Case: State Bank of Travancore Vs. M/s. Kingston Computers (I) P. Ltd

The suit was filed by the respondent through Shri Ashok K.Shukla, who described himself as one of the Directors of the company and claimed that he was authorised by Shri Raj K.Shukla, the Chief Executive Officer of the company vide authority letter dated 02.01.2003 to sign, verify and file suit for recovery on behalf of the company. A copy of the authority letter allegedly signed by Shri Raj K.Shukla was also annexed with the plaint. In the written statement filed on behalf of the appellant, a preliminary objection was taken to the maintainability of the suit on the ground that Shri Ashok K.Shukla was not authorised by the company to file the suit and the authority letter given by Shri Raj K.Shukla was not sufficient to entitle him to do so. The respondent filed replication but did not plead that Shri Ashok K.Shukla was authorised by the company to file thethe pleadings of the parties, the trial Court framed the following issuesWhether the suit has been signed, verified and filed by a duly authorised person?2. What is the effect of not joining Sh.Debashish Saraswati in the present suit?3. Whether any loss has been caused by the defendant to the plaintiff?4. Whether payments have been made by the defendant in due course and in good faith as alleged inof the preliminary objections of the written statement if so its effect?5. Whether the plaintiff is entitled to the suit amount?6. Whether the plaintiff is entitled to interest, if so at what rate and for what period?7.considering the pleadings and evidence of the parties, the trial Court decided all the issues except issue No.1 in favour of the company but dismissed the suit on the ground that Shri Ashok K.Shukla was not authorised to file the same. The Division Bench of the High Court allowed the appeal of the company, reversed the judgment of the trial Court and decreed the suit by relying upon the letter of authority issued by Shri Raj K.Shukla in favour of Shri Ashok K.Shukla.

Court's reasoning:
The Division Bench of the High Court did take cognizance of the fact that the company had not summoned any witness from the office of the Registrar of Company to prove that Shri Ashok K.Shukla was a Director of the company and that the minute book of the company had not been produced to prove the appointment of Shri Ashok K.Shukla as a Director, but reversed the finding of the trial Court on issue No.1 on the basis of the authority letter issued by Shri Raj K.Shukla and resolutions dated 14.2.2001 and 19.4.2001, by which the Board of Directors of the company had authorised some persons to operate the bankour view, the judgment under challenge is liable to be set aside because the respondent had not produced any evidence to prove that Shri Ashok K.Shukla was appointed as a Director of the company and a resolution was passed by the Board of Directors of the company to file suit against the appellant and authorised Shri Ashok K.Shukla to do so. The letter of authority issued by Shri Raj K.Shukla, who described himself as the Chief Executive Officer of the company, was nothing but a scrap of paper because no resolution was passed by the Board of Directors delegating its powers to Shri Raj K.Shukla to authorise another person to file suit on behalf of the company.