Shamdas Chuharmal Khiatani v. The Indian Chamber of Commerce Hong Kong

HCA001619/1969

IN THE SUPREME COURT OF HONG KONG

ORIGINAL JURISDICTION

ACTION NO.1619 OF 1969

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Coram: Mills-Owens, J. in Chambers.

Date of Judgment: 23rd April 1970.

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JUDGMENT

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1. On the 25th March 1970 an interim injunction was obtained ex parte by the plaintiff, whereby the defendant corporation, the Indian Chamber of Commerce Hong Kong, was restrained from holding an election of a General Committee until after the hearing of a summons for an interlocutory injunction in the same terms. The return date of the summons was the 11th April 1970; due to adjournments it came on for hearing today. In the meantime an order for speedy trial of the action had been made. The General Committee has control of the business and funds of the Chamber.

2. Basically, the dispute between the parties (the plaintiff being a member of the defendant Chamber which is a company limited by guarantee and without a share capital, and being a member also of the present General Committee) is as to the eligibility of certain persons and undertakings to be members of the Chamber and consequently as to the validity of votes cast by such persons and undertakings in the ballot for the election of the present General Committee on its election in March 1969. I have been referred to the Memorandum and Articles of Association of the Chamber. Obviously the purpose of its formation was the establishment of an association of Indian mercantile men and undertakings, with important duties, inter alia, in the issue of certificates of origin and the settlement of trading disputes by arbitration.

3. The plaintiff alleges that a number of named persons or undertakings who have been accepted as members are ineligible for membership of the Chamber; paragraph 8 of the statement of claim provides particulars of nine specific alleged instances. Thus, for example, it is said that in a number of cases a person has been admitted to membership in more than one capacity, that is to say as an individual merchant and as the sole proprietor of his one-man mercantile firm, thus giving him or purporting to give him more than one vote at the election of the General Committee. Another instance is where the member is a Hong Kong incorporated company none of whose immediate shareholders is an Indian, although it may be that by tracing beneficial ownership through associated companies it will turn out that the ultimate beneficial owners, as to the majority interest, are Indian individuals. The plaintiff claims various declarations which are intended, inter alia, to have it laid down by the Court that 'multiple membership', in the sense I have described, and membership by corporations whose immediate majority shareholders are not Indian individuals, are invalid, and that the present General Committee was consequently invalidly constituted, and he asks, inter alia, that the election of a new General Committee, now due to be elected, should be held under the supervision of the Court so as to preclude the alleged abuses of which he complains. It is agreed that pending the election of a new General Committee the present Committee will remain in office.

4. I would say immediately that the plaintiff has. in my view, made out a case which is reasonably capable of succeeding, but it by no means follows that he will succeed.

5. As to the practical effect: if an interlocutory injunction is granted, the present Committee will continue to hold office until after the trial of the action; thus, in a sense, the status quo will be maintained; if it is refused then no doubt the Annual General Meeting will be held and an election of a new General Committee will take place. Am I to assume that the same alleged abuses will occur at such an election? I suppose so, in view of the attitude taken by the present General Committee. There is, apparently, no means of knowing whether the ballot for membership of the present Committee in March 1969 was, in fact, affected by the alleged invalid voter; whether the results would have been any different if those votes had not been cast. I have some doubts as to the status of the plaintiff - as to his capacity to sue solely in his own name - but will, for present purposes, assume that in his capacity as a member of the Chamber he is entitled to insist that the provisions of the Memorandum and Articles as to membership and voting be strictly adhered to.

6. It is difficult to perceive what each party, respectively, hopes to gain by these interlocutory proceedings. The action will come on for trial within the very near future. What would it matter to the members of the present Committee if they are obliged to remain in office as such until after the trial? What have they to gain by insisting on a new election prior to the trial? In each case, nothing, so far as I can see, except, perhaps, to show consistency in their rebuttal of the plaintiff's allegations. What does it matter to the plaintiff if a new Committee is elected? In this event, no doubt, his proceedings will require adjustment to the new situation; the present Committee whose election he claims is invalid will have been superseded by a new Committee; and if the new committee is held, at the trial, to have been invalidly constituted then another election will be required, so that the presently proposed election will have been held in vain. Further counsel for the plaintiff argues, the new Committee may seek to amend the Articles so as to render eligible those whose eligibility he attacks. But if it does so by resort to the allegedly invalid votes that also may be challenged. And what is to prevent the present Committee from now proceeding in the same way?

7. Turning to the position of the plaintiff: he is himself a member of the present Committee and was also a member of the 1968 Committee. No allegation is made that he is in danger of being deprived of his membership of the Chamber, or of his office on the Committee, by the use of the allegedly invalid votes. Prima facie, he brings the action as a matter of principle, in the best interests of the Chamber, but not for the protection of any proprietory right vested in himself. In these circumstances, where is that prejudice to avoid which he is driven to seek an injunction pending the trial? What apprehended damage or injury does he seek to be protected against, pending trial? I can perceive none, and accordingly would dismiss the summons. As to costs it was agreed at the hearing of the summons that the costs of and incidental thereto should be reserved to the trial judge and I order accordingly. I also certify for counsel for each party.

8. I feel bound to add that I think it is most unfortunate that these proceedings have come about. The Chamber is a voluntary association formed for mutual benefit, and the members should be able to resolve their differences if not ...(illegible) then by taking a proper vote on the matter in dispute. No amount of litigation can ultimately frustrate the will of the majority if they are determined upon what they think are the proper requirements for membership and voting. Surely all should combine to ascertain the majority view on the matters in dispute, and, if necessary, to revise the Articles so as to put the position beyond doubt.

23rd April 1970.

Representation:

Jackson-Lipkin (instructed by Peter Mo & Co.) for plaintiff.

Gittons, Q.C. and A. Sakhrani (instructed by H.A. Hoosenally & Co.) for defendant.

Upon the foregoing being delivered in the presence of Mr. Ives, solicitor for the plaintiff, and Mr. Hoosenally, solicitor for the defendant, Mr. Ives raised the question whether any attempt such as I have suggested to resolve the differences between the parties, as e.g. by calling a general meeting and taking a vote on the matters in dispute, might possibly be a contempt of court in view of the case being sub judice. In my view, no question of contempt of court can possibly arise out of any such attempt at a settlement (vide 8 Halsbury pp.2-12). The questions before the court are questions of construction of the Memorandum and Articles and it is not even remotely possible that any comment, argument or discussion in the course of an attempt at settlement will tend to interfere with the court's duties or influence the result. I would give my blessing to any efforts directed to arriving at a settlement.