The Kerala High Court on Monday struck down Clause 44 of the articles of association of the SNDP Yogam which provided for voting rights to a representative for every 200 members in the general body meetings of the yogam.
Justice T.R. Ravi, while allowing a writ petition filed by V. Vijayakumar and another SNDP Yogam member from Kollam challenging the representative voting method, declared that Clause 44 of the articles of association was ultra vires the statutory provisions of the Companies Act, 1956, read with the provisions of the Kerala Non-Trading Companies Act, 1961.
Central govt. order
The court also declared that all members of the Yogam had a right to vote in any election to be held by the Yogam. The court also made clear that the judgment would 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 would not have any sanctity of law. The court also set aside a Central government order issued under section 25(6) of the Companies Act, 1956 exempting the Yogam from the provisions which gives voting rights to all the members at general body meetings. The court had earlier struck down Clause 47 which had restricted the voting rights to a representative for every 100, on the ground that the Yogam was not granted exemption by the Centre from the one member one vote pattern. Therefore, the Yogam later incorporated the clause 44 in its articles of association restricting the voting right to a representative for every 200 members after obtaining exemption order from the Centre.
The court observed that while considering the application for exemption in 1974, the Central government had overlooked the aspect that the Yogam was governed by Kerala Non-Trading Companies Act which came into force in 1962. When the Kerala Act was to apply, the consideration of a request for exemption under Section 25 of the Companies Act, 1956 could only be given by the State government and not the Central government. 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 court found that the exemption granted by the Centre was without authority of law. It was not issued by the competent authority and “hence cannot stand the test of law.”
