Rajasthan State Electricity Board vs Central Bank of India

Instant first appeal is directed against the judgment and decree dt. 06.09.1996 passed by the Additional District & Sessions Judge No.6, Jaipur City, Jaipur in Civil Suit No.248/1995.

The brief facts noticed are that the appellants-plaintiff filed a civil suit alleging that the respondents-Bank had given Bank Guarantee on behalf of Indo Engineering (Kota) Private Limited.

The Company had agreed to take the electric supply by following the orders issued from time to time as per the general conditions of supplies. The appellants-plaintiffs directed that the security for average charges of three months has to be given. In pursuance thereto, the Indo Engineering (Kota) Private Limited offered to give Bank Guarantee for Rs.28,712/- which was accepted by the appellants-plaintiffs and consequently, the respondents-bank gave Bank Guarantee No.75500 dt.03.12.1986 and the same was renewed from time to time. The payment of consumption of electricity was not made and, therefore, an amount of Rs.2,78,538.44/- remain outstanding, the appellants-plaintiffs asked the respondents-bank to encash the Bank Guarantee as the amount was not paid by the limited Company but the same was not done and therefore, the suit for recovery of Rs.28,712/- along with interest was filed before the Trial Court.

The respondents had filed their written statement and denied the allegations made in the plaint and particularly averred that the signatory of the plaint Shri Madan Lal (Assistant Account Officer) was not authorized officer for instituting the suit and as such he has no authority to institute the suit. It was further stated that within the time limit, the Bank Guarantee was not invoked, therefore, they are not under obligation to make the payment. It was also alleged that the Bank Guarantee was executed at Bombay and therefore, the same should have been invoked at Bombay only and as such the Trial Court has no jurisdiction. On the basis of the pleadings of the parties, seven issues were framed. On behalf of the appellant, two witnesses were produced.

The respondents did not produce any evidence. The Trial Court in the impugned order decided all the issues in favour of the appellants-plaintiffs except issue No-1 which related to the fact about competence of the signatory of the plaint being Shri Madan Lal, who was merely Assistant Account Officer and thus, the suit was dismissed.

Learned counsel for the appellants-plaintiffs vehemently contended that Shri Madan Lal (Assistant Account Officer) was duly authorized to file a suit on behalf of the appellants-plaintiffs and proper power was delegated by the appellants-plaintiffs in this regard. There was a Board resolution of the appellants-plaintiffs as also an office order (Exhibit-21, 22 & 23) which too prove that the Chairman had delegated powers to the lower authorities to institute the suit in respect of the court cases on behalf of the appellants-Board.

Counsel further contends that it was a mere technicality and the Trial Court was unjustified in carrying ahead such technicalities which could have been cured, if an opportunity would have been granted by the Trial Court to rectify by filing or amending the suit on behalf of the competent person. Counsel contends that the Apex Court in the case of United Bank of India Vs. Naresh Kumar & Others reported in (1996) 6 SCC 660 has held that mere signatory being someone else it being a technicality should not come in the way of granting substantial justice. Counsel thus, contends that when all the other six issues are decided in favour of the appellants then on the facts noticed herein before, this issue for the reasons assigned, deserves to be considered and the appeal deserves to be allowed.

It is noticed that none appeared on behalf of the respondents on 08.02.2017 & 05.05.2017. Today also, none appeared on behalf of the respondent despite name of the counsel being shown in the cause list and the said appeal is pending for last almost 20 years and after hearing counsel for the appellant is being decided.

I have considered the arguments advanced by the counsel for the appellants and have perused the material including the record of the Trial Court.

On perusal of the same, it is noticed that the Board resolution/office orders (Exhibit-21, 22 & 23) are there delegating powers to the Officers subordinate to the Chairman/Secretary and once the powers have been delegated by the competent Authority to Shri Madan Lal (Assistant Account Officer), in my view, the Trial Court was unjustified in coming to the conclusion that the appellant fails only on this ground.

I also agree with the arguments of the counsel for the appellants-plaintiffs that if the Trial Court was not satisfied, an opportunity must have been afforded to the appellants-plaintiffs to amend/rectify the appeal filed by competent authority and no harm was caused, if only the plaintiff was allowed to amend.

In my view, it is a mere irregularity and such technicalities need not come in the way of granting substantial justice in the contested matter between the parties.

It would be appropriate to quote from the judgment of the Apex Court in the case of United Bank of India Vs. Naresh Kumar & Others (supra) which has also taken into consideration the identical fact situation:-

"10. It cannot be disputed that a company like the appellant can sue and be sued in its 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 an dehors Order 29 Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorise 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 authorised 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 express or implied. The court can, on the basis of the evidence on record, and after taking all the circumstances of the case, specially with 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.

The courts below could have held that Sh. L.K. Rohatgi must have been empowered to sign the plaint on behalf of the appellant. In the alternative it would have been legitimate to hold that the manner in which the suit was conducted showed that the appellant-bank must have ratified the action of Sh. L.K. Rohatgi in signing the plaint. If, for any reason whatsoever, the courts below were still unable to come to this conclusion, then either of the appellate courts ought to have exercised their jurisdiction under Order 41 Rule 27(1)(b) of the Code of Civil Procedure and should have directed a proper power of attorney to be produced or they could have ordered Sh. L.K. Rohatgi or any other competent person to be examined as a witness in order to prove ratification or the authority of Sh. L.K. Rohatgi to sign the plaint. Such a power should be exercised by a court in order to ensure that injustice in not done by rejection of a genuine claim.

The courts below having come to a conclusion that money had been taken by respondent 1 and that respondent 2 and the husband of respondent 3 had stood as guarantors and that the claim of the appellant was justified it will be a travesty of justice if the appellant is to be non suited for a technical reason which does not go to the root of the matter. The suit did not suffer from any jurisdictional infirmity and the only defect which was alleged on behalf of the respondents was one which was curable.

The court had to be satisfied that Sh. 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 authorised the institution of the same. The only reasonable conclusion which we can come to is that Sh. L.K. Rohatgi must have been authorised to sign the plaint and, in any case, it must be held that the appellant had ratified the action of Sh. L.K. Rohatgi in signing the plaint and thereafter it continued with the suit."

This Court in the case of Bank of Baroda Vs. Narendra Kumar Yadav & Ors. in SB Civil First Appeal No.294/1996 vide judgment & order dt16.05.2017 has taken into consideration the identical fact situation, which is also squarely applicable on the facts of instant case.

Admittedly, in the instant case, seven issues were framed and all other issues on merits were decided against the respondents-Bank-defendants and the Trial Court has rightly found that the respondents-bank ought to have invoked the Bank Guarantee which was issued by the respodents-bank in favour of Indo Engineering (Kota) Private Limited which had defaulted in paying the electricity charges. There is no cross appeal or cross objections on behalf of the respondents-Bank about the six issues having been decided by the Trial Court against the respondents- Bank on merits, thus when Trial Court has held all other issues in favour of appellant then the claim is allowed.

In view of what has been observed herein before, the appeal deserves to be allowed and the same is accordingly allowed. The appellants-plaintiffs is liable to recover the amount as claimed by the appellants-plaintiffs from the respondents-Bank alongwith interest. Let a copy of this judgment be sent/forwarded to the respondents-Bank for information.