Hindustan Medical Institution vs Birla Corporation Limited
- Court
- Supreme Court
2026 INSC 554
REPORTABLE
IN THE SUPREME COURT OF INDIA
CIVIL APPELLATE JURISDICTION
CIVIL APPEAL NO…………………..OF 2026
(ARISING OUT OF SLP (C) NO. 1182 OF 2023)
HINDUSTAN MEDICAL INSTITUTION …APPELLANT(S)
VERSUS
BIRLA CORPORATION LIMITED & ORS. …RESPONDENT(S)
WITH
CIVIL APPEAL NO…………………..OF 2026
(ARISING OUT OF SLP (C) NO. 1183 OF 2023)
AND
CIVIL APPEAL NO…………………..OF 2026
(ARISING OUT OF SLP (C) NO. 23145 OF 2022)
AND
CIVIL APPEAL NO…………………..OF 2026
(ARISING OUT OF SLP (C) NO. 1185 OF 2023)
AND
CIVIL APPEAL NO…………………..OF 2026
(ARISING OUT OF SLP (C) NO. 1187 OF 2023)
AND
CIVIL APPEAL NO…………………..OF 2026
(ARISING OUT OF SLP (C) NO. 22799 OF 2022)
Signature Not Verified
Digitally signed by
SONIA BHASIN
Date: 2026.05.26
17:46:38 IST
Reason:
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J U D G M E N T
VIKRAM NATH, J.
1. Leave granted.
2. The present appeals arise out of the common judgment and
order dated 26.09.2022, as corrected by order dated
27.09.2022, passed by the Division Bench of the High Court
(hereinafter referred to as “Division Bench”) at Calcutta in
APOT Nos. 180, 181 and 182 of 2022. By the impugned order,
the Division Bench disposed of the said appeals and affirmed
the orders dated 16.09.2022 passed by the Single Judge of
the High Court (hereinafter referred to as “Single Judge”) in
G.A. No. 1 of 2022 in C.S. Nos. 212, 213 and 214 of 2022.
The appellants in SLP (C) No. 1182 of 2023, SLP (C) No. 1183
of 2023 and SLP (C) No. 23145 of 2022 are, respectively,
Hindustan Medical Institution, Eastern India Educational
Institution and Belle Vue Clinic. Each of them is a society
registered under the West Bengal Societies Registration Act,
1961 (hereinafter referred to as the “1961 Act”). The appellant
in SLP (C) No. 1185 of 2023, SLP (C) No. 1187 of 2023 and
SLP (C) No. 22799 of 2022 is Ms. Anamika Lodha.
Respondent No. 1 in each of the three suits is Birla
Corporation Limited (hereinafter referred to as the “BCL”).
SLP (C) No. 1183 of 2023 arises out of APOT No. 180 of 2022
in C.S. No. 212 of 2022 concerning Eastern India Educational
Institution. SLP (C) No. 1182 of 2023 arises out of APOT No.
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181 of 2022 in C.S. No. 213 of 2022 concerning Hindustan
Medical Institution. SLP (C) No. 23145 of 2022 arises out of
APOT No. 182 of 2022 in C.S. No. 214 of 2022 concerning
Belle Vue Clinic. The connected appeals by Ms. Anamika
Lodha, namely, SLP (C) No. 1185 of 2023, SLP (C) No. 1187
of 2023 and SLP (C) No. 22799 of 2022, correspond
respectively to APOT Nos. 180, 181 and 182 of 2022. All six
appeals are directed against the same impugned order and
arise out of the three suits instituted in relation to the
exercise and consideration of voting rights attached to the
shares held by the three societies in BCL. For the sake of
convenience and clarity, SLP (C) No. 1182 of 2023 shall be
treated as the lead matter, and the facts shall be noticed
principally from the record of the said appeal except where a
distinct fact from the connected matters requires specific
reference.
3. The facts giving rise to the present appeals are as follows:
3.1. The appellants in SLP (C) No. 1182 of 2023, SLP (C) No.
1183 of 2023 and SLP (C) No. 23145 of 2022 are,
respectively, Hindustan Medical Institution, Eastern India
Educational Institution and Belle Vue Clinic. Each of them
is a society registered under the 1961 Act. Each of them
holds shares in BCL. The shareholding placed on record in
relation to BCL is 9.30 per cent in the case of Hindustan
Medical Institution, 4.36 per cent in the case of Eastern
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India Educational Institution and 0.23 per cent in the case
of Belle Vue Clinic. The record further shows that, under
the constitutive documents of the societies, the movable
and immovable properties of the societies vest in the
trustees, and the managing committee is to exercise only
such powers as are delegated by the trustees. The by-laws
relied upon before the High Court also contemplate
delegation of authority by a resolution evidenced in writing
under the hands of the majority of the trustees.
3.2. Priyamvada Devi Birla died on 03.07.2004. Testamentary
proceedings in relation to her estate are pending before the
High Court at Calcutta. By a judgment and order dated
23.08.2012, the Division Bench appointed an
Administrators Pendente Lite Committee (hereinafter
referred to as the “APL Committee”) for the administration,
preservation and protection of the estate during the
pendency of the testamentary proceedings. It is also on
record that this Court, by order dated 26.11.2012,
declined to interfere with the said judgment and order
dated 23.08.2012.
3.3. On 18.09.2020, the Single Judge passed an order in the
testamentary proceedings. The said order was appealed
and, by order dated 01.10.2020, the Division Bench
declined interim stay and clarified certain aspects of the
directions issued by the Single Judge. The parties before
us have relied upon these orders for different purposes,
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including on the question of the role of the APL Committee
and the effect, if any, of the restraints recorded in the
testamentary proceedings upon the holding of offices and
the exercise of rights in entities associated with the M. P.
Birla Group.
3.4. Disputes thereafter arose in relation to the internal
governance of each of the three societies and, in particular,
as to the authority to act on behalf of each society in
relation to the shares held by it in BCL. It is the case of the
societies that resolutions were passed on 04.03.2021 by
circulation by their trustees. The societies rely upon those
resolutions, among other matters, to contend that changes
were effected in their boards of trustees and managing
committees and that authorisations to act on behalf of the
societies were thereafter issued in accordance with their
respective Rules and Regulations. It is the case of Ms.
Anamika Lodha, on the other hand, that the said
resolutions and the changes asserted on behalf of the
societies are disputed and that there were, consequently,
rival claims within each society as to who was entitled to
issue authorisations and cast votes. It is also the case of
the societies that the resolutions dated 04.03.2021 were
acted upon and continued to remain operative. The record
further shows that Ms. Anamika Lodha instituted separate
proceedings challenging the said resolutions, being Title
Suit No. 357 of 2021 in relation to Hindustan Medical
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Institution, Title Suit No. 358 of 2021 in relation to Eastern
India Educational Institution and Title Suit No. 359 of
2021 in relation to Belle Vue Clinic. In the said
proceedings, applications seeking ad interim stay of the
resolutions dated 04.03.2021 were declined on
10.03.2021, and no interim order in appeal was granted in
her favour.
3.5. The immediate controversy in the present proceedings
concerns the exercise and consideration of the voting
rights attached to the shares held by the three societies in
BCL for successive annual general meetings. In relation to
the annual general meeting held in 2021, it is stated that
votes were cast on behalf of the societies through remote
electronic voting and that the scrutiniser treated such
voting as invalid on the ground of claims and
counterclaims. BCL thereafter issued notice convening its
annual general meeting to be held on 27.09.2022. The
societies also placed on record communications addressed
by the APL Committee in September 2022 in relation to the
manner in which, according to it, the voting rights
attached to the relevant shareholding were to be exercised.
3.6. In this backdrop, the three societies instituted suits on the
Original Side of the High Court, being C.S. Nos. 212, 213
and 214 of 2022, along with interlocutory applications,
seeking interim and ad interim protection in relation to the
exercise and consideration of voting rights attached to
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their shares in BCL for the annual general meeting
scheduled on 27.09.2022. The principal reliefs were
framed as injunctions against BCL to act in accordance
with the decisions stated to have been taken within each
society for authorising representatives to attend and vote
and to restrain BCL from preventing such representatives
from attending and voting. Since SLP (C) No. 1182 of 2023,
relating to Hindustan Medical Institution, has been treated
as the lead matter, it would be apposite to reproduce the
principal prayers in C.S. No. 213 of 2022. The plaintiff
therein prayed as follows:
“a) Decree of mandatory injunction directing the defendant
no. 1 or its men, agents, servants and assigns to abide and
act in terms of the decisions taken by Hindustan Medical
Institution, the plaintiff by its Board of Trustees in majority,
inter alia, with regard to the shares held by the plaintiff in
the defendant no. 1 and the exercise of rights in respect
thereof;
b) Decree for perpetual injunction restraining the defendant
no. 1 and/or its men, agents, servants and assigns from
preventing the representatives/proxies nominated by the
Board of Trustees of the plaintiff to attend the Annual
General Meetings and/or Extra Ordinary General Meetings
of the company or from voting in the same;
c) Decree for mandatory injunction against the defendant no.
1 or its men, agents, servants and assigns directing them to
abide by the decisions taken by the plaintiff by its Board of
Trustees in regard to the shares held by the plaintiff in the
defendant no. 1 in the matter of voting in the Annual General
Meeting of 2022 or any other Annual General Meeting or
General Meeting;
d) Injunction;
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e) Receiver;
f) Attachment before Judgment;
g) Judgment upon admission;
h) Costs;
i) Further and/or other relief or reliefs.”
3.7. By three separate orders dated 16.09.2022, the Single
Judge declined to grant ad interim relief in G.A. No. 1 of
2022 in each of the three suits and directed exchange of
affidavits. The Single Judge held, in substance, that it was
for the plaintiff society itself to decide who would exercise
the voting rights attached to its shares and that BCL had
no role in deciding such internal questions of authority.
The Single Judge further held that the scrutiniser, upon
being faced with rival claims in relation to the same
shareholding, could not be directed at the ad interim stage
to accept one claim and reject the other since that would
necessarily involve an adjudication upon the correctness
of rival authorisations. The Single Judge also declined to
grant preventive relief on a quia timet basis, holding that
the facts as then presented did not justify such ad interim
intervention. The Single Judge also noted that, although
the plaintiffs relied upon the rejection of votes at the 2021
annual general meeting, they had not challenged the
scrutiniser’s report except by writing letters and had
waited for about a year before instituting the suits.
3.8. Aggrieved by the orders dated 16.09.2022, the three
societies preferred APOT Nos. 180, 181 and 182 of 2022.
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By the common judgment and order dated 26.09.2022, the
Division Bench disposed of the three appeals while
affirming the orders of the Single Judge. The Division
Bench referred to the relevant clauses of the by-laws of the
societies which provide for delegation of authority by a
resolution evidenced in writing under the hands of the
majority of trustees. It nevertheless proceeded to rely upon
Section 48 of the Indian Trusts Act, 1882 (hereinafter
referred to as the “Trusts Act”) and the decision of this
1
Court in Janakirama Iyer v. Nilakanta Iyer and
concluded that trustees must act in consonance and not
in contradiction and that if any one of the trustees had not
joined in the decision, the same could not be treated as a
decision of the board of trustees. The Division Bench
further referred to Rule 20 of the Companies (Management
and Administration) Rules, 2014 (hereinafter referred to as
the “2014 Rules”) and held that once an electronic vote is
cast, the same person or entity cannot be permitted to cast
the vote again. It also observed that the scrutiniser is to
count the vote cast and has no authority to invalidate a
vote already cast on the basis of a communication received
later in point of time. On that reasoning, the Division
Bench disposed of the appeals by affirming the orders of
the Single Judge with a caveat that the vote cast first by
the plaintiff society, irrespective of whether it is cast by a
1
1961 SCC OnLine SC 112
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member of the managing committee or by the board of
trustees, shall be taken into consideration and that no
subsequent communication shall be entertained by the
scrutiniser to invalidate such vote. On 27.09.2022, a
correction order was passed directing that the citation of
L. Janakirama Iyer (supra) be inserted in the order dated
26.09.2022.
3.9. The annual general meeting of BCL was held on
27.09.2022. It is stated that disputes again arose at the
stage of attendance and voting and that the scrutiniser
invalidated the votes in relation to the shares held by the
societies on the ground of rival claims and counterclaims.
BCL thereafter submitted the voting results together with
the scrutiniser’s report on 29.09.2022.
4. The three societies have approached this Court by Civil
Appeals arising out of SLP (C) Nos. 1182 of 2023, 1183 of
2023 and 23145 of 2022. They assail the impugned order
dated 26.09.2022, as corrected on 27.09.2022, principally on
the ground that the High Court misread the governing by-
laws of the societies and wrongly applied Section 48 of the
Trusts Act and the decision in L. Janakirama Iyer (supra)
to hold that trustees must act in consonance and that the
absence of unanimity defeats a decision. They also challenge
the direction which accords primacy to the vote cast first and
contend that the validity of a vote must depend upon lawful
authorisation under the governing rules of the societies and
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the statutory framework regulating voting, and not upon
priority in point of time. Ms. Anamika Lodha has approached
this Court by Civil Appeals arising out of SLP (C) Nos. 1185
of 2023, 1187 of 2023 and 22799 of 2022. Her principal
grievance is directed against the caveat in the impugned order
which accords primacy to the vote cast first. According to her,
neither the Companies Act, 2013 nor the 2014 Rules permit
the counting of a vote merely because it was cast first,
irrespective of whether it was validly cast.
5. On 04.01.2023, this Court passed an interim order in the
connected matters staying the operation of the impugned
judgment to the extent that it directed or held that the
decision of the trustees would be binding only if they act in
consonance and not in contradiction. This Court clarified that
a decision by the majority of the trustees will be treated as
the decision of the trustees. This Court further clarified that
the interim order would not affect resolutions or decisions
taken prior to 04.01.2023 and that any pending proceedings
relating to or questioning such earlier resolutions or
decisions would continue and be examined on their own
merits and in accordance with law without being influenced
by the impugned judgment or by the interim order. This Court
also directed that the observation in the impugned judgment,
to the effect that the submissions made on behalf of the APL
Committee did not commend to the Division Bench, shall not
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be treated as binding observations or findings operating as
res judicata.
6. Before proceeding further, it is necessary to define the limits
of the present adjudication. The appeals before this Court
arise from orders passed at the ad interim/interlocutory
stage. The suits instituted before the High Court, as well as
the proceedings in which the resolutions dated 04.03.2021
and subsequent authorisations are directly in issue, remain
to be decided in accordance with law. We are therefore not
called upon to pronounce upon the factual validity of any
particular resolution, authorisation, cessation, nomination or
appointment. At the same time, the impugned appellate order
rests upon certain legal premises, namely, that the trustees
could act only in consonance, that the Board of Trustees and
the Managing Committee could be treated alike for the
purpose of voting authority, and that the vote cast first would
prevail irrespective of the source of authority. These premises
form the basis of the operative directions under challenge.
Their correctness necessarily arises for consideration in the
present appeals. Our examination is confined to those legal
premises and shall not be understood as a final adjudication
upon the factual disputes pending before the competent
forum.
7. Having heard the learned counsel for the parties and having
perused the material on record, we find that the controversy
before us lies in a narrow compass. The issues which arise
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for consideration are whether the Division Bench was
justified in holding that the trustees must act in consonance,
whether the governing structure of the societies permitted the
matter of voting authority to be approached in the manner
adopted in the impugned judgment, and whether the
direction that the vote cast first would prevail, irrespective of
the source of authority, is sustainable in law. It is these
issues which we now proceed to examine.
Issue I- Whether the Division Bench was justified in holding
that the trustees must act in consonance and that, if any
one trustee had not joined in the decision, the same could
not be treated as a decision of the Board of Trustees.
8. Since the first issue turns upon the manner in which
authority is structured and exercised within the three
societies, it is necessary to first notice the relevant provisions
of their constitutive by-laws. The by-laws form part of the
internal governing framework of the societies and regulate,
among other matters, the manner in which the trustees may
act, regulate their proceedings, and delegate authority. The
record shows that the clause dealing with these matters is
materially identical in all three societies. Since the present
controversy centres on whether a decision evidenced under
the hands of the majority of the trustees can validly bind the
society, Clause 24 of the by-laws is extracted below:
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“24. The trustees may regulate their meetings,
proceedings, and discharge of duties in such manner
as they may decide. The trustees may, by resolution,
authorize any one or more of them to do or execute
any act, deed, or thing required to be done or
executed on their behalf, and any such act, deed, or
thing done or executed pursuant to such resolution
shall be as valid and effectual as if it had been done
or executed by all the trustees. Such delegation of
authority may be made by a general or special
resolution passed without any meeting of the trustees
and evidenced in writing under the hands of the
majority of the trustees, and it shall be as valid and
effectual as a resolution passed at a meeting of the
trustees.”
9. A proper construction of Clause 24 of the by-laws must begin
with the clause as a whole. It is a settled principle of
interpretation that a provision is not to be construed by
isolating a part of its language from the rest, but by reading
the text in its setting and in the context of the scheme to
which it belongs. In Reserve Bank of India v. Peerless
2
General Finance and Investment Co. Ltd. and Others ,
this Court emphasized that interpretation must depend upon
2
(1987) 1 SCC 424
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both the text and the context, and that neither can be ignored
since each furnishes the meaning of the other. The relevant
portion from the same is reproduced hereunder:
“ 9. There will be complete harmony however if we hold
instead that clause 5(a) will apply in all other cases of
proposed dismissal or discharge except where an inquiry
is pending within the meaning of clause 23. We reach the
same result by applying another well known rule of
construction that general provisions yield to special
provisions. The learned Attorney-General seemed to
suggest that while this rule of construction is applicable
to resolve the conflict between the general provision in one
Act and the special provision in another Act, the rule
cannot apply in resolving a conflict between general and
special provisions in the same legislative instrument. This
suggestion does not find support in either principle or
authority. The rule that general provisions should yield to
specific provisions is not an arbitrary principle made by
lawyers and Judges but springs from the common
understanding of men and women that when the same
person gives two directions one covering a large number
of matters in general and another to only some of them
his intention is that these latter directions should prevail
as regards these while as regards all the rest the earlier
direction should have effect. In Pretty v. Solly (quoted in
Craies on Statute Law at p.m. 206, 6th Edn.) Romilly,
M.R., mentioned the rule thus:“The rule is, that whenever
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there is a particular enactment and a general enactment
in the same statute and the latter, taken in its most
comprehensive sense, would overrule the former, the
particular enactment must be operative, and the general
enactment must be taken to affect only the other parts of
the statute to which it may properly apply”. The rule has
been applied as between different provisions of the same
statute in numerous cases some of which only need be
mentioned : De Winton v. Brecon , Churchill v. Crease,
United States v. Chase and Carroll v. Greenwich Ins. Co.
10. Applying this rule of construction that in cases of
conflict between a specific provision and a general
provision the specific provision prevails over the general
provision and the general provision applies only to such
cases which are not covered by the special provision, we
must hold that clause 5(a) has no application in a case
where the special provisions of clause 23 are applicable.”
10. Applying the above principle in the present case, Clause 24
of the by-laws first enables the trustees to regulate their
meetings, proceedings and discharge of duties in such
manner as they may decide. It next provides that the trustees
may, by resolution, direct any act, deed or thing required to
be done or executed by them to be done or executed by any
one or more of them. The clause then makes a specific
provision as to the manner in which such delegation may be
affected, namely, by a general or special resolution passed
without any meeting of the trustees and evidenced in writing
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under the hands of the majority of the trustees. It finally
declares the consequence of such a resolution by providing
that it shall be as valid and effectual as a resolution passed
at a meeting of the trustees. The structure of the clause is
therefore deliberate and complete. It confers the power,
prescribes the mode, and attaches legal efficacy to the act so
done.
11. The meaning of Clause 24 of the by-laws becomes clearer
when each part of it is given its due weight. The clause does
not merely say that the trustees may discuss matters or
express views by majority. It expressly recognizes that
delegation of authority may be evidenced in writing under the
hands of the majority of the trustees, and that a resolution so
made shall be as valid and effectual as one passed at a
meeting of the trustees. These are words of legal
consequence. In J.K. Cotton Spinning & Weaving Mills Co.
3
Ltd. v. State of U.P. , this Court held that, in construing a
provision, the Court must adopt an interpretation which gives
effect to all its parts, and must avoid a construction which
renders any word or expression redundant or otiose. If the
interpretation adopted by the Division Bench were to be
accepted, the words “under the hands of the majority of the
trustees” and the further declaration that such resolution
shall be “as valid and effectual” as a resolution passed at a
3
1960 SCC OnLine SC 16
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meeting would be stripped of operative content. Such a
construction would reduce express language in the by-laws
to redundancy, which the law of interpretation does not
permit.
12. Clause 24 of the by-laws, therefore, cannot be read as
insisting upon unanimity for every act of delegation or
authorization by the trustees. On the contrary, it
incorporates a clear rule of efficacy in favor of a written
resolution supported by the majority of the trustees. The
deeming effect built into the clause is crucial. It places an act
done pursuant to such majority-backed resolution on the
same legal footing as a resolution passed at a meeting of the
trustees. The correct interpretation of Clause 24 of the by-
laws thus is that, where the by-laws contemplate delegation
or authorization by the trustees, the same may validly be
accomplished through a resolution evidenced in writing
under the hands of the majority of the trustees, and once so
made, it cannot be disregarded merely because all trustees
have not concurred in it.
13. It is only after Clause 24 of the by-laws is thus understood
that the relevance of Section 48 of the Trusts Act needs to be
examined. Section 48 of the Trusts Act, which has been
reproduced hereunder:
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“48. Co-trustees cannot act singly.
When there are more trustees than one, all must join in
the execution of the trust, except where the instrument of
trust otherwise provides.”
14. It is evident that Section 48 of the Trusts Act lays down that
when there are more trustees than one, all must join in the
execution of the trust, except where the instrument of trust
otherwise provides. The exception is not incidental. It is built
into the statutory rule itself. The provision therefore does not
enact an absolute requirement of unanimity in every case. It
recognises that the governing instrument may prescribe a
different mode. In such a case, effect must be given to the
governing instrument. The statutory text itself thus makes
the instrument primary where it provides otherwise.
15. The next step, therefore, was to examine whether, in the
present case, the governing instrument did otherwise provide.
In our view, the answer to that inquiry is clearly in the
affirmative. Clause 24 of the by-laws, which forms part of the
by-laws of the societies, expressly permits delegation by a
resolution evidenced in writing under the hands of the
majority of the trustees and declares such delegation to be
valid and effectual. Once that position emerges from the
governing instrument itself, Section 48 of the Trusts Act
could not have been applied by the Division Bench as though
it imposed an overriding requirement that all trustees must
act in consonance and that absence of joinder by even one
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trustee would defeat the decision. Such an approach reads
the exception out of Section 48 of the Trusts Act and, at the
same time, deprives Clause 24 of the by-laws of its operative
force. That construction cannot be accepted.
16. The Division Bench also placed reliance upon the decision of
this Court in L. Janakirama Iyer (supra) . That decision
undoubtedly explains the general principle underlying
Section 48 of the Trusts Act. However, it cannot be read
divorced from the statutory language itself. If Section 48 of
the Trusts Act applies except where the instrument otherwise
provides, then any precedent explaining Section 48 of the
Trusts Act must also be read subject to that same
qualification. L. Janakirama Iyer (supra) could not
therefore have been relied upon to nullify an express
provision in the by-laws which permits majority-backed
delegation and gives it legal effect. The error in the impugned
judgment lies in lifting the general rule from Section 48 of the
Trusts Act and L. Janakirama Iyer (supra) without giving
due effect to the express exception and to the societies’ own
governing framework.
17. Applying the aforesaid principles to the present case, we are
unable to sustain the view taken in the impugned judgment
that all trustees had to act in consonance and that, if any one
trustee had not joined in the decision, the same could not be
regarded as a decision of the Board of Trustees. In the case
of the present societies, the governing by-laws themselves
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recognise and validate delegation evidenced in writing under
the hands of the majority of the trustees. Once that is so, a
majority-backed decision falling within that framework
cannot be disregarded merely because there is dissent or
non-joinder on the part of one or more trustees. The first
issue is answered accordingly.
Issue II- Whether the governing structure of the societies
permitted the matter of voting authority to be approached in
the manner adopted in the impugned judgment.
18. Having concluded that a decision evidenced under the hands
of the majority of the trustees is capable in law of binding the
society in terms of Clause 24 of the by-laws, the next question
is whether, under the governing structure of the societies, the
authority in relation to the exercise of voting rights attached
to the shares held by them in BCL inhered in the Board of
Trustees or could be approached on the footing that the
Managing Committee stood on the same plane.
19. The second issue must likewise be examined in the light of
the constitutive documents of the three societies. The
Memorandum of Association is one of the foundational
documents of a society and indicates, among other matters,
the framework within which its affairs are to be conducted.
The Rules and Regulations operate with it and govern the
internal distribution and exercise of powers. Since the
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present issue concerns the relationship between the Board of
Trustees and the Managing Committee, it becomes necessary
to notice the relevant provisions contained in these
documents. In the case of Hindustan Medical Institution and
Eastern India Educational Institution, the relevant provisions
are contained in Clause V of the Memorandum of Association
and Rule 23 of the Rules and Regulations. In the case of Belle
Vue Clinic, the corresponding provisions are contained in
Clause VI of the Memorandum of Association and Rule 24 of
the Rules and Regulations. Though differently numbered,
these provisions are materially to the same effect:
“V/VI a) (i) All properties movable and immovable
belonging to the Society shall vest in the Trustees.
(ii) Notwithstanding any decision by members in any
general meeting, the Trustees will have power to
nominate the members of the Managing Committee and
delegate such authority or authorities in the Managing
Committee in relation to the management of the affairs of
the Society as they may deem fit and the Managing
Committee will be entitled to exercise only such powers
as are delegated by the Trustees from time to time.
(b) Subject to Sub-clause (a), the management of the
whole of the affairs of the Society shall be entrusted to
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 22 of 37
the Managing Committee consisting of not less than five
and not more than fifteen persons.”
“Rule 23/24. Notwithstanding any decision by members
in any general meeting, the Trustees will have power to
delegate such authority or authorities in the Managing
Committee in relation to the management of the affairs of
the Society and the Managing Committee will be entitled
to exercise only such powers as are delegated by the
Trustees from time to time.”
20. The language of the above provisions leaves little room for
doubt as to the internal governance structure of the societies.
First, all movable and immovable properties of the societies
vest in the trustees. Second, the power to nominate the
members of the Managing Committee and to delegate
authority to it is vested in the trustees, and that too
“notwithstanding” any decision by members in any general
meeting. Third, the Managing Committee is expressly stated
to be entitled to exercise only such powers as are delegated
by the trustees from time to time. Fourth, even the clause
entrusting management of the affairs of the society to the
Managing Committee is made “subject to” the preceding sub-
clause. These expressions are of decisive significance. The
use of the words “notwithstanding” and “subject to” is not
accidental. The former gives overriding force to the authority
of the trustees in the field specified, while the latter makes
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the managerial authority of the Managing Committee
subordinate to that overriding position. Equally, the word
“only” in the expression “only such powers as are delegated”
is a clear textual limitation and not a matter of mere drafting
surplusage.
21. Read together, these provisions establish a two-tier structure
in which the Board of Trustees is the source body and the
Managing Committee is a body of delegated administration.
The trustees are not merely one organ among several. The
properties of the societies vest in them. The Managing
Committee does not enjoy an independent or co-equal
reservoir of authority in relation to such properties. Its
authority is derivative and circumscribed by delegation.
Therefore, the constitutive documents do not permit the
Board of Trustees and the Managing Committee to be treated
as interchangeable bodies for all purposes. To do so would be
to ignore the express textual arrangement created by the
Memorandum of Association and the Rules and Regulations
themselves.
22. This distinction assumes particular importance in the
present case because the controversy concerns the exercise
of voting rights attached to the shares held by the societies in
BCL. Those shares form part of the assets and properties of
the societies. Once the constitutive documents declare that
the properties of the societies vest in the trustees, the
authority to determine the manner in which rights flowing
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 24 of 37
from those properties are to be exercised cannot be detached
from that vesting. In such a situation, the source of authority
must be traced to the trustees, unless there is a valid and
demonstrable delegation in favour of the Managing
Committee. The societies have consistently asserted that the
power to appoint authorised representatives to attend annual
general meetings and to exercise voting rights on the shares
held by them had never been delegated by the Board of
Trustees to the Managing Committee and had, since
inception, been exercised by the trustees themselves.
Whether every factual element of that assertion is ultimately
established in every forum is not the immediate point. The
point is that, under the governing documents, the inquiry
into voting authority had to begin with the trustees and with
the existence or absence of delegation. It could not begin by
assuming that the Managing Committee stood on the same
footing.
23. It is precisely here that the infirmity in the impugned
judgment becomes evident. The Division Bench itself noticed
that the properties of the societies vest in the trustees, that
the Managing Committee derives authority through
delegation, and that the by-laws contemplate delegation by
the trustees. Yet, while framing the operative caveat, it
directed that the vote cast first by the plaintiff society,
irrespective of whether it was cast by a member of the
Managing Committee or by the Board of Trustees, shall be
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 25 of 37
taken into consideration. In doing so, the Division Bench
effectively treated the Board of Trustees and the Managing
Committee as standing on the same plane for the purpose of
exercising voting rights attached to the assets of the societies.
That approach is not borne out by the constitutive
documents. Once the source of authority under the
Memorandum of Association and the Rules and Regulations
is identified, the Board of Trustees and the Managing
Committee cannot be collapsed into one undifferentiated
category.
24. We are therefore of the view that the governing structure of
the three societies did not permit the question of voting
authority to be approached in the manner adopted in the
impugned judgment. The correct approach was first to
identify, from the constitutive documents, the body in which
authority inhered in relation to the shares and the rights
flowing therefrom, and thereafter to examine whether and to
what extent such authority stood delegated. Instead, the
impugned judgment proceeded on a footing which treated the
Managing Committee and the Board of Trustees as if they
were normatively interchangeable for the purposes of
authorising the vote of the society. That approach is
inconsistent with the scheme of the societies’ own governing
framework. The second issue is answered accordingly.
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Issue III- Whether the direction that the vote cast first would
prevail, irrespective of the source of authority, is sustainable
in law.
25. The third issue must be examined in the light of the statutory
framework governing the exercise of voting rights by
electronic means at a general meeting of a company. Section
108 of the Companies Act, 2013 enables members to vote by
electronic means, and Rule 20 of the Companies
(Management and Administration) Rules, 2014 prescribes the
procedure in accordance with which such voting is to be
conducted. Since the impugned direction concerning the vote
cast first must necessarily be tested against that framework,
it also becomes necessary to notice the Notice dated
08.08.2022 issued by BCL convening its 102nd Annual
General Meeting to be held on 27.09.2022, for the said notice
sets out the procedure for remote e-voting and voting at the
meeting in implementation of the statutory scheme. The
relevant part of the notice reads as follows:
“21. Instructions for Members for Remote e-Voting
are given below:
a) In compliance with the provisions of Section 108 of the
Act, read with Rule 20 of the Companies (Management
and Administration) Rules, 2014, as amended, SS-2 and
Regulation 44 of the Listing Regulations and in terms of
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 27 of 37
SEBI Circular No.
SEBI/HO/CFD/CMD/CIR/P/2020/242 dated 9th
December, 2020 on ‘e-voting facility provided by Listed
Companies’, the Company is pleased to provide the
facility to member to exercise their right to vote on the
resolutions proposed to be considered at the AGM by
electronic means. The facility of casting the vote by the
members using an electronic voting system from a place
other than venue of the Meeting (‘remote e-voting’) will be
provided by CDSL.
b) The remote e-Voting period commences on Saturday,
24th September, 2022 at 9.00 a.m. (IST) and ends on
Monday, 26th September, 2022 at 5.00 p.m. (IST)… Once
the vote on a resolution is cast by the member, the
member shall not be allowed to change it subsequently.”
The same notice further provided:
“ 22. General Guidelines for shareholders.
d) The Facility for voting through ballot/polling papers
shall be made available at the Meeting and the members
attending the Meeting who have not already cast their
vote by remote e-Voting shall be able to exercise their
voting right at the Meeting through Polling Paper.
However, the members who have cast their vote by
remote e-Voting prior to the Meeting may also attend the
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 28 of 37
Meeting but shall not be entitled to cast their vote again
at the Meeting.”
26. The notice also contained specific instructions for non-
individual shareholders. These provisions assume
significance in the present case because the members whose
votes were in dispute were not natural persons but societies.
The notice stated:
“ii. Additional Facility for Non-Individual
shareholders and Custodians For Remote Voting
only.
5. It is mandatory that, a scanned copy of the Board
Resolution and Power of Attorney (POA) which they have
issued in favour of the Custodian, if any, should be
uploaded in PDF format in the system for the scrutinizer
to verify the same.
6. Alternatively, Non-Individual shareholders are
required mandatory to send the relevant Board
Resolution/Authority letter etc. together with attested
specimen signature of the duly authorized signatory who
are authorized to vote, to the Scrutinizer and to the
Company… for the scrutinizer to verify the same.”
27. The significance of the above provisions is twofold. First, once
the vote on a resolution is cast by the member through remote
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e-voting, the member cannot change that vote subsequently
and cannot vote again at the meeting. Secondly, in the case
of a non-individual shareholder, the voting process itself
proceeds on the basis that the scrutiniser is to verify the
Board Resolution or authority letter under which the vote is
cast. In other words, the statutory and procedural framework
does not treat chronology as the source of validity. It treats
authority as anterior to, and foundational for, the act of
voting. A vote cast first in point of time is protected against
duplication or subsequent alteration only if it is, in law, the
vote of the member. In the case of a society or other non-
individual shareholder, that condition can be fulfilled only
where the vote is cast by a person authorised in accordance
with the governing documents of that entity and the authority
is capable of verification by the scrutiniser under the
prescribed procedure.
28. The scrutiniser’s own role, as reflected in the record, is
consistent with the above understanding. The scrutiniser’s
report placed on record states that his responsibility was
restricted to making a consolidated scrutiniser’s report of the
votes cast in favour or against the resolutions contained in
the notice of the annual general meeting, based on the reports
generated from the e-voting system and the voting through
ballot or polling papers at the venue of the meeting. The same
report records that the Company had provided the facility of
voting through remote e-voting and voting through ballot or
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 30 of 37
polling papers in compliance with Section 108 of the
Companies Act, 2013 read with Rule 20 of the Companies
(Management and Administration) Rules, 2014. The statutory
scheme therefore contemplates scrutiny of the voting process
in a fair and transparent manner. It does not contemplate
that validity may be made to depend upon a race between
rival claimants purporting to act for the same juristic
member.
29. It is here that the infirmity in the impugned judgment
becomes evident. The Division Bench, after observing that
once an electronic vote is cast, the same person or entity
cannot be permitted to cast the vote again, and after further
observing that the scrutiniser has no authority to invalidate
a vote already cast on the basis of a communication received
later in point of time, proceeded to direct that the vote cast
first by the plaintiff society, irrespective of whether it was cast
by a member of the Managing Committee or by the Board of
Trustees, shall be taken into consideration. This direction
introduces into the statutory process a rule which neither
Section 108 of the Companies Act, 2013 nor Rule 20 of the
Companies (Management and Administration) Rules, 2014
nor the annual general meeting notice contemplates. The
statute and the rules recognise a valid vote of the member
and prohibit its duplication or later alteration. They do not
enact that whichever rival claimant acts first for the member
must necessarily prevail, regardless of whether such person
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 31 of 37
was lawfully authorised to represent the member. The
impugned caveat, therefore, substitutes chronology for
authority.
30. This Court has repeatedly held that where a statute
prescribes the manner in which a thing is to be done, it must
be done in that manner or not at all. In Babu Verghese v. Bar
Council of Kerala, (1999) 3 SCC 422 , this Court reiterated that
where the law requires a particular act to be done in a
particular manner, the requirement must be strictly followed
and cannot be displaced by a procedure not contemplated by
the statute. Applying that principle here, once Section 108 of
the Companies Act, 2013 read with Rule 20 of the Companies
(Management and Administration) Rules, 2014 and the
procedure framed thereunder govern the field of remote e-
voting, the Court could not have engrafted an additional norm
that the vote cast first would prevail irrespective of the source
of authority. Such a rule is not borne out by the statutory
text. On the contrary, the procedural requirements for non-
individual shareholders, including production and
verification of Board Resolution or authority letter, show that
authority is not incidental to the voting process but integral
to it. A vote cast first but without lawful authority cannot
become valid merely by reason of priority in time. The law
protects the first valid vote of the member against duplication
or change. It does not validate the first unauthorised act of a
rival claimant.
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 32 of 37
31. We are also unable to sustain the direction in the impugned
judgment that the vote cast first by the plaintiff society,
irrespective of whether it was cast through the Managing
Committee or the Board of Trustees, shall be taken into
consideration. That direction could not have been justified
even as an interim arrangement. The dispute before the High
Court did not arise from any difficulty in counting votes
already validly cast. It arose because rival persons asserted
competing authority to vote on behalf of the same society. In
such a situation, the Court could not resolve the matter by
according primacy to the vote cast first in point of time. To do
so was, in effect, to substitute chronology for authority. Such
an approach not only travels beyond the statutory framework
governing remote e-voting but also disregards the internal
hierarchy of authority established under the constitutive
documents of the societies, as already discussed while
dealing with the second issue.
32. For the aforesaid reasons, we are of the view that the direction
contained in the impugned judgment that the vote cast first
would prevail, irrespective of the source of authority, is
unsustainable in law. The statutory framework prevents the
same member from changing its vote or voting again once a
valid remote e-vote has been cast. It does not authorise the
Court to hold that priority in point of time, by itself,
determines the validity of a vote cast on behalf of a juristic
member. The third issue is answered accordingly.
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 33 of 37
33. Insofar as the connected appeals preferred by Ms. Anamika
Lodha are concerned, her challenge to the direction in the
impugned judgment that the vote cast first would prevail
must also succeed for the reasons recorded while dealing with
the third issue. However, to the extent any submission was
advanced on her behalf in support of the view taken by the
Division Bench that the trustees must act in consonance or
that the matter of voting authority could be approached
without due regard to the governing structure of the societies,
the same cannot be accepted for the reasons already recorded
while dealing with the first and second issues.
34. For the reasons recorded above, the impugned judgment
cannot be sustained. The Division Bench erred in construing
the by-laws of the societies as requiring trustee action only in
consonance, in approaching the question of voting authority
without due regard to the governing structure of the societies,
and in directing that the vote cast first would prevail
irrespective of the source of authority.
Conclusion
35. In view of the foregoing discussion, the Civil Appeals arising
out of SLP (C) No. 1182 of 2023, SLP (C) No. 1183 of 2023
and SLP (C) No. 23145 of 2022, preferred respectively by
Hindustan Medical Institution, Eastern India Educational
Institution and Belle Vue Clinic, are allowed.
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36. The Civil Appeals arising out of SLP (C) Nos. 1185 of 2023,
1187 of 2023 and 22799 of 2022, preferred by Ms. Anamika
Lodha, are allowed to the limited extent with respect to her
challenge to the direction in the impugned judgment that the
vote cast first would prevail must also succeed for the reasons
recorded while dealing with the third issue. However, insofar
as the impugned judgment was supported by her on the basis
that the trustees could bind the societies only if they acted in
consonance or that the matter of voting authority could be
approached without due regard to the governing structure of
the societies, the same cannot be sustained for the reasons
already recorded.
37. The common judgment and order dated 26.09.2022, as
corrected by order dated 27.09.2022, passed by the Division
Bench in APOT Nos. 180, 181 and 182 of 2022, is set aside.
Consequently, the orders dated 16.09.2022 passed by the
Single Judge in G.A. No. 1 of 2022 in C.S. Nos. 212, 213 and
214 of 2022 are also set aside.
38. It is held that, in the case of the present societies, a decision
or delegation evidenced in writing under the hands of the
majority of the trustees, in terms of Clause 24 of the by-laws,
is capable in law of constituting a valid decision or
authorization on behalf of the society. The contrary view
taken in the impugned judgment, namely, that the trustees
could bind the society only if they acted in consonance and
C.A. @ SLP(C) NO. 1182/2023 with connected matters Page 35 of 37
that absence of joinder by even one trustee would defeat the
decision, is unsustainable and stands set aside.
39. It is further held that the direction in the impugned judgment
that the vote cast first by the plaintiff society, irrespective of
whether it was cast through the Managing Committee or
through the Board of Trustees, shall be taken into
consideration, is unsustainable in law and is set aside. The
validity of a vote cast on behalf of a society cannot be
determined merely by priority in point of time and must rest
upon lawful authority traceable to the governing documents
of the society and the statutory framework governing voting.
40. We clarify that we have not adjudicated upon the factual or
ultimate legal validity of any particular resolution, including
the resolutions dated 04.03.2021, or of any subsequent
authorisation said to have been issued on behalf of any of the
three societies. We have also not adjudicated upon the
validity of any alleged cessation, removal, nomination or
appointment of any trustee or member of the Managing
Committee. All such questions, including the maintainability
of the suits and the entitlement of any particular person to
act on behalf of the societies, shall be decided by the
competent forum on their own merits and in accordance with
law. The present judgment is confined to the legality of the
reasoning and directions contained in the impugned interim
appellate order.
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41. The suits and interlocutory applications out of which the
present appeals arise shall stand restored to the file of the
High Court. The Single Judge shall proceed to consider the
same afresh, if anything survives for consideration, in
accordance with law and in the light of the observations made
in the present judgment.
42. There shall be no order as to costs.
43. Pending application(s), if any, shall stand disposed of.
………………………………..J.
[VIKRAM NATH]
………………………………..J.
[SANDEEP MEHTA]
NEW DELHI;
MAY 26, 2026
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