The Calcutta High Court recently held that an association or body corporate has a clear right to maintain a writ petition on behalf of its members or shareholders if the cause of action effects them both.
The Court clarified that normally in case of a contract courts will not interfere in writ jurisdiction. However, where the terms of the contract are such as to infringe the fundamental rights and a public law element arises, the same can be looked upon by courts in writ jurisdiction.
The Court also touched upon the fairness of agreements entered by few people binding all others for an infinite period. The Court said, “This kind of an agreement, to be fair and to pass the test of arbitrariness and reasonableness, must be of specific duration, to be renewed or novated from time to time. This agreement entered into by six members of the Association in dubious circumstances, cannot bind all the members of the Association for an infinite period of time. For those reasons, even if the rest of the agreement is sustained by this court, it has to be superseded by a fresh agreement within six months from date. Otherwise the said agreement will automatically stand terminated by operation of this order.”