IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17.08.2011 CORAM: THE HONOURABLE MR.JUSTICE ELIPE DHARMA RAO AND THE HONOURABLE MR.JUSTICE M.VENUGOPAL O.S.A.Nos.359 and 360 of 2008 T. Mohanraj ... Appellant in both the Appeals(Defendant) Vs. Akila Thiruvidancore Siddha Vaidhya Sangam, Munchirai, Puddukkadai Post, K.K.District, having its Branch Office at 17, C.K. Street, Aynavaram, Chennai-23 represented by L.N.Noelraj, Director/Acting President ... Respondent in both the Appeals(Plaintiff) Prayer: Appeals filed under Order XXXVI Rule 11 of the O.S. Rules read with Clause 15 of the Letters Patent against the common order dated 07.03.2008 in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 on the file of this Court. For Appellant : Mr.V.Selvaraj in both the Appeals For Respondent : Ms.Kanimozhi Mathi in both the Appeals COMMON JUDGMENT M.VENUGOPAL,J. The Appellant/Defendant has filed the O.S.A.Nos.359 and 360 of 2008 as against the common order dated 07.03.2008 in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 passed by the Learned Single Judge. https://hcservices.ecourts.gov.in/hcservices/ 2.The Learned Single Judge, while passing orders in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005, has, among other things, observed that '... the Respondent/Plaintiff is not a commercial venture registered as a Limited Company under the Companies Act, 1956. It is an Association registered under Section 25 of the Companies Act, 1956, with the object of promoting Siddha System of Medicine. It is a non profitable organisation, which got registered under the Companies Act, 1956, instead of getting registered under the Societies Registration Act or under the Trusts Act. Therefore, a suit by such a non profitable organisation filed with a view to seek rendition of accounts from one of the erstwhile office bearers, cannot be thrown out under Order 7 Rule 11 of the Civil Procedure Code, on the ground of such a technical objection and further opined that, it is seen that a part of the cause of action allegedly arose within the jurisdiction of this Court. This is disclosed in Paragraph 30 of the Plaint. What is stated in Paragraph 30 of the Plaint may be true or false. But for the present, they have to be assumed to be true to decide the Application under Order 7 Rule 11 of the Civil Procedure Code. Moreover, Item-3 of the suit schedule property is stated to be a Dispensary in Ayanavaram, Chennai-600 023. Therefore, the other grounds on which the rejection of the Plaint is sought for, also cannot be sustained and resultantly dismissed both the Applications.” 3.The Learned Counsel for the Appellant/Defendant urges before this Court that the common order of the Learned Single Judge passed in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005, dated 07.03.2008, is contrary to law and therefore, it is liable to be set aside. 4.It is the further contention of the Learned Counsel for the Appellant/Defendant that the Learned Single Judge erred in holding that though L.N.Noel Raj, who filed the suit is not a Member of the Company as per the Document No.10, dated 04.01.2003, filed along with the Plaint and Additional Document No.9, dated 30.09.2004, filed during the course of the arguments are set to be by the General Body and that the validity of the Resolution cannot be gone into an Application as per Order 7 Rule 11 of the Civil Procedure Code. 5.Advancing his arguments, it is the submission of the Learned Counsel for the Appellant/Defendant that the Learned Single Judge is not correct in coming to the conclusion that whether the suit is filed by a person who is authorised or not, is a disputed question of fact and the same cannot be decided in the present Interlocutory proceedings. https://hcservices.ecourts.gov.in/hcservices/ 6.The Learned Counsel for the Appellant/Defendant strenuously contends that the Authority to file a suit is not a technical matter and a person who is neither a Member nor a Director of the Company, cannot file a suit on behalf of the Company. 7.The Learned Counsel for the Appellant/Defendant projects an argument that the Appellant/Defendant has raised a plea relating to the Authority to institute the suit on behalf of the Company and not the manner of verification of the pleadings. As such, the reference made by the Learned Single Judge to the decisions of the Honourable Supreme Court in Ramesh B. Desai and others v. Bipin Vadilal Mehta and others, [(2006) 5 Supreme Court Cases 638] and All India Reporter Ltd., Bombay with Branch Office at Nagpur and another v. Ramchandra Dhondo Datar, [AIR 1961 Bombay 292], are not applicable to the facts of the present case. 8.Expatiating his submissions, the Learned Counsel for the Appellant/Defendant contends that the Learned Single Judge is not correct in holding that the Plaint cannot be rejected on technical objections. 9.Apart from the above, the Learned Counsel for the Appellant/ Defendant submits that the filing of the Civil Suit No.752 of 2005 on the file of this Court by L.N.Noel Raj is an abuse of process of Court in view of the order passed in O.S.No.272 of 2003 on the file of District Munsif Court, Kuzhithurai and the Judgment in O.S.No.316 of 1995 on the file of District Munsif Court, Kuzhithurai and as such the suit ought to have been dismissed by the Learned Single Judge as not maintainable. 10.The pith and substance of the contention of the Learned Counsel for the Appellant/Defendant is that the present C.S.No.752 of 2005 has been projected by L.N.Noel Raj at the instance of Abraham and Sasidharan and further that, repeatedly filing suits on the same cause of action amounts to gross abuse of process of this Court. 11.In response, it is the contention of the Learned Counsel for the Respondent/Plaintiff that the Learned Single Judge has rightly dismissed the Application Nos.7131 and 4527 of 2007 by assigning cogent and proper reasons and therefore, the same need not be interfered with in Appeals. 12.In O.A.No.7131 of 2007, the Appellant/Defendant has averred that L.N.Noel Raj (who represents the Respondent/Plaintiff Company) is neither a Member of the Respondent/Plaintiff Company nor a Director and that the Company never authorised him to file any suit on behalf of it. https://hcservices.ecourts.gov.in/hcservices/ 13.Added further, the suit filed by the said L.N.Noel Raj representing the Respondent/Plaintiff as its Director/Acting President is not maintainable, especially, when he has nothing to do with the Company. Therefore, the Appellant/Defendant has sought for the dismissal of the suit as not maintainable. 14.In the counter filed by the Director/Acting President of the Respondent/Company represented by L.N.Noel Raj, it is stated that he is the Acting President, pursuant to a Resolution of the Respondent/Plaintiff Sangam and he has sworn to the Plaint and the other proceedings and that the Resolution of the Sangam dated 04.01.2003 has been filed by him in the typed set of papers No.1 filed against the O.A.No.4527 of 2007 filed by the applicant to reject the Plaint and in the said Resolution, he has been elected as Acting President by the Executive Committee and, as such, his description in the Plaint and all further proceedings instituted before this Court is duly authorised and legal one. 15.It is the case of the Respondent/Plaintiff that from the documents filed by the Appellant/Defendant in support of O.A.No.7131 of 2007, the Minutes of the General Body at Page 53 at Page 55, dated 12.09.1992, of the typed set of papers, it is clear that he is a Member of the Executive Committee, Sl.No.12. Further, the Appellant/Defendant takes a plea that the Appellant relied upon the Minutes of the General Body before the City Civil Court in I.A.No.21115 of 2002 in O.S.No.15290 of 1996, while B.Abraham the applicant in I.A.No.21115 of 2002, relied upon the Minutes of the General Body dated 31.08.2002. In the order of the City Civil Court dated 12.03.2003, it is observed that 'As well as the genuineness of the resolution in the resolution book Ex.R.1 becomes highly doubtful.' 16.The Appellant/Defendant filed CRP No.914 of 2003 as against the order dated 12.03.2003 passed by the City Civil Court, Chennai, in I.A.No.21115 of 2002 in O.S.No.15290 of 1996 and the same was dismissed by this Court on 14.08.2002. The Appellant was discharged from the Receivership, after a compromise decree has been passed in the main suit. 17.It is the case of the Respondent/Plaintiff that the Appellant by virtue of the orders of the City Civil Court and this Court cannot place reliance upon the Minutes of the General Body dated 31.08.2002, conducted by the Appellant in which he has been allegedly removed. 18.The other contention of the Respondent/Plaintiff is that he being a Member of the Executive Committee in the year 1992 by means of Minutes of the General Body, dated 12.09.1992 and the Minutes of the General Body relied upon by the Appellant being doubted by the City Civil Court, Chennai, the Appellant cannot rely on the said https://hcservices.ecourts.gov.in/hcservices/ Minutes, nor it is open to him to contend that he is not the Member of the Respondent/Plaintiff Company nor the Director nor authorised to file the suit. After the dispute and subsequent to 31.08.2002, the further General Body Meeting has been conducted by the Appellant on 30.08.2003, 21.08.2004, 28.09.2005 and 27.05.2006 and the list of Directors and Members has no relevance to issue on hand. Moreover, all these matters are for evidence and to be established at the trial of the suit. 19.According to the Respondent/Plaintiff, because of the Appellant's wrong acts, an Interim Administrator has been appointed earlier, but he has been discharged from the receivership on 14.08.2003 by an order of this Court. The misdeeds of the Appellant have been clearly mentioned in the Plaint and till date, no written statement has been filed by the Appellant/Defendant denying those allegations. However, the Appellant has been projecting applications after applications for rejection of the Plaint. 20.The case of the Respondent/Plaintiff is that a suit cannot be rejected based on the whims and fancies of the Appellant/Defendant, but it can be based only on the grounds mentioned in Order 7 Rule 11 of the Civil Procedure Code. Further, the present suit is maintainable in view of the fact that a Company can maintain a suit of the present nature against a wrong doer. 21.In O.S.No.843 of 2005, this Court appointed Thiru.Hari Chandran, Retired District Judge, as Interim Administrator on 16.03.2003 and he has not taken charge. Therefore, an Application has been filed for modification of the order appointing Thiru. Hari Chandran as Interim Administrator and the same has been modified by appointing Honourable Mr.Justice A.Ramamurthi (Retired), as Interim Administrator by means of an order 20.06.2006 who has taken charge on 10.07.2006. The Appellant filed O.S.A.No.243 of 2007 challenging the order dated 18.03.2006 and not the order dated 20.06.1986 and obtained an order of Stay for appointment of Mr.Hari Chandran, Retired District Judge, as Interim Administrator on 04.10.2007. The Respondent/Plaintiff immediately filed necessary Applications and in M.P.Nos.2 and 3 of 2007 in O.S.A.No.243 of 2007, this Court has passed the following orders on 30.10.2007. “The Administrator, Justice A.Ramamurthi has already taken charge of the Trust and its properties and he is presently acting as Administrator of the Trust. The prayer for interim relief is already rejected, and therefore, the order of interim stay dt: 04.10.2007 stands vacated. M.P.No.2 of 2007 and M.P.No.3 of 2007 are accordingly disposed of. The appellant is directed not to interfere with the administration of the Trust by the Administrator. The Administrator can continue to file interim reports and appropriate directions may be passed by the learned Single Judge on the reports that may be https://hcservices.ecourts.gov.in/hcservices/ filed by the Administrator.” 22.The stand of the Respondent/Plaintiff is to the effect that the Appellant/Defendant has been swallowing the fees of the students and also removing the articles of the College in connivance with the staff, who are under the control of the Principal, etc. Further, the Appellant has not filed his written statement in the suit though summons have been served on him two years before and also that, the Appellant has not made out the prima facie case in these two applications. 23.In the affidavit in O.A.No.4527 of 2007, the Appellant/ Defendant has stated that the Respondent/Plaintiff has no locus standi to file the suit and that the Respondent/Plaintiff is neither a Director nor the Acting President as claimed by him and further, there is no such post of Acting President in the Bye-Laws of the Respondent Sangam. Also, the Respondent/Plaintiff is neither a person aggrieved nor a person interested in the subject matter. 24.The Appellant/Defendant has also averred in O.A.No.4527 of 2007 that the Respondent L.N.Noel Raj and one D.Abraham have been removed from the rolls of the Sangam and indulged in various sorts of harassment to him and tried to disrupt the administration. They have neither any legal right nor any lawful claim over the Sangam, the Hospital or the College. D.Abraham filed O.S.No.272 of 2003 before the Learned I Additional District Munsif, Kuzhithurai, on 10.09.2003 seeking the relief of permanent injunction restraining the Appellant/Defendant from the administration of the Siddha Medical College and I.A.No.382 of 2003 (Interim Injunction) has been dismissed on 30.09.2003. The Appellant/Defendant referred to the Contempt Petition No.960 of 2003 filed against him before this Court stating that he has been functioning as the President and Officer in violation of the Order dated 14.08.2003 in CRP No.914 of 2003 and the same has been dismissed by this Court on 09.02.2004. 25.L.N.Noel Raj and others arranged to file another suit against the Appellant/Defendant in O.S.No.18 of 2004 in the name of four persons before the Principal Sub Judge, Nagercoil, seeking for a declaration and injunction that the meeting convened by them on 31.08.2002 is a valid one and obtained an Ex parte Order of injunction. However, the Learned Sub Judge suspended the forcible police action on 09.02.2004 and returned the Plaint itself on 25.02.2004 for want of jurisdiction. The Plaint has not been represented till date. 26.D.Abraham projected one P.Dhasan to file a suit against the Appellant/Defendant in O.S.No.463 of 2004 before the Learned Principal District Munsif, Kuzhithurai (mentioning the Plaintiffs https://hcservices.ecourts.gov.in/hcservices/ in O.S.No.18 of 2004 in Sub Court, Nagercoil, as D2 to D5) and sought for an injunction restraining the Management of the Sangam and the Medical College. An I.A.No.389 of 2004 has been filed for interim injunction. But, the Court has not issued any orders in favour of P.Dhasan. Now, the proceedings are stayed by the Madurai Bench of this Court in C.M.P.No.657 in CRP No.140 of 2004. 27.The Revenue Divisional Officer, Padmanabhapuram initiated similar proceedings and called the Appellant to appear for enquiry on 20.09.2004. In W.P.No.2619 of 2004, the Madurai Bench of this Court on 19.10.2004 stayed the Revenue Divisional Officer's proceedings. Subsequently, the Revenue Divisional Officer dropped all further proceedings. 28.The Respondent/Plaintiff L.N.Noel Raj, suppressing the above facts, filed W.P.No.4500 of 2004 before the Madurai Bench of this Court as though he submitted his representation to the Superintendent of Police of Nagercoil on 07.09.2004 and he obtained an order dated 22.12.2004 behind his back directing the Superintendent of Police to consider his petition. Though the Appellant has been cited as the third respondent in the writ petition, no notice has been given to him before passing of the order. 29.The Appellant filed Review Petition No.7 of 2005 after coming to know the order dated 22.12.2004 passed in W.P.No.4500 of 2004 by the Madurai Bench of this Court. On 16.04.2005, the Review Petition has been admitted and in W.P.M.P.No.2954 of 2005, the order passed in the W.P.No.4500 of 2004 has been suspended. The Respondent/Plaintiff filed W.A.No.331 of 2005 and the same is pending. 30.Thereafter, the Respondent/Plaintiff projected another W.P.No.6432 of 2005 before the Madurai Bench of this Court seeking a direction for the issuance of a Writ of Mandamus, directing the police to give protection and assistance in safeguarding the interest of Sangam and forbearing the Appellant, his men, etc., in any manner interfering with the functioning and the management of the Sangam, the College and the properties. Also, W.P.M.P.No.6985 of 2005 has been filed praying for an order of injunction. The Respondent/Plaintiff has filed the present suit without any valid reason or cause of action. 31.Even according to the Bye-Laws, the President is the Officer competent to represent the ATSVS Sangam in all Court matters. 32.Assuming the suit in C.S.No.752 of 2005 is maintainable under Section 10 of the Civil Procedure Code. The suit filed by D.Abraham as Administrative Secretary of Akila Thiruvidancore https://hcservices.ecourts.gov.in/hcservices/ Siddha Vaidhya Sangam, Munchirai, in O.S.No.272 of 2003 in the Court of I Additional District Munsif, Kuzhithurai on 10.09.2003 seeking for a permanent injunction restraining the applicant from the Siddha Medical College and the present suit are one and the same. The cause of action and the Issues in both the suits are similar. Also, the subject matter, the reliefs sought and the parties are substantially identical. 33.According to the Appellant/Defendant, no cause of action has arisen within the territorial limits of this Court either in part or in full. The ATSVS Sangam, the Medical College and all the properties are situate outside the territorial limits. The said Sangam has no properties now (neither at the time of institution of the suit nor till date) outside the Revenue District of Kanyakumari. 34.The Learned Single Judge in the course of his order dated 07.03.2008 in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 in Paragraphs 13 to 20 has observed as follows: “13.The learned counsel also relied upon the decision of the learned Single Judge of the Delhi High Court in Nibro Ltd. -vs- National Insurance Company Ltd. (Company Cases Vo.70 page 388), for the preposition that unless a Director is authorised to file a suit on behalf of the Company, by a Resolution, the suit is not maintainable. It is held in the said judgment as follows:- "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 the 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 such a power can be conferred by the board of directors only by passing a resolution in that regard." https://hcservices.ecourts.gov.in/hcservices/ 14. In short, the contention of the learned counsel for the applicant/defendant is- (a)that the person, who instituted the suit on behalf of the Company is not a Director; (b)that the fact, that the person, who instituted the suit is not a Director, is borne out by the statutory forms filed on the file of the Registrar of Companies; and (c)that there is no Resolution of the Board of Directors of the Company authorising the person concerned to institute the present suit. 15.There is no dispute about the fact that the person, who has instituted the suit, has not filed any Form No.32 or Form No.36 before the Registrar of Companies. The forms filed before the Registrar of Companies do not contain the name of Mr.Noel Raj, who has instituted the suit. However, the plaintiff has filed a document along with the plaint. Document No.10 filed along with the plaint is purported to be the Minutes of the Executive Committee of the plaintiff electing Mr.Noel Raj as the Acting President. It is dated 04.01.2003. 16.Similarly in the course of arguments, the respondent/plaintiff filed a set of additional documents. The additional document No.9 is the Resolution allegedly passed by the General Body of the respondent/ plaintiff on 30.09.2004. The aforesaid Noel Raj has been purportedly authorised under Resolution No.2 passed in the said General Body Meeting for instituting a suit against the applicant/defendant on the file of this Court. 17.Though the respondent/plaintiff ought to have filed the alleged Resolution dated 30.09.2004 at the time of institution of the suit itself, I cannot brush it aside, at this stage. Under normal circumstances, the suit should not have been numbered without demanding a copy of the resolution. It a demand had been raised at the time of scrutiny, the plaintiff would have had an opportunity to file the document, which is now filed as additional document No.9. Since a question is raised only now, the plaintiff has filed the said document. 18.Therefore, now a factual dispute has arisen as to whether the person, who instituted the suit on behalf of the Company, was really authorised to institute the suit and as to whether he was actually an Office bearer competent to verify and sign the pleadings. While the case of the applicant/ defendant is based upon the statutory returns and statutory provisions, the defence of the respondent/plaintiff is based upon an alleged Resolution. 19.But if the General Body of the plaintiff had, https://hcservices.ecourts.gov.in/hcservices/ in fact, passed a Resolution as alleged by the plaintiff on 30.09.2004, then it cannot be said that the suit was instituted by an incompetent person, not authorised in this regard. If no such Resolution had been passed, as claimed by the plaintiff, then the very institution of the suit is bad and unauthorised. Therefore, the answer to the question raised by the applicant/defendant lies in finding out, as a matter of fact, whether there was any Resolution actually passed on 30.09.2004 or not. This finding of fact cannot be arrived at, in an application under Order VII Rule 11 C.P.C. 20.It is true that there is a statutory presumption in favour of the contents of the forms filed with the Registrar of Companies. But, as admitted by Mr.V.Selvaraj, learned counsel for the applicant/defendant, it is a rebuttable presumption. Section 164 itself says that the returns filed are only prima facie evidence of their contents. Therefore, it is always open to the respondent/ plaintiff to show that the forms were actually filed by a person, who was not in the Board and who was not authorised to file them. It is always open to the persons, who are the actual office bearers, to come and rebut the presumption created under Section 164. But the opportunity to do so will arise only at the time of trial. In other words, the question as to whether Mr.Noel Raj was a Director, whether the Company authorised him to institute the suit and whether the suit was properly instituted or not, are all questions of fact, which can be decided only at the time of trial especially when the plaintiff has produced a document to show his authority. The jurisdiction to reject a plaint either under Order VII Rule 11, C.P.C. or to dismiss the suit on any technical ground, cannot be exercised, if the dispute raised is on a question of fact, which can be established only by evidence. It is only on admitted plaint averments that a suit can be dismissed or plaint rejected, if no further evidence is necessary. I find in this case that a disputed question of fact has arisen about the status of a person, who has filed a suit on behalf of the Company and also about his authority to institute the suit. This disputed fact cannot be decided at this stage.” 35.The Learned Counsel for the Appellant/Defendant cites the decision of the Honourable Supreme Court in State Trading Corporation of India Limited (in all the Petitions) v. The Commercial Tax Officer and Others, (In petns.Nos.202, 203 of 1961) and The Asst. Supdt. Of Commercial Taxes, Bihar and Others (In Petn.No.204 of 1961), [AIR 1963