M/S. Industrial Aid And Anr vs Mohan Chains Limited , Through Its ...
2018 Latest Caselaw 545 Bom

Dixit
               IN THE HIGH COURT OF JUDICATURE AT BOMBAY
                                   CIVIL APPELLATE JURISDICTION

                               WRIT PETITION NO.14157 OF 2017

        1. Industrial Aid,                                      ]
           A Partnership Firm,                                  ]
           duly registered, having its address                  ]
           at 189, Bhagirathi Apartments,                       ]
           Near Bhawkar Garage,                                 ]
           Shivaji Nagar, Pune - 411005.                        ]
        2. Umesh Naidu,                                         ]
           Age : Adult, Occ. Business,                          ]
           Partner of M/s. Industrial Aid,                      ]
           Having its address at 189,                           ]
           Bhagirathi Apartments,                               ]
           Near Bhawkar Garage,                                 ] .... Petitioners /
           Shivaji Nagar, Pune - 411005.                        ] [Original Defendants]
                    Versus
        Mohan Chains Limited,                                   ]
        Registered under the provisions of                      ]
        the Companies Act, 1956,                                ]
        Having its registered address at                        ]
        84, Diana House, S.V. Road,                             ]
        Juna Khar, Khar (West),                                 ]
        Mumbai - 400052.                                        ]
        Through its Director Shri Anuj R. Gupta,                ]
        Age : Adult, Occ. Business,                             ] .... Respondent /
        Khar, Mumbai - 400 052.                                 ]     [Original Plaintiff]


        Mr. Mandar Soman, with Mr. Rahul Garg, for the Petitioners.
        Mr. Vishwajeet Kapse, with Mr. Rajesh Dharap, i/by Mr. S.G. Walam, for
        the Respondent.
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                           CORAM : DR. SHALINI PHANSALKAR-JOSHI, J.

                          DATE          : 17 TH JANUARY 2018.


ORAL JUDGMENT :

1. Rule. Rule is made returnable forthwith. Heard finally, at the stage

of admission itself, by consent of Mr. Soman, learned counsel for the

Petitioners, and Mr. Kapse, learned counsel for the Respondent.

2. By this Writ Petition, filed under Article 227 of the Constitution of

India, the Petitioners are challenging the order dated 11 th September

2017 passed by the Ad-Hoc Judge, City Civil Court, Borivali Division,

Dindoshi, Mumbai, in Summons for Judgment No.75 of 2014 in a

Summary Suit No.76 of 2014, thereby granting conditional leave to the

Petitioners for defending the said Suit.

3. Respondent is a Company, whereas, Petitioner No.1 is a registered

Partnership Firm. Respondent is engaged in the business of

manufacturing 'tailor-made goods', made of chains and accessories

required mainly for industrial purposes. In the year 2002, Petitioner

No.2, who is the Partner of Petitioner No.1, approached the Respondent

for supply of the goods. Accordingly, in the financial year 2002-2003,

the Respondent started selling tailor-made goods and raised invoices

towards the said sale. During the course of business, Petitioner No.2

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informed the Respondent that some tailor-made goods, so purchased, are

further purchased by M/s. KSB Pumps Ltd.

4. It is the case of the Respondent that, in the year 2010, the

Petitioners started committing default in payment of invoices and bills.

When Respondent made inquiry with Petitioner No.2, assurance was

given that payment will be made of all the outstanding invoices and bills.

In January 2011, Petitioner No.2 also issued 13 cheques, each of

different invoices of the amount totalling to Rs.15,61,024/- in the name

of the Respondent, duly signed by Petitioner No.2 and drawn on

Shamrao Vithal Co-operative Bank, Pune. However, when the said

cheques were deposited in the Bank, they were dishonoured. Hence,

immediately thereafter, by issuing a notice dated 27 th January 2011,

giving all the particulars of the transactions, the cheques, the invoices

etc., the Respondent made demand of the amount due. Petitioners failed

to pay the said amount. Hence, Respondent filed a Suit before the Trial

Court for recovery of the amount of Rs.22,63,485/-, with interest at the

rate of 12% thereon. Simultaneously, the Respondent also filed a

Criminal Case, bearing C.C. No.501/SS of 2011, against the Petitioners in

the Magistrate's Court at Bandra, under Section 138 of the Negotiable

Instruments Act, 1881.

5. When the Petitioners appeared, on receipt of the summons, they

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denied the claim of the Respondent, raising the first contention to the

effect that, Mr. Anuj Gupta, who has filed the Suit, is not the Constituted

Attorney of the Respondent, as no Power of Attorney is annexed to the

plaint and there is also no Board Resolution passed by the Respondent-

Company authorizing him to file the Suit. Secondly, it was submitted

that, the necessary conditions laid down for institution of Summary Suit

are not satisfied. Thirdly, it was contended that, the Petitioners have

never issued alleged cheques in respect of the invoices.

6. In the alternate, it was submitted that, the cheques were given in

good faith to the Respondent on the request of one Rajendrakumar

Gupta, who is father of Anuj Gupta, so that he can avail overdraft facility

from the Bank. The blank cheques were given without mentioning the

date as well as the amount on the said cheques. It was submitted that,

the Respondent has misused those cheques with a malafide intention to

achieve unlawful gain. It was denied that the Respondent has raised any

bills or invoices towards the delivery of 'tailor-made goods'. An attempt

was also made to contend that, in Criminal Case bearing C.C. No. 501/SS

of 2011, filed under Section 138 of the Negotiable Instruments Act,

1881, Petitioner No.2 was acquitted and, therefore, it was submitted

that, there is no case made out and the Summons for Judgment taken

out by the Respondent be rejected and the Petitioners be allowed to file

their pleadings on record.

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7. The Trial Court, after considering the rival contentions advanced

at bar, was pleased to reject the Summons for Judgment and having

regard to the triable issues raised in the Suit, was pleased to grant

conditional leave to the present Petitioners for defending the said Suit.

The condition was to deposit the amount of Rs.15,61,024/-, which was

the principal amount.

8. The Petitioners, being aggrieved by the condition imposed by the

Trial Court, have preferred the present Petition. The first submission

advanced by learned counsel for the Petitioners pertains to

authorization of Mr. Anuj Gupta to file the Suit. It is submitted that,

though the Respondent has produced on record the copy of the

'Resolution' dated 15th June 2011, showing that, in the place of Ramesh

Kadam, who was earlier authorized to represent the Respondent-

Company, now Mr. Anuj Rajendrakumar Gupta is appointed, the said

'Resolution' clearly states that, Mr. A.R. Gupta is authorized to act,

appear and represent the Respondent-Company in respect of the

Criminal Case pending in the Metropolitan Magistrate's Court, Bandra.

The attention is invited to paragraph No.2 of the said 'Resolution', which

reads as follows :-

"It is resolved that, Mr. Ramesh Kadam has left the Company. Hence, a Criminal Case pending in Metropolitan Court, Bandra. It is resolved that, Mr. A.R. Gupta shall be substituted and replaced in a

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Criminal Case as appear represent. He is authorised to act, appear and represent the Company, so that our Company take appropriate steps such as tendering evidence, filing documents etc. from the Hon'ble Court."

9. Here in the case, it is submitted that, there is no specific resolution

passed by the Respondent-Company, authorizing Mr. A.R. Gupta to

represent the Company in this Civil Suit. Whatever authorization was

there was only for the purpose of Criminal Case.

10. Learned counsel for the Petitioners has, therefore, placed reliance

on the two Judgments of the Delhi High Court; one that of M/s. Nibro

Limited Vs. National Insurance Company Ltd., 172 ILR (1991) II Delhi ,

and, secondly, that of Rajghria Paper Mills Ltd. Vs. General Manager,

Indian Security Press & Anr., 2000 (56) DRJ (Suppl) 764 .

11. In the second Judgment of Rajghria Paper Mills Ltd. (Supra), the

earlier judgment of M/s. Nibro Limited (Supra) is also referred. Learned

counsel for the Petitioners has drawn attention of this Court to

paragraph No.24 of the Judgment of M/s. Nibro Limited (Supra),

wherein it was observed as follows :-

"24. It is well-settled that, under Section 291 of the 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

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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."

12. In view of these observations, the submission of learned counsel

for the Petitioners is that, the absence of resolution passed by the Board

of Directors of the Respondent-Company, authorizing Mr. A.R. Gupta to

appear or represent the Company in the Civil Suit, goes to the root of the

matter. The Suit itself suffers from basic defect and hence, it cannot be

maintainable. Therefore, on this ground itself, the plaint was liable to be

rejected.

13. However, perusal of the observations made by the Delhi High Court

in paragraph No.26 of the Judgment in the case of M/s. Nibro Limited

(Supra), which discloses that, in the said Judgment, Delhi High Court

was considering the Appeal, which was preferred against the Decree of

the Suit and hence, in the light of the same, it was observed that, even

after the Suit was instituted, no resolution was passed by the Company

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ratifying the action of Mr. Jhajharia, who has instituted the Suit, and no

such decision of the Board of Directors was placed on record in the said

case. In the light thereof, it was held that, whatever defect has accrued

in institution of the Suit was also not cured, even after the Suit was

instituted and finally decided. Hence, this Judgment of the Delhi High

Court cannot be an authority to hold that, if, at the time of filing of the

Suit, there is no such authorization, or, there is no such resolution

passed by the Company, authorizing a particular person to file a Suit,

the Suit filed by the said person suffers from such an incurable infirmity

that, even subsequent resolution cannot cure the said defect. Here in the

case, the Suit is yet to be decided and, therefore, the Respondent can

properly get the resolution passed, authorizing Mr. A.R. Gupta to

represent the Respondent-Company. This defect, therefore, cannot be

sufficient to reject the Suit.

14. The second contention raised by learned counsel for the

Petitioners is pertaining to merits of the claim. However, as rightly held

by the Trial Court, the Respondent has given sufficient details in the

plaint, coupled with the details given in the notice issued prior to

institution of the Suit, as to how the invoices were raised towards the

delivery of the goods and Petitioners failed to pay the amount raised in

the invoices. Petitioners have also issued the cheques, which,

admittedly, came to be dishonoured. As regards the contention of the

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Petitioners that, those cheques were issued for availing the overdraft

facility, that contention needs to be proved at the time of the trial, but, at

this stage, the said contention cannot be accepted to dismiss the Suit.

15. Learned counsel for the Petitioners has then placed reliance on the

Judgment in C.C. No.501/SS/2011 filed by the Respondent against the

Petitioners, under Section 138 of the Negotiable Instruments Act, 1881,

in respect of dishonour of these cheques, particularly to paragraph

No.28, of the said Judgment, wherein the learned Magistrate has

discussed certain admissions given by Mr. A.R. Gupta in his cross-

examination. On the basis of the same, it is argued that, there was no

such transaction, as he had admitted that the Respondent-Company has

no document to show that it has delivered the goods in question to the

Petitioners and the same were received by them.

16. However, in the first place, those admissions are yet to be tested in

cross-examination of Mr. A.R. Gupta in this Suit. Merely because, on the

basis of the said admissions, the Criminal Case has ended into acquittal

of Petitioner No.2, that cannot be sufficient to hold that, the present Suit

is also liable to be dismissed. As rightly observed by the Trial Court, the

'standard of proof' required in the Criminal Case and in the Civil Suit

being different and much lighter, the result of the Criminal Case cannot

have much bearing on the outcome of the Civil Suit.

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17. The impugned order passed by the Trial Court goes to show that, as

the Petitioners have raised these triable issues, the leave was granted,

rejecting the Summons for Judgment. However, having regard to the

fact that, the amount was claimed towards the delivery of the goods and

towards payment thereof, the cheques were issued, which came to be

dishonoured, the Trial Court has rightly deemed it proper to grant

conditional leave by directing the Petitioners to deposit the outstanding

principal amount of Rs.15,61,024/-.

18. The impugned order passed by the Trial Court being just, legal and

correct, no fault can be found therewith. Hence, the Writ Petition, being

without merits, stands dismissed.

19. At this stage, learned counsel for the Petitioners requests that the

Petitioners may be granted four weeks time to deposit the principal

amount of Rs.15,61,024/-, as ordered by the Trial Court. The request is

granted.

20. Rule is discharged.

[DR. SHALINI PHANSALKAR-JOSHI, J.]

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