United
Bank of India Vs. Sh. Naresh Kumar & Ors
[1996] INSC 1159 (18
September 1996)
Kirpal
B.N. (J) Kirpal B.N. (J) Bharucha S.P. (J) Kirpal, J.
ACT:
HEAD NOTE:
The
main question which arises in this appeal by special leave is whether the suit
for recovery of money filed by the appellant bank was properly instituted.
The
appellant's branch at Ambala Cantt. had instituted a suit in the Court of
Sub-ordinate Judge, Ambala Cantt. for recovery of Rs. 1,40,553.91 from the
respondents. The case of the appellant was that on 12th April, 1984 a sum of Rs.50,000/- was advanced as loan to respondent no.
1 for the purposes of his business and on that date he had executed a demand
promissory note, hypothecation of goods agreement and other documents.
Respondent no.2 and one Sh. Suresh Kumar, husband of respondent no.3 had stood
as guarantors for the repayment of the loan. The respondents were stated to
have agreed to pay interest at the rate of 18 percent per annum with quarterly
rests. When default in payment of the money was committed the aforesaid suit
was filed for the recovery of the principal amount and the interest thereon.
The sum total came to Rs.1,40,553.91.
In the
written statement filed by respondent no.1 the plea which was taken was that he
had never taken loan as alleged by the appellant bank and respondent no. 2 and Sh.
Suresh Kumar had not executed any guarantee deed. It was, however, admitted
that certain blank documents had been got signed but it was denied that the
respondents had agreed to pay interest at the rate of 18 percent per annum. He
also took an additional plea challenging the authority of Sh. L.K. Rohatgi to
sign and file the plaint on behalf of the appellant. Respondent no.2 filed a
separate written statement taking the pleas similar to the one which had been
raised by respondent no.1 in his written statement. A further plea which was
taken by her was that her guarantee was limited to the extent of Rs. 50,000/-
and she was not liable to pay any more amount merely because additional credit
facilities may have been allowed to respondent no.1.
As the
other guarantor- Sh. Suresh Kumar had died his widow, namely, respondent no.3
was impleaded as one of the defendants but as she did not appear the case
against her proceeded ex parte. The appellant bank filed its replication
wherein it denied the allegations contained in the written statements filed by
respondents 1 and 2.
On the
pleadings of the parties the following issues were framed:- "1. Whether
the plaint is duly signed and verified by a competent person? OPP
2.
Whether the defendant no. 1 raised a loan of Rs. 50,000/- from the plaintiff
bank on 12.4.84 and executed a demand promissory note, hypothecation of goods
agreement, letter of loan and other documents in favour of the plaintiff bank?
OPP
3.
Whether the defendants no.2 and 3 stood as guarantors for the repayment of the
loan and if so, what is the extent of their liability? OPP
4.
What is the balance amount? OPP
5.
Whether the plaintiff varied the terms of loan and if so, its effect qua the
liabilities of defendants no.2 and 3, Onus on parties.
6.
Whether the statement of account produced by the plaintiff is admissible in
evidence? OPP
7.
Whether the defendants agreed to pay interest if so, at what rate and to what
amount? OPP
8.
Whether the plaintiff has no cause of action? OPP
9.
Relief."
The
trial judge by his judgment dated 14th November, 1987 decided issue nos. 1,2
and 7 against the appellant.
Issues
3,4,5 and 6 were held in the appellant's favour. The trial court, however,
held, under issues 2 and 3, that respondent no.3 was not liable to pay any
amount and respondent no.2 was liable to pay only a sum of Rs.55,699.20 as the
principal amount plus interest at the rate or 18 per cent per annum for the
period 12th April, 1984 to 11th February, 1985. In view, however, of the
decision against the appellant of issue no.1 the suit filed by the appellant
was dismissed with costs.
The
appellant then filed an appeal which was decided on 2nd November, 1992 by the Additional District Judge, Ambala.
The
Additional District Judge reversed the findings of the trial court in so far as
issues 2 and 7 were concerned and came to the conclusion that the appellant had
been able to prove that respondent no.1 had taken a loan of Rs. 50,000/- and
had also proved the execution of relevant documents by the respondents. The
principal debtor and the guarantors were also held to have agreed to pay
interest at the rate of 18 percent per annum. It affirmed the decision of the
trial court limiting respondent no. 2'& liability to Rs. 50,000/- and
interest thereon. With regard to the liability of respondent no.3 the lower
appellate court held that in the absence of any evidence to prove that she had
inherited any estate from her deceased husband no liability could be fastened
on her and the decision of the trial court, to that effect, was affirmed. The
appeal was, however, dismissed because the Additional District Judge upheld the
decision of the trial court with regard to issue no.1. It was held that it has
not been proved that Sh. L.K. Rohatgi had held any valid authority to file the
suit on behalf of the appellant bank.
Against
the aforesaid decision of the Additional District Judge the appellant filed a
regular second appeal.
By
order dated 30th August, 1993 a single judge of the Punjab and Haryana High
Court dismissed the said appeal in limine by observing that there was no ground
for interference with the concurrent findings of facts recorded by two courts
below. Hence this appeal by special leave.
In
this appeal, therefore, the only question which arises for consideration is
whether the plaint was duly signed and verified by a competent person.
In
cases like the present where suits are instituted or defended on behalf of a
public corporation, public interest should not be permitted to be defeated on a
mere technicality. Procedural defects which do not go to the root of the matter
should not be permitted to defeat a just cause. There is sufficient power in
the Courts, under the Code of Civil Procedure, to ensure that injustice is not
done to any party who has a just case. As far as possible a substantive right
should not be allowed to be defeated on account of a procedural irregularity
which is curable.
It
cannot be disputed that a company like the appellant can sue and be sued 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 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 and de hors
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 it's officers a
Corporation can ratify the said action of it's 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 it's
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 is not done by rejection
of a genuine claim.
The
Courts below having come to a conclusion that money had been taken by
respondent no.1 and that respondent no.2 and husband of respondent no.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.
CONCLUSIONS:
The
suit of the appellant had been dismissed because issue no.1 had been decided
against it. Counsel for the parties have not challenged the decision of the
lower appellate court on the other issues, which decision was affirmed by the
High Court when it dismissed the second appeal in limine. For the reasons
stated hereinabove we hold that issue no.1 was wrongly decided and this being
so the appellant was entitled to a decree in view of the decision of the lower
appellate court on the other issues.
The
appeal of the appellant is, accordingly, allowed in the aforesaid terms. The
effect of this would be that the suit of the appellant would be decreed in
accordance with the decision of the lower appellate court on the other issues
which that court had decided in favour of the appellant. The appellant will
also be entitled to costs.
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