Agarwal Packers & Movers Pvt. Ltd, Mumbai & Anr. v. DRS Logistics Pvt. Ltd., Secunderabad & Anr.

HON’BLE SRI JUSTICE G.V.SEETHAPATHY Civil Revision Petition No.2444 of 2011 ORDER: This revision petition is directed against the order dated

30.05.2011 in IA No.212 of 2011 in OS No.185 of 2010 on the file of the I Additional Chief Judge, City Civil Court, Secunderabad, wherein, the said application filed by the petitioners/D.1 & D.3 under Order 7 Rule 11 CPC seeking rejection of the plaint, was dismissed.

2. Heard both sides. Perused the record.

3. The respondent herein filed suit against petitioners/defendants for permanent injunction restraining the defendants from infringing statutory right of the plaintiff to the service mark ‘Agarwal Packers and Movers’ and passing off their business under the main trade name ‘Agarwal Packers and Movers Private Ltd’ and certain other reliefs.

4. The petitioners/defendants 1 and 3 filed IA No.212 of 2011 seeking rejection of the plaint, mainly on the ground that the suit is barred by law, inasmuch as the plaint has not been filed by a person, who is duly authorized by the Board of Directors, to file the suit and is therefore, contrary to the provisions of Section 291 of the Companies Act.

5. The respondent/plaintiff filed counter, mainly contending that the grounds urged for rejection of the plaint do not come within the purview of Order 7 Rule 11 CPC.

6. As seen from the plaint, the plaintiff is described as ‘DRS Logistics Private Ltd’ through its authorized representative Sri S. Bhoopal Rao. The plaintiff is stated to be a company incorporated under the Companies Act and Sri S. Bhoopal Rao, who signed and verified the plaint is stated to be the Manager, (Legal) and duly authorized by the Board resolution dated 25.09.2008 of the plaintiff’s company as stated in the verification appearing at the end of the plaint. Copy of the Board resolutions, which is filed along with the material papers, states thus: “RESOLVED THAT, in addition to the existing authorized representatives, Mr. S. Bhoopal Rao, has been authorized to lodge and file criminal complaints, represent and dispose on behalf of the company wherever the cheque(s) issued by or on behalf of the party/parties towards discharging of liability lis/are dishonoured by his/their bankers for any reason whatsoever, attend all courts, cases, file cases and counter in OP, suits, to sign on plaint, counter and in all cases to appoint advocates, and withdraw cases on behalf of the company M/s DRS Logistics (P) Ltd., Secunderabad. IT IS FURTHER RESOLVED THAT Mr. S.Bhoopal Rao, authorized signatory, be and is hereby authorized to file cases, petitions, revision petitions and counter in OP’s before any Court of law and to do all legal necessary acts and formalities and to sign affidavits vakalats, counter(s) and other necessary documents wherever and whatever needed in the interest and for the benefit and in the name of M/s DRS Logistics (P) Ltd.”

7. A perusal of the above resolution would show that the Board of Directors of the plaintiff company in their meeting held on

25.09.2008 resolved to authorize Sri S.Bhoopal Rao, to lodge and file criminal complaints, depose on behalf of the company, attend all the courts, cases, file cases and suits, to sign on plaints, counters and to appoint Advocates and withdraw the cases. He was further authorized to file cases, petitions, revision petitions etc. and do all legally necessary acts. The above resolution of the Board would show that among other things, Sri S.Bhoopal Rao was authorized to file cases in courts and to sign on plaints. The contention of the learned counsel for the petitioners is that the said authorization is only in respect of filing cases pertaining to dishonor of cheques, is untenable. The resolution is couched in such a way that the authorization in favour of Sri S.Bhoopal Rao extends to filing of other cases and signing of plaints, besides filing the criminal complaints pertaining to the dishonor of cheques. From a plain reading of resolution, it is not possible to accord narrow interpretation and limit the scope of authorization only to filing of the criminal complaints. As per the resolution, the company authorized Sri S.Bhoopal Rao, inter-alia to file suits in courts and to sign on plaints. It cannot be said that the plaint in the present suit signed and verified by Sri S.Bhoopal Rao is without proper authorization from the Board of Directors.

8. Even otherwise, the question that arises for consideration next is whether an improper presentation of the plaint by a person not duly authorized renders the plaint liable for rejection within the meaning of Order 7 Rule 11(d) CPC. The grounds of rejection of the plaint are set out in Rule 11 of Order 7 and Clause (d) thereof states that the plaint shall be rejected where the suit appears from the statement in the plaint to be barred by any law. The averments of the plaint do not disclose that the suit is barred by any law. The contention of the petitioners is that the suit is barred in view of the provisions of Section 291 of the Companies Act. Section 291 deals with the general power of board and sub-section (1) states that subject to the provisions of the Act, Board of Directors of a company shall be entitled to exercise all such powers and to do all such acts and things as the company is authorized to exercise and do. The above provision is an enabling one, which enables the Board of Directors of the company to exercise all powers and do all acts on behalf of the company.

9. In that connection, the learned counsel for the petitioners relies upon the decision in ‘Nibro Ltd. Vs. National Insurance Co. Ltd.,[1]’, wherein the High Court of Delhi held as follows: “…It is well-settled that under Section 291 of Companies Act except where express provision is made that the powers of a company in respect of a particular matter are to be exercised by the company in general meeting in all other cases the Board of Directors are entitled to exercise all its powers. Individual directors have such powers only as are vested in them by the Memorandum and Articles. It is true that ordinarily the court will not unsuit a person on account of technicalities. However, the question of authority to institute a suit on behalf of a company is not a technical matter. It has far reaching effects. It often affects policy and finances of the company. Thus, unless a power to institute a suit is specifically conferred on a particular director, he has no authority to institute a suit on behalf of the company. Needless to say that such a power can be conferred by the Board of Directors only by passing a resolution in that regard. Chapter IV of the Delhi High Court (Original Side) Rules deal with the question of presentation of suits. Under this Rule, suit can be presented by a duly authorised agent or by an advocate duly appointed by him for the purpose. This authorization, in my view, in the case of a company can be given only after a decision to institute a suit is taken by the Board of Directors of the company. The Board of Directors may in turn authorise a particular director, principal officer or the secretary to institute a suit.”

10. The above interpretation of the scope of Section 291 of the Companies Act cannot be disputed. In the above case, one of the issues framed was whether the suit had been instituted on behalf of the plaintiff company by the authorized person and the plaint signed and verified by a competent person. While dealing with the said issue, the above reference to Section 291 of the Companies Act was made. It was not a case where the court was dealing with the aspects of rejection of plaint under Order 7, Rule 11 CPC. Even assuming that Sri S.Bhoopal Rao was not duly authorized to file suit, it can only mean that the suit was not properly instituted by a competent person. It does not, however, mean that the suit is barred by law. Non-maintainability of the suit on account of the plaint being signed and verified by a person not duly authorized is one thing and the suit itself being barred by any law is quite different. The two situations are distinct and mutually exclusive. Rejection of plaint under Order 7 Rule 11(d) CPC is contemplated only when from a reading of the plaint it appears that the suit is barred by any law. Signing of the plaint and its verification by a person not duly authorized may if at all result in non-suiting the plaintiff on the ground that the plaint as presented is not maintainable, but certainly is not a ground for rejection of the plaint under Order 7 Rule 11(d) CPC.

11. The bar contemplated in clause (d) of Rule 11 of Order 7 is a statutory bar, which prevents institution of the suit and not a legal objection, which may subsequently be up-held rendering the suit not maintainable. The impugned order, dismissing application holding that the plaint is not liable for rejection on the grounds raised by the petitioners/defendants, does not therefore, for any interference. It is certainly open petitioners/defendants raise any objection regarding maintainability of the suit and on such objection being raised, the trial Court shall deal with the same on its own merits, without in any way being influenced by any of the observations made herein above.

12. In the result, the civil revision petition is dismissed. No order as to costs. Date: 05.09.2011 [1] AIR 1991 Delhi 25(70 Comp.Cases 388(delhi),41 __________________ GV.SEETHAPATHY, J