How to prove resolution passed by board of directors of company?

Sec. 193(1A)(a) of Company Act makes it clear that each page of the minute book is to be initialed or signed and the last page of the record of proceedings of each meeting in such book is to be dated and signed in case of minutes or proceedings of a meeting of Board or of a committee thereof, by the chairman of the said meeting or the chairman of the next succeeding meeting. Ld. counsel for the plaintiff has tried to make mountain out of a mole hill in view of the photostat copy Ex. DW 1/1 (mark A) of the resolution dated 9.3.1999 i.e. the 83rd resolution. In this document (mark A) Ex. DW 1/1 Ajay Chaudhary was mentioned as the chairman. Ld. Counsel for the plaintiff wanted to take this particular fact to be sufficient to conclude that this resolution was fabricated as Shiv Nadar was not present on 9.3.99 and he had later on signed the same. It is not in dispute that Shiv Nadar was the chairman of the company. Therefore in view of Sec. 193(1A)(a) Companies Act he had signed the 83rd resolution at the time of the meeting dated 20.4.99 on which date 84th meeting of the board of director had been convened. The photostat copy of the 84th meeting of Board of Directors shows that it was attended by Shiv Nadar. Therefore, in view of Sec. 193(1A)(a) of Companies Act, he was entitled to sign the minutes of the 83rd meeting. Thus, there is no material to hold that the minute book had been fabricated later on. The original minute book had been produced at the time of recording of statement of G.P. Kalra DW 1. The evidence had been recorded by my ld. predecessor. When the defendants were directed to produce the photostat copy of the minute book containing the entries of 83rd and 84th meeting, the same had been produced before on 13.12.2003. I had also perused the original minute book containing the minutes of 83rd and 84th meeting. The minute book appeared to be properly maintained in accordance with Sec. 193 of Companies Act and there did not appear anything to raise suspicion.

The judgment relied upon in the case of Amal Kumar Mukherjee (supra) with respect to the argument that the minute book of a company ought to be bound and written in hand, is to be read in the context of the facts of the said case wherein there were disputes inter se shareholders of a company and in such circumstances, the issue had arisen with respect to manipulation of the minute book of the company. In the present case, there is no dispute inter se shareholders or inter se Directors of the Board of the company and therefore the judgment in the case of Amal Kumar Mukherjee (supra) will have no application to the facts of the present case, especially for the reasons stated above that there is no subsequent resolution of the Board of Directors or any resolution in the General Body meeting of defendant No. 1/respondent No. 1-company questioning or rescinding the termination of services of the appellant - Sh. Pawan Kumar Dalmia.

IN THE HIGH COURT OF DELHI

RFA Nos. 180/2004 and 235/2004

Decided On: 13.03.2012

Pawan Kumar Dalmia Vs. M/s. HCL Infosystems Ltd. & Ors.

Hon'ble Judges/Coram:

Hon'ble Mr. Justice Valmiki J. Mehta

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Whether resolution of board of directors is more important letter issued by company?

 Whether the defendant company in refusing to register shares did so on the ground of indebtedness of Hemmad or not has in our opinion first to be found from the terms of the resolution of the meeting of the Board of Directors. The company or the Board of Directors speak primarily through its or their resolution. If the enquiry is as to what was the decision taken by the Board of Directors the Court would look more and depend more on the actual terms of the resolution than on the terms and the language in which such decision was conveyed by letter or correspondence even if such a letter in fact was written and despatched. It is, therefore, necessary to refer to the resolutions in this case.

Calcutta High Court

Babulal Choukhani vs Western India Theatres Ltd. And ... on 5 December, 1956

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How to prove resolution of board of directors of company?

In this view of the matter, as the power to institute the suit had to be proved, copy of Resolution No. 5 passed in the meeting of the Board of Directors of Escorts Limited (plaintiff) held on 16th October, 1965 was placed on record, as this was not enough, the original minutes book containing Resolution No. 5 dated 16.10.1965 was brought to Court. I saw the original minutes book. It contains the aforesaid Resolution No. 5 dated 16.10.1965. This Resolution approves the draft Power of Attorney which was proposed to be granted. The manner of proving the said Resolution which has been adopted by the plaintiff is an affidavit of Mr. P.N. Arora, son of Mr. Lekh Raj, being affidavit dated 22nd March, 1990. In that affidavit, it is stated that the minutes of the Board of Directors have been written in the hands of Ms. Amarjit Kaur, who is the representative of the plaintiff company. The deponent says that he can identify the handwriting of the said Amarjit Kaur.

(14) The manner in which such a resolution of the Board of Directors of Companies are to be proved, is clearly stated by Hardayal Hardy, J. in a judgment passed in Suit No. 469 of 1986 in M/s. Oberoi Hotels (India) Pvt. Ltd. v. M/s. Observer Publications (P) Ltd. and others. In this judgment it has been stated that "the only way to prove that a particular resolution was passed at a meeting of the Board of Directors of a company is that the minutes book in which the said resolution was recorded as having been passed should be produced in Court as that alone can form evidence of the fact under section 194 of the Act". Section 194 of the Companies Act reads as under :

"194.Minutes of meetings kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein".
(15) In view of the fact that the minutes book of the plaintiff has been produced before me, after seeing the same I am satisfied that resolution No. 5 was passed in the meeting of the Board of Directors held on 16th October, 1965. The plaintiff has thus proved the conferment of the powers of attorney to Shri Charanjit Singh with power to institute the suit. By virtue of provisions of Order 29 of the Code of Civil Procedure, a Principal Officer can sign and verify the plaint, it is also established that Charanjit Singh is a principal officer of the plaintiff company, who can as such officer, sign and verify the plaint in suit, he is also authorised to institute this suit by virtue of the power of attorney dated 28.1.1966.
IN THE HIGH COURT OF DELHI

Suit No. 2043 of 1987

Decided On: 20.07.1990

Escorts Limited Vs. Sai Autos and Ors.

Hon'ble Judges/Coram:
Mahinder Narain, J.

Citation:(1991) 72 Com cases 483

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Whether blanket authority can be given to particular director to institute suit or proceeding?

The essential requirement of this provision is that the Company which is a juristic person must itself decide to sue.

Once that is done, it would authorise one of its Directors who is the agent of the Company or its principal officers the Secretary of the Company or the Managing Director to file the Suit. The suing in each case is a separate act. The Company acts only through its meetings. Hence the Board of Directors in the day to day management of the company must decide and resolve to sue or not to sue. A blanket authority cannot be given to a particular Managing Director or Director to sign the papers and documents, including the power to sue. The power to sue requires application of mind upon the particular cause of action. It requires the Company to pay the requisite Court fee. It requires the Company to be represented by a legal officer being an Advocate of the Court. It is an act which, therefore, is not a part of the day to day management of the Company. A Company would decide in a given case upon legal advice or otherwise whether or not it would sue upon a given cause of action. Such exercise is imperatively required to be performed if the intention of the Company, which is only a juristic person, is to be deciphered. That act, of course, may be undertaken even after the filing of the Suit and ratified by the Board as all other acts of management. However, the seminal requirement is to see the act of the Company though its Board or members (dependent upon whether the resolution is passed in the Board meeting or a general meeting) or is given by the Company itself (under its Articles of Association).

Bombay High Court

M/S.Hari Shree Enterprises vs M/s vikas housing ltd on 19 March, 2009

Bench: R. S. Dalvi

Citation: 2009(4) ALLMR 247

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Whether complaint for dishonour of cheque is maintainable by officer of company if he is not specifically authorized in that behalf?

Reference was also made to M/s. Hari Shree Enterprises V/ s. M/s. Vikas Housing Ltd. & Ors. (2009 (4) ALL MR 247) wherein it was held that unless a power to institute a suit is specifically conferred on particular director, he has no authority to institute a suit on behalf of the company. It was further held therein that it was essential requirement of this provision that the company which is a juristic person must itself decide to sue and once that is done, it would authorise one of its directors who is the agent of a company or its principal officers, the secretary of the company or the managing director to file the suit. The suing in each case is a separate act. The company acts only through its meetings. The Board of Directors in the day to day management of the company must decide and resolve to sue or not to sue.

12. In the light of the law laid down by this Court, I need not refer to the case of Geekay Exim (India) Ltd. & Ors. V/s. State of Gujarat and Anr. MANU/GJ/0023/1997 : (1998 Cri.L.J. 700) which was followed by this Court in the case of M/s. Credential Finance Ltd. V/s. State of Maharashtra & Ors. (MANU/MH/0359/1999 : 1999 (1) ALL MR 211) or for that matter the case of Hyderabad Lamps V/s Asiatic Oxygen (2000 DCR 615).

13. The complainant was the payee in this case and was juristic person. It had passed no resolution in favour of the said Shri Gomes either to file the complaint or to depose in favour of the complainant. The case being criminal in nature it was for the said Shri Gomes to prove that he had authority from the company either to file the complaint or to depose in support of the complainant. The accused has a profound right to remain silent in a criminal trial and that fundamental principle need be followed even in cases under Section 138 of the Negotiable Instruments Act. The accused had clearly suggested to the complainant that he had no right to file the complaint. At least at that stage the said Shri Viegas ought to have made an effort to produce a resolution, if there was one, or get the acts done by him ratified by a resolution of the company. That he accepted two payments made by the accused on behalf of the company would not cure the fundamental defect of there being no resolution authorising him to file a complaint or depose in support of the complaint. In the absence of any resolution by the complainant - company in favour of Shri Viegas either to file a complaint and/or depose on behalf of the complainant, the accused could not have been convicted. Shri Viegas who claimed that he was the authorised representative was expected to produce such authority and the Court was not expected to believe him, in the absence of such authorisation, even if the accused had not contested his statement. In my view, the acquittal of the accused cannot be faulted. This is not a fit case to grant leave to appeal.

IN THE HIGH COURT OF BOMBAY AT GOA

Criminal Misc. Application No. 241 of 2010 in stamp Number Main No. 1828 of 2010

Decided On: 25.11.2010

 Candy Spirit Pvt. Ltd.
Vs.
 Reeves Mia

Hon'ble Judges/Coram:

N.A. Britto, J.

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Whether any director can institute suit on behalf of company without authorization by board of directors?

 It is well-settled that under Section 291 of the Companies Act except where express provision is made that the powers of a company in respect of a particular matter are to be exercised by the company in general meeting in all other cases the Board of Directors are entitled to exercise all its powers. Individual directors have such powers only as are vested in them by the Memorandum and Articles. It is true that ordinarily the court will not unsuit a person on account of technicalities. However, the question of authority to institute a suit on behalf of a company is not a technical matter. It has far-reaching effects. It often affects policy and finances of the company. Thus, unless a power to institute a suit is specifically conferred on a particular director, he has no authority to institute a suit on behalf of the company. Needless to say that such a power can be conferred by the Board of Directors only by passing a resolution in that regard.

Delhi High Court

M/S. Nibro Limited vs National Insurance Co. Ltd. on 6 March, 1990

Bench: M S Bhandare

Read full judgment here: click here

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Whether certified copy of minutes of meetings of board of directors is admissible in evidence?

 Next comes the document No.1 - the certified true copy of the resolution dated 16.2.2009, whereby the complainant company had allegedly resolved to give consent of the Board of Directors to execute power of attorney in favour of Ashwin Sheth, Managing Director and/or Sharad Doshi, Executive Assistant to the Managing Director to institute or defend any suit or criminal proceedings. The learned trial Court observed in the impugned order that there is no clear-cut provision about issuance of certified copy of extract of minutes book but if sub-sec. (2) of Section 196 of the Companies Act is read, it may be stated that certified copy of the minutes can be given. The learned trial Court observed that the witnes Sharad Doshi in his affidavit had deposed about the said document and thereby he has proved the genuineness of the document. Under Section 195 of the Companies Act, where minutes of the proceedings of any general meeting of the company have been kept in accordance with the  provisions ofsection 193, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place. Section 194 of the Companies Act provides that the minutes of meetings kept in accordance with the provisions ofsection 193 shall be evidence of the proceedings recorded therein. However, no provision in theCompanies Act is brought to my notice which provides that the certified copy or extract of the minutes would be admissible in evidence without proof of the original. Section 65(f) of the Evidence Act provides that secondary evidence may be given of the existence, condition and contents of the document when the original is the document of which a certified copy is permitted by the Evidence Act or by any other law in force in India to be given in evidence. As no provision from the Companies Act is brought to my notice under which the certified copy of the minutes of the meetings of the board of directors is admissible in evidence without proof of the original, it must be said that the copy of the minutes cannot be admitted in evidence directly unless the original is proved or the copy is admitted by opposite party. Therefore, even though that document is given exhibit number, it cannot be treated to have been proved, unless the complainant leads appropriate evidence to prove the minutes.

Bombay High Court

Ashish C. Shah vs M/S. Sheth Developers Pvt.Ltd. on 16 March, 2011

Bench: J. H. Bhatia

Criminal writ petition NO.40/2011

Citation:2011 (4) AIR Bom R 266

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Duties of board of directors while making decision of retirement/compulsory retirement of employee of company

In pursuance to the directions of the Single Bench, record pertaining to the retirement/compulsory retirement was produced by the counsel for the appellant bank wherein it was evident that the impugned orders had been passed by the Board of Directors on the advise of the Legal Advisers and the Banking Experts. In terms of Rule 15, it was incumbent upon the Board of Directors to have independently applied their mind and taken decision based on specific grounds. The specific grounds which have been spelt out in Rule 15 include doubtful integrity or incompetence to discharge official duties or inefficiency in due performance of official duties which would have the effect of the employees losing their utility.        It was, therefore, necessary for the Board of Directors to have independently considered the entire service record of the employees so as to form opinion with regard to their utility to the Bank. The requirement of recording specific grounds to arrive at the decision in the rules is intended to ensure that the Board of Directors does not act arbitrarily while compulsorily retiring the employees. There does not seem to be any independent and due application of mind on the part of the Board of Directors while arriving at the decision which has the effect of bringing the services of the employees to a premature end. The function which had been entrusted upon the Board of Directors by the rule could not have been outsourced to the legal advisers. 
The Single Bench has also held that the record which had been produced had not been contemporaneously maintained inasmuch as that the proceedings of the Board of Directors in the meeting held on 31.03.2010 was not made available and instead only an office note dated 31.03.2010 had been produced. This office note refers to the meeting of the Board of Directors held on 22.03.2010 wherein it was decided to compulsorily retire the officials. The proceedings of the meeting of the Board of Directors held on 22.03.2010 indicate that the decision had been arrived in view of the earlier meetings held on 24.02.2010 and 10.03.2010. However, in the proceedings of the meetings held on 24.02.2010 and 10.03.2010 there is no mention of any consideration of the matter as contemplated under Rule 14 and 15 of the Rules of 2006 regarding superannuation and retirement/ compulsory retirement of the officials. 
It has also been held by the Single Bench that the record which had been produced included the attendance register of the meetings of the Board of Directors from 01.07.2009 onwards as well as the register containing details of the proceedings of the Board of Directors from 01.07.2009 to 27.04.2011 which were serially paginated. However, the office note dated 31.03.2010 and the report on the analysis of the service record of the employees alongwith annexures had been prepared in separate sheets. Even in the legal opinion which had been tendered by the legal Advisers, there was no mention of any reference number and date of any document in response to which the legal opinion had been furnished. It has been held that these documents along with the fact sheet reflecting consideration of the service record of the respondents by the committee of four senior and experienced staff and banking expert (on contract) which examined the individual records of the employees on 20th March appear to be documents which were subsequently generated to fill the lacuna. Therefore, the Single Bench has expressed serious doubts about the contemporaneity of the record. We find that there is no basis for us to take a different view in the matter.

IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN
AT JAIPUR BENCH, JAIPUR

(1) D.B. Special Appeal (Writ) No.529/2015
Rajasthan Urban Co-operative Bank Ltd. vs. Ajay Kumar Katewa & Ors.


Date of Judgment : 12th January, 2016

HON'BLE THE ACTING CHIEF JUSTICE MR.AJIT SINGH
HON'BLE MR. JUSTICE ANUPINDER SINGH GREWAL



Reportable

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