S.25 Company – Amendment in MOA without Government permission is illegal

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HIGH COURT OF DELHI AT New Delhi

20th April, 2012

1. FAO 481/2011

VINOD TIHARA & ORS

versus

DELHI & DISTRICT CRICKET ASSOCIATION

2. FAO 482/2011

ASHOKA CRICKET CLUB & ORS

Versus

DELHI & DISTRICT CRICKET ASSOCIATION

The argument on behalf of DDCA that as per Rule 23(b) once there is an entitlement to determine the manner in which elections can be held by the Executive Committee for the Sports Working Committee, and consequently the Executive Committee can prescribe the requirement for registration, is an argument if accepted will amount to permitting DDCA to do indirectly what cannot be done directly. As there is no restriction in the existing Memorandum and Rules of DDCA for requiring a club to be a registered club and therefore, if DDCA takes up a stand that only registered club can be an affiliated member, it would require amendment to the Memorandum and the Rules of DDCA and which amendment even assuming if it is carried out by resolution dated 1.3.2007 cannot be looked into as admittedly there is no prior sanction/approval of the Central Government to the amendment of the Memorandum and Rules of the DDCA whereby the definition of a club is introduced that only a registered club can be an affiliated club.

Now let me examine issue as to whether the order of Sh. K.S. Mohi, ADJ passed on 12.4.2007 is binding on the appellants/plaintiffs/unregistered clubs and whether it is permissible for DDCA to contend that the said order dated 12.4.2007 binds the appellants/plaintiffs/unregistered clubs. In my opinion, this argument on behalf of DDCA is clearly misconceived, inasmuch as, admittedly the appellants/plaintiffs/unregistered clubs were not parties to the litigation in which the order dated 12.4.2007 was passed. It is trite that a judgment only binds the parties to the suits and persons who claim thereunder. The judgment dated 12.4.2007 cannot be read to be a judgment in rem for obvious reasons that it is not in exercise of matrimonial, probate or admiralty etc. jurisdiction. I am informed that not a single unregistered club was a party to the litigation which resulted in passing of the order dated 12.4.2007 by Sh.K.S. Mohi, ADJ. The order of Sh. K.S.Mohi basically implements the resolution of DDCA dated 1.3.2007 and on which aspect I have already commented above that there is absolutely no resolution whatsoever dated 1.3.2007 and if even there is such a resolution, the same will be an illegal resolution because the same amounts to an amendment of the Memorandum of Association or Rules without prior sanction/approval of the Central Government as required under Section 25 of the Companies Act, 1956, the license granted to the DDCA and as duly incorporated in Clause 4(vii) of the Memorandum of Association.Therefore, the order dated 12.4.2007 cannot bind the appellants/plaintiffs either on principle of res judicata or because there is no resolution dated 1.3.2007 of DDCA on which the order was passed, or on the ground even if there is a resolution dated 1.3.2007, the said resolution would be an illegal resolution in the absence of any prior sanction or approval from the Central Government.