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Judgment
N.A. Britto
Heard. This Writ petition is filed by the petitioner which is a company. Petition has been signed and verified by one Shri I. B. Muchandi who claims to be its company secretary. The Writ Petition is directed against the Order dated 30.9.2008 of the learned Civil Judge, Senior Division, by which an application filed by the writ petitioner, as defendant no. 1 in Regular Civil Suit no. 628/2000, was dismissed. The said application was filed to set aside a consent decree dated 13.4.2006 in said civil suit, on the ground that defendant no.1 (petitioner herein) had not conferred any powers on Ghanashyam Srinivas Pai Raikar to sign the compromise terms leading to the said consent decree dated 13.4.2006.
The preliminary objection taken is that the petition is not maintainable, in the absence of a resolution of the Board of Directors authorising the company secretary to file the same.
Shri Usgaonkar, learned senior counsel, appearing on behalf of the petitioner has referred to the provisions of Order 29, Rule 1, of C.P.C. and has submitted that the company''s secretary can sign and verify the pleadings. Order 29 deals with suits by or against corporations. Rule 1 therefore provides that in a suit filed by or against corporation, any pleadings 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. Shri Usgaonkar therefore submits that this writ petition has been filed in accordance with law. Shri Usgaonkar has placed reliance on the United Bank of India Vs. Naresh Kumar and others, wherein Apex Court referring to the provision of Order 29, Rule 1, and Order 6, Rule 14, of C.P.C.. has observed that it would appear that even in the absence of formal letter or authority or power of attorney having been executed a person referred to in Rule 1 of Order 29, can by virtue of office which he holds, sign and verify the pleadings on behalf of the corporation.
The Apex Court in the above decision, has also observed that in 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 Code of Civil Procedure, as a company is a juristic entity, it can duly authorise any person to sign the plaint or written statement on its behalf and this would be regarded as sufficient compliance with provisions of Order 6, Rule 14 of the Code of Civil Procedure. A person may be expressly authorised to sign the pleading on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by Power of attorney being executed in favour of any individual. In the absence thereof in case where pleadings have been signed by one of its officer, a corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be express or implied.
The question therefore is whether company''s secretary has been expressly authorised to sign the pleadings of this Writ petition by the company on whose behalf this writ petition is filed.
Shri Godinho, learned counsel on behalf of the respondent submits that the petitioner has not produced any resolution of the company authorising the said company''s secretary to file the present petition and in this context he has placed reliance on several decisions namely the Leela Capital & Finance Ltd. Vs. Modiluft Ltd(2003 (1) ALL 290 ), Dale and Carrington Invt. (P) Ltd. and Another Vs. P.K. Prathapan and Others, and M/s Hari Shree Enterprises vs. M/s Vikas Housing Ltd. and Ors.( 2009(4) ALL MR 247).
i. In the case of the Leela Capital & Finance Ltd. (supra a Division Bench of this Court ), had referred to Nibro Limited Vs. National Insurance Company Ltd., (1991 CC 388) 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 that such a power can be conferred by the Board of Directors only on passing resolution in that regard.
ii. The case of Nibro Limited was followed in K. N. Sankaranarayanan Vs. Shree Consultation and Services Pvt. Ltd, [(1994) 80, Company Cases 558] which was case where company petition was instituted in the name of company by one Chandra Prakash Sodhani claiming to be director of the company who had verified the petition and had signed the same. The petition was dismissed as the petitioner was a company and institution of any proceedings on its behalf should have been authorised by its Board of Directors.
iii. Reference was also made to Swadharma Swarajya Sangh Versus Indian Commerce and Industries Co. Pvt. Ltd. [(1999) 98 CC 151]. In this case the suit was filed by a company without a resolution of Board of Directors authorising a particular director to file a suit and as such it was held that the suit was not maintainable as the same was not filed by a person authorised under Order 29 Rule 1 of C.P.C.
iv. In M/s Hari Shree Enterprises (supra) it has been 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 has been further been held that it is essential requirement of this provision is that the company which is a juristic person must itself decide to sue and once that is done, it would authorise one of its director who is 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. The Board of Directors in the day to day management of the company must decide and resolve to sue or not to sue.
v. In Chico Ursula D''Souza Vs. Goa Plast Pvt. Ltd (2008(2) Bom. C. R. (cri) 776), it was held that an incorporated Company is a separate juristic person distinct from its directors or shareholders. It acts through the resolution passed by its Board of directors. Mr. Mulchadi/PW1 ( the very company secretary, who has filed this Writ petition) could have deposed on behalf of the complainant (Goa Plast Pvt Limited )only in case there was a resolution of Board of Directors or in case he was otherwise authorised by Article of Association of the company. A person who claims to represent another is expected to produce an authority or power which entitles him to so appear. Mr. Mulchadi/ PW1 would have appeared and deposed on behalf of the company only in case he was authorised by resolution of board of Directors or as already stated, by Article of Association of the company.
vi. In Ashok B. Pagui(2007(4) Bom. C. R. 465), after referring to other cases, it was held that a director, as an individual director, has no power to act on behalf of the company. He is only one of a body of the directors called Board of Directors and alone he has no power except such may be delegated to him by the Board of Directors or given to him by Article of Association of the company.
One does not know as to what exactly transpired in RCS 628/200 but the fact remains that the petitioner filed an application to set aside the consent decree dated 13.4.2006 which application has been dismissed by Order dated 30.9.2008 impugned herein. It appears that there was also no resolution in favour of said Raikar and he had acted upon a power given by one of the director of the said company. This Writ petition has been filed by the company''s secretary of the petitioner. No resolution of the Board of Directors has been produced till date inspite of the fact that objection whether company''s secretary can file this writ petition was taken earlier. The provision of Order 29 Rule 1 is only an enabling provision which enables pleadings to be signed and verified on behalf of the corporation by secretary or any director or any principal officer. The proceedings in which pleadings are to be verified could be filed only in case they are authorised by Board of Directors of the company or otherwise authorised by Article of Association of the company and not otherwise. The law is clear on that point from various authorities referred to herein above including the one cited on behalf of the petitioner. No submission is made before this Court to get the filing of the petition duly ratified by the Board of Directors.
Therefore in the absence of a resolution of the Board of Directors of the petitioner company in favour of the company secretary to file this petition or to sign or verify it, this petition cannot be entertained and therefore is hereby dismissed.