FEDERAL COURT OF AUSTRALIA

Ananda Marga Pracaraka Samgha Ltd (ACN 003 193 897) v
Tomar [2010] FCA 565

THE COURT ORDERS THAT:

1.                  The plaintiffs file and serve a statement of claim on or before 11 June 2010.

2.                  The defendants file and serve a defence and any counter‑claim on or before 30 June 2010.

3.                  The plaintiffs file and serve any reply and any defence to any counter‑claim on or before 9 July 2010.

4.                  Paragraph 8 of the Order made on 31 March 2010 be vacated.

5.                  The notice of motion filed on 27 May 2010 be stood over to a date to be fixed.

6.                  Costs be reserved.

7.                  There be a directions hearing on 16 July 2010.

Note:Settlement and entry of orders is dealt with in Order 36 of the Federal Court Rules.
The text of entered orders can be located using Federal Law Search on the Court’s website.

REASONS FOR JUDGMENT

1                     By a notice of motion dated 27 May 2010, the plaintiffs, Ananda Marga Pracaraka Samgha Ltd (“AMPS Ltd” or “the company”), Messrs D.V. Pillay and P. Pillai, applied pursuant to O 14 r 8 of the Federal Court Rules to strike out a large number of paragraphs contained in seven affidavits filed on behalf of the defendants in this proceeding, on the grounds that the impugned paragraphs are either scandalous or oppressive.

2                     For the reasons set out below, I ordered, inter alia, that the notice of motion be stood over to a date to be fixed and that the matter henceforth proceed by way of pleadings.

3                     Order 14, rule 8 of the Federal Court Rules provides:

Where there is scandalous or oppressive matter in an affidavit, the Court may order that the affidavit be taken off the file.

4                     The paragraphs alleged to be scandalous assert, for example, that particular plaintiffs are apostate or renegade in their religious standing.

5                     The majority of the impugned paragraphs are alleged to be oppressive, because they are not relevant to any issue in dispute and are burdensome as they would oblige the plaintiffs to respond to voluminous issues and material, thereby increasing the costs and time involved in the trial and the preparation for it.

6                     The application is supported by the affidavit of David Shaw affirmed on 27 May 2010.

7                     It is opposed by the defendants, who comprise eleven persons who are, or who claim to be, directors and/or members of AMPS Ltd.

8                     The amended application dated 7 April 2010 seeks declarations: that the purported removal of Messrs D.V. Pillay and P. Pillai as directors of AMPS Ltd at a meeting on 20 March 2010 was not in accordance with s 203D of the Corporations Act 2001 (Cth); that the purported appointment of three defendants, (S. Tomar, R. Pfeiffer and D. Tiwari) on that day is void and of no effect; that D.V. Pillay and P. Pillai remain directors; that eight nominated defendants are not members of the company; and that seven nominated persons are the only members the plaintiffs also seek orders that the company’s register be rectified for the taking of accounts and repayment of any misappropriated monies.

9                     The relief sought thus principally relates to the identity of the legitimate directors and members.  The issues are interrelated, as under the company’s articles of association, the board of directors (called the Committee) determines the admission or rejection of members of AMPS Ltd, which is a company limited by guarantee.  The Committee can also expel or suspend members in some circumstances.  Further, the members of the company in general meeting elect the office bearers of the company and other Committee members and, under article 37, the company by ordinary resolution (of which special notice has been given) can remove any office bearer or other Committee member before the expiration of his period of office and, by ordinary resolution, appoint another person in his stead.

10                  In essence, the plaintiffs allege that at a general meting of AMPS Ltd on 20 March 2010 (the validity of which they challenge) a number of invalid resolutions were passed, removing D.V. Pillay and P Pillai as directors, and appointing the first defendant, Mr Tomar, as President and two other defendants (Messrs Pfeiffer and Tiwari) as directors.

11                  The plaintiffs say that certain defendants who were not members of AMPS Ltd but were in “Mr Tomar’s camp” purported to act and voted on, inter alia, the resolutions to remove D.V. Pillay and P. Pillai at the meeting on 20 March 2010.  The plaintiffs also allege that five persons in their “camp” were entitled to vote but two were unlawfully excluded from the meeting and from voting.

12                  The memorandum of the company originally stated that its objects include, inter alia:

a.         To propagate the ideals, the philosophy and practice of ANANDA MARGA.

b.         To carry out the objectives of the company through discourses, open addresses, personal contacts and through the medium of literature and such other means as may assist in the fulfilment of the objectives of the “the company”.

c.         To work for the development of a universal society and the welfare of all human beings through:

i.          Social service.

ii.          Relief work among suffering humanity.

iii.                  Primary, secondary and tertiary schools and pre-school facilities such as kindergartens and child-minding centres.

iv.                 Encouraging literacy and artistic faculties.

v.                   Homes for the aged and physically and mentally handicapped.

vi.                 Hospitals and other medial services.

vii.                Spiritual, moral and cultural upliftment.

viii.              Development of integrated human personalities embracing all spheres of life, social, individual and married.

ix.                 And such other means as may assist in the fulfilment of the above objectives.

d.                   To exert and expend all its resources for the purpose of expansion of the company, social services, and universal and world unity.

e.                   To provide all the above types of services without any form of discrimination based on race, religion or sex.

…

13                  In 1992, the memorandum was amended to expand the statement of objects, including as follows:

1. Clause 2(a) be amended by deleting the full stop after the words "Ananda Marga" and adding the words "which is an autonomous religion, faith and social system based upon the teachings of the Founder and Preceptor of Ananda Marga, Shri P.R. Sarkar, also known as Shrii Shrii Anandamurtii. The religious doctrine, faith, moral canons and creed of Ananda Marga being contained in the scriptures given by the Founder including but not limited to: The Supreme Command, Ananda Sutram, Guide to Human Conduct, Subhasita Samgraha and Ananda Marga Carva Carva I_, II and III.  The Articles of Faith, and religious doctrines of Ananda Marga are:

i.          The belief in One, Infinite, Supreme Entity which in the Sanskrit language is referred to as Parama Purusa.

ii.          The belief that through the twice daily practice of Ananda Marga meditation the Supreme, Infinite Being may be fully and personally realised by the individual.

iii.         Meditation and hence realisation of the Supreme, Infinite Being is dependent upon the proper application of cardinal moral principles (Yama and Niyama) in the individual's life.

iv.      It is a duty of the highest order to encourage all persons to practice Ananda Marga meditation and to follow a life of virtuous and righteous conduct.

v.             Engaging in selfless, humanitarian service dedicated to the relief of human suffering whether it be physical, mental, or spiritual is indispensable in the individual's progress toward the realisation of the Supreme, Infinite Entity,"

2. Clause 2(c) be amended by deleting clause 2(c)(ix) and inserting after clause 2(c)(viii) the following words:

"(ix) Conducting the religious functions of Ananda Marga including collective meditation services, marriages, baby namings, funerals, and religious holidays.

(x) Providing for the training, ordination and ongoing maintenance of religious ministers of Ananda Marga for the purposesof instruction and guidance of members in the doctrines, faith, and practices of Ananda Marga.

(xi) And such other means as may assist in the fulfillment of the above objectives."

…

4. That clause 3 be amended by adding at the end of the clause after the words "any share of profits he/she may receive in respect of such payment." the following words:

"Provided further that nothing herein shall prevent the company from fulfillingits fiduciary, equitable and legal duties and obligations in relation to property and any income therefrom that it holds as custodian trustee or otherwise on trust for any person, association, institution, venture or enterprise, whether incorporated or unincorporated."

…

14                  The individual parties to the litigation profess the Ananda Marga religion.  They are in dispute over control of the company and, it would appear, questions of religious orthodoxy or standing.

15                  On 31 March 2010, I ordered, inter alia, that the parties file and serve affidavits at various dates (that the process to be completed by 7 May 2010) and that the parties participate in a mediation which is to be conducted on 7 June 2010.  Pleadings were not ordered.

16                  In the ordinary course, objections to evidence are made shortly before or at trial and are dealt with at trial.  There are good practical reasons for that course. Caution is required before departing from it as, at any earlier stage, a judge is rarely sufficiently in command of the issues and material to rule conclusively on the exclusion of evidence, which may have far reaching consequences for a party’s claim.

17                  The avoidance of unjustifiable costs, effort and delays are an attractive advantage of early rulings on admissibility, but the potential benefits must be weighed against the risks of harm and practical difficulties necessarily entailed.

18                  In the absence of pleadings, the plaintiffs characterise the present case as a relatively straight forward matter requiring determination, according to the articles and/or applicable provisions of the Corporations Act 2001 (Cth), of the identity of the legitimate directors and members of the company.  On that basis, they submitted that the impugned paragraphs are not only disputed but irrelevant as they go principally to the following: the operation of Ananda Marga in India; the role of the General Secretary in India; the relationship between Ananda Marga in India and Ananda Marga in Australia; the position of Sectional Secretary and other secretaries; the validity and effect of posting orders, letters, certificates and notices by a person said to be the General Secretary; the meaning of the holy scripture of Ananda Marga; the role of various bodies and committees external to the company; and assertions of apostacy and the like against certain individuals.

19                  The plaintiffs submitted that the Ananda Marga religious organisation is in dispute in India to the extent that it is dysfunctional and split into rival factions and governing structures, which are involved in an ongoing litigation.

20                  The plaintiffs gave notice that they disputed the defendants’ construction of holy scripture and the status of the person the defendants allege to be the General Secretary.

21                  The defendants submitted that the impugned material goes to the following:

(a)        AMPS Ltd is the vehicle through which the Ananda Marga religion operates in Australia, holds its assets and receives its funding;

(b)        the Ananda Marga religion includes a governance system (Ananda Marga Pracaraka Samgha or AMPS) which is set out in a sacred text called Carya Carya;

(c)        this governance system establishes certain governance bodies for the religion;

(d)        the membership and directorship of AMPS Ltd is dependent upon this governance system and those governing bodies;

(e)        Mr Pillay and Mr Pillai (and others) have breached this governance system and have been stripped of their standing in Ananda Marga;

(f)        they are not capable of occupying leadership positions in Ananda Marga; and

(g)        they are not capable of being members or directors of AMPS Ltd.

And that:

(a)        the 1992 amendment to the AMPS Ltd Memorandum of Association which expressly incorporated reference to the Ananda Marga Carya Carya, and the fact that the Carya Carya creates a system whereby a person cannot be a leader of Ananda Marga Pracaraka Samgha at a local level (here a director or member of AMPS Ltd) if they do not follow the directions of the General Secretary of AMPS Central;

(b)        AMPS Ltd is the holding entity for the assets and funds of the Ananda Marga religion in Australia; and

(c)        the assets of AMPS Ltd have been acquired using funds donated to the Ananda Marga cause or acquired in the course of Ananda Marga’s activities.

22                  The defendants submitted that the 1992 amendment to the company’s memorandum incorporated, by its reference to the holy scripture, an authorised organisational system, and thereby in effect disqualified from leadership in AMPS Ltd any person who did not follow the directions of the General Secretary of AMPS Central.  Further, they submitted that the company holds assets acquired using funds either donated or acquired through its activities, that the membership provisions in the articles do not apply with literal rigour and that, in practice, the required subscription was not invariably provided.

23                  The defendants contended that there is thus an arguable case to which the impugned material is relevant.  They further foreshadowed that they may, inter alia, seek that the company be wound up and its assets applied cy-pres; and that the matter should proceed by way of pleadings.

24                  I took the view that at this stage, particularly in the absence of pleadings, it would be premature to rule on the admissibility of the material on the basis of relevance.  I observe that a company’s constitution constitutes a statutory contract which can include both express and implied terms.  It is to be interpreted according to the ordinary rules of construction, and extrinsic evidence is admissible as an aid.  The company’s objects may be relevant to a foreshadowed application to wind the company up.  Pleadings will facilitate an assessment of relevance.  Ultimately, as Allsop J stated in Mignon Cakes Pty Ltd v Hiltide Pty Ltd [2004] FCA 1453, litigants who inflate the costs and burden of litigation by introducing voluminous irrelevant material may face the prospect of indemnity costs.

25                  A mediation in the matter is scheduled for the near future.  In the circumstances, I ordered (the parties not opposing that course) that pleadings be filed and served, stood the notice of motion over to a date to be fixed and reserved costs.

Associate:

Dated:         3 June 2010