held as under:
"It is well-established by the pronouncements of the highest tribunals that the terms of this Section are imperative, and that a suit not complying with its provisions cannot be entertained by any Court and, if instituted, must be rejected under Order VII CPC Rule II, Even where the Government was only a pro-forma defendant, it was held that a notice under this Section is necessary. The notice must substantially fulfilll the object in informing the parties concerned generally of the nature of the suit intended to be filed, and it is essential, having regard to the language of Section 80, that notice should state the names, designations and places of residence of all the plaintiffs."
11. A similar view was taken by Patna High Court as far back as in the year 1938 in the case of Baldfoe Prasad v. Sukhi Singh AIR 1938 Patna 127. On the facts of the said case, the Court further held that Section 80 applied to all suits in which the Secretary of State is a defendant and its provisions cannot Page 1884 be relaxed in cases in which the Secretary of State happens to be only one of the defendants. Further that where the plaint in such a suit does not contain a statement that notice required by Section 80 has been issued to the Secretary of the State, the plaint is a defective and the Code of Civil Procedure intends that a plaint which is defective in this manner is liable to be rejected as a whole under Order VII rule 11(d). Non-compliance of the requirement of Section 80 was treated to be a ground covered by Order VII Rule 11(d). On the strength of this authority, Mr.Chandhiok also contended that the plaint is liable to be rejected in the case in hand inasmuch as it does not contain either an averment to the effect that the plaintiff has complied with the provisions of Section 115 of the Act by serving a notice upon the Central Registrar or an averment that in the reckoning of the plaintiff compliance of the above provision was not necessary. In absence of any of these averments, the plaint should be rejected. Mr. Gupta, learned senior counsel appearing for the plaintiff has, controverter this submission on the premises that the present suit is not one before institution of which the plaintiff was required to comply with the provisions of Section 115 of the Act and consequently there was no question of incorporating a negative averment in that behalf in the plaint. Since it is the plea of the plaintiff that no notice as contemplated by Section 115 of the Act was necessary before filing of the present suit, therefore, omission to make a reference in regard to the non-compliance of the provisions of Section 115 cannot be said to be fatal and the plaint cannot be rejected on this ground alone.
12. Mr. Chandhiok, learned counsel for defendant No. 2-society has then tried to interpret the provisions of Section 115 of the Act in a manner so as to lead to the conclusion that the phrase 'in respect of any act touching the constitution, management of the business of the society' are relatable to only the suits which could be instituted against the officers of multi state co-operative society and not against the multi state co-operative society itself. According to him, so far as the multi-State co-operative society is concerned, there is an absolute bar against the institution of suit of any kind against such a society even though the suit may not be in respect of any act touching the constitution, management or the business of society. This Court is unable to accept such a construction of this provision. On a bare and cohesive reading of Section 115 of the Act and applying the golden principle of interpretation of statute that the language of a statute is to be given the normal meaning which can be derived from such language, it is not possible to hold that Section 115 contains an absolute embargo for filing a suit of any kind or for any relief against a multi state co-operative society, even if the suit does not relate to any act(s) touching the constitution, management or the business of society. The phrase commencing in respect of any act touching the constitution, management or the business of the society not only governs the suits against the officers of the multi state co-operative society but a multi state co-operative society as well. Though this Court is not in agreement with the interpretation of Section 115 as put-forth by Mr.Chandhiok, but it is in full agreement that the provisions of Section 115 are mandatory and must be complied with, whenever a suit is sought to be instituted against a multi state cooperative society or any of its officers in respect of any act touching the constitution, management or the business of a Multi-State cooperative society.
Page 1885
13. The main plank of the submissions of Mr.Parag Tripathi and Mr.Chandhiok, learned senior counsel representing defendants No. 1 and 2 is that the present suit filed by the plaintiff for the reliefs claimed therein is clearly in respect of the acts touching the business of IFFCO. In this connection attention of the Court has been invited to the averments contained in para-3 of the plaint as also to the bye-laws of IFFCO. In para-3 of the plaint, the plaintiff has itself averred 'that the defendant No. 2, Indian Farmers Fertilizer Cooperative Limited (hereinafter referred to as 'IFFCO') is a Multi State Cooperative Society governed by the Act and is, inter alia, engaged in the business of manufacture, sale and distribution of fertilizer and that of General Insurance, IFFCO is also a party to the said JVA dated 17.11.2000 and DoA dated 22.4.2002'. Bye-law (3) of the bye laws of IFFCO as amended up to 13th June, 2005 list out the objects and activities which can be carried out by the IFFCO. General insurance business is one such activity which can be undertaken by IFFCO. Mr.Gupta, learned senior counsel representing the plaintiff has not disputed this position but he has tried to explain that the mention made in para-3 is due to some inadvertence and cannot be relied upon by defendant No. 1 and 2 in as much as defendant No. 2 in reply to para 5(3) of the plaintiff's application under Section 9 had clearly denied that IFFCO is engaged in the business of general insurance. In the said reply, defendant No. 2 stated as under:-
"5(3)...IFFCO is the largest producer of Chemical fertilizers in the co-operative sector in the world. It manufactures urea, DAP and NPK fertilizers. However, it is incorrect to say that IFFCO is engaged in the business of general insurance. The business of general insurance is being carried on by an independent joint venture company namely, IFFCO-Tokio General Insurance Co. Ltd. (ITGI), promoted by IFFCO and Tokio Marine and Fire Insurance Co.Ltd., Japan"
Reference is also made to the reply of ITGI in its written statement filed in the present suit.
"5(3)...In reply to para 3 of the suit it is stated that IFFCO is the largest producer of Chemical fertilizers in the co-operative sector in the world. However, it is incorrect to say that IFFCO is engaged in the business of general insurance. The business of general insurance is being carried on by an independent joint venture company, the defendant No. 1, promoted by IFFCO and Tokio Marine and Fire Insurance Co.Ltd., Japan."
14. Mr.Gupta also contended that defendant No. 2 cannot claim that the general insurance business of IFFCO is its own business merely because IFFCO is holding majority shares in ITGI. According to him business of a company is not and cannot be the business of its shareholders, directors, promoters etc. even if the said persons enjoyed a majority of shares in that company. In this regard, he has referred to the well celebrated decision of the House of Lords in the case of Salomon v. Salomon & Company Limited (1895-9) All England Report ER 33 laying down the basic principle that a company is a legal entity distinct from individual members who compose it and the decisions of the members of a company and the directors or the Page 1886 members of the company cannot claim the business of the company as their own business. In the case of Dharam Dutt and Ors. v. UOI and Ors. the Supreme Court held that once a company or incorporation is formed, the business which is carried on by the said company or corporation is the business of the company or corporation and is not the business of the citizens who get the company or corporation formed or incorporated. Further that the rights of the incorporated body must be judged on that footing alone and cannot be judged on the assumption that they have rights attributable to the business of individual citizens. In view of this legal position, this Court has no hesitation in holding that IFFCO merely by virtue of their holding majority equity in ITGI cannot claim that the business of ITGI is its business. However, by virtue of bye laws of IFFCO, they can certainly claim that they are engaged in the business of general insurance through ITGI which is a vehicle to carry out the joint venture entered into between IFFCO and Tokio Marine.
15. It needs to be further considered if the present suit can be said in relation to and touching the business of IFFCO. Mr.Gupta has strongly contended that the expression 'touching the business' means the actual trading or commercial or other similar activities of the society which the society is authorised to enter into under the Act and the rules and its bye laws. According to him, it applies only to the object and purpose for which the society has been set up and registered but will not apply to every activity performed by the society, even if it is needed or required to be performed for the purposes of carrying out its objects. He submits that a dispute pertaining to many activities of a society have been held to be not the dispute, touching the business of the society. The question has been morefully considered by the Supreme Court in the case of Deccan Marines Cooperative Bank v. Dulichand AIR 1969, SC 1320. In that case the Supreme Court examined the question as to what is the meaning of the expression 'touching the business of the society' appearing in Section 91(1) of the Maharashtra Cooperative Societies Act and held as under in paras 17, 18 and 22 as under:
"17. The answer depends on the words used in the Act. Although number of cases have been cited to us on similar expressions contained in various other Acts, both Indian and English, in the first instance, it is advisable to restrict the enquiry to the terms of the enactment itself because the legislatures have been changing the words and expanding the scope of references to the arbitrators or to the Registrars step by step. The sentence, namely, 'notwithstanding anything contained in any other law for the time being in force' clearly ousts the jurisdiction of Civil Courts if the dispute falls squarely within the ambit of Section 91(1). Five kinds of disputes are mentioned in sub-sec. (1); first, disputes touching the constitution of a society; secondly, disputes touching election of the office-bearers of a society; thirdly, disputes touching the conduct of general meetings of a society; fourthly, disputes touching the management of a society; and fifthly, disputes touching the business of a society. It is clear that the word Page 1887 'business' in this context does not mean affairs of a society because election of office-bearers, conduct of general meetings and management of a society would be treated as affairs of a society. In this sub-section the word 'business" has been used in a narrower sense and it means the actual trading or commercial or other similar business activity of the society which the society is authorised to enter into under the Act and the Rules and its bye-laws.
18. The question arises whether the dispute touching the assets of a society would be a dispute touching the business of a society. This would depend on the nature of the society and the rules and bye-laws governing it. Ordinarily, if a society owns buildings and lets out parts of buildings which it does not require for its own purpose it cannot be said that letting out of those parts is a part of the business of the society. But it may be that it is the business of a society to construct and buy houses and let them out to its members. In that case letting out property may be part of its business. In this case, the society is a co-operative bank and ordinarily a co-operative bank and ordinarily a co-operative bank cannot be said to be engaged in business when it let out properties owned by it. Therefore, it seems to us that the present dispute between a tenant and a member of the bank in a building which has subsequently been acquired by the Bank cannot be said to be a dispute touching the business of the Bank, and the appeal should fail on this short ground.
22. While we agree that the nature of business which a society does can be ascertained from the objects of the society, it is difficult to subscribe to the proposition that whatever the society does or is necessarily required to do for the purpose of carrying out its objects can be said to be part of its business. We however, agree that the word 'touching' is very wide and would include any matter which relates to or concerns the business of a society, but we are doubtful whether the word 'affects' should also be used in defining the scope of the word 'touching'."
16. Mr.Sunil Gupta, learned counsel for the plaintiff has strongly urged that having regard to the true nature and character of the suit as would be disclosed from a reading of the plaint it cannot be said that the present suit is in respect of any act touching the business of society IFFCO. According to him, the suit is with regard to certain grievances relatable to defendant No. 1 ITGI. According to him, the disputes raised in the present suit, inter alia, are as follows:
(i)"The purported transfer of rights and interests of Tokio Marine in ITGI to Millea Holdings and Millea Asia by an alleged amendment of the JVA constituting the ITGI (Supplemental Agreement No. 1) without the consent and signature of KRIBHCO which is absorbed as an original party to the JVA.
(ii)The legality and validity of the amendment of JVA constituting the ITGI whereby certain parties, including a wholly unauthorised party such as Millea Asia sought to exclude KRIBHCO from the JVA (Supplemental Agreement No. 2) without the consent and signature of KRIBHCO which is absorbed as an original party to the JVA.
(iii)The legality and validity of the amendment of JVA constituting the ITGI (Supplemental Agreement No. 2) for substitution of KRIBHCO with NCDEX and Page 1888 NCMSL in the list of 'associates' in the JVA constituting the ITGI as well as the Articles of Association of ITGI.
(iv)The true scope and meaning of the expressions 'associate' and 'ceasing to be an 'associate' in the JVA constituting the ITGI and the DOA entered in pursuance thereof.
(v)The legality and validity of the acts and steps taken by Executive Committee, Board of Directors, and General Body of ITGI seeking to amend the Articles of Association of ITGI in order to delete KRIBHCO from the list of 'associates' even at a time when the purported amendment to exclude KRIBHCO from the JVA had not taken place.
(vi)The legality and validity of the acts and steps taken by ITGI seeking to amend the Articles of Association of ITGI in order to delete KRIBHCO from the list of 'associates' without complying with the mandatory provisions of service of notice on the Director, Shri Chandra Pal Singh (KRIBHCO's nominee) under Sections 169/286 of the Companies Act and Article 4.6.2 of the JVA constituting the ITGI."
17. It is no doubt true that the suit, in fact, raises the above disputes but nevertheless the main reliefs claimed in the present suit are in relation to certain acts of omission and commission on the part of IFFCO, defendant No. 2. In the present suit the plaintiff mainly seeks to challenge the action of IFFCO, defendant No. 2 in denying the plaintiff's status of an 'associate', in order to usurp the share holding of the plaintiff in ITGI on an arbitrary presumption that on return of the equity shares of KRIBHCO, due to operation of law, KRIBHCO stood dis-associated from IFFCO thereby losing its status as an associate of IFFCO. Based on those actions of IFFCO, defendant No. 2, the main relief claimed by the plaintiff are as under:
"(a) declare that the plaintiff is and continues to be an Associate of IFFCO (Defendant No. 2) for the purposes of and in terms of the JVA, the Deed of Adherence and the Articles of Association of ITGI (Defendant No. 1) and as such continues to be share holder holding 20% equity in ITGI (Defendant No. 1) and, by way of consequential relief, restrain ITGI (Defendant No. 1) from affecting the same by making any amendment or taking any step in that behalf in the JVA or Articles of Association of the JVC or by performing in that behalf any other act, action or deed of any nature;
(b) declare that the actions, claims and deeds of Defendants No. 1 to 5 made by way of amendments to the JVA by means of Supplemental Agreement No. 1 dated 24.3.2004 and Supplemental Agreement No. 2 dated 6.11.2004 to be illegal, ineffective, null and void; and, by way of consequential relief, restrain the said Defendants from giving effect to the said Supplemental Agreements in relation to the plaintiff or otherwise in any manner."
18. It is noteworthy that unless the plaintiff succeeds on the above claims and reliefs (a) & (b) (supra), other claims and reliefs sought by it cannot be granted. Having regard to the true nature of the claims and reliefs (a) and (b) (supra), it would appear to the Court if the plaintiff succeeds on these claims or is granted any of these reliefs, it would resultantly affect the constitution Page 1889 and management not only of ITGI, defendant No. 1 but also of IFFCO, defendant No. 2. The proposed actions of ITGI, defendant No. 1 sought to be challenged in the present suit necessarily arise out of the actions of defendant No. 2 IFFCO.
19. According to Mr.Gupta, the main thrust of the plaintiff's case in the present suit is that the plaintiff being an original party to the JVA, it being a promoter of JVC in terms of JVA, Deed of Adherence and Memorandum of Understanding, the position of the plaintiff could not be altered pursuant to certain actions taken by defendant No. 2. In other words the case of the plaintiff is that independent of the actions taken by IFFCO in returning the equity of the plaintiff and plaintiff returning the equity of IFFCO pursuant to the directions issued by the Central Government under Section 122 of the Act, the plaintiff continues to be an Associate of IFFCO as well as ITGI. At this stage, this Court can only make one observation that the plaintiff acquired the status of an Associate of ITGI primarily by virtue of its status as an Associate if IFFCO and not independent of the said status. Once the plaintiff has ceased to be an Associate of IFFCO by virtue of the statutory change brought about in the constitution and management of both KRIBHCO and IFFCO, KRIBHCO cannot claim that it continues to be a part of JVC. However, this is an important question which can only be considered in a duly framed and instituted suit.
20. Thus on a careful consideration of various averments and allegations made in the plaint and having regard to the nature and extent of reliefs claimed in the suit, it would appear to the Court that in essence the plaintiff's challenge is to those acts of IFFCO, defendant No. 2 which touches not only the business of a Multi-State Cooperative Society but also touches its constitution and management. That being so, the plaintiff was under a statutory obligation to serve a notice on the Central Registrar of the Multi-State Cooperative Societies as envisaged by Section 115 of the Act before filing of the suit. Since no such notice has been served, the present suit is hit by the provisions of Order VII Rule 11 clause (d) CPC as barred by law.
21. In the result, IA Nos. 684/2005 & 1851/2005 are hereby allowed and plaintiff's suit is hereby dismissed as not maintainable. The ad interim order dated 4.12.2004 is hereby vacated. Needless to mention that the observations made herein above are relevant only for the purpose of disposal of these applications and are not on the merits of the claims raised by the plaintiff in the present suit.