IN THE HIGH COURT OF HIMACHAL PRADESH, SHIMLA OSA No. 1 of 2005 Reserved On. 23.09.2008. Date of decision: 26 .09.2008 M/s Continental Spinners Ltd and others. … Appellants. Versus HPSIDC and others. … Respondents Coram The Hon’ble Mr.Justice Deepak Gupta, J. The Hon’ble Mr. Justice V.K.Ahuja, J. Whether approved for reporting?1 No. For the appellants: Mr. Anuj Nag, Advocate. For the respondent No.1: Mr. Balwant Kukreja, Advocate. Per Deepak Gupta, J. This appeal is directed against the judgement of a learned Single Judge in Civil Suit No. 47 of 2000 whereby he has decreed the suit filed by the respondent No.1 (here-in-after referred to as the plaintiff) and passed a decree for a sum of Rs.1,02,90,191/- in favour of the plaintiff and against the appellants (here-in-after referred to as the defendants) jointly and severally and also directed the defendants to pay interest at the rate of 19.5% per annum with half yearly rests from the date of the institution of the suit till the realization of the decretal amount. The undisputed facts are that the defendant No.1, which is a Company, applied for a loan of Rs. 60 lacs from the plaintiff, H.P. State Industrial Development Corporation. This loan was sanctioned in favour 1 Whether the reporters of the local papers may be allowed to see the Judgment? Yes. 2 of the defendant company. The defendants agreed to repay the loan amount alongwith interest at the rate of 18.5% per annum which interest was lateron enhanced to 19.5% per annum with half yearly rests. The defendants No.2 and 3, who were the directors of the defendant No.1- Company, executed the loan agreement on 20.11.1995. Equitable mortgage was created by deposit of title deeds. Defendants No. 2 to 5 stood guarantee in respect of the loan amount and executed personal deeds of guarantee on 20.11.1995 and 8.12.1995, guaranteeing the repayment of the loan amount. The defendant-Company did not repay the amount as per the installments fixed by agreement between the parties and on 15.10.1998 the plaintiff issued a notice recalling the entire loan. Thereafter, one time settlement was entered into between the parties but the defendants did not comply with the terms and conditions of the one time settlement. Consequently, the possession of the hypothecated mortgaged assets of the defendant-Company were taken over by the plaintiff Corporation on 17.7.1999. On this basis, the plaintiff filed a suit for realization of the outstanding amount of Rs.1,02,90,191/- as is stood in the filing of the suit. The defendants contested the suit on various grounds. One of the main grounds was that Shri Vinayaka Kahol, who had filed the suit on behalf of the plaintiff had no authority to file the suit or sign the pleadings. They did not deny the execution of the loan documents nor did they deny the fact that they had availed of the loan. They, however, set up the plea that they were not liable to pay compound interest as claimed by the plaintiff. 3 On the basis of the evidence of the parties, a number of issues were framed. It is not necessary to deal with all these issues, since, at the time of the hearing of the present appeal, the learned counsel for the defendants-appellants limited his contention to one ground only. According to Shri Anuj Nag, learned counsel for the appellants Shri Vinayaka Kahol had no authority to file the suit and hence the suit was not maintainable. The plaintiff has proved on record the resolution of the Board of Directors of the plaintiff-Company dated 18th June, 1997. At this meeting, the Board of Directors of the plaintiff-Company approved a memorandum submitted by the Managing Director whereby the powers to file suits for recovery of dues against the industrial units and their promoters/directors were delegated to the Managing Director and the Financial Adviser/ Senior Manager/ Manager. The only caveat was that in the case of the Financial Advisor/ Senior Manager/ Manager, the suit could be filed with the approval of the Managing Director. This resolution has proved on record as Ext.PW-2/A. It has also been proved on record that the Managing Director had specifically authorized Shri Vinayaka Kahol to file the suit and sign the pleadings on behalf of the Corporation. The noting on the file shows that the Managing Director had approved the proposal to file the suit against the Company. It has been urged that there has been no resolution of the plaintiff- Company to file the suit. This contention is without any merit whatsoever. The plaintiff-Company by a general resolution has delegated the powers of the filing of the suit which include the power and to sign and verify the plaint to the Officers mentioned here-in-above. In United Bank of 4 India vs. Naresh Kumar and others, (1996) 6 SCC 660, the Apex Court held as follows:- “9. In cases like the present where suits are instituted or defended on behalf of a public corporation, 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 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. 10. It cannot be disputed that a company like the appellant can sue and be sued in its own name. Under Order 6 Rule 14 of the Code of Civil Procedure 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 Code of Civil Procedure, 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 the 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 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. A person may be expressly authorized 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 expressed or implied. The court can, on the basis of the evidence on record, and after taking all the circumstances of the case, specially with 5 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, we find that there is substantial compliance with the legal provisions. We find no defect in the suit being filed by Shri Vinayaka Kahol. He has been especially authorized to file the suit and the Managing Director has further authorized him to sign and verify the pleadings and execute power of attorney in favour of the counsel. This is in compliance with the resolution of the Board Ext.PW-2/A. In view of the above discussion, we find no merit in the appeal, which is dismissed with no order as to costs. ( Deepak Gupta ), J. September 26, 2008 ( V.K.Ahuja ), J. ™