Chembur Trombay Education Society & Others v. D.K. Marathe & Others (2001)

Introduction

The Bombay High Court in Chembur Trombay Education Society & Others v. D.K. Marathe & Others considered a dispute concerning the internal management of a public trust and the effect of changes made in its constitution and governing body while Change Reports relating to those changes were pending before the Charity Commissioner.

The Court examined whether a change reported under Section 22 of the Bombay Public Trusts Act, 1950 becomes effective only after its approval by the competent authority or whether it takes effect from the date on which the change actually occurs.

The Court also considered whether proceedings under Order XXXIX Rule 2-A of the Code of Civil Procedure could be initiated for alleged breach of consent terms after disposal of the suit, and whether the Civil Court could proceed with interim relief without first deciding an objection to its jurisdiction.

Background of the Case

Chembur Trombay Education Society was an educational society consisting of approximately 110 founder members. Shri D.K. Marathe was one of its founder members.

On 24 March 1985, the General Body of the Society amended its constitution and appointed Shri Marathe as the life President of the Society. He thereafter assumed charge and discharged the functions of the President.

Subsequently, differences arose between Shri Marathe and seven members of the Society. Those members were removed from the ordinary membership as well as the Governing Body. They challenged their removal before the City Civil Court, Bombay, by filing Short Cause Suit No. 5935 of 1992, after obtaining consent of the Charity Commissioner under Section 50 of the Bombay Public Trusts Act.

The seven members also questioned the authority of Shri Marathe to continue as life President.

Consent Terms and Disposal of the Earlier Suit

Short Cause Suit No. 5935 of 1992 was ultimately settled between the parties and, on 6 April 1994, the City Civil Court disposed of the suit in terms of the consent terms.

Under the settlement, the seven members acknowledged Shri Marathe as the life President of the Society and agreed not to question his tenure as President. In turn, they were recognised as members of the Society as well as members of the Governing Council.

The parties also agreed to cooperate with each other in achieving the objects of the Society and withdrew the allegations made against each other.

Fresh Dispute and Amendment of the Constitution

After the settlement, differences again arose between Shri Marathe and other members of the Society. One of the readmitted members, Shri Mahapankar, was again removed from the Governing Council by Shri Marathe.

Thereafter, a General Body meeting was convened on 7 January 1995, and a sub-committee was appointed to suggest amendments to the constitution of the Society.

A further General Body meeting was held on 19 March 1995. The General Body adopted amendments to the constitution, including deletion of the provision relating to the life Presidentship of Shri Marathe and introduction of an electoral system for the post of President and the Governing Council.

Thereafter, another General Body meeting was held on 18 June 1995. Shri B.M. Pant was elected as President and a new Governing Council was elected in accordance with the amended constitution.

The changes relating to the amendment of the constitution and the election of the new President and Governing Council were reported to the Charity Commissioner by filing Change Reports under Section 22 of the Bombay Public Trusts Act.

Change Report Proceedings

One of the relevant proceedings was Change Report No. 1456 of 1995. The Assistant Charity Commissioner rejected that Change Report on 6 June 1998.

The Joint Charity Commissioner thereafter restored the Change Report on 13 June 1998. The matter was subsequently carried before the City Civil Court in Charity Appeal Application No. 15 of 1998, where further orders were passed concerning the proceedings.

This procedural history was relied upon by Shri Marathe in support of his contention that the alleged changes could not be treated as having taken effect merely on the basis of the resolutions while the Change Report proceedings remained unresolved.

Fresh Proceedings Before the City Civil Court

Shri Marathe challenged the subsequent developments by filing Short Cause Suit No. 5470 of 1995 before the City Civil Court.

He sought declarations that the actions of the defendants were illegal, null and void and that he continued to be the life President of the Society under the earlier constitution.

He also sought to restrain the defendants from preventing him from acting as life President, from giving effect to the resolution dated 19 March 1995, from acting upon the amended constitution and from proceeding with the Change Reports filed before the Charity Commissioner.

In the fresh suit, Shri Marathe filed Notice of Motion No. 4762 of 1995 seeking interim relief.

Proceedings Under Order XXXIX Rule 2-A

Shri Marathe also filed Notice of Motion No. 4572 of 1995 in the earlier Short Cause Suit No. 5935 of 1992, alleging breach of the consent terms and seeking action under Order XXXIX Rule 2-A of the Code of Civil Procedure.

The High Court held that the earlier suit had already been finally disposed of in terms of the consent decree. The order dated 6 April 1994 was therefore not an interim injunction under Order XXXIX Rules 1 or 2, but a final decree based upon the consent terms.

Once the suit had been disposed of, the Court had become functus officio. Proceedings under Order XXXIX Rule 2-A could therefore not be invoked in the disposed-of suit for enforcement of the consent decree.

If there was a breach of the terms incorporated in the consent decree, the appropriate remedy was to seek enforcement of the decree in accordance with law.

Consent Order and Contempt Jurisdiction

The High Court gave an additional reason for rejecting the proceedings based upon the alleged breach of the consent terms.

The Court referred to Babu Ram Gupta v. Sudhir Bhasin, AIR 1979 SC 1528 and Ahmed R.V. Peermohamed v. Jogi S. Bhar, 1989 (2) Bom.C.R. 592 while considering the distinction between breach of a consent order and breach of an express undertaking given to the Court.

The Court held that a mere consent order or consent decree does not, by itself, amount to an undertaking to the Court. In the absence of an express undertaking given to the Court, breach of the consent terms could not be treated as contempt merely because those terms had been incorporated into the Court’s order.

On behalf of Shri Marathe, reliance was also placed upon Raje Anandrao v. Shamrao, AIR 1961 SC 1206 and Chiranjilal v. T.I. Corporation, AIR 1959 Bom 396. These authorities were relied upon in relation to the representative character of proceedings and the application of principles such as res judicata in suits of that nature.

The High Court, however, held that these decisions were inapposite to the question before it. The issue was whether Notice of Motion No. 4572 of 1995 under Order XXXIX Rule 2-A could be maintained in a suit which had already been finally disposed of by a consent decree. The authorities relied upon by Shri Marathe did not answer that question.

Thus, apart from the fact that the Court had become functus officio after disposal of the suit, the alleged breach of the consent decree did not provide a basis for contempt in the absence of an express undertaking to the Court.

Issues Before the High Court

The High Court was principally required to consider whether proceedings under Order XXXIX Rule 2-A were maintainable after disposal of the earlier suit; whether the amendments and changes made by the General Body remained ineffective until acceptance of the Change Reports; and whether the City Civil Court could proceed to grant interim relief without first deciding the objection to its jurisdiction.

The effect and scope of Section 22 of the Bombay Public Trusts Act therefore became an important part of the controversy.

Effect of a Change Under Section 22

It was contended that although the General Body had amended the constitution and elected a new President and Governing Council, those changes could not become effective until the Change Reports were accepted by the competent authority under Section 22.

The Bombay High Court rejected this contention.

The Court relied upon the decision of the Supreme Court in Managing Committee, Khalsa Middle School v. Smt. Mohinder Kaur, AIR 1993 SCW 3006. That case considered an analogous provision under Section 12-A of the Societies Registration Act concerning changes in the name of a society.

While considering when a change can be said to have occurred, the Court also referred to the meaning of the word “occur” in Black’s Law Dictionary. The reasoning supported the distinction between the occurrence of the change itself and its subsequent reporting or approval by the statutory authority.

The High Court held that Section 22 does not provide that a change becomes effective only after it is approved by the authority. The provision requires a change which has occurred to be reported to the prescribed authority.

Accordingly, the Court held that the change takes effect from the date of the resolution by which the change is brought about and not from the date on which the Change Report is subsequently approved.

Therefore, the mere pendency of the Change Report did not mean that the amendments made by the General Body and the consequential changes remained inoperative until their formal acceptance.

Scope of Inquiry Under Section 22

At the same time, the Court did not treat the inquiry under Section 22 as a mere formality.

The Court referred to Jagatnarayansingh Swarupsingh Chithere and Others v. Swarupsingh Education Society and Another and recognised that the inquiry under Section 22 is not confined merely to the factum of the change but extends to its legality and validity as well.

Thus, acceptance of a Change Report is not the event which necessarily creates the change. At the same time, the competent authority retains jurisdiction to examine whether the reported change was legally and validly brought about.

The distinction is therefore between the occurrence and effective date of the change and the statutory determination of its legality and validity under Section 22.

Section 80 and the Jurisdiction of the Civil Court

The appellants had specifically objected to the jurisdiction of the City Civil Court. They contended that the dispute involved matters which were required to be determined by the authorities under the Bombay Public Trusts Act.

For this purpose, reliance was placed upon Section 80 of the Bombay Public Trusts Act, which bars the jurisdiction of the Civil Court in respect of questions which are required under the Act to be decided by an officer or authority under the Act.

The Court considered Dinanath Ajabrao Ingole v. Shetkari Shikshan Prasarak Mandal, AIR 1983 Bom 404, which was relied upon in relation to the maintainability of a Civil Suit while Change Report proceedings were pending before the Charity Commissioner.

The Court also considered Jagatnarayansingh Swarupsingh Chithere, which recognised that the inquiry under Section 22 extends to the legality and validity of the change and is not confined merely to determining whether the change factually occurred.

In view of these authorities and the specific objection raised by the appellants, the question of the Civil Court’s jurisdiction required determination before the Court proceeded to decide the application for interim relief.

Section 9-A and the Preliminary Issue of Jurisdiction

The defendants had specifically requested the City Civil Court to decide the objection to its jurisdiction before considering the merits of the interim application.

The trial court nevertheless proceeded to consider the controversy on merits.

The Bombay High Court held that this approach was contrary to Section 9-A of the Code of Civil Procedure as it then applied in Maharashtra.

In this context, the Court referred to Meher Singh v. Deepak Sawhny, 1999 (1) Bom.C.R. (O.O.C.J.) 107. The principle was that where an objection to jurisdiction was raised in circumstances attracting Section 9-A, the Court was required to determine that issue at the threshold.

The trial court therefore could not proceed to determine the application for interim relief on merits without first deciding the preliminary issue concerning its jurisdiction.

Ratio Decidendi

Final Order

The Bombay High Court held that both Notices of Motion filed by Shri Marathe ought to have been dismissed by the trial court.

Since a specific objection to the jurisdiction of the Civil Court had been raised, the trial court was required to frame and decide that issue first in accordance with Section 9-A before proceeding further with the suit.

Accordingly, Appeal From Order No. 1260 of 1995 and Appeal From Order No. 1256 of 1995 succeeded.

The impugned order dated 17 October 1995 was set aside with costs throughout.

Conclusion

The Bombay High Court held that a change under Section 22 of the Bombay Public Trusts Act does not remain ineffective merely because the Change Report concerning it is pending. The change takes effect from the date of the resolution by which it is brought about and not merely from the date of its subsequent approval.

At the same time, the statutory inquiry under Section 22 extends not only to whether the change occurred but also to its legality and validity. The judgment therefore distinguishes between the effective date of a change and the statutory determination of whether that change was legally and validly brought about.

The Court further held that proceedings under Order XXXIX Rule 2-A could not be used in the already disposed-of suit to enforce the consent decree, and that a jurisdictional objection falling within the then-applicable Section 9-A procedure had to be decided before the trial court proceeded to consider interim relief.

Case Details

Case: Chembur Trombay Education Society & Others v. D.K. Marathe & Others

Court: Bombay High Court

Bench: A.M. Khanwilkar, J.

Case Nos.: Appeal From Order No. 1260 of 1995 with Civil Application No. 6599 of 2000, with Appeal From Order No. 1256 of 1995

Date of Decision: 01-10-2001

Citation: 2002 (3) Bom.C.R. 161

Statutes Considered: Bombay Public Trusts Act, 1950 – Sections 22 and 80; Code of Civil Procedure, 1908 – Section 9-A and Order XXXIX Rule 2-A

Result: Both appeals allowed; impugned order set aside with costs throughout.

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