Election of Trade Organization

2015 CLD 107 KARACHI-HIGH-COURT-SINDH Judicial Precedent

S. 42Companies Ordinance (XLVII of 1984) Ss. 159 & 177Election of Trade OrganizationChamber of CommerceInterpretation of Articles of Association of said Chamber of Commerce

Suit for declaration to the effect that elections held by defendant Chamber of Commence were held illegally and without jurisdiction and further that associate members were inducted illegally

Grievance of plaintiff was that the associate members were inducted illegally and in violation of the Articles of Association which classified associate members as those persons "which are not a body corporate, or a multinational or sales tax registered manufacturer and business concern having annual turnover of Rs.50 million or above"

Associate members were inducted on the interpretation that said Article started with a negative covenant by use of the word "not", therefore having a turnover of 50 million rupees was not mandatory to become associate member of the Chamber of Commerce

Held, that if such interpretation was accepted, it would create absurdity and complications and any person would become an associate member without any threshold, which was against the true intention and scope of classification of an associate member under the Articles of Association of the Chamber of Commerce

Basic intention of the author was that such Article of Association should show the differentiation of two classes of members, corporate and associate, however the basic criteria and the threshold was having an annual turnover of fifty million rupees or above

Body corporate, multinational corporation or sales tax registered manufacturer having turnover of fifty million rupees or above and business concern having annual turnover of fifty million or above could become a corporate member

For becoming an associate member, person may not be body corporate, and/or multinational or a sales tax registered manufacturer but according to the intention of the author manifesting from Articles of Association; such member must have annual turnover of fifty million rupees or above

Word "and" used was qualifying that associate member may not fulfil the above pre-requisite but he should be a business concern having a turnover of fifty million rupees or above

Such threshold of fifty million rupees turnover, if read in negative, would mean that there would be no control and any person could apply for associate membership no matter what business such person may be doing

Associate member therefore could only be allowed with some restrictions in the class itself and the requirement of having a minimum turnover was the true spirit and interpretation of said Article of Association

High Court observed that the entire controversy could be resolved between both types of members if an extraordinary general meeting (EGM) of the Chamber of Commerce was convened under S.159 of the Companies Ordinance, 1984

High Court directed that the present executive committee should continue till next election, and that the EGM should decide the fate of Articles of Association concerning associate members; and at the EGM, the date of next elections should be announced; which shall be conducted under the supervision of Nazir of the Court

High Court enumerated further directions for the fair conduct of the elections in accordance with law and Articles of Association

Suits were decreed, accordingly.