P L D 1962 (W (PLP)

The order of Mr. Sadik Ali G. Khoja, Sub‑Civil Judge, Hyderabad, was challenged in Miscellaneous Civil Appeal No. 9 of 1961 before the learned District Judge, Hyderabad, who has accepted the appeal and issued a temporary injunction in the following terms by an order dated the 3rd of August 1961: "In consequence, I confirm the Interim Injunction granted by me on 31‑5‑1961. The result of this will be that the office bearers elected on 9‑4‑1961 will be restrained from holding and exercising the powers of their office, that in terms of Article 35 of the Memorandum of Association of Hyderabad Chamber of Commerce and Industry the last or previous committee shall continue to be in office until further orders are passed and a fresh Executive Committee has been properly and legally constituted. In these terms the order of the learned First Class Sub‑Judge dated 22‑5‑1961 is set aside and the Interim Injunction granted by me confirmed. I would further order in the interest of justice that the five respondents of Town Association, i.e., defendants 3 to 7 should be precluded from having anything to do with the present Hyderabad Chamber of Commerce and Industry until and unless they have been properly registered and that this bitter tug of war in the initial stages of the life of the Chamber of Commerce and Industry set up for a laudible purpose must terminate as early as possible. The strength of the present office‑bearers and their consciousness of it is indicated by their having failed in terms of Article 58 of the Memorandum and Articles of Association to face a meeting of the General Body for the recording of the elections of the office‑bearers for the ensuing year namely for the so‑called elections held on 9‑4‑1961. The further conse quence of this order will be that this matter will be sent back for regular trial to the Lower Court. This application will also dispose of the main appeal but I would in parting suggest that if the present office‑bearers are confident of having been inducted into office with clean hands they should take the first opportunity of holding a meeting for the recording and otherwise of their election and this would determine to all concerned how far the election held on 9‑4‑1961 was bona fide or otherwise. In these terms the application and the main appeal are disposed of." Mr. Nurul Arifin, the learned counsel for the petitioner, has urged before me that the impugned order is without jurisdiction and suffers from errors apparent on the face of the record. He urged that the learned District Judge has erred In coming to the conclu sion that opponent No. 1 has got a prima facie case and that the balance of convenience was in his favour. His main grievance is that the learned District Judge not only has granted the temporary injunction but has also prejudged the entire case in expressing his views in strong terms on the issues involved in the suit and had thus prejudiced the applicant's and other opponent's case. The petition is strongly opposed. Mr. K. A. Ghani, counsel for opponent No. 1, and Mr. Abdul Jalil, counsel for the other contesting opponents, have supported the impugned order in this revision. As already stated, the dispute between the parties is In respect of the election of office‑bearers of opponent No. 1 Chamber of Commerce held on 9th April 1961. The contention of opponent No. 1 before the learned District Judge was that opponents Nos. 3 to 7 could not represent the Town Associations as these bodies were not registered under section 26 of the Companies Act. It was further contended that because these opponents participated in the election of the office‑bearers as members of the Executive Committee to which body they were not entitled to be elected, the election of the petitioner and other office‑bearers was not valid and they were not entitled to intermeddle with the affairs of the Hyderabad Chamber of Commerce. The observation of the learned District Judge on this point are as follows Arguments on behalf of the appellant and some of the supporting respondents have been that the present elections were the first elections and in consequence the registration of the Town Associations specially of respondents 3 to 7 was mandatory. Mr. Hassan Ahmad Shah for the five contesting respondents has urged that this was the first election held and not the second one and admitted as already stated that these 5 members were not registered under the Companies Act. The Annual report for the year 1959‑60 produced before me establishes that the permission for registration and for the recognition of the Chamber was granted by the Ministry of Commerce on 16‑3‑1959. In consequence the Ad‑Hoc Com mittee took immediate steps to hold elections which were actually held on 5‑7‑1959. The report also indicates that in consequence the Executive Committee took over from the Ad‑Hoc Committee. Furthermore, the report establishes that the general elections of Chamber were held on 5‑7‑1959, the Executive ‑Committee being duly elected and this Committee on 6‑7‑59 elected the office‑bearers. In these admitted circum stances both in regard to date and to time there is no doubt in my mind that the present election which took place on 9‑4‑1961 is the second election under the Articles of Association. The learned Judge fell into error in a finding on this aspect of the question and not giving proper consideration to the proviso to Article 4(d) of the Articles of Association. (6) Now, if the office‑bearers have been elected on the votes of persons who were debarred from voting there is no doubt, they cannot be said to have properly elected themselves. The impression on my mind after hearing counsel on either side and after the replies I received to several questions perplexing me in the course of arguments, has been that the contesting respon dents, in view of what appears to have been a dishonest act on the part of some of the respondents in manoeuvring the acceptance and existence of the Town Associations and their eligibility to vote now desire to continue in office at any cost and were not prepared to discard them. I am therefore con vinced that if the elections fundamentally to the respective offices were improper, if not dishonest, the elections of the respective Executive Committee is also prima facie improper. The appellant has therefore in my view asserted and established that he has a good and arguable prima facie case initially in his favour." Therefore the most important question for consideration in this revision is whether the election of the office‑bearers of Hyderabad Chamber of Commerce was in any way affected by the participa tion of opponents Nos. 3 to 7 in the election held on 9‑4‑

61. After hearing the learned counsel for the parties prima facie I am of the opinion that the contention of the petitioner that Article 4(d) of the Articles of Association of the said Chamber of Commerce was not applicable for the election of the first year is not without foundation. Article 4(d) is in the following terms: "The Associations of trade and industry formed in the smaller towns of Hyderabad and Khairpur Divisions can become the member of Chamber as Town Association provided they are registered under section 26 of the Companies Act, 1913 and who shall undertake to give the Chamber a sum of Rs. 500 per year as annual subscription and shall on such payment for the first year in advance shall be entitled to become member as Town Association. This may not be applicable for the first year as to enable the Chamber to cover the widest possible representation but after one year this clause shall be deemed as cancelled." It requires that the Town Association should not only be registered under section 26 of the Companies Act but should also pay Rs. 500 as membership fee before their representatives are allowed to act as members of the executive committee of opponent Chamber of Commerce. The material portion of the clause that "this may not be applicable for the first year as to enable the Chamber to cover the widest possible representation but after one year this clause shall be deemed as cancelled" prima facie shows that this particular clause would not be applicable during the first year of the incorporation of the Chamber of Commerce. Mr. Nurul Arifin relied on section 23(2) of the Companies Act and contended that from the date of the in corporation of a company a new legal person comes into existence and that in this case as the Hyderabad Chamber of Commerce was incorporated on the 14th of July 1960, the relevant time for deciding the question which is "the first year" will be that which followed thereafter. This argument is not without substance and casts a shadow on the case of opponent No.

1. Both Mr. Ghani and Mr. Abdul Jalil, the learned counsel for the opponents, argued that opponent No. 1 Chamber of Commerce was even working before its incorporation and therefore the first year truly speaking refers to the first year in which the said Chamber of Commerce started working before its 'incorporation. This argument requires an enquiry firstly of the intention of the framers of the Articles of Association and secondly whether this intention could prevail after the Chamber of Commerce was incorporated under the Companies Act. There is no reliable evidence on the first point before me and in the absence of any such evidence it is not possible for me to come to any prima facie conclusion on the arguments advanced by the learned counsel for the contesting opponents. It is a settled principle that the life of a corporation is to be counted from the date of its incorporation in spite of the fact that it functioned as an unincorporated body, the reason being that thereafter it becomes a legal entity distinct from its members. Natal Land and Colonization Company Limited v. Pauline Colliery and Development Syndicate, Limited (1904 A C 120 (P C)), the Privy Council held that a company cannot by adoption or ratification obtain the benefit of a contract purporting to have been made on its behalf before the company came into existence and in order to do so a new contract must be made with it after its incorporation on the terms of the old one. To the same effect is the decision in Wearne Brothers, Ltd. v. The Russa Engineering Works Ltd. and others (I L R 7 Rang. 144 (P C)). There is no doubt in my mind that if the first year referred to in Article 4(d) is counted from 14‑7‑1960, the election of the office‑bearers of the opponent No. 2 Chamber of Commerce is perfectly valid. The observations of the learned District Judge that "there is a keen struggle prevailing between the individual groups and that it strikes at the very object of the Chamber of Commerce and Industry, Hyderabad, and its intended and basic purposes" are irrelevant in a Civil Court for deciding the question whether a temporary injunction should be issued or not. Apart from this the learned District Judge failed to observe that the temporary injunction issued by him goes far beyond the reliefs claimed in the suit filed before the Subordinate Court. In the original suit opponent No. 1 has only challenged the election of the office‑bearers and confined his relief against them. But it is strange that the learned District Judge did not notice it and instead of issuing a temporary injunction against them has made the whole of the Executive Body functus officio and paralysed its activities. The impugned order shows that the learned District Judge in disposing of the appeal against an interlocutary matter has expressed himself in very strong terms on the merits of the case, and has practically left nothing to be decided in the suit itself. This is to be depricated because in deciding the question whether a temporary injunction should be issued or not the Court has only to determine whether there is a serious question to be tried in the suit and not how the question ought to be decided at the trial. This condition is generally termed "a prima facie case". The learned District Judge has totally ignored this principle in the case before him. For the guidance of the Sub ordinate Courts I would like to draw their attention to the observations of Turner, L. J. in Walker v. Jones (1865 L R A C 50 at p. 61): "The real point before us upon this appeal is not how these questions ought to be decided at the hearing of the cause, but whether the nature and difficulty of the questions is such that it was proper that the injunction should be granted until the time for deciding them should arrive." It will be re‑called that the learned District Judge was con sidering the issuing of a temporary injunction on the appellate jurisdiction and it is quite clear to me that before accepting the appeal the Court concerned should have held in clear terms that the learned Subordinate Court improperly exercised the discretion vested in him. But this was not done. In my opinion the impugned order suffers from an illegality in this respect. On the whole I am of the opinion that the opponent has not been able to make out a prima facie case and the learned District Judge committed an illegality in the exercise of his jurisdiction. Accordingly the order of the learned District Judge dated the 3rd of August 1961 is set aside and the order passed by Mr. Sadik Ali G. Khoja, Sub‑Civil Judge, Hyderabad, dated 22nd of May 1961 is restored. For the reasons given above the revision application is allowed with costs. A. H. Petition allowed.