By means of the present revision the revisionist is challenging the order dated 11.1.2011 passed by the Additional District Judge, Court No. 10, Agra by which the application of the revisionist 65-C claiming rejection of plaint summarily has been rejected.
M/s Brij Leasing (P) Ltd. filed a Suit No. 812 of 2009 through its Director Sri Avin Jain against the revisionist. The plaint was duly signed and verified by Sri Avin Jain. The plaint was filed through counsel Sri N.K. Gupta, who has also signed the plaint. The suit was for specific performance. The defendants have filed written statement specifically disputing the authority of Sri Avin Jain, to sign, verify and institute the suit on the behalf of the company as no documentary proof had been filed at the time of presentation of the suit in compliance of Order 7 Rule 14 read with Order 29 Rule 1 of the Code of Civil Procedure, 1908 (hereinafter referred to as "C.P.C.").
The respondents filed an interim stay application on which the revisionist filed objection about the maintainability of the stay application. On 4.1.2011, the defendants filed an application for the dismissal of the suit on the ground that no proof specifying the power to sign, verify and institute has been tendered in the present suit as per the requirement of Section 291 of the Companies Act, 1956 (hereinafter referred to as the "Act"). The said application is marked as 65-C. The said application has been rejected by the court below vide impugned order dated 11.1.2011. Hence, the present revision.
This Court has held that it is not in dispute that Sri Avin Jain is the Director of the Company. As per the provisions of the Act, the Director is authorised to do all acts on behalf of the Company unless he is specifically restrained to do any specific work. Under Section 291 of the Act, any act done by the Director will be deemed to be on behalf of the Company. It has been further held that under Order 29 Rule 1 C.P.C., the Director can sign and verify on behalf of the Company. It has been observed that as per Article 31 of the Board resolution dated 27.12.2006 Sri Avin Jain has been appointed as Director of the Company and plaint has been signed and verified by Sri Avin Jain and for the purposes of filing of suit no power of attorney and fresh resolution is required for the signature and verification and, therefore, it has been held that plaint signed and verified by Sri Avin Jain, Director of the Company, was in accordance to law.
Heard Sri Shashi Nandan, learned Senior Advocate, assisted by Sri Swapnil Kumar, Advocate, appearing on behalf of the revisionist.
Learned counsel for the revisionist submitted that under Order 29 Rule 1 C.P.C., the Director can sign and verify the suit but signing and verifying the plaint is different from filing the suit. The suit can only be filed by the person, who has been authorised to do so by the Board of Directors. In the present case, the respondents have failed to submit the resolution of the Board by which Sri Avin Jain has been authorised to file the suit. Therefore, the suit is not maintainable and liable to be rejected.
In support of the contention he relied upon the decisions of the Delhi High Court in the case of M/s. Nibro Limited Vs. National Insurance Company Ltd., reported in AIR 1999 Delhi-25, Dale & Carrington Invt (P) Ltd. Vs. P.K. Prathapan, reported in (2005) 1 SCC-212 and M/s. Rajghria Paper Mills Ltd. Vs. General Manager, Indian Security Press and another, reported in AIR 2000 Delhi-239.
I have considered the submissions of learned counsel for the revisionist.
The Delhi High Court in the case of M/s. Nibro Limited Vs. National Insurance Company Ltd. (supra) and in the case of M/s. Rajghria Paper Mills Ltd. Vs. General Manager, Indian Security Press and another (supra) has held that unless a power to institute suit is specifically conferred on a particular Director he has no authority to institute the suit on behalf of the Company. The Court has drawn the distinction between the signing of the plaint and the authority to file the suit.
In the case of Dale & Carrington Invt (P) Ltd. Vs. P.K. Prathapan (supra) the dispute relates to the right to control and manage the Company between the two parties. Relating to the defendants dispute, the matter went to the Company Law Board. The Company Law Board took the view that Ramanujam had committed an act of oppression by not only informing Prathapan about issue of further share capital of the Company but also not offering him the further share capital which was being issued by the Company. Having given a finding of oppression in favour of Prathaapan the Company Law Board while considering relief, gave an option to Prathapan to sell his shares to Ramaunjam. During the pendency of the company petition filed by Prathapan, a petition was filed before the Company Law Board for rectification of the register of members so as to delete the entries recording transfer of shares in favour of Prathapan and his wife. The proceeding was taken under Sections 397 and 398 of the Act. While deciding the dispute under the Act the Apex Court observed that a Company is a juristic person and it acts through its Directors who are collectively referred to as the Board of Directors. An individual Director has no power to act on behalf of a Company of which he is a Director unless by some resolution of the Board of Directors of the company specific power is given to him or her. This is not the case of filing of a suit. The observation of the Supreme Court is to be read in the context of the issue involved in the Supreme Court and, therefore, in my view, the decision of the Supreme Court is not applicable in the present case.
The learned counsel for the revisionist also relied upon the decision of the apex Court in the case of State Bank of Travancore v. M/s Kingston Computers (I) P. Ltd., reported in JT 2011 (3) SC 66. In the said case, Shri Ashok Kumar Shukla has signed, verified and filed the suit on the basis of the authority letter issued by Shri Raj Kumar Shukla, Chief Executive Officer, of the company. The apex Court observed that no evidence has been produced to prove that Shri Ashok Kumar Shukla was appointed as a Director of the company and the resolution was passed by the Board of Directors. The suit has been filed by one Shri Ashok Kumar Shukla only on the basis of the authority letter issued by Shri Raj Kumar Shukla, Chief Executive Officer, of the company.
In my view, the case is distinguishable on the facts of the case. In the present case, it is not in dispute that Shri Avin Jain was the Director of the company. The Board resolution dated 27.12.2006 has been produced to this effect. Under Order 29, Rule 1 the Director can sign and verify the plaint. There is nothing to the contrary that Shri Avin Jain as a Director could not sign, verify and file the suit. Therefore, this case is not applicable to the present case.
In the case of Bharat Petroleum Corporation Limited Vs. M/s. Amar Autos, reported in 2008 (72) ALR-75, a similar argument has been raised by the learned counsel for the respondent relying upon the decision of the Delhi High Court in the case of M/s. Nibro Limited Vs. National Insurance Company Ltd. (supra). This Court negated the submissions and held as follows:
"Upon considering the pros and cons of the matter we are of the view that the learned Judge of the Court below has proceeded in a wrong premises and with hot-haste. According to us, a power of attorney or an affidavit of such nature is only required to prima facie satisfy the Court that a company or corporation or a body corporate has presumably proceeded with the suit under its seal and signature, it has nothing to do with the registration of the document unless it is compulsorily registrable. Persuasive value of M/s Nibro Ltd. (supra) cannot pursue us. There is a thiner line in between authorization to sign and verify the pleadings, and to institute a suit on behalf of the corporation, company or a body corporate. Whenever a person is authorised to sign and verify the pleadings other than verification of plaint, written statement, memorandum of appeal, etc., it is doing so by filing affidavit in support of such contentions. Therefore, it stands on a better position than ordinary verification. But a person when verifies the plaint, written statement or memorandum of appeal, it is a verification simplicitor, meaning thereby that the verification part is also to be evidently proved unlike an affidavit, which itself is an evidence. Hence, authorization to institute a suit stands in the lower side than putting signature and verifying a pleading by way of an affidavit. On the other hand, signature and verification of the pleading of a plaint cannot be made for the sake of signature and verification alone but for the purpose of filing of the same before the Court either by him or by his learned Advocate. As soon as it is filed, the same will be treated to be institution of such proceeding by the person who has signed and verified. It is automatic. Institution of suit and right to institute the suit are distinct and different. The argument of Mr. Shashi Nandan restricted only to the first part of Order XXIX, Rule 1 of C.P.C. but not to the last part. If the suit is proceeded and the evidence is led and if any of the defendants want to challenge the verification of the plaint, he can call the deponent as witness for the purpose of examination. But Court cannot prevent any one from instituting a suit when his authority is apparently satisfactory. No body will be prevented from enforcing his legal right. It is a gross mistake on the part of the Court below to construe that the power of attorney should be registered and then only the suit can be instituted by a representative of the company or corporation. Moreover justification of filing the plaint by the authorised representative of the corporation or company will be considered from the practical point of view. If the Court below is not happy, it could have called upon the company to file an affidavit of competency, which is desirable under such circumstances, but not outright rejection of the plaint. Therefore, from any angle the order/s impugned appear to be perverse in nature. Thus, in totality the orders impugned in both the appeal cannot be sustained. Hence, the orders dated 24th January, 2008 passed by the Court below in the above referred suits, impugned in the instant appeals, are set aside. Thus, both the appeals are allowed without imposing any cost."
In my view the Division Bench decision of this Court referred hereinabove squarely covers the issue.
In the case of Union Bank of India Vs. Naresh Kumar and others, reported in AIR 1997 SC-3, the apex Court has observed as follows:
"In cases where suits are instituted or defended on behalf of a public corporation like bank; public interest should not be permitted to be defeated on a mere technicality. Procedural defects which do not go to the root of the matter should not be permitted to defeat a just cause. There is a sufficient power in the Courts, under the Code of Civil Procedure, to ensure that injustice is not done to any party who has a just case. As far as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable."
It has been further observed as follows:
"It cannot be disputed that a company like the bank can sue and be sued in its own name. Under Order 6, Rule 14 of the C.P.C. a pleading is required to be signed by the party and its pleader, if any. As a company is a juristic entity it is obvious that some person has to sign the pleadings on behalf of the company. Order 29, Rule 1 of the C.P.C., therefore, provides that in a suit by or against a corporation the Secretary or any Director or other Principal Officer of the corporation who is able to depose to the facts of the case might sign and verify on behalf of the company. Reading Order 6, Rule 14 together with O. 29, R. 1 of Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in R. 1 of O. 29, can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and dehors O. 29, R. 1, as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of O. 6, R. 14. A person may be expressly authoirsed to sign the pleadings on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a Corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied. The Court can, on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by its officer."
In the present case, the court below has categorically held that the Company has produced Paper No. 9G, Annexure-A/5 of the Board Resolution dated 27.12.2006. Article 31 of the said resolution appointed Sri Avin Jain as the Director of the Company. There is no denial to this finding recorded by the trial court. The Director acts as an agent of the Company unless any thing is provided to the contrary. Order 29 Rule 1 provides that a Director can sign and verify the plaint. There is no provision under the C.P.C. which provides that Director cannot institute the suit unless he is authorised by the Board of Directors. The objection raised by the revisionist-defendant, in any view of the matter, is highly technical and cannot be allowed to defeat the justice.
In view of the above, with due respect I do not subscribe to the view taken by the Delhi High Court in the case of M/s. Nibro Limited Vs. National Insurance Company Ltd. (supra) and in the case of M/s. Rajghria Paper Mills Ltd. Vs. General Manager, Indian Security Press and another (supra).
In view of the foregoing discussion, I do not see any error in the impugned order which requires any interference. The revision fails and is dismissed.
Dated: 18th March, 2011 OP