// 1 // IN THE HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR ORDER IN S.B. Civil Regular First Appeal No.125/1994 {M/s Gupta Plastics Private Limited Vs. Firm Amrish Plastics} Date of Order ::: 03.03.2009 Present Hon'ble Mr. Justice Narendra Kumar Jain Shri Amit Gupta, Advocate, for Shri Bihari Lal Agarwal, Counsel for appellant None present for respondent #### //Reportable// By the Court:- Heard learned counsel for the appellant. The only point involved in this appeal is as to whether Shri Ramawtar Gupta, one of the Directors of the plaintiff Company M/s Gupta Plastics Private Limited, was authorized to institute the present suit in the name and on behalf of plaintiff Company against the defendant in the trial court, or not? The trial court framed Issue No.4A in this regard and decided the same against the plaintiff- appellant. The trial court, while deciding other Issues in favour of the plaintiff, dismissed the plaintiff's suit on the basis of the finding on Issue No.4A. The plaintiff-appellant filed a suit for recovery of a sum of Rs.2,05,600/- against the defendant-respondent in the trial court. The // 2 // defendant contested the suit by filing a written-statement. The trial court framed five issues. Later on, Issue No.4A was also framed. The plaintiff examined PW-1 Ramawtar Gupta and produced documentary evidence. The defendant examined DW-1 Laxmi Niwas Bangur and DW-2 Damodar Lal Sharma. All the Issues, except Issue No.4A, were decided in favour of the plaintiff. Issue No.2, as to whether the plaintiff-company is entitled to recover a sum of Rs.2,05,600/- from the defendant, was decided in favour of the plaintiff. The issue No.3, as to whether the plaintiff is entitled only to receive Rs.30,000/-, was also decided against the defendant. The trial court, while deciding Issue No.4A, held that the plaintiff is a registered Company and Ramawtar Gupta is its one of the Directors but a resolution of Company authorizing him to institute the present suit has not been filed, therefore, the trial court, on the basis of the judgment of the Delhi High court in M/s Nibro Limited Vs. National Insurance Company Limited - AIR 1991 Delhi 25, decided the said Issue against the plaintiff and, on the basis of the finding on Issue No.4A, dismissed the plaintiff's suit vide impugned judgment and decree dated 21st May, 1994. The learned counsel for the appellant contended that the trial court committed an // 3 // illegality in deciding Issue No.4A against the plaintiff. He contended that Ramawtar Gupta was Director of plaintiff Company and he was authorized by Memorandum and Articles of Association of the Company itself to institute legal proceedings in the name and on behalf of the plaintiff Company therefore there was no need of separate resolution by Board of Directors to institute the present suit on behalf of the plaintiff Company. In support of his submission, he referred Memorandum of Association (Exhibit-2) and Order 29 Rules 1 and 2 of the CPC as well as the decision in United Bank of India Vs. Naresh Kumar and Others - 1996 (6) SCC 660. He also contended that the trial court committed an illegality in relying upon the judgment of the Delhi High court in M/s Nibro Limited Vs. National Insurance Company Limited (Supra), as the said judgment was distinguishable and not applicable in the present case for the reason that in the case before the Delhi High Court the Memorandum and Article of Association of the Company were not placed on the record whereas in the present case the Memorandum and Articles of Association of the plaintiff Company was placed on the record and got the same exhibited and marked as Exhibit-2, wherein the Director of the Company was specifically authorized to institute, // 4 // conduct, defend, compound or abandon any legal proceedings by or against the Company; he also referred the decision in Jaipur Udyog v. Union of India – AIR 1972 Rajasthan 129. He, therefore, submitted that the finding of the trial court on Issue No.4A may be set-aside and, in view of the finding of the trial court in respect of Issues No.2 and 3, the plaintiff's suit be decreed. No one is present on behalf of the respondent despite service of notice and, as such, there is no assistance available on behalf of the respondent. I have considered the submissions of the learned counsel for the appellant and examined the finding in respect of Issue No.4A as well as the record of the trial court. The plaintiff filed a suit for recovery of a sum of Rs.2,05,600/- on 2nd January, 1990 in the trial court wherein it was pleaded that on 11th October, 1980 one premise was taken on license by the defendant at the rate of Rs.19,250/- per month, which remained with the defendant up-to 17th January, 1984. The total license fees which remained due against the defendant was Rs.4,37,620/- but a settlement took place in between both the parties on 18th July, 1986 and the defendant agreed to pay a sum of Rs.2,30,000/- to the plaintiff Company // 5 // against full and final settlement; the amount of Rs.30,000/-, which was payable by the plaintiff to one Amrish Beneficiary Trust, was got adjusted by the defendant; thus, Rs.2,00,000/- remained due on 18th July, 1986. The defendant thereafter gave a Cheque of Rs.70,000/- in December, 1986. The other details were also given and ultimately it was pleaded that the total amount of Rs.2,05,600/- i.e. original amount of Rs.1,33,600/- with interest of Rs.72,000/-, is due against the defendant. The suit was contested by the defendant by filing a written-statement wherein the facts, as pleaded in the plaint, were denied. One of the objections taken in the written-statement, was that the plaintiff Company is a registered Company but it has not been proved as to whether Shri Ramawtar Gupta is its Director and he has been authorized by the plaintiff Company to institute the present suit. From the finding of the trial court, it appears that without discussing and considering the oral and documentary evidence available on the record, it has decided the Issue No.4A against plaintiff only on the basis of the judgment of the Delhi High Court in M/s Nibro Limited Vs. National Insurance Company Limited (Supra) in absence of resolution of plaintiff's Company authorizing Ramawtar Gupta to institute // 6 // the suit on behalf of Company. So far as the judgment passed by the Delhi High Court in M/s Nibro Limited Vs. National Insurance Company Limited (Supra), is concerned, I find that the same was not applicable in the facts and circumstances of the present case for the simple reason that in Para 27 of the judgment it has specifically been mentioned that “the Memorandum and Articles of Association of Company was also not placed on the record”, whereas, in the present case, the plaintiff-Company has placed on the record its Memorandum and Articles of Association (Exhibit- 2), wherein the Directors of the Company have been authorized to institute the suit. I find that the judgment of the Delhi High Court in M/s Nibro Limited Vs. National Insurance Company Limited (Supra) is in favour of the plaintiff as in Para 25 thereof it has been observed that “Individual directors have such powers only as are vested in them by the Memorandum and Articles”. This judgment is in favour of the plaintiff as in the present case it is clear from the Memorandum and Articles of Association (Exhibit-2) of the plaintiff Company that Shri Ramawtar Gupta was one of the Directors of the plaintiff Company and Directors were authorized to institute the suit and to sign and verify the pleadings on behalf of the plaintiff Company. // 7 // Exhibit-2 clearly shows that in Article 12(iii) thereof, the names of two Directors have been mentioned; the name of Ramawtar Gupta has been mentioned at Serial No.2, therefore, it is clear that he was one of the Directors of the plaintiff Company. By Article 17 of Memorandum and Articles of Association, specific powers have been given to the Directors. Para 7 of Article 17 of the Memorandum and Articles of Association makes it clear that the Director has been authorized to institute, conduct, defend, compound or abandon any legal proceedings by or against the Company. Article 12(iii) and Article 17(7) of the Memorandum and Articles of Association of the plaintiff Company, are reproduced as under:- “12. (i) ... (ii) .... (iii) The following are the first Directors of the Company, (1) Kajore Mal Gupta (2) Ramawtar Gupta 17. Without prejudice to the General power conferred by the last preceding Article and the other powers conferred by these articles but subject, however, to the provisions of sections 291 to 293 A of the Act, it is hereby expressly declared that the Directors shall have the following powers that is to say power:- (1) ... (2) ... (3) ... (4) ... (5) ... (6) ... (7) To institute, conduct, defend, compound or abandon any legal proceedings by or against the Company or // 8 // its Officers or otherwise concerning the affairs of the Company, and also to compound and allow time for payment or satisfaction of any debt due and to any claims or demands by or against the Company.” When a Director of a Company is authorized to institute a suit by its Memorandum and Articles of Association then there is no need of separate resolution of Board of Directors of the Company in favour of one particular Director to institute a particular suit on behalf of the Company. The above articles of the Memorandum and Articles of Association of the plaintiff Company make it clear that Ramawtar Gupta was one of the Directors of the plaintiff Company and he was authorized to institute, conduct, defend, compound or abandon any legal proceedings by or against the Company. As per Order 29 Rule 1 of the CPC it is clear that in suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case. In view of the above, it is clear that Ramawtar Gupta, the Director of the plaintiff Company, was not only authorized to institute the suit on behalf of the plaintiff Company but // 9 // he was also competent to sign and verify the pleadings on its behalf. In Jaipur Udyog v. Union of India – AIR 1972 Rajasthan 129, this Court, while considering Order 29 Rule 1 CPC held that a petition, signed and verified on behalf of Company by its principal Officer, who was able to depose to the facts of the case, is not defective merely because there was no resolution of the company empowering him to present the petition. Para 22 of the judgment is reproduced as under:- “22. Regarding the preliminary objection of the respondents that the first two petitions are not maintainable as they have not been filed by the authorized persons, I may mention that Rule 1 of Order 29 of the Code of Civil Procedure would be applicable for the presentation of the petitions by or on behalf of the corporations. Rule 1 lays down that in suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the Secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case. The requirement of this rule is not that the principal officer must be empowered by a specific resolution to present the suit in a court of law. The only requirement of this rule is that the principal officer must be in a position to depose to the facts of the case. In the case of Jaipur Udyog Ltd., the petition has been signed by one Shri G.P. Gogla who has in his affidavit deposed that he is the Senior Executive Officer (Quarry) of the Jaipur Udyog Limited and that he was fully conversant with the facts of // 10 // the case and was competent to swear the affidavit. In Petition No.11 of 1971 of M/s. Hindusthan Sugar Mills Ltd., Bombay, the affidavit has been sworn by one Shri Rangnath Kabra who has described himself as the Administrative Manager of the petitioner company and has stated that he was fully conversant with the facts of the case. These averments of the aforementioned two officers clearly show that the petitions were signed and verified on behalf of the companies by their principal officers who were able to depose to the facts of the cases and as such they were entitled to sign the petitions and present them in the court. The preliminary objection has, therefore, no force and it is rejected.” Apart from the above, it is relevant to mention that PW-1 Ramawtar Gupta, in his statement before the Court, stated that he is Director of the plaintiff Company and he placed on the record a certificate of incorporation as well as Memorandum of Association of plaintiff Company and they were marked as Exhibit-1 and Exhibit-2. The cross-examination of PW-1 shows that not a single question was put by the defendant on the point that he is not authorized by the plaintiff Company to institute the suit or sign and verify the pleadings on behalf of the Company. No such question was asked by the defendant from PW-1. DW-1 Laxmi Niwas Bangur and DW-2 Damodar Lal Sharma, in their examination- in-chief, have not stated that Ramawtar Gupta was not a Director of the plaintiff Company or he was not authorized by the plaintiff company // 11 // to institute the suit or to sign and verify the pleadings on its behalf. The suit was filed on behalf of the plaintiff Company; the statement was given on behalf of the plaintiff Company; all other relevant documents, which have been placed on the record by the plaintiff, are in the name of the plaintiff Company; therefore, all these facts show and prove that the suit has been instituted on behalf of the plaintiff Company only. In similar circumstances, the Hon'ble Supreme Court in United Bank of India Vs. Naresh Kumar and Others – 1996 (6) SCC 660, held that it is difficult even to presume that the suit had been filed and tried without the appellant having authorized the institution of the same. The only reasonable conclusion which we can come to is that Shri L.K. Rohatgi must have been authorized to sign the plaint. Para 13 of the judgment is reproduced as under:- “13. The court had to be satisfied that Shri L.K. Rohatgi could sign the plaint on behalf of the appellant. The suit had been filed in the name of the appellant company; full amount of court fee had been paid by the appellant-Bank; documentary as well as oral evidence had been led on behalf of the appellant and the trial of the suit before the Sub-Judge, Ambala, had continued for about two years. It is difficult, in these circumstances, even to presume that the suit had been filed and tried without the appellant having authorized the institution of the same. The only reasonable conclusion which we can // 12 // come to is that Shri L.K. Rohatgi must have been authorized to sign the plaint and, in any case, it must be held that the appellant had ratified the action of Shri L.K. Rohatgi in signing the plaint and thereafter it continued with the suit.” In view of the above discussion, it is clear that there was overwhelming evidence on behalf of the plaintiff to prove that Ramawtar Gupta was fully authorized on behalf of the plaintiff Company to institute, sign and verify the suit and to depose his statement on behalf of the plaintiff-Company. In my view, the trial court committed a serious illegality in recording its finding in respect of Issue No.4A. Hence, the finding of the trial court in respect of Issue No.4A is set-aside and the said Issue is decided in favour of the plaintiff-appellant. It is also relevant to mention here that defendants filed an application under Order 7 Rule 11 CPC in the trial court on 07.08.1990 for dismissal of the suit, contending therein that plaintiff has pleaded in its plaint that plaintiff is a private limited Company but it has not been disclosed as to whether plaintiff Company is registered under the provisions of Company Act or not, whether it has its Memorandum and Articles of Association or not, whether Ramawtar Gupta has an authority to institute the suit on behalf of the Company or // 13 // not. The plaintiff filed a copy of Memorandum of Association of plaintiff Company along-with application on 08.10.1990. Thereafter the trial court vide its order dated 08.10.1990 dismissed the application of the defendant dated 07.08.1990. From the record it does not appear that the order dated 08.10.1990 passed by trial court has been set aside by appellate or revisional court. Therefore the issue in dispute had already been decided by the trial court in favour of the plaintiff and there was no need to frame additional issue No.4A. So far as other Issues are concerned, the trial court itself has decided the same in favour of the plaintiff and the findings of the trial court in respect of those issues have not been challenged by the defendant by way of cross-appeal or cross-objection, therefore, there is no need to discuss the same and, in these circumstances, in view of finding of the trial court in respect of Issue Nos.2 and 3, the suit of the plaintiff is liable to be decreed with interest. Consequently, the appeal is allowed. The impugned judgment and decree dated 21st May, 1994 passed by the District & Sessions Judge, Jaipur City, Jaipur, in Civil Suit No.73/1990, is set- aside. The plaintiff's suit for recovery of a sum of Rs.2,05,600/- is decreed in favour of the // 14 // plaintiff and against the defendant, with interest at the rate of 6% per annum from the date of filing of the suit till the date of realization. The costs is made easy. (Narendra Kumar Jain) J. //Jaiman//