Saji Koduvath, Advocate.
1. Introduction
The nexus between the branches and its central organisation has to be settled by the bye laws. Usually the upper body holds supervisory jurisdiction over the affairs of the branches; and, if the bye laws so provide, the property acquired by the branches may remain as the property of the whole/central organisation. When the parental body exercises its supervisory jurisdiction, in matters other than the formal administrative governance, it has to obey principles applicable to a quasi-judicial authority (ie., observing principles of natural justice, etc.).
The extent of autonomy or independence in administration of a branch is determined by the bye laws. Normally, so long the branches function within its jurisdiction, in conformity with the provisions of the bye laws, they can claim freedom from interference. When they violate the provisions of the bye laws and act in an arbitrary manner, their actions will be subject to the supervisory control of the central organisation.
Referring English Electric Co. of India Ltd v. Deputy Commercial Tax Officer, (1976) 4 SCC 460, it is observed in S.N.D.P. Yogam v. G. Krishnamoorthy, 2022-4 Ker HC 168, that a registered company can have Branches under the Companies Act and they are not independent or separate entities, and that the company and its branches constitute one single entity.
2. Does a Branch Regd. with a Regd. Society Get the Status as a Regd. Society?
An (unregistered) association which is registered with a registered-society will not get the status of a registered society.[1] Same will be the position as to a branch of a registered society. Section 4 of the Societies Registration Act provides for filing Annual List of Managing Body once in every year with the Registrar. Societies Registration Act does not envisage societies-with-branches.
In Kerala Vyapari Vyavasayi Vs. Kerala Vyapari Vyavasayi Ekopana Samithi[2] after considering the definition and character of the ‘Governing Body’ in the So. Regn. Act, so also the scheme of the Act, it is held that the committee of officers at the district level or unit level is not the ‘Governing Body’ under the Societies Registration Act.
3. Can a Branch Sue?
The Supreme Court, in P. Nazeer Vs. Salafi Trust, AIR 2022 SC 1580, held:
- (i) A society registered under the Societies Registration Act is entitled to sue and be sued, only in terms of its byelaws.
- (ii) The byelaws may authorise the President or Secretary or any other office bearer to institute or defend a suit for and on behalf of the society,
- since section 6 of the Societies Registration Act, provides that ‘every society registered under the Act may sue or be sued in the name of President, Chairman, or Principal Secretary, or trustees, as shall be determined by the rules and regulations of the society and,
- in default of such determination, in the name of such person as shall be appointed by the governing body for the occasion’.
- (iii) Unless the plaintiff, which claims to be a society, demonstrates that it is a registered entity and that the person who signed and verified the pleadings was authorised by the byelaws to do so, the suit cannot be entertained
- The fact that the plaintiff in a suit happens to be a local unit or a Sakha unit affiliated to a registered society is of no consequence, unless the byelaws support the institution of such a suit.
4. Fundamental Principles and Decision of a Branch to Sever
It being not open for the majority of the members of a society to alter the fundamental principles upon which it is founded, even the unanimous decision[3] of a branch (unless such a power is specifically reserved under the bye laws)[4] cannot sever the relation with the central body. This principle was expounded in Milligan Vs. Mitchel,[5] Atttorney General Vs. Anderson.[6] In Free Church of England Vs. Overtoun,[7] House of Lords (by a majority of 5-2) found that the minority, which adhered to the ‘principles of establishment’, was entitled to the assets of the Free Church. It was observed that when men subscribe money for a particular object, and leave it behind them for the promotion of that object, their successors have no right to change the object endowed. It was held that, by adopting new standards of doctrine (and particularly by abandoning its commitment to ‘the establishment principle’, which was held to be fundamental to the Free Church), the majority had violated the conditions on which the property of the Free Church.[8]
5. Can a Branch Dissociate?
A branch of a (central) organisation created under the provisions of bye laws, cannot (unless the Rules provide otherwise) lawfully sever its connections with its central body, as observed in John Vs. Rees [9], inasmuch as the act of severance will amount to violation of the rules or bye laws.
6. Merger of an Association with Another Association
If a voluntary association came into existence independently, and subsequently subjected itself as a branch of another association, such a ‘branch’ may have the right[10] to dissociate or disaffiliate from such association or ‘central body’; because, the ‘branch’, when came into existence, had all characteristics of an independent voluntary association with its own basic principles of foundation. The same will be the position of a voluntary association which merged or amalgamated[11] with another association.
If the conduct of the members of the merged association shows that their act amounted to unanimous or undisputed surrendering or abandonment of the identity of the former voluntary association, or they became an integral-whole with the association in which they merged, principles of acquiescence and estoppel will be a bar for dissociation.
7. Parallel Administration within a Church Not Allowable
In Varghese Vs. St. Peters and Pauls Syrian Orthodox Church [12] it is pointed out by our Apex Court that ‘running parallel governance’ at the cost of Church by creating factionalism within the constituent parish churches is not permissible. It is settled proposition of law that when a mode is prescribed for doing a thing, it can be done only in that manner and not otherwise.
8. Incidents of trust in Clubs and societies
See blog: Incidents of Trust in Clubs and Societies.
[1] Kalyani Mitra Vs. Hindu Milan Mandir: ILR 1986 MP 657
[2] 2004-1 Ker LT 756, 2004 KHC 122
[3] Long Vs. The Bishop of Cape Town: (1863) 1 Moo. P.C. (N.S.) 411; Merriman Vs. Williams: (1882) L.R.7 A.C.484
[4] Prasanna Venkitesa Rao Vs. Srinivasa Rao: AIR 1931 Mad. 12; See also: Profulla Chorone Requitte Vs. Satya Chorone Requitte: AIR 1979 SC 1682; Inderpal Singh Vs. Avtar Singh: 2007-4 Raj LW 3547.
[5] 40 ER 852
[6] (1888) 57 LJ Ch 543
[7] (1904) AC 515
[8] All these English decisions were referred to in Prasanna Venkitesa Rao Vs. Srinivasa Rao: AIR 1931 Mad. 12. See also: Inderpal Singh Vs. Avtar Singh: 2007-4 Raj LW 3547.
[9] John Vs. Rees: [1970] 1 Ch 345: [1969] 2 All ER 275.
[10] Unless principles of estoppel and acquiescence work against.
[11] Sec. 14A of the Karnataka Co-operative Societies Act, 1959 provides powers to the Registrar to order amalgamation of societies. See: H Puttappa Vs. State of Karnataka: AIR 1978 Kar 148.
[12] Varghese Vs. St. Peters and Pauls Syrian Orthodox Church: (2017) 15 SCC 333.
