Thulasi Das Mavuji and Others vs Alleppey Chamber of Commerce and Others

Vithayathil, J.—This is a petition for a writ of ''certiorari'' under Article 226, Constitution of India, read along with Article 238. The 1st counter-Petitioner in this case is the Alleppey Chamber of Commerce, a Company incorporated under the Travancore Companies Act. It has got a Produce Section which was started in 1947. Ext. 1 is the bye-laws, Rules and Regulations of the Produce Section of the Company. The main objects of the Produce Section are "to promote, support, and protect the character, status and interests of the merchants in general and those engaged in Produce Trade in particular, to define the customs and usages of such trade, to make rules and regulations conducive to just and honourable practices therein, to consider all questions affecting the interests of Produce Trade, to adjust controversies, to arbitrate upon and settle disputes of all kinds, to appoint arbitrators and umpires and experts to make awards and decisions, and generally to encourage and stimulate fair and honourable trading, to collect, print, publish and circulate statistics and other information relating to the Produce Trade and to do all such things necessary or conducive to the promotion of Produce Trade." The business of the Produce Section is managed by a committee including the President of the Alleppey Chamber of Commerce who shall always be the President of the Produce Section. The other members of the Committee are elected annually at the General Meeting of the Produce Section. The Committee has got an. Honorary Secretary and Treasurer. The 2nd counter-Petitioner is the present Honorary Secretary. The other counter-Petitioners are members of the Committee. There are at present 149 members in the Produce Section. The Petitioners who are five in number are members of the Produce Section.

The normal business of the Produce Section is the carrying on of forward transactions in respect of cocoanut oil and pepper. The manner in which such forward transactions are effected in respect of cocoanut oil is the following: Each member of the Produce Section who desires to participate in such transaction has to deposit a sum of Rs. 25/- per candy of oil which he wishes to sell or buy. This is called coupon deposit. No member can transact business without making the necessary coupon deposit and cannot transact any business in excess of the limit of the coupons possessed by him. Contracts for sale or purchase are entered into for a period known as "Vaida" which starts on the 1st of the month and ends on the 25th of the succeeding month. Normally there is a clearance after close of business every Friday when the Committee will fix the clearance price. The Committee has power to fix any special clearance price on any day in the week other than the usual weekly clearance day if circumstances warrant such a clearance in the interests of the trade. Accounts will be settled on the basis of the difference between the clearance price and the contract price as on the clearance days. On the last day of the ''Vaida'' also namely on the 25th clearance rate will be fixed by the Committee and delivery of oil will have to be given or taken the next day or accounts settled between the parties on the basis of the difference between the clearance price and the contract price and amounts paid or received as the case may be. The coupon deposit is maintained as security for payment of the difference between the clearance price and the contract price.

On 24-9-1951, the oil market opened at 10 A.M. at Rs. 700/- per candy and according to the Petitioners the price rose in the course of the day to Rs. 710 per candy and then came down to Rs. 690/-. Seeing the downward tendency of the market, it is alleged, that the Secretary in order to help himself and some of his friends unjustly issued a notice closing the market abruptly at 2-45 P.M. and fixing the price for clearance at Rs. 707 per candy. The Petitioners'' case is that this act of the Secretary is unjust and ''ultra vires'' of his powers and is highly prejudicial to the interests of the Petitioners and several other members of the Company. As many members resented the action of the Secretary the Committee composed of counter-Petitioners, 2 to 13, met on morning of 25-9-1951 and resolved to fix the price of oil for clearance at Rs. 696 per candy and closed the market for the day. According to the Petitioners this rate was higher than the actual price that prevailed at the close of the previous day which was only Rs. 690 per candy, and the Committee went wrong in not keeping the market open, till 5 P.M. on 25-9-1951 and in not fixing the clearance price on the basis of the market rate at 5 P.M. on 25-9-1951, which according to the Petitioners was only Rs. 680/- per candy. It is stated that if the clearances are made on the basis of the price fixed by the committee the Petitioners would be put to heavy losses.

In the affidavit filed by the 5th Petitioner on 3-10-1951 it is stated that the Petitioners have taken 860 coupons in all, and that if the clearance price was fixed at Rs. 680/- the Petitioners would be entitled to get a profit of approximately Rs. 8600/-. The Petitioners therefore pray for the issue of a writ of certiorari to the counter Petitioners to bring up the notice dated 24-9-1951 issued by the 2nd counter-Petitioner closing the business of the Produce Section of the Company at 2.45 P.M. on 24-9-1951 as also the resolution dated 25-9-1951 of the Committee composed of counter-Petitioners 2 to 13 fixing the price of cocoanut oil for clearance of forward contracts and all records connected therewith in order to quash the said notice and resolution and to make such other writs, directions or orders as in the circumstances of the case this Court may deem fit. Along with the O.P., a petition for an injunction restraining the counter-Petitioners 1, 2, 4, 12 and 13 from distributing or otherwise dealing with the coupon deposits remaining with the 1st counter-Petitioner Company was also moved and an interim injunction in respect of the coupon deposits in which the Petitioners are concerned was issued from this Court.

The petition is opposed by the counter-Petitioners. The 2nd counter-Petitioner has filed an affidavit on 3-10-51 denying the allegations contained in the affidavit filed along with the O.P. It is contended that the petition is an abuse of the process of Court, that it is a concerted attempt to wreck and paralyse the work of the Chamber of Commerce and that it is totally devoid of good faith. It is stated that the Secretary has been authorised by the Committee as provided in the bye-laws to exercise the powers of the committee, that he was therefore competent to issue the notice fixing the clearance price and that it was done in good faith in the interests of the trade. It is also contended that the committee was competent to pass the resolutions mentioned in the petition, that the fixing of the clearance rate is a matter entirely in the discretion of the committee that the clearance price fixed by the committee was quite fair, that they were justified in closing the market on 25-9-1951, that the committee acted in the best interests of the members of the trade and that there are no grounds for interfering with this exercise of discretion by the committee. It is also stated that Petitioners Nos. 1 to 4 and some Ors. filed a suit on 25-9-1951 in the District Munsiff''s Court of Alleppey for a declaration that the acts complained of in this petition are invalid and an injunction restraining the Company from distributing the coupon deposits. These Plaintiffs also applied for a temporary injunction restraining the company from carrying on any business, and a provisional order of injunction was issued by the Additional District Munsifl on 27-9-1951. The Petitioners Nos. 2, 3 and 5 filed Anr. suit in the same Court on 27-9-1951 and moved a petition before the Principal Munsiff for a temporary injunction restraining the 1st Defendant Company from operating its bank accounts. A provisional order was passed in that petition also. It was after that the present O.P. was filed in this Court on 29-9-1951 and an injunction was applied for. The fact that two suits have been filed in the Munsiff''s Court and that applications for temporary injunction have been moved was not mentioned in the affidavit filed along with the original petition. It is contended that since the Petitioners have already instituted suits for the reliefs claimed in this O.P. they are not entitled to move this Court for a writ of certiorari. The 5th Petitioner filed a supplementary affidavit on 3-10-1951 and a supplementary counter-affidavit was filed by the 4th counter-Petitioner on 4-10-1951.

The counter-Petitioners have filed some documents which were marked for purpose of reference. Ext.- I is the bye-laws of the Produce Section of the Company. Ext. II is the copy of the resolution of the Committee dated 15th November 1948 empowering the Secretary, to fix special clearance pripes. Ext. III is the minutes of the meeting of the Committee on 25-9-1951. Ext. IV is the statement of accounts relating to the transactions of the Petitioners. Ex. v. is the copy of the notice issued by the Secretary on 24-9-1951. Ext. VI is the book relating to ''Vaida'' transactions of the Produce Section. Ext. VII is the copy of the plaint in O.S. 920 of 1951 of the Alleppey Munsiff''s Court. Ext. VIII is the copy of the plaint in O.S. 932 of 1951 of the same Court. Ext. IX is the copy of the plaint in O.S. 949 of 1951 of that Court. Ext. X is the copy of the order on the injunction petition in O.S. 920 of 1951. Ext. XI is a letter from the Secretary of the Alleppey Oil Millers'' and Merchants'' Association, dated 3-10-1951.

The questions that arise for consideration in this case are: (1) whether the notice issued by the 2nd counter-Petitioner, Secretary of the Company, on 24-9-1951 closing the oil market at 2-45 P.M. on that day and fixing the clearance price at Rs. 707 per candy is unauthorised and illegal and whether it is liable to be quashed. (2) whether the resolution passed by the committee of the Produce Section on 25-9-1951 fixing the clearance price at Rs. 696 and closing the oil market on 25-9-1951 is ultra vires and illegal and whether it is liable to be quashed. (3) whether the Petitioners are entitled to the reliefs claimed in the petition, and (4) what should be the order as to costs.

A preliminary objection to the maintainability of the petition was raised by the learned Advocate for the counter-Petitioners. It was argued that since other remedies are available to the Petitioners and since they have availed themselves of those remedies the present petition is not maintainable. Reference was made to the rulings reported in - In re: In Re: Gadea Nagabhushana Reddi and Another, and - Shyamapada Ganguly Vs. Abani Mohan Mukherjee, . In In Re: Gadea Nagabhushana Reddi and Another, it was held that since the Petitioners in that case could have filed a suit and obtained an order of injunction and had got the same relief which they sought from the High Court, an application for a writ of prohibition under Article 226(1) of the Constitution was not maintainable. In Shyamapada Ganguly Vs. Abani Mohan Mukherjee, Bose J. observed thus:

It is an elementary principle that recourse ought not to be allowed to an extraordinary remedy when it is not really needed, and a mandamus will never be granted to enforce the general law of the land which may be enforced by action.

In - Rashid Ahmed v. Municipal Board, Kai-rane 1950 Bom LR 53 it was observed by the Supreme Court that although the existence of an adequate legal remedy is a thing to be taken into consideration in the matter of granting writs, the powers conferred on the Supreme Court under Article 32, Constitution of India, are much wider and are not confined to issuing prerogative writs only. It was also held in that case that the right which the Petitioners in that case had to appeal to the Local Government was not an adequate legal remedy. In - Krishnankutty v. State 1951 Bom LR 199 this Court held, following the decision of the Supreme Court in the above case, that although the Court should keep in mind the fact that the party has other remedies when exercising its jurisdiction under Article 226, the availability of other remedies is no legal bar to the Court exercising the jurisdiction under that Article. There is certainly great force in the contention that when a party has otfter adequate legal remedy available to him and has sougnt such remedy, he is not entitled to invoke tne extraordinary jurisdiction of this Court under Article 226 of the Constitution. I do not however propose to dismiss this petition on that short ground.

It was also argued by the learned Advocate for the counter-Petitioners that the suppression by the Petitioners in the affidavit filed along with the petition of the fact that they had filed two suits for substantially the same reliefs as those claimed in this petition and had also applied for temporary injunctions is a sufficient ground for dismissing the petition. In - Rex v. Kensington Income Tax Commissioners (1917) 1 K B 486 it was held that if on the argument showing cause against a rule nisi the Court comes to the conclusion that the rule was granted upon an affidavit which was not candid and did not fairly state the facts, but stated them, in such a way as to mislead and deceive the Court, there is power inherent in the Court, in order to protect itself and prevent an abuse of its process, to discharge the rule nisi and refuse to proceed further with the examination of the merits. Lord Cozens Hardy M.R. observed thus in that case:

... On an ex parte application ''uberrima fides'' is required, and unless that can be established, if there is anything like deception practised on the Court, the Court ought not to go into the merits of the case, but simply say ''we will not listen to your application because of what you have done''.

To the same effect is the observation of Scrutton L.J. His Lordship observed thus:

It has been for many years the rule of the Court and one which it is of the greatest importance to maintain, that when an applicant comes to the Court to obtain relief on an ex parte statement he should make a full and fair disclosure of all the material facts ....and the penalty by which the Court enforces that objection is that if it finds out that the facts have not been fully and fairly stated-to it, the Court will set aside any action which it has taken on the faith of the imperfect statement.

These observations are quoted with approval by Bhagwati J. in Manibhai Hathibhai Patel Vs. C.W.E. Arbuthnot, . There is no doubt that there has been a deliberate suppression of material facts in this case when the application for temporary injunction was moved by the Petitioners and the petition deserved to be dismissed on that ground. But in view of the fact that the petition was argued on the merits at length by both sides I do not propose to dismiss it for this reason. This will, however, be taken into consideration when awarding costs.

Coming to the merits of the petition, the Petitioners'' case with regard to the first point is that under the bye-laws of the Company, the Committee has no authority to delegate its power of fixing clearance prices to the Secretary and that the act of the Secretary in fixing the clearance price at 2.45 P.M. on 24-9-1951 and closing the market for the day is ultra vires and mala fide. In view of the fact that the Committee itself cancelled the notice issued by the Secretary and fixed its own clearance price it is not necessary to decide in this case whether the notice issued by the Secretary is ultra vires or illegal. It may however be observed that Clause 2(a) of the bye-laws provides that

the Committee may from time to time delegate any of their powers to Sub-committees consisting of such member or members of their body or Ors. as they think fit.

Ext. 11 is the copy of the resolution dated 15-11-1948 passed by the Committee which is to the following effect:

Resolved that under Sub-clause 5(f) of Clause (3) of the bye-laws of the Produce Section the Secretary be empowered hereby to fix special clearance on any day or even daily if he thinks it necessary.

The only question to be decided in this case is that covered by the second point, namely whether the action of the Committee in fixing the clearance price and in closing the oil market on 25-9-1951 is ultra vires and illegal. It is not alleged in the affidavit filed along with the petition that the resolution of the Committee is vitiated by any bad faith or malice although bad faith is attributed to the Secretary in issuing the notice on 24-9-1951. Therefore, the only question to be considered is whether the Committee acted within its powers in passing the resolution and whether the resolution is unjust and illegal. Clause 5, Sub-clause (a) of the bye-laws provides thus:

The Committee shall ordinarily fix the rate of settlement for clearance on every Friday after closing the business for that day. The rates so fixed and all the decisions made by the Committee on that behalf shall be final and be binding on all the members who are parties.

In Sub-clause (f) of Clause 3 it is provided that

the Committee shall be competent to fix any special clearance prices on any day in the week other than the usual weekly clearance on Fridays referred to in Sub-section (a) if circumstances warrant such a clearance in the interests of the trade.

It is therefore clear that the Committee had power to fix the clearance price as on 24-9-1951. This power to fix the clearance price on any day in the week implies the power to close the market on any day. There is therefore no force in the contention of the Petitioners that the Committee was bound to have the market kept open till the close of 25-9-1951 and to have fixed the clearance price on the basis of the market rate at the close of that day. It is true that under Sub-clause (a) of Clause 3, the Committee should ordinarily fix the rate of settlement for clearance on every Friday after close of business on that day. But Sub-clause (f) empowers the Committee in special circumstances to fix any special clearance price on any day in the week, and there is no limitation imposed on the Committee in such cases with regard to the time at which the clearance price should be fixed. I am therefore of opinion that the action of the Committee in fixing the clearance price by the resolution dated 25-9-51 is not in any way ultra vires.

The further question for consideration is whether the resolution of the committee is unjust and illegal. The proceedings of the meeting of the Committee on 25-9-1951 as seen from Ext. II are to the following effect:

The meeting discussed the present market conditions. After carefully considering the relevant facts the meeting unanimously came to the following resolution:

The Committee found that there had been a good deal of artificiality in the transactions on Monday the 24th September 1951 which led to the closing of the market at 2.45 P.M. that day. This was evident not only in the transactions in the Chamber Produce Section but also in the available report about ready transactions, although it was noted that there had been general tendency of rise in prices during last week. Again even though the market (Produce Section Market) was closed at 2.45 P.M. yesterday ''Sotha'' sheets from many members were not received in time yesterday and Messrs T.K. Narayanan, Narayan Annappa Naick and Co., K. Narasimha Shenoi and B. Rama Pai did not deposit ''Sotha'' sheets till 9-30 A.M. today when the meeting was going on. After full discussion of all facts it was unanimously resolved as follows: (a) Resolved that September and October ''Vaida'' transactions in oil effected on Monday the 24th September 1951 shall be cancelled and treated as void as the transactions had a colour of artificiality and as many members had failed to deposit the Sotha sheets in time yesterday and some members, did not even deposit the sheets till 9-30 A.M. this morning, (b) Resolved also that pending September ''Vaida'', transactions in Oil as at close of business on Saturday the 22nd September 1951 shall be fully and finally supplied at Rs. 696 per candy and this settlement clearance at Rs. 696 per candy shall be effected between 3 and 5 P.M. today, (c) The clearance notice issued yesterday No. 487/51/PR dated 24-9-1951 is hereby cancelled. (d) Resolved that the October oil transaction shall be started again only from tomorrow 10 A.M., Wednesday the 26th September 1951, while pepper market alone will be open for both September and October Vaida transaction from 10-30 A.M. today, (e) Necessary Circulars shall be issued accordingly immediately.

In this connection, it has to be noted that it is to minimise the element of risk in forward transactions and to keep the prices more or less steady that the Committee is invested with the power to fix special clearance prices. The forward contracts for sale or purchase of oil will, according to the bye-laws of the Company, remain in force for nearly 2 months. The clearance price is fixed on every Friday during this period so that if a party loses in some weeks he may have a chance of gaining in other weeks. It will also be necessary to see that the margin of difference between the contract price and the clearance price does not exceed the coupon deposit of Rs. 25 per candy of oil. Some times some members who have got more command of money than Ors. may be able to raise or lower the market rate by means of manipulation. In actual practice, it is the nature of the offer and acceptance made by the members on the floor of the Chamber that determines the market rate at a particular point of time. One of the reasons why the Committee is invested with special power to fix the clearance price under Clause 3 Sub-clause (f) is to avoid hardship to the general body of members as a result of wild fluctuations in the price of oil brought about by manipulation. Sometimes, there will be such fluctuations in the price of oil in the open market also owing to various causes. It is admitted that on 24-9-51 there was a fluctuation in the price of oil. According to the Petitioners, the market opened at 10 A.M. with Rs. 700/- per candy and it rose to Rs. 710 and then came down to Rs. 690/-. According to the counter-Petitioners the minimum price was Rs. 698/-. In view of the sudden fluctuation in prices the Secretary closed the market at 2-45 and fixed the clearance price at Rs. 707. As there were complaints, about this action of the Secretary, the Committee met at 8-30 A.M. on the 25th and passed the resolution mentioned above fixing the clearance price at Rs. 696.

That there was a wild fluctuation in the period of oil on 24-9-1951 justifying the closing, of the market and the fixing of a special clearance price can be seen from the action taken by the sister association at Alleppey, namely, The Alleppey Oil Millers'' and Merchants'' Association. The Counter-Petitioners have produced a letter sent by the Honorary Secretary of that Association to the second counter-Petitioner on 3-10-1951. It was market for reference as Ex. XI, That letter shows that as a result of the wild fluctuation in the price of oil on 24-9-1951 the Alleppey Oil Millers'' and Merchants'' Association closed their market at 3 P.M. when closing transactions took place at Rs. 704 per candy. No clearance circular was issued by the Association on 24-9-51 for the transactions that took place on that day. On account of the peculiar conditions that prevailed on the 24th the Committee thought it better to ignore the transactions that took place on that day and to fix the clearance price on the basis of the rate that prevailed on the previous business day, namely the 22nd, 23rd being Sunday. Ext. VI shows that Rs. 696 was the market price at the close of business on the 22nd.

In the circumstances mentioned above, I do not think that the Committee has acted unjustly or unreasonably in fixing the clearance price on the basis of the market price of the previous business day. The counter-affidavit filed by the 2nd counter-Petitioner shows that most of the members of the committee lost large amounts as a result of the fixing of the clearance price at Rs. 696. The 3rd counter-Petitioner lost Rs. 7780, the 4th counter-Petitioner Rs. 1920, the 6th counter-Petitioner Rs. 180, the 8th counter-Petitioner Rs. 750/- and the 10th counter-Petitioner Rs. 1680. If the clearance price was fixed at a lower rate, these counter-Petitioners would have made large profits. The only counter-Petitioners who made profits were the 9th counter-Petitioner who got 4540 Rs. and the 5th counter-Petitioner who got Rs. 530. The other counter-Petitioners including the Secretary had no dealing in cocoanut oil. In the circumstances, it cannot be said that the counter-Petitioners were actuated by any dishonest or selfish motive in fixing the clearance price at Rs. 696. It has also to be noted that the resolution of the Committee was passed unanimously. If the action taken by the Committee is within their authority and if it is not vitiated by dishonesty or malice there is no reason why the Court should interfere with their exercise of discretion.

The 1st counter-Petitioner Company is a voluntary association.

One of the fundamental characteristics of a voluntary society is the notion that it should be autonomous and that its powers of self-government should not be interfered with save in exceptional circumstances. (Vide Justice and Administrative Law by W.A. Robson, 2nd Edn., p. 222).

Sub-clause (c) of Clause 3 of the bye-laws of the Company shows that the position of the Committee is that of a domestic tribunal in respect of matters connected with the working of the Company. The Sub-clause reads thus:

In the event of any dispute arising between any of the parties hereto in respect of the contracts or as to the equality of goods or with regard to other matters relating to clearance, settlement etc., the Committee shall have powers to decide the issue raised and such decisions of the Committee shall be final and be binding on all parties concerned.

There are two conditions imposed by the Court on the proceedings of a domestic tribunal. The first is that the tribunal must not exceed its jurisdiction, and the second is that the proceedings should not offend the rules of natural justice.

It has been laid down again and again that the decisions of domestic tribunals will not be reviewed by the Court, unless the rules or constitution or conditions of membership of the constituent body have not been followed by the tribunal or unless some obvious form of malice or corruption is manifested by the members. (Robson, p. 233)

For the reasons mentioned above, the resolution of the committee is not ultra vires and is not vitiated by any malice or dishonesty. There is also no reason to hold that it is in any way unjust or; unfair. It is therefore not liable to be quashed. It follows that the Petitioners are not entitled to the reliefs claimed in the petition.

With regard to costs, I have no doubt that this is a fit case in which the Petitioners should be made to pay exemplary costs to the counter-Petitioners. As stated above, the Petitioners deliberately suppressed the fact of their having filed two suits and applied for temporary injunctions when they moved this Court for temporary injunction. The prayer in one of the injunction petitions moved in the Munsiff''s Court was to restrain the company from transacting any business. Ext. X order passed on that petition did not allow this prayer but only restrained the Company from making any payment from the coupon deposits standing in the name of the Plaintiffs in that case. The original prayer in the petition for injunction moved in this Court was to restrain the counter Petitioners from distributing or otherwise dealing with all the coupon deposits remaining with the Company and not merely those in which the Petitioners are interested. The object was clearly to paralyse the work of the Company. When this attempt did not succeed a third suit was filed in the Munsiffs Court on 1-10-1951 and a fresh application was made for temporary injunction. It is clear from these facts that the petition is devoid of good faith. In the circumstances, I order the Petitioners to pay the costs of the counter-Petitioners including Advocates fee Rs. 200/-.

The petition is dismissed with costs as stated above.