JUDGMENT
S.K. Mahajan, J.
(1) This order will dispose of application of the plaintiff under Order 39 Rules 1 & 2 Civil Procedure Code for stay of the suit and the application of the defendant under Order 39 Rule 4 Civil Procedure Code for vacating the ex parte stay granted on 20th October, 1995.
(2) Carpet Export Promotion Council (In short referred to as the Council) is a company limited by guarantee, incorporated under the provisions of Companies Act. Main object of the company is to support, protect, maintain, increase and promote the export of hand knitted carpets, woolen druggist and floor coverings by such methods as may be necessary or expediet. The administration of the Council is vested in a committee known as the Committee of Administration. This Committee consists of a Chairman, 2 Vice-Chairmen, 16 elected members (including Chairman and 2 Vice- Chairmen) and 4 Government nominees (including a representative of the Federation of Association of Small Industries). Elected members are elected in accordance with the procedure prescribed in Articles of Association of the Council. Articles of Association of the Council shows that the Government has some control over the affairs of the Council in as much as not only that the budget has to be prepared in consultation with the Government but there can also not be any change, alteration or modification of the Articles without approval of the Central Government in the Ministry of Commerce. Central Government has also the power
(3) In its general meeting held on 12th June, 1995, the Council decided to amend the Articles of Association of the Council in the manner contained in the Resolution passed by the Governing Body meeting of the Council held on the said date. This Resolution was sent to the Government for approval, however, the Government by its letter dated 16th August, 1995 informed the Council that proposed amendments were not found feasible in the larger interest of the public, to accede to the same. While rejecting the proposed amendments, the Government also issued directives to hold the elections as per existing rules at the earliest possible but not later than 30th September, 1995. On receipt of these directions, the Committee of Administration issued the circular dated 5th September, 1995 for holding the elections on 27th October, 1995, Schedule of elections was also fixed by the said circular.
(4) The plaintiff has filed this suit for declaration that the amendments which had been carried out in the Articles of Association of the Carpet Export Promotion Council in its extra- ordinary general meeting held on 12th June 1995, are final and binding and the Council was bound by the same irrespective of any approval/rejection by the Central Government and for a further declaration that the notice dated 5th September, 1995 for holding the elections on 27th October, 1995 was illegal, ultra virus, ineffective and had no sanctity of law and was liable to be quashed. The allegations of the plaintiff are that the said circular dated 5th September, 1995 issued by the committee of administration for holding the annual general meeting and the schedule of elections was clearly in violation of the Resolution adopted and approved by the general body at its extra-ordinary meeting held on 12th June, 1995 and irrespective of the approval/rejection of the said amendments by the Government, the elections were required to be held only in terms of the amendments made in the rules/bye laws by the general body on 12th June, 1995. The plaintiff has, therefore, challenged the very circular dated 5th September, 1995 issued by the committee of administration for holding the annual general meeting and the elections schedule for 27th October, 1995.
(5) Along with the suit, an application under Order 39 Rules 1 & 2 Civil Procedure Code was also filed for an ad- interim temporary injunction restraining the defendants from holding the elections on 27th October, 1995. The application came up for hearing on 20th October, 1995 when after hearing learned counsel for the plaintiff, this Court was of the opinion that it will not be proper to stay the process of elections which had started with the issue of the notification dated 5th September, 1995. However, it was directed that the result of the elections will not be announced till the next date of hearing and the notice of the application was directed to be issued for 21st November, 1995.
(6) The defendants had on 13th November, 1995 filed an application under Order 39 Rule 4 Civil Procedure Code for vacating ex parte order of injunction and for permission to announce the results of elections held on 27th October, 1995. Reply to this application has been filed by the plaintiff. Defendant has also filed written statement as well as reply to the application of the plaintiff under Order 39 Rules 1 & 2 CPC.
(7) The contention of Mr.Keshav Dayal, Sr.Advocate appearing on behalf of the plaintiff against the holding of elections were that : – 1.THEGovernment could not put any restriction upon the functioning of the Council and consequently it could not reject the amendments made by the general body of the Council and the elections were, therefore, necessarily to be held in accordance with the amendments made by the general body on 12th June, 1995; 2.Before passing any order rejecting the amendments, the Government should have given an opportunity of hearing to the Council; 3.No guidelines have been provided as to under what circumstances the Government can approve or reject the proposals made by the general body of the Council and the decision, therefore, taken by the Government rejecting some of the amendments made by the general body on 12th June, 1995, were arbitrary; 4.The decision of the Government was violative of Article 12 of the Articles of Association of the Council; and 5.The decision was also discriminatory in as much as the Government in case of Councils constituted for export of other commodities has approved similar amendments made by the general body of the said Councils.
(8) In terms of Article 74 of the Articles of Association of the Council, no change can be made in the Articles except with the approval of the Central Government in the Ministry of Commerce and the Central Government has also the powers to issue the directives to the Council in public interest and the Council is bound to carry out the said directives faithfully. It will be useful to mention in detail the powers of the Government as contained in Article 74 to 76 of the Articles of Association of the Council : – “74. No change, alteration or modification of these Articles shall be made except by the Council in General Meeting which is convened with the issue of a Notice as required under the Articles of Association, and any such change, alteration or modification shall become effective only after the same is approved by the Central Government in the Ministry of Commerce. 75. The Central Government in the Ministry of Commerce shall have powers to issue directives to the Council, in public interest from time to time relating to the functioning and properties of the Council. The Council shall be carrying out those directives faithfully. 76. The Government will have the powers : i) To give directions to the Council as to the exercise and performance of its function in matters involving national public interest and to ensure that the Council gives effect to such directions; ii) To call for such reports, returns and other informations with respect to the property and other activities of the Council as may be required for time to time; iii) To approve the Council’s revenue and capital budget i.e. the Revised Estimates and Budget Estimates, and iv) To approve agreements involving foreign collaboration, if any, proposed to be entered into by the Council.”
(9) By letter dated 16th August, 1995 the Government in terms of the powers vested in it by the aforesaid Articles, held that the proposed amendments made by the general body of the Council were not in larger interest of the public and were also not feasible and, accordingly, rejected the same. It was further directed by the same letter that the Association should hold elections as per the existing rules at the earliest possible but not later than 30th September, 1995. This was also stated to be the requirement in view of the provisions contained in para 150 of the Export and Import Policy 1992 – 1997.
(10) Under the provisions of Article 75, the Council, after the rejection of the amendments, proposed by the general meeting on 12th June, 1995, by the Central Government and after a directive had been issued to hold elections in accordance with the existing rules, in my opinion, did not have any option but to hold the elections in accordance with Articles as they existed prior to the proposed amendments. A company has to function strictly in accordance with its Articles of Association and no fault can be found about the same. At this stage of deciding the application for interim stay, I do not have any material before me to even prima facie hold that the decision of the Government in rejecting the amendments was arbitrary. There is nothing in the Articles which could even suggest that the Government cannot put any restriction upon the functioning of the Council or cannot issue any directives. On the other hand, there is a definite power in the central Government to issue directives in public interest. I have also not been shown the Articles of any other Council of similar nature, where the Government had approved similar amendments in the Articles of that Council. I am, therefore, not inclined to hold that the decision of the Government is discriminatory.
(11) At this stage of deciding this application for stay, I do not think it necessary to deal in detail with the arguments advanced by Mr.Keshav Dayal and suffice to say that prima facie I am not convinced that any case has been made out by the plaintiff for challenging the elections held in accordance with the articles of association of respondent No.1. Plaintiff could not insist upon the elections being held in accordance with the resolution dated 12th June, 1995 which has not become effective on account of the Government having not approved the same in accordance with Article 74.
(12) Prima facie, I am, therefore, of the opinion that elections cannot be stayed on any of the pleas raised by the plaintiff.
(13) Moreover, interference in the democratic process of elections, particularly at the interim stages, should be sparing. The democratic process should not be stopped in between because the final result can always be challenged. In my opinion, the elected representative should not be restrained from holding the office to which he has been elected, as the general body of electorate would be deprived of the elected representatives in case they are not allowed to take seat in accordance with the result of the elections. It will be unreasonable denial to the elected representatives to work on the committee of administration in case the application of the plaintiff is allowed. In my opinion, there is no, prima facie, case for the grant of any relief to the plaintiff.
(14) In view of the above discussions, I dismiss the application of the plaintiff under Order 39 Rules 1 & 2 Civil Procedure Code and vacate the interim stay granted on 20th October, 1995.