Dismissed

Tamil Film Producer Council v. The Secretary to the Government

Madras HC14 Jun 2019WP/12935/2019

Case brief

AI extract

What is this about?

The High Court of Madras dismissed a Writ Petition filed by the Tamil Film Producers Council challenging a Government Order appointing a Special Officer. The Court held that the petitioner lacked locus standi once the Special Officer was appointed to manage the society.

What did the court decide?

Writ Petition dismissed on grounds of no locus standi; connected Writ Miscellaneous Petitions closed.

Tamil Film Producer Council Vs The Secretary to the… — Company and Corporate | Madras HC (2019)

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IN THE HIGH COURT OF JUDICATURE AT MADRAS

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DATED: 14.06.2019 CORAM: THE HON'BLE MR.JUSTICE S.MANIKUMAR AND THE HON'BLE MR.JUSTICE SUBRAMONIUM PRASAD

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WP.No.12935 of 2019 and WMP Nos.13097 & 13099 of 2019

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Tamil Film Producer Council Represented by its Hon Secretary S.Kathiresan No.606, Anna Salai, Chennai - 600 006. ... Petitioner

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vs.

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The Secretary to the Government, Home (Cine-I) Department, Fort St.George, Secretariat, Chennai. ... Respondent

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WRIT Petition filed under Article 226 of the Constitution of India, praying for the issuance of a writ of certiorari, calling for the records pertaining to G.O.Ms.No.1599, Home (Cinema) Department, dated 26.09.2018 and quash the same as arbitrary, discriminatory, unconstitutional and violative of Articles 14, 19 and 21 of the Constitution of India.

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For Petitioner : Mr.Krishna Ravindran

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For Respondent : Mr.T.M.Pappiah

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Special Government Pleader

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ORDER

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(Order of the Court was made by S.MANIKUMAR, J)

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On 13.06.2019, we passed the following Order.

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On the last occasion, representation was made, that a writ petition has been filed challenging G.O.Ms.No.1599, Home (Cinema) Department, dated 26.09.2018, appointing a Special Officer, for the functioning of the Tamil Film Producer Council.

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Today, Mr.A.Charles Darwin, learned counsel for the petitioner, submitted that, Writ Court has not granted any stay.

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On behalf of Mr.T.M.Pappaiah, learned Special Government Pleader (Registration), Mr.A.Akhil Akbar Ali, learned Government Advocate, submitted that there is an oral instruction, to withdraw the writ petition. However, he is awaiting for written instruction, to withdraw the writ petition.

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4.Post the matter on 14.06.2019, in the motion list.

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2. G.O.(Ms).No.56, Commercial Taxes and Registration (M1) Department dated 26.04.2019, appointing a Special Officer is reproduced.

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ABSTRACT

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Societies - ‘Tamil Film Producers Council" (Reg.No.144/1979), Chennai - Complaints against the society - Enquiry conducted - Certain allegations proved - Invocation of section 34-A of Tamil Nadu Societies Registration Act, 1975 - Appointment of Special Officer- Orders - Issued.

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COMMERCIAL TAXES AND REGISTRATION (M1) DEPARTMENT G.O.(Ms).No.56 Dated: 26.04.2019 Read: 1. Representation From Thiru.R.Radhakrishnan, dated 24.12.2018

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Orders of High Court of Madras in WP.No.112 of 2019 dated 8.1.2019. 3. From the District Registrar, Central Chennai Letter No.7203/D2/2018, dated 21.2.2019.

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From the Inspector General of Registration, Letter No.52410/11/2018, dated 01.03.2019,

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Government Letter| No. 13893/M 1/20186, Commercial Taxes

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and Registration Department dated

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7.3.2019.

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Representation from the Hon.Secretary, Tamil Film Producers Council, Chennai, dated 16.04.2019. 7. From the District Registrar, Central Chennai, Letter No.7-2(33/02/2018, plated 23.4.2019.

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From the Inspector General of https://hcservices.ecourts.gov.in/hcservices/ Registration, Letter

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No.52410/11/2018, dated 24.04.2019. (along with enclosures)

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ORDER:

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"Tamil Film Producer’s Council” is a Society formed on 18.07.1979 with 7 members viz., Thiru Muktha V.Srinivasan-as its President, Thiru Valamburi Somathan as its Secretary and Thiru A.V.M.IVurugan as its Treasurer, along with 4 others. The address of the Society since registration is No.606, Anna Salai, Chennai-06. The society came under the jurisdiction of Registrar of Societies, Chennai Central Registration District.

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The Inspector General of Registration in his report in the letter 4^th read above has stated the following:“Thiru R.Radhakrishnan made, a representation dated 24.12.2018 to the Inspector General of Registration with a copy marked to the District Registrar office, Chennai Central alleging non-convening of Genera! Bcdy Meeting and misuse of funds. The complainant has further filed a Writ Petition No.112/2019 before the Hon’ble Madras High Court on 02.01.2019 seeking direction to the respondents to consider his representation dated 24.12.2018 and to conduct an enquiry in respect of the affairs of the Society and to take appropriate action within a stipulated time.

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The Hon'ble High Court of Madras in its order dated 08.01.2019 in the said W.P has directed the respondents 1,2 & 3 viz., (1) The Inspector General of Registration (2) District Registrar (Admin), Chennai Central and (3) Deputy Registrar of Society, Chennai Central to consider the petitioner’s^r epresentation dated 24.12.2018 and pass appropriate orders, on merits in accordance with law, after issuing notice to the petitioner,‘Society and the persons interested in this regard,and also affording them an opportunity of personal hearing, within a period of four weeks from the date of receipt of a copy of the Court order."

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Accordingly the District Registrar (Admin), Chennai Central conducted enquiry under Section 36(1) and inspection under Section 35 of the Tamil Nadu Societies Registration Act, 1975 and has submitted his

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enquiry report. The allegations levelled against the society by Thiru. R.Radhakrishnan and the findings of the Inspector General of Registration along with provisions of the Act which the said society has violated are as follows:

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Allegation 1:

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Mr.Vishal Krishna, President of the Tamil Films Producers Council who is conducting the affirs of the Council according to his whims and fancies without convening executive committee meeting properly is acting deetrimental to the larger interest of the Council and its members who are the regular Producers.

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The present office bearers of the society were elected on 2.4.2017. As per the bye-law of the Council, the Society should have conducted the Annual General Body meeting not later than 30th September 2017. However the same was not done by the office bearers and did not administer the Council properly. Further many vital issues have not been addressed and unable to be solved by the office bearers and further on account of mismanagement and maladministration, financial irregularities committed by the President, Honorary Secretary, Treasure, there is a widespread discontentment among the members, who had given the requisition for convening the Annual General Body meeting to ventilate their grievances as against the existing committee members and office bearers.

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Findings of the Inspector General of Registration:-

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The Society has neither conducted any Annual General Meeting nor obtained approval ol relevant records to be fijled with the Registrar concerned till date from the year 2017 Thus the society violated section 16(3) and section 26 of the Tamil Nadu Societies Registration Act, 1975 andithe rules made therein.

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Allegation 2:

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The President had unifateralty and arbitrarily set up an additional office for the Council at the new rental place in T.Nagar for huge rents which is unwarranted and the same

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has been opposed by the majority of the members. The said office was started without the approval of the Executive: Committee and there is no proper resolution in the minutes book. Further, Byelaw No.30 of the society dictates that Deeds, Bonds and other instruments are to be affixed with the Association seal and signed by the President (or Vice president) and counter signed by one of the Secretaries. In the Lease agreement executed by the President on 05.05.2017, neither the office seal nor the counter signature of the Secretary is (affixed which is a clear violation.

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Findings of the Inspector General of Registration:-

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The Society has neither kept|the relevant records at the registered office of the society nor filed Form V regarding qhange cf address with the Registrar concerned till date. Thus, the society violated section 29(3) and section 13 of the Tamil Nadu Societies Registration Act, 1975 and|the rules made, therein. Allegation 3:

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On 17.04.2018 one of the elected senior executive committee member namely P.L.Thenappan had tendered thei resignation and sent a detailed letter dated 17.04.2018 to the council and the said letter itself speaks of the mismanagement and financial irregularities and the office bearers are acting against the interest of the members and the council. The majority of members had convened the meeting against the present office bearer more particularly against the president to resign/remove from the post of President since he had cancelled tne fixed deposit of Rupees Seven Crore of funds deposited in the Bank and ptilized the same, indulged in financial irregularities which is against the interest of the Council and members and without the approval of the Annual General Meeting.

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The two elected Vice presidents are not attending the office and not participating in any executive committee meeting;. It is also pertinent to mention that Mr.Partheeban, recently elevated as Vice President has tendered his resignation from both the office bearer and E.C membership by giving a media

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interview regarding the mismanagement of the Council.

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Findings of the Inspector General of Reaistration:-

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As there is no violation of any Act provisions with regard to this allegation the same may be held as not substantiated.

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Allegation 4:-

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The office bearers are indulging in grave acts of misfeasance and malfeasance and misappropriating the funds of the Council. They arc incurring huge unauthorized expenditure without any transparency whatsoever and the office bearers are going helter-skelter to dissipate the funds of the Council to the maximum extent possible.

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More than Rupees Seven Crores has been siphoned of which was lying in the fixed deposit by the previous regime and further unnecessarily an additional office premises which has been taken on rent of Rs.2,00,000/per month at T.Nagar and further it is pertinent to mention that earlier total staff salary per month was only Rs.1,80,0Q0/-The monthly expenditure of staff salary is now more than Rs. 12,00,000/- which all unwarranted and waste of Council money and not properly conducting executive meeting as per the byelaw of the association and the office bearers are committing act of waste of Council’s finance. The funds of the Council ought to be . preserved and ought not to be allowed to be mishandled by the office bearers. Since they have lost confidence, they are indulging in squandering the funds of the Council lying in various bank accounts and other Trust account. They are conducting the affairs of the Council according to their whims and fancies without any transparency at all. They are committing acts of waste of the assets of the Council. It is totally unsafe to allow the administration to continue in the hands of the present Executive Committee who have lost the confidence of the members of the Council.

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There is absolute prohibition and bar in the byelaws as well as in the Tamil Nadu Societies Registration Act, that the funds of https://hcservices.ecourts.gov.in/hcservices/ the Council cannot be distributed among the

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members in any manner. More than One Crore has been distributed as Deepavali bonus to the members. It is pertinent to mention that the present office bearers while assuming office the bank balance available was Rs.7,53,74,133/as on 02.04.2017 and, thereafter in this two years more than Rs.5 Crore income. All these money are to be properly accounted.

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Findings of the Inspector General of Registration:-

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It is observed that the society has distributed funds among the members in the guise of Pension, Gift for Diwali, financial assistance for marriages and education of member’s children which are in contravention of the Acts & Rules as well as the bye- laws of the said Society. Thus, the society has violated section 25 of Tamil Nadu 4 Societies Registration Act, 1975.

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As the allegations 1, 2 and 4 have been provisionally held as proved after due examination, a show cause notipe to the President and other office bearers of the Tamil Film Producers Council was issued in the letter fifth read above under the provisions of section 34-A cf the Tamil Nadu Societies Registration Act, 1975. The Honorary Secretary of the said society has submitted reply to the show cause notice in the letter sixth read above. The explanation of the society with regard to each of the allegations leveled and the findings of the Inspector General of Registration are as' below:-

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Explanation of the Society with reference to allegation 1:

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The object No.3(d) and (g) of the Byp-law of the Society read as follows:-

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3(d) To watch, protect and extend the rights and privileges of members of the association and to procure them benefits, special advantages and concessions of all kinds;

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3(g) To organize & look after the welfare of the persons engaged in Tamil Film Production; and to found a Trust for that purpose and allied objects.

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Bye law No. 15h(viii) of the Society reads

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as follows,

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“To invest and deal witn the funds of the Association in or upon such securities and in such manner as they think fit and from time to time vary realize such securities".

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As per the above said provisions of the byelaws, the Society has the right to use the funds of the Society as it deems fit. It is pertinent to mention here that there is no misappropriation of the funds of the Society, they were given to the members as welfare measures through the Charitable Trust. All the accounts, bills, vouchers receipts and other documents were handed over to the complainant as well as the District Registrar, botn of them are not able to pin points any misappropriation of funds by the present office bearers. All the decisions taken by the Society in this regard are collective decisions and have been approved by ihe Executive Committee. Hence the allegation of misappropriation of* funds I mismanagement of Society is baseless and not maintainable. The assumptions and presumptions of the complainanf without any documentary evidence is taken on record by the District Registrar for the reasons best known to him and even after verifying the entire records, and not being able to pin point any action that proves the false allegations, the present show cause notice is totally unwarranted.

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Findings of the Inspector General of Registration:-

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Income and Expenditure of the Society, which runs into several crores, has not passed the test of approval by the General Body. Thus, when the Income & Expenditure Statements have not been approved by the majority of the members through the conduct of Annual General Meeting, the claim of the Society that the allegations regarding mismanagement of funds are frivolous, does not hold water.”

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Whileso, the explanation of the Society in trying to correlate the reported mismanagement of funds to the backing of the vague byelaws, is totally absurd and even assuming that, the byelaw directly supports such actions, then such byelaws deserves to be rejected in toto, since they Would be in contravention to sections 25 and 42 of the Tamil Nadu Societies Registration Act, '[1975. This is for the

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simple reason that in any case the Act overrules the byelaws of any Society.

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The Society has neither conducted any Annual General Meeting nor obtained approval of relevant records to be filed with the Registrar concerned till date from the year 2017. Thus the society violated section 16(3) and section 26 of the Tamil Nadu Societies Registration Act, 1975 and the rules made therein.

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Explanation of the Society with reference to allegation 2:

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The Office of the petitioner is situated at No.606, Anna Salai, 4^th floor, Chennai - 06. Since the said office is small and insufficient to perform its. obligation, after due approval from the Executive Committee Members, another branch office was functioning at No.14, Yogambal Street, T.Nagar, Chennai - 600017. Copy of the minutes of the Executive Committee meeting is enclosed herewith. It is submitted that the Association for its convenience and benefit of its members had started the branch office at T Nagar and .it is well within the byelaws to do the same. It is incorrect to state that the registered office of the Society was shifted to the above mentioned address at T.Nagar. Only the branch office was opened since anti-piracy and other allied activities have been enhanced by the present office bearers and the registered office was not shifted cut. It always remains 'only at No.606, Anna Salai, Chennai-600006. Hence, the allegation that the registered office was shifted to T.Nagar without any approval is incorrect. It is stated that some of the records pertaining to the association was kept in T.Nagar Office for convenience and better safeguard.

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Findings of the Inspector General of Registration:-

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As per the inventory taken by the Registrar on 22.12.2018, on the direction of the Hon’ble Madras High Court from the T.Nagar office, it is evident that all the books and documents relating to the said Society are maintained only in the T.Nagar office' Furthermore, as per the copy of the minutes dated 02.05.2017 as found in page nos. 11 to 15, taken from' the Minutes Book maintained at T.Nagar office, the

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resolutions adopted on that date doesn’t carry any reference to the effect that the branch office has been started at T.Nagar. Whileso, the Society has enclosed with its explanation dated 16.4.2019 an extract of the minutes dated 02.05.2017 by including a resolution passed to that effect, which is not originally found in the said Minutes book.

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Hence it is submitted that the findings that the running of a parallel office in T.Nagar, incurring nuge expenditure is neither supported by the Act or rules or byelaws or any requisite collective decision.

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The Society has neither kept the relevant records at the registered office of the society nor filed Form V regarding change of address with the registrar concerned till date. Thus, the society violated spction 29(3) and section 13 of the Tamil Nadu Societies Registration Act, 1975 andjthe rules made therein.

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Explanation of the Society with reference to allegation 4:

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It is submitted that the allegation that the funds of the Society are being distributed amongst its members ip denied for the following reasons. The welfare measures viz., pension to penior members, gift to willing members (Solatium), financial Assistance to education and marriage, Diwali gift to members are being done by the Charitable Trust belonging to the Society. Whenever there is shortage of funds in the trust, funds are infused by way of loan from the Society to the Charitable Trust. This is peimitted under Law and also whenever possible, the trust tries to return the funds back to the Society. The same is clearly reflected in the accounts of the Society and the Trpst. Cinema being a very volatile industry, there is always the risk of a producer losinp all the funds and savings in a project and then become financially weak, some of these members have contributed in the past to the ^ welfare of Tamil Film Producers andi cinema industry. Hence, for the past several years, the Society has been helping the trpst as stated above, this was done even during the regime of the complainant. The present office bearers have only increased the quantum keeping in view the current inflation and cost of living. The said increase in quantum of welfare

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measures has been duly approved by the Executive Committee.

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Findings of the Inspector General of Registration:-

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The Society by its own submission that “whenever there is shortage of funds in the trust, funds are infused by way of loan from the Society to the Charitable Trust" has accepted that it has mismanaged its funds running into Crores of Rupees in total contravention of the Societies Regis ration Act and Rules.

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Hence the findings that:

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Senior members above 60 yeprs of age numbering 101 members are being paid a monthly pension of Rs.1250|0/- each with effect from 1.4.2018,which amounts to about Rs. 12.62 Lakhs per month.

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This is in addition to any willing member being paid a gift amount of Rs.4000/- per month.

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Apart from this, financial assistance of Rs.2 lakhs is being paid to the marriage of members’ daughters. Similarly, for the marriage of member’s sons, an amount of Rs. 1 Lakh is being paid from the funds of the Society.

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Educational fee of members’ children are been paid in Cheques.

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630 members have been paid as gift for Diwali in 2018 at Rs. 10,000/- amounting to Rs.63 Lakhs.

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And that as per the audited income and expenditure account of the Society for the year 2017-18, the Society has spent Rs.3,03,750/- as pension, Rs.40,24,026/- as Urimaithogai — pension and Rs.26,55,386/- as Donation to its members are in total contravention of Section 25.

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Further Section 42 of the Act implies that even on dissolution, the funds of a Society shall not be paid or distributed among the members, instead can only be transferred to some other Registered Society or to any association of persons having the same objects.

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It is observed that the society nas distributed funds among the members in the guise of Pension, Gift for Diwali, financial https://hcservices.ecourts.gov.in/hcservices/ assistance for marriages and education 'of

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member’s children which are in contravention of the Acts & Rules as well as the bye- laws of the said Society. Thus the society has violated section 25 of Tamil Nadu Societies Registration Act, 1975.

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The Inspector General of Registration nas therefore stated that, since the complaints against the society are held proved and the explanation of the society in response to theshow cause notice are not maintainable, the recommendation of the Registrar may be accepted and recommended the Government to appoint Special Officer to manage the affairs of the said Society.

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After careful examination of the allegations with explanation of the society in its letter, remarks of the Registrar and the Inspector General of Registration on the explanation of the society, the Government have decided to hold the allegations 1,2 and 4 against the Society as proved and that the explanation cf the Society deserves to be rejected as devoid of merits. In view of proven allegations, the Government have decided to supersede the Committee of the Society viz, "Tamil Film Producers Council” (Reg.No.144/1979) ar.d to appoint a Special Officer to manage the affairs of the said society under the provisions of section 34-A of the Tamil Nadu Societies Registration Act, 1975.

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According to sub-section (1) of section 34-A of the Tamil Nadu Societies Registration Act, 1975 (Tamil Nadu Act 27 of 1975), the Governor of Tamil Nadu hereby appoints Thiru N.Sekar, District Registrar (Admin), Central Chennai, as Special Officer to the Society, “Tamil Film Producers Council" (Reg.No.144/1979) for a period of one year. The Special Officer shall manage the affairs of the committee of the. society for a period of one year from the date of issue of order. Further the Special Officer shall take speedy action to set right the mismanagement noticed in the said society and shall hand over the society to the proper committee members by conducting election within one year.

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Accordingly, the Government direct that the notification appended to this order shall be published in the extra-ordinary issue of the Tamil Nadu Government Gazette dated 26^th April https://hcservices.ecourts.gov.in/hcservices/ 2019.

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The Special Officer appointed in paragraph 7 above shall, subject to the control of the Registrar, namely the Inspector General of Registration, and to such directions as he may, from time to (ime, give, have power to exercise all or any of the functions of the Committee of the!said society and to take such action as may be required in the interest of the Society.

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The Registrar, namely the Inspector General of Registration, may fix the remuneration payable tc the Special Officer appointed in paragraph 7 above, the amount of remuneration so fixed and such other expenditure incidental to the management of the Society during the oeriod of supersession shall be payable from the funds of the said registered society,

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The Special Officer appointed in paragraph 7 above shall discharge the duties and responsibilities in accordance with the provisions of the Tamil Nadu Societies Registration Act, 1975 and the Tamil Nadu Societies Registration Rules, 1978.

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(BY ORDER OF THE GOVERNOR)

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(Ka.BALACHANDRAN) PRINCIPAL SECRETARY TO GOVERNMENT

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In view of the Government Order, as of now, the writ petitioner - Tamil film Producers Council, Chennai, has no locus to pursue the writ petition. Special Officer appointed by the Government would be bound by the Government Orders and thus, he has no locus to go against the directions issued by the Government from time to time. In such a view of the matter, instant writ petition is dismissed. However, it is open to Tamil Film Producers Council, Chennai to approach the Court, if there is any order in their favour. No Costs. Consequently, the connected Writ Miscellaneous Petitions are closed.

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Sd/-

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Assistant Registrar(CS VI)

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//True Copy//

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Sub Assistant Registrar

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ars

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https://hcservices.ecourts.gov.in/hcservices/

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The Secretary to the Government, Home (Cine-I) Department, Fort St.George, Secretariat, Chennai.

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+1 cc to Government Pleader Sr.No. 49122,50100

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WP.No.12935 of 2019 and WMP Nos.13097 & 13099 of 2019

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A.SK(15/07/2019)

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https://hcservices.ecourts.gov.in/hcservices/

Tamil Film Producer Council v. The Secretary to the Government

Case brief

What is this about?

What did the court decide?

Tamil Film Producer Council v. The Secretary to the Government

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

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