Monday, 26 April 2021

Whether court can entertain a pleading filed by an officer of the company if the company Board resolution does not authorize him?

 According to us, the decision of the Hon'ble Supreme

Court in the case of United Bank of India vs. Naresh Kumar and

ors. (supra) affords a complete answer to the objection now raised by the Appellant. In this case, it is held that as far as possible, substantive rights should not be allowed to be defeated on account of procedural irregularities which are curable. It is further held that companies can sue and can be sued in their own name. Under Order 6, Rule 14 of the CPC, a pleading is required to be signed by the party ad its pleader, if any. As a company is a juristic entity it is obvious that some persons has to sign the pleadings on behalf of the company. Order 29, Rule 1 of CPC, 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 Order 29, Rule 1 of CPC, 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 Rule

1 of Order 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 Order 29, Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorize 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 Order 6, Rule 14 of the Code of Civil Procedure. {Para 21}

22. The Hon'ble Supreme Court, in the aforesaid Judgment has

further proceeded to hold that a person may be expressly authorised 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 evidence on record, and after taking all the circumstances of the case, specifically with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleadings by its officer.

26.  In the present case, there is evidence on record that

PW.1, who actually signed, verified and instituted the suit on behalf

of the Respondent, was its Company Secretary and General Manager

(Corporate Affairs). Besides, the facts in the present case on the

issue of institution of the suit, are substantially similar to the facts in

the case of United Bank of India vs. Naresh Kumar and ors . (supra).

Accordingly, the first point for determination will have to be

answered against the Appellant and in favour of the Respondent.

IN THE HIGH COURT OF BOMBAY AT GOA

FIRST APPEAL NO. 123 OF 2013

The New India Assurance Co. Ltd.  Vs  Messrs Sesa Goa Ltd.,

Coram : M.S. Sonak &

Smt. M.S. Jawalkar, JJ.

Pronounced on : 16th January, 2020

J U G M E N T : (Per M.S. SONAK, J.)

Citation: 2020(5) MHLJ 66.

Read full Judgment here: Click here


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