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Judgment
T.R.Ravi, J
The reliefs sought for in these writ petitions are intrinsically connected and the writ petitions are hence being heard and disposed of together.
W.P.(C)No.8382/2020
This writ petition has been filed praying to quash Ext.P5 order issued by the 3rd respondent whereby M/s.Sree Narayana Dharma Paripalana
Yogam (hereinafter referred to as 'the Yogam') was exempted from the provisions of Sections 172 (2), 219 and Article 14 of Table C of Schedule I of
the Companies Act, 1956 (hereinafter referred to as 'the Act'), in exercise of the power conferred under Section 25(6) of the Act. The petitioner has
also prayed for a declaration that clause 44 of the Articles of Association of the Yogam is ultra vires the Union, illegal and unenforceable in law and
for a writ of mandamus appointing an independent and responsible person or persons as Administrator/Administrators for the Yogam for the purpose
of preparing a true and correct voters' list of the members and to conduct the election thereafter.
W.P.(C)No.1385/2021
The writ petition has been filed praying for a writ of certiorari to quash Ext.P2 order issued by the 3rd respondent (Ext.P5 in W.P.
(C)No.8382/2020) or in the alternative to declare Ext.P2 as having been rendered without jurisdiction, obtained by fraud, misrepresentation and
suppression of facts and therefore liable to be quashed. The petitioner has also sought for a declaration that every member of the Yogam has a right
to vote at any election to be held by the Yogam. Unless otherwise indicated, the reference to documents in this judgment are as they are referred to in
W.P. (c)No.8382 of 2020.
FACTS RELEVANT FOR DECIDING THE DISPUTE:
The Yogam was originally incorporated as a Company under Regulation 1 of 1063 of Travancore Regulations, which was the equivalent of the
Indian Companies Act, 1882. Ext.P1 is the copy of the Certificate of Incorporation of the Yogam and it is dated 15.05.1903. Ext.P1 would show that
the Yogam was formed for the purpose of promoting and encouraging religious and secular education and industrious habits among the 'Ezhava'
community and the doing all such other things as are incidental or conducive to the attainment of the above said objects with limited liability, but
without the addition of the word 'Limited' to its name. Such a form of registration was permissible under Section 26 of the Indian Companies Act, 1882
which corresponds to Section 25 of the Companies Act, 1956. The Yogam continued to be governed by the Companies Act, 1956. The Kerala Non-
Trading Companies Act,1961 (Act 42 of 1961) (hereinafter referred to as the Kerala Act) came into force with effect from 01.03.1962. A copy of the
Act has been produced as Ext.P1 in W.P.(C)No.1385/2021. As per the preamble to the Kerala Act, its purpose is to provide for the incorporation,
regulation and winding up of Companies, other than trading corporations (including banking, insurance and financial corporations), with objects
confined to the State of Kerala. The petitioners as well as the contesting respondents (Yogam) are now in agreement, that by virtue of the Kerala
Act, the Yogam is governed by the Kerala Act and not by the Companies Act,1956 and its successor enactment. In 1968, regulations were issued
under the Kerala Act and Regulation 6 stipulated that the Memorandum of Association of the proposed company shall be in the Form specified in
Annexure 1 or in a Form as near to, as circumstances admit. Clause 5(6) of Annexure 1 says that no alteration shall be made to the Memorandum of
Association or to the Articles of Association of the Company which are for the time being in force, unless the alteration has been previously submitted
to and approved by the Government.
Ext.P4 is the Articles of Association of the Yogam, of the year 1966. Clause 47 of Ext.P4 which is in the vernacular, when translated to English
says that in the general meeting of the Yogam, the members of the Director Board, Union Presidents, Union Secretaries and 1% of the permanent
members of the Unions who are selected in the manner prescribed, will be entitled to participate. That is to say, if there are 100 permanent members
in a Union, 1% will be entitled to represent in the general meeting. The stipulation in Clause 47 was based on a resolution dated 19.03.1966 as can be
seen from Ext.P4. Prior to the above resolution, all members were entitled to participate in the General Meeting. Clause 47 was subject matter of a
challenge before this Court and a Division Bench of this Court in the decision dated 28.11.1972 in P.C.Aravindhan v. M.A.Kesavan & Ors. reported
in [1973 KLT 70] declared that Clause 47 of the Articles of Association of the Yogam is violative of the provisions of Table C of Schedule 1 of the
Companies Act, 1956 and hence void. It would appear from the judgment that the provisions of the Kerala Act which had by then come into force
was not considered by the Division Bench. The Court proceeded on the basis that the Companies Act, 1956 governs the Yogam. Section 181 of the
Companies Act, 1956 provided that no member shall exercise any voting right in respect of any shares registered in his name, on which any calls or
other sums presently payable by him have not been paid, or in regard to which the Company has, and has exercised, any right of lien. The above
Section permits restriction on the voting right for the reasons stated therein. The Division Bench held that every member of a Company is entitled to
take part in its administration and that right can be exercised only in the meeting of shareholders. It was held that such right cannot be restricted. The
right was inherent in the membership of the Company and need not be specifically conferred upon. It was on the above reasoning that the Court held
that clause 47 is violative of the provisions in Table C of Schedule 1 and the provisions of the Companies Act and hence void. However, in paragraph
21 of the judgment, the Division Bench observed that it is open to the Yogam to take advantage of Section 25(6) of the Companies Act.
The Yogam thereafter approached the Central Government under Section 25(6) of the Companies Act, and, apparently under a mistaken notion
that the Yogam was governed by the Companies Act and not by the Kerala Act, a request was made to exempt the Yogam from the provisions of
Section 172(2), 219 and Article 14 of Table C. The main dispute in these writ petitions is regarding Article 14 in Table C which says that “every
member shall have one voteâ€. The Central Government by Ext.P5 order in W.P. (C)No.8382/2020 granted exemption to the Yogam from the above
provisions. The order is dated 20.08.1974. It can be seen from Ext.P4 that even prior to Ext.P5 order, the Yogam has adopted Schedule A of Act 9 of
1114 ME. It is seen from Ext.R1(p) produced by the Yogam in their second counter affidavit filed in W.P. (C)No.1385/2021 that a special resolution
to adopt Table C instead of Table A was passed only on 09.11.1974, subsequent to Ext.P5 order. It would thus appear that the Yogam had moved the
Central Government for exemption from Article 14 of Table C, when the Yogam as a matter of fact had adopted Table A and not Table C. It is in the
above circumstances that the petitioners have filed these writ petitions seeking quashing of Ext.P5 order issued in 1974 for the reason that the Central
Government did not have any power to grant exemption, since the Yogam was governed by the Kerala Act and even on facts, the order has been
issued without any reference to the fact that the Yogam had actually adopted Table A and not Table C. Even though the challenge is made after
several years of the issuance of Ext.P5, it is the contention of the petitioners that the illegality should not be allowed to be perpetrated, even if the
actions taken so far are to be protected to the possible extent.
The Yogam had filed a counter affidavit on 20.05.2009 in C.P.No.18/2008 before this Court, a copy of which has been produced as Ext.P6,
wherein it is admitted that the Yogam is governed by the Kerala Act. Such an admission is also seen in Ext.P7 dated 12.02.2020 which is the
judgment of this Court in F.A.O.No.18/2020. Ext.P8 dated 26.12.2019 is an order issued by the Government of Kerala authorising the Registration
Deputy Inspector General (Licensing) to be the Adjudicating Authority with regard to filing of annual returns of the Yogam. The order has been
issued on the basis that the Kerala Act applies to the Yogam. Ext.P10 is an order dated 21.04.2015 issued by the Company Law Board, Chennai,
where again an application complaining of mismanagement was rejected for the reason that the Yogam is governed by the Kerala Act and the
Company Law Board lacks jurisdiction. Another document showing the fact that the Yogam admits that it is governed by the Kerala Act is Ext.P11
dated 02.10.2005, which is an application filed by the Yogam itself, before the Registrar of Companies, Ernakulam, requesting that all records relating
to the Yogam be transferred to the Office of the IG of Registration, State of Kerala. The reason stated in the application is that the Yogam is
governed by the Kerala Act.
ISSUES FOR CONSIDERATION
The crucial question to be decided is whether every member of the Yogam has got a right to vote. If the Yogam is a Company Limited by Shares,
by operation of Section 87(1)(a) of the Companies Act, every member will have a right to vote. If on the other hand the Yogam is a Company Limited
by Guarantee, then its Articles of Association should be in one of the forms in Table C, D or E. According to the Yogam, Table C will apply. Clause
14 of Table C says that “every member shall have one voteâ€. Whether the Yogam can delete the said clause and restrict the voting right to one
representative for every 200 persons will then be the issue to be decided. According to the petitioners, going by Section 29 of the Companies Act, if
the Articles of Association of the Yogam is inconsistent with the model Articles of Association, the model Articles of Association will prevail over that
of the Yogam. It is also submitted that by operation of Section 9 of the Companies Act, 1956, the Act has an overriding effect over the Memorandum
and Articles of Association.
Even on the admitted facts, till an amendment restricting the voting right was brought in for the first time in the form of clause 47 in 1966, every
member could vote. The amendment was challenged and a Division Bench of this Court in Aravindhan (supra) held that Clause 47 is void. It is
thereafter, Ext.P5 order was issued by the Central Government. It is to be noted that the Kerala Act had come into force in 1962 and even when
clause 47 was introduced, the Yogam was legally to be governed by the Kerala Act. The fact that the Kerala Act governs the field was never noticed
either at the time of bringing in the amendment or when the issue was considered by this Court, resulting in the judgment dated 28.11.1972. While
considering the application for exemption in 1974, the Central Government overlooked the aspect that the Yogam was governed by the Kerala Act.
When the Kerala Act is to apply, the consideration of a request under Section 25 of the Companies Act, 1956, can only be by the State Government
and not the Central Government. After Ext.P5 order was issued by the Central Government, clause 47 which had been struck down by this Court was
brought back in 1977. This was again amended in 1999 whereby instead of one out of 100, the representation of members in General meeting is
restricted to one out of 200 members. The clause 47 has been replaced by Clause 44 in the amended Articles of Association. The petitioner contends
that since the Kerala Act applies, the process by which clause 47 was brought back in 1977 is not supported by law. The Central Government could
not have granted exemption and the power is to be exercised by the State Government.
Sri A.N.Rajan Babu, appearing for the Yogam seeks to defend the Government order dated 20.08.1974. It is contended that Schedule A applies in
cases of Companies Limited by shares. Section 29 deals with Companies not limited by shares, to which Table C Schedule 1 will be applicable. It is
contended that Table C should be deemed to have been adopted by the Yogam. According to him, the Articles of Association was amended adopting
the C Schedule and the Memorandum and Articles of Association together constitutes the framework of the Company. It is further contended that the
Memorandum and Articles of Association have a binding force and are to be treated as a statutory agreement to which all the members have
subscribed to. As such when a resolution is adopted by the Yogam amending the Articles of Association or the Memorandum of Association, it is
binding on all members and the petitioners cannot challenge the amendment or the order Ext.P5 issued by the Central Government which was
pursuant to an application filed by the Yogam as authorised by the members of the Yogam. It is submitted that when the members of the Yogam itself
wanted their voting rights to be curtailed and on that basis orders have been issued, it is not open to some of the members to challenge the same. It is
further submitted that after the amendment made in 1999 was registered on 7.1.2001 with the Registrar of Companies, the General Body of the
Yogam was being held with such restricted membership and the challenge is preferred after 20 years, which should not be entertained by this Court. It
is further submitted that the order that is challenged was issued as early as in 1974 and the present challenge is highly belated. The counsel submits
that once Table C is adopted, nothing further remains.
STATUTORY PROVISIONS WHICH HAVE A BEARING
The following statutory provisions in the Companies Act, 1956, which are relevant for consideration of the issue in question are extracted below;
“Section 9.- Act to Override Memorandum, Articles, etc.- Save as otherwise expressly provided in the Act -
(a) the provisions of this Act shall have effect notwithstanding anything to the contrary contained in the memorandum or articles of a company, or in any agreement
executed by it, or in any resolution passed by the company in general meeting or by its Board of directors, whether the same be registered, executed or passed, as the
case may be, before or after the commencement of this Act ; and
(b) any provision contained in the memorandum, articles, agreement or resolution aforesaid shall, to the extent to which it is repugnant to the provisions of this Act,
become or be void, as the case may be.
Section 12.- Mode of forming incorporated company.- (1) Any seven or more persons, or where the company to be formed will be a private company, any two or more
persons, associated for any lawful purpose may, by subscribing their names to a memorandum of association and otherwise complying with the requirements of this
Act in respect of registration, form an incorporated company, with or without limited liability.
(2) Such a company may be either-
(a) a company having the liability of its members limited by the memorandum to the amount, if any, unpaid on the shares respectively held by them (in this Act termed
a company limited by shares"") ;
(b) a company having the liability of its members limited by the memorandum to such amount as the members may respectively undertake by the memorandum to
contribute to the assets of the company in the event of its being wound up (in this Act termed ""a company limited by guarantee"") ; or (c) a company not having any
limit on the liability of its members (in this Act termed ""an unlimited company"").
Section 13.- Requirements with respect to memorandum.-
xxx                     xxx                     xxx      Â
              xxx                     xxx                     xxx      Â
              xxx                     xxx                     xxx
(3) The memorandum of a company limited by guarantee shall also state that each member undertakes to contribute to the assets of the company in the event of its
being wound up while he is a member or within one year after he ceases to be a member, for payment of the debts and liabilities of the company, or of such debts and
liabilities of the company as may have been contracted before he ceases to be a member, as the case may be, and of the costs, charges and expenses of winding up,
and for adjustment of the rights of the contributories among themselves, such amount as may be required, not exceeding a specified amount.
Section 14.- Form of memorandum.- The memorandum of association of a company shall be in such one of the Forms in Tables B, C, D and E in Schedule I as may be
applicable to the case of the company, or in a Form as near thereto as circumstances admit.
Section 25.- Power to dispense with ""Limited"" in name of charitable or other company.-
(1) Where it is proved to the satisfaction of the Central Government that an association-
(a) is about to be formed as a limited company for promoting commerce, art, science, religion, charity or any other useful object, and
(b) intends to apply its profits, if any, or other income in promoting its objects, and to prohibit the payment of any dividend to its members, the Central Government
may, by licence, direct that the association may be registered as a company with limited liability, without the addition to its name of the word ""Limited"" or the words
Private Limited"".
(2) The association may thereupon be registered accordingly; and on registration shall enjoy all the privileges, and (subject to the provisions of this section) be
subject to all the obligations, of limited companies.
(3) to (5) xxx                   xxx                     xxx      Â
              xxx                     xxx                     xxx
                            xxx                     xxxÂ
                    xxx
(6) It shall not be necessary for a body to which a licence is so granted to use the words “Limited†or the words “Private Limited†as any part of its name and,
unless its articles otherwise provides, such body shall, if the Central Government by general or special order so directs and to the extent specified in the directions, be
exempt from such of the provisions of this Act, as may be specified therein
xxx                     xxx                     xxx      Â
              xxx                     xxx                     xxx      Â
              xxx                     xxx                     xxx
Section 28.- Adoption and application of Table A in the case of companies limited by shares.-
(1) The articles of association of a company limited by shares may adopt all or any of the regulations contained in Table A in Schedule I.
(2) In the case of any such company which is registered after the commencement of this Act, if articles are not registered, or if articles are registered, insofar as the
articles do not exclude or modify the regulations contained in Table A aforesaid, those regulations shall, so far as applicable, be the regulations of the company in the
same manner and to the same extent as if they were contained in duly registered articles.
Section 29.- Form of articles in the case of other companies.- The articles of association of any company, not being a company limited by shares, shall be in such
one of the forms in Tables C, D and E in Schedule I as may be applicable, or in a form as near thereto as circumstances admit:
Provided that nothing in this section shall be deemed to prevent a company from including any additional matters in its articles insofar as they are not inconsistent
with the provisions contained in the form in any of the Tables C, D and E, adopted by the company.
Section 31.- Alteration of articles by special resolution (1) Subject to the provisions of this Act and to the conditions contained in its memorandum, a company may,
by special resolution, alter its articles:
Provided that no alteration made in the articles under this sub-section which has the effect of converting a public company into a private company, shall have effect
unless such alteration has been approved by the Central Government.
(2) Any alteration so made shall, subject to the provisions of this Act, be as valid as if originally contained in the articles and be subject in like manner to alteration by
special resolution.
Section 37.- Provision as to companies limited by guarantee.- (1) In the case of a company limited by guarantee and not having a share capital, and registered on or
after the first day of April, 1914, every provision in the memorandum or articles or in any resolution of the company purporting to give any person a right to
participate in the divisible profits of the company otherwise than as a member shall be void.
(2) For the purpose of the provisions of this Act relating to the memorandum of a company limited by guarantee and of this section, every provision in the
memorandum or articles, or in any resolution, of any company limited by guarantee and registered on or after the first day of April 1, 1914, purporting to divide the
undertaking of the company into shares or interests, shall be treated as a provision for a share capital, notwithstanding that the nominal amount or number of the
shares or interests is not specified thereby.
Section 87.- Voting rights (1) Subject to the provisions of section 89 and sub-section (2) of section 92-
(a) every member of a company limited by shares and holding any equity share capital therein shall have a right to vote, in respect of such capital, on every resolution
placed before the company.â€
Relevant provisions in the Kerala Non-trading Companies Act, 1961 are extracted below;
 “2. Definitions.â€"In this Act and in the Companies Act, 1956 (Central Act I of 1956), as applied to the State of Kerala by section 3, unless the context otherwise
requires,--
(1)“company†means a company, other than a trading corporation (including banking, insurance and financial corporations), with objects confined to the State of
Kerala formed and registered under the Companies Act, 1956 (Central Act I of 1956), as modified by this Act, or an existing company as defined in clause (2).
xxx                      xxx                      xxx       Â
              xxx                      xxx                      xxx       Â
              xxx                      xxx                      xxx
Application of the Companies Act, 1956 (Central Act I of 1956) to non-trading companies with objects confined to the State of Kerala.- The Companies Act, 1956,
(Central Act I of 1956), in so far as it is the law relating to companies, other than trading corporations (including banking, insurance and financial corporations), with
objects not confined to one State shall, mutatis mutandis, and subject to the modifications specified in the Schedule to this Act, be applicable to the State of Kerala,
and shall be the law relating to companies, other than trading corporations (including banking, insurance and financial corporations, with objects confined to the
State of Kerala.
Provision relating to existing companies.â€" Every existing company with its registered office in any place in the State of Kerala shall be deemed to be registered
under the Companies Act, 1956 (Central Act I of 1956), as applied to the State of Kerala by section 3, and shall be governed by the said Act, accordingly.
Validation of registration of non-trading companies under Central Act 1 of 1956.- Every company other than a trading corporation (including banking, insurance
and financial corporations), with objects confined to the State of Kerala, registered before the commencement of this Act under the Companies Act, 1956 (Central Act
1 of 1956), shall be deemed to have been validly and lawfully registered as if the said Act, in so far as it relates to such companies, had been passed by the State
Legislature.
Transfer of records relating to existing companies to Registrar.- On the commencement of this Act, the records relating to existing companies in the office of
Registrars appointed under the Companies Act, 1956 (Central Act 1 of 1956), shall be transferred to the office of the Registrar referred to in clause (3) of section 2 and
shall thereafter be maintained in that office.â€
ARGUMENTS ADVANCED BY COUNSEL ON EITHER SIDEÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â
Sri Joseph Kodianthara, learned Senior Advocate appearing for the petitioners submitted that admittedly all the members were entitled to vote at
the time of formation of the Company, which is continued till 1966. Amendment was sought to be introduced in 1966 whereby clause 47 of the
Articles of Association of the Yogam was sought to be amended to the effect that 1% of the total members of the Union could alone take part in the
General Body Meeting. The above amendment was challenged and it resulted in the judgment in Aravindhan (supra). This Court held that clause 47 is
violative of the provisions contained in Table C to Schedule 1 and the provisions of the Companies Act and is void. The Division Bench in the above
case was considering a first appeal filed against the judgment of a learned Single Judge in Company Petition No.10/1970. The above petition was filed
under sections 397 and 398 of the Act by two members, for prevention of oppression and mismanagement by the General Secretary of the Yogam.
The learned Single Judge allowed the petition and by way of an interim arrangement appointed two Advocates of this Court as Administrators for
carrying on the affairs of the Yogam and to convene a general meeting of the Yogam in accordance with the 1966 Articles of Association and to
conduct the elections. The order was challenged before the Division Bench in appeal contending that Regulation 47 of the 1966 Articles of
Association is void. On the basis of an earlier judgment in Company Petition No.6/1969, a contention was raised before the Division Bench that the
Court has already held that the Yogam is a Company Limited by Guarantee and the said finding will be res judicata. The Bench did not choose to go
into the correctness of the said plea and assumed for the purpose of the discussion that the Yogam is not a Company Limited by Shares. In paragraph
17, the Court considered the contention on behalf of the respondents based on the absence of a provision conferring voting rights on the members of
the Companies Limited by Guarantee similar to Section 87 of the Companies Act, 1956, which confers voting rights to members of Companies Limited
by Shares. The Division Bench held that the conferment of voting right by a specific provision cannot be a criteria to hold that there is no such right
available to members of the Companies Limited by Guarantees to be present and to vote in the meeting of a Company. The Court went on to state
that a Company registered under the Companies Act is an association of persons which can function only through its members. Before the Division
Bench, the parties appear to have agreed that Table C governs the Yogam. Article 14 of Table C shows that every member shall have one vote. The
Court went on to hold that every member is entitled to vote and there cannot be a restriction by operation of clause 47 of the Articles of Association.
It can thus be seen that whether the company is limited by shares or by guarantee, all members are to be entitled to vote in usual course. Section 25(6)
of the Act empowers the Central Government to issue orders exempting a company from such of the provisions of the Act as is specified in the order.
On the basis of an observation in the judgment that to address difficulties of convening of a meeting to large body of members it is open to the Yogam
to take advantage of Section 25(6) of the Companies Act, the Yogam appears to have approached the Central Government which resulted in Ext.P5
order dated 20.8.1974. The counsel submits that after the Kerala Act came into force in 1962, admittedly, the Yogam is governed by the 1961 Act and
not the Companies Act. Going by the provisions contained in the Kerala Act, the provisions of the Companies Act are to apply with certain
modifications as are stated in the Schedule to the Act. One of the modifications stated is that reference to Central Government and Government is to
be construed as reference to the Government of Kerala. That is to say that if Section 25(6) of the Act can be applied for the purpose of seeking
exemption, the application for such a relief has to be made to the State Government. It is hence submitted that the application submitted in 1974 before
the Central Government itself is an application which was not maintainable and the same ought to have been made before the State Government and
the State Government alone had the power to grant such exemptions and that, as long as there is no order by the State Government granting an
exemption similar to Ext.P5 order, the Yogam cannot restrict the voting rights of its members. It is submitted that the clause which was struck down
by this Court in Aravindhan (supra) could not have been later reintroduced in 1977 on the basis of an order issued without jurisdiction or authority by
the Central Government in 1974 nor could there have been a further amendment in the year 1999, whereby the restriction was even increased by
making it half percent of the total number of members in a Union.
Another contention raised by the learned Senior Counsel is that even though this Court had observed that the parties have agreed that Table C
applies, as a matter of fact, going by the records, on the date on which the application was made before the Central Government and on the date on
which Ext.P5 was issued by the Central Government, the Memorandum and Articles of Association of the Yogam stated that it is governed by A
schedule. This is all the more clear from Ext.R1(b) produced along with the second additional counter affidavit filed in W.P.(C)No.1385/2021. The
said document says that on 9.11.1974 an Extraordinary General Body Meeting of the Yogam was held at Kollam Terminus Theatre wherein the
Articles of Association which were framed on 19.3.1966 at the meeting held in Ernakulam Town Hall was amended. It can be seen that Article 1 was
amended by including Table C in the place of Table A. In the second additional counter affidavit it is admitted that the amendment was brought in only
after Ext.P5 order was passed on 23.8.1974 by the Central Government. It is thus evident that the Central Government while issuing Ext.P5 order
was not aware of the fact that on that day the Articles of Association stood adopting Table A and not Table C. A reading of Ext.P5 will show that the
order proceeded as if the Yogam was a Company registered under the Travancore Regulation as an association with limited liability and was seeking
exemption from the provisions of Sections 172(2) and 219 and Article 14 of Table C of Schedule 1. When Table C itself was not available, there is no
question of exempting the provisions of Article 14 of Table C; is the contention.
The Senior Counsel further pointed out that Section 8 of the Companies Act, 2013, corresponds to Section 25 of the 1956 Act but a provision
similar to Section 25(6) of the 1956 Act is no longer available. The only provision under which a company can be exempted from the provisions of the
2013 Act is Section 462, but the same can apply only as a general exemption. It is further pointed out as per Section 465 of the 2013 Act, the 1956
Act stands repealed and under Section 465(2)(a) the only aspects saved from the repeal are actions taken or purported to have been done etc., in so
far as they are not inconsistent with the provisions of the new Act. It is admitted in the counter affidavit of the Yogam that in Ext.R1(c) order dated
23.8.2005, the Central Government had held that the Kerala Act is applicable, while rejecting an application filed by some members of the Yogam
seeking permission/sanction to move a petition under Section 397/398 of the 1956 Act before the Company Law Board, Chennai. The above order
was set aside by the Delhi High Court by its judgment dated 9.2.2009, directing the Central Government to consider the issue afresh. The order is
produced as Ext.R1(d). The reason stated in the judgment is that the order of the Central Government does not consider the issue as to whether the
activity of the company is confined to the State of Kerala properly. The Court observed that the issue can be decided on the basis of an interpretation
with is either subject based ie. “Ezhava Community†or activity/operation based. However, the petitioners before the High Court did not pursue
the matter any further. The Delhi High Court did not render a finding on the applicability of the Central Act or the Kerala Act. The attempt in the
counter affidavit of the Yogam appears to be to justify the authority of the Central Government, despite the fact that the Kerala Act had come into
force in 1962, by taking shelter under the observation of this Court in Aravindhan (supra), Ext.P5 order and the order of the Delhi High Court
Ext.R1(d) whereby the order of the Central Government was set aside. Neither the judgment in Aravindhan (supra) nor the judgment of the Delhi
High Court, have considered inter alia as to which Act is applicable.
Sri Rajan Babu, counsel for the Yogam addressed elaborate arguments with regard to the right of the petitioners to challenge Ext.P5 on the ground
that the members are bound by the amendment of the Articles of Association and were not entitled to challenge the same. It was also contended that
Ext.P5 was issued in 1974 at a time when the Companies Act, 1956 was being followed by the Yogam and it was within the authority of the Central
Government to issue such an order. It is submitted that under Section 10 of the 2013 Act, there is a statutory agreement between the members as
regards the contents of the Memorandum and Articles of Association. On facts, it is contended that the membership of the Yogam increased to
around 12 lakhs by 1998 which necessitated the reduction of representation of members in the General Body meetings. It is contended that the
Articles as amended in 1999 is being followed till now and there is no need for any interference at this stage at the instance of members who are
bound by the amendment.
Detailed arguments were also addressed on the question whether the company is limited by shares or limited by guarantee. On the basis of the
judgment of this Court in In Re SNDP Yogam, Quilon reported in [1970 KLT 365], the counsel for the Yogam contended that it has categorically
been held that the Yogam cannot be treated as a Company Limited by Shares and is a Company Limited by Guarantee. A reading of the judgment will
show that this Court held that the company is not limited by shares. However, the judgment does not contain any discussion regarding the question
whether the Yogam is a Company Limited by Guarantee, except a finding being entered in that regard. In Aravindhan (supra), the Division Bench did
not go into the question, but held that even if it is to be presumed that the Yogam is limited by guarantee, going by Article 14 of Table C which would
then be applicable, every member has a right to vote. The view expressed by the Division Bench was noted with approval by the Delhi High Court in
the decision in Pramod Chopra and others v. Apparels Export Promotion Council reported in [ILR 1984 Delhi 717]. Sri D. Anilkumar, counsel
appearing for the petitioners in W.P.(C)No.8382 of 2020, supplemented the arguments advanced by Sri Joseph Kodianthara, Senior Counsel, and
submitted that Section 13(2) and (3) of the 1956 Act specifically states as to what should be contained in the Memorandum of Association of a
Company Limited by Guarantee and a reference to the Memorandum will show that no such details are stated in the Memorandum of the Yogam to
the effect that it is limited by guarantee. It is hence submitted that the observation in the judgment in In Re SNDP (supra) will not by itself have the
effect of rewriting the Memorandum of Association of the Yogam.
The Counsel for the Yogam does not dispute the fact that the Yogam is governed by the provisions of the Kerala Act. However, the contention is
that Ext.P5 exemption has been validly granted by the Central Government and that the said exemption continues to be valid even after the Companies
Act 2013 came into force. It is further contended that for the last 46 years a representative General Body alone is being convened for the purpose of
election. It is submitted that there are now 32 lakhs members in the Yogam. It is contended that there is no inconsistency between Ext.P5 and the
provisions of the Companies Act, 2013, regarding the power to grant exemption to the companies. It is contended that the petitioners are barred by the
principles of res judicata in the light of the decisions in Aravindhan (supra) and the judgment in O.S.45 of 1999 which is a suit in which the issue
regarding Ext.P5 was put in issue. Another contention taken is that the Latin maxim “Ex diuturnitate (wrongly quoted as duntumitate in the counter
affidavit) temporis omnia praesumuntur rite et solenniter esse acta†is applicable.
CONSIDERATION
Whether the contentions raised are barred by principles of res judicata or estoppel ?
The specific question that is put in issue in these writ petitions is whether Ext.P5 order issued by the Central Government in purported exercise of
the power available under Section 25(6) of the Companies Act, 1956 can be sustained legally, given the fact that the Yogam is governed by the Kerala
Act with effect from 1.3.1962. Such a question was never put in issue before the Division Bench of this Court in Aravindhan (supra). The issue that
was considered by this Court was the validity of Clause 47 of the Articles of Association of the Yogam which restricted the voting rights of members.
Even though the question whether the Yogam is a Company Limited by Shares or Guarantee was raised before the Division bench, the Bench
observed that it is not necessary to go into the issue and even assuming that the Yogam was a Company Limited by Guarantee, the voting right cannot
be restricted in view of Article 14 of Schedule C. It is well settled that only matters that are put in issue and considered and decided will act as res
judicata between the same litigants. A decision is only an authority for what it actually decides. What is of the essence in a decision is its ratio and not
every observation found therein nor what logically follows from the various observations made in it [See State of Orissa v. Sudhansu Sekhar Misra
(AIR 1968 SC 647)]. The above decision was noted with approval by the Hon'ble Supreme Court in a recent decision in State of Kerala v. Mother
Superior Adoration Convent, [(2021) 5 SCC 602] wherein it was observed that it is well settled that a decision is only an authority for what it decides
and not what may logically follow from it. A mere observation by the Court regarding a legal remedy that might be available to a losing party in a
litigation is never treated as res judicata. As such it cannot be held that the petitioners are barred by the principles of res judicata in putting forth such
a contention. Regarding the judgment in O.S.45 of 1999, admittedly, the judgment is challenged in appeal and is pending before this Court as
R.F.A.No.843 of 2003. The decision has not reached its finality. The said finding also cannot be res judicata. Regarding the question whether the
petitioners are barred by res judicata regarding the contention that the Yogam is a Company Limited by Shares in view of the judgment of a learned
Single Judge in In re SNDP(supra), the judgment will clearly show that this Court had not considered the issue as to whether the Yogam is a
Company Limited by Guarantee with reference to the statutory provisions contained in Section 13 of the Act. A finding that a company cannot be
treated as a Company Limited by Shares by itself cannot create a presumption that it is limited by guarantee. The findings of the learned Single judge
in the judgment in In Re SNDP (supra) cannot in my opinion be treated as a binding precedent regarding the question, since it is rendered without any
discussion on the issue and without reference to the statutory provisions. However, I do not think it is necessary in these proceedings to go into the
question whether the Yogam is a Company Limited by Shares or Guarantee for the reason that in Aravindhan (supra) this Court categorically held
that even if the Yogam is a Company Limited by Guarantee, all members have a right to vote. I am in complete agreement with the above view. It is
immaterial whether the company is limited by shares or by guarantee, when it comes to the question of right to vote. The right to vote could only have
been taken away by a legal and valid order issued by the appropriate Government under Section 25(6) of the Act. The said finding actually acts as res
judicata against the Yogam.
Whether Ext.P5 can be treated to be a valid order issued with necessary legal authority ?
Ext.P5 purports to have been issued on an application submitted before the Central Government under Section 25(6) of the Companies Act, 1956.
The application has been preferred admittedly after the Kerala Act came into force in 1962. The apparent reason for preferring the application before
the Central Government is the observation contained in the judgment in Aravindhan (supra). In the said judgment, this Court had only observed that the
Yogam is not without remedy and they can always approach the Central Government under Section 25. This Court had not considered whether such
an application has to be preferred before the Central Government or the State Government in view of the Kerala Act. As a matter of fact it was not
even brought to the notice of the Court that the Kerala Act applies to the Yogam. Thus Ext.P5 cannot be justified as an order issued on the basis of
directions issued by this Court.
By operation of Sections 3 to 6 of the Kerala Act, the registration of Yogam as a non-trading company under the Companies Act, 1956 is deemed
to be a registration in the State of Kerala. The Kerala Act is a statute falling under Entry 32 of List II of the Seventh Schedule of the Constitution and
the State Legislature has exclusive power to make laws with respect to the matter. After coming into force of the Kerala Act, the Companies Act,
1956 can no longer govern the Yogam. Sections 3 to 6 of the Kerala Act in effect facilitates the transfer of governance from under the Companies
Act, 1956 to the Kerala Act. Section 3 specifically says that the operation of the Companies Act, 1956 with regard to companies coming under the
Kerala Act, will be subject to such modifications specified in the Schedule to the Kerala Act. One such modification made by the Schedule is that
references to “the Central Government†and “Government†where it refers to the Central Government shall be construed as references to
the Government of Keralaâ€. Section 25 of the Companies Act, 1956 will thus have to be read with the above modification and the necessary result is
that an application under Section 25(6) has to be preferred before the State Government and not the Central Government, in the case of the Yogam,
after 1.3.1962. Admittedly, Ext.P5 was issued on the basis of an application preferred much after 1962. Ext.P5 is hence not issued by the competent
authority and hence cannot stand the test of law.
Whether the passage of time and continued acceptance of Ext.P5 order for the past several years can legitimise the order ?
Sri Rajan Babu relied on the Latix maxim “Ex diuturnitate -----†, to contend that owing to the passage of more than 46 years, Ext.P5 order
should be treated as legal, since many actions had been taken on the basis of the validity of the order. The maxim only means that things which had
been done several years past, by passage of time, lends them a presumption that they were performed rightly and in the usual manner, or with the
necessary solemnities. The maxim is used mostly with regard to documents that had been executed long past, about the origin of which there is not
sufficient evidence. In Brooms Legal Maxims, Tenth Edition the maxim has been dealt with from page 640 onwards. As far as official acts are
concerned, the applicability of the maxim is that “everything is presumed to be rightly and duly performed until the contrary is shown†(see at
page 642 with reference to Davies v. Pratt 17 C.B.183). As a matter of fact, such presumptions are statutorily recognised in the Evidence Act, 1872.
Section 114 of the Evidence Act raises a presumption that official acts have been regularly performed. Such a presumption is however rebuttable, in a
case where the correctness of such act itself is under challenge. Section 90 of the Evidence Act raises a presumption regarding documents which are
thirty years old, that the signature and every other part of a document, which purports to be in the handwriting of any particular person, is in that
person's handwriting and that it is duly executed and attested. Such a presumption is similar to the presumption contained in the maxim referred above.
However, the presumption does not apply to orders issued under purported exercise of authority given by a statute. I am hence of the opinion that
Ext.P5 cannot be held to be legal solely for the reason that several years have passed after it was issued. Since the correctness of the order has been
specifically challenged before the Court of law, once the court finds that the order has been issued without authority of law and by persons not
competent to issue the same, as per Section 25(6) of the Companies Act, 1956, as modified by Section 3 of the Kerala Act, this Court cannot allow
the illegality to be perpetrated any further.
Whether, the petitioners, who have subscribed to the memorandum and articles of association are estopped from challenging the same
?
The above arguments necessarily have to be appreciated with particular reference to Section 9 of the 1956 Act. As per Section 9, the provisions
of the Act will prevail upon anything contrary stated in the Articles of Association. That is, the members cannot have any statutory agreement which
does not align with the provisions of the 1956 Act. So, unless the Yogam had been granted a valid exemption under Section 25(6), there could not have
been any provision in the Articles of Association which restricts the right of every member to vote. This again takes us to whether the Kerala Act will
apply. If Kerala Act applies, the Central Government could not have issued Ext.P5. The necessary consequence is that in the absence of Ext.P5,
there cannot be any agreement between the members of the Yogam, which is against Article 14 of Schedule C, if the Yogam is a Company Limited
by Guarantee. If the Yogam is a Company Limited by Shares, then Section 87(1)(a) of the Companies Act, 1956 will operate and every member will
get a right to vote. Hence, the Yogam will have to get exemption from the appropriate authority, from the operation of the provisions of the statute, if
the same is legally permissible, in order to restrict the voting right of its members.
It would not be proper for this Court to merely decide on the legal issue without issuing any further directions. This Court is aware of the
ramifications that may result by the finding that Ext.P5 is without authority of law. As admitted, the members of the Yogam were being governed by
the Articles of Association prepared on the basis of the exemption granted under Ext.P5 till now. It would hence not be proper to set at naught all
actions that had been carried out on the basis of Ext.P5 so far. It is hence made clear that this judgment will not in any way nullify the meetings held
by the Yogam earlier or elections conducted earlier. However, decisions taken at the meetings to restrict the voting rights will not gain sanctity of law.
CONCLUSION
In the result, Ext.P5 order is set aside. It is declared that clause 44 of the Articles of Association of the SNDP Yogam is ultra vires the statutory
provisions contained in the Companies Act, 1956 read with the provisions of the Kerala Non-Trading Companies Act,1961. It is declared that all the
members of the Yogam have a right to vote in any election to be held by the Yogam.
The writ petitions are disposed of as above.