M/S United India Insurance Co. Ltd ... vs M/S Okara Trade Parcel Carriage
2010 Latest Caselaw 5563 Del

 *             IN THE HIGH COURT OF DELHI AT NEW DELHI
 +                     RFA No. 160/1991
 %                                             7th December, 2010


 M/S UNITED INDIA INSURANCE CO. LTD & ANR.               ......
                                                         Appellants

                                  Through:     Mr. Vishnu Mehra and
                                               Mr. R.L.Kadamb,
                                               Advocates.
                       VERSUS

 M/S OKARA TRADE PARCEL CARRIAGE                    .... Respondent

Through: None.

CORAM:

HON'BLE MR. JUSTICE VALMIKI J.MEHTA

1. Whether the Reporters of local papers may be allowed to see the judgment?

2. To be referred to the Reporter or not?

3. Whether the judgment should be reported in the Digest?

VALMIKI J. MEHTA, J (ORAL)

1. By this first appeal under Section 96 of the Code of Civil

Procedure, 1908 (CPC), the appellants/plaintiffs have challenged the

impugned judgment and decree dated 4.12.1990 whereby the suit for

recovery of the appellants against the respondents was dismissed. The

respondent in this case was duly served and counsel on its behalf had

appeared on 25.3.2009 however, thereafter, no one has appeared for

the respondent. The appeal has therefore been heard in the absence

RFA 160/1991 Page 1 of any representation on behalf of the respondent. It may be noted

that the notices issued by this court for appearance on 13.9.1991 was

duly served upon the respondent as per the endorsement on the

notices of receipt along with the seal of the respondent company on

9.8.1991.

2. The appellant no.1 is an insurance company. Appellant no.2

company was the endorsed consignee of the goods for valuable

consideration and which goods were insured by the appellant no.1. The

goods were entrusted for transportation to the respondent. The

transportation was Ex-Narol to Phagwara and which was accepted for

transportation by the respondent vide its Cover Note No. 027931 dated

18.5.1984. The case of the appellant no.2 was that at the time of

effecting delivery of the goods, the cases of the goods were found in

broken condition and on open delivery being taken 43 nos. of Nickel

Cylinders (serum), and 20 nos. of Mesh Cylinders were found dented

and in damaged condition for which a damage certificate was issued

by the respondent dated 7.7.1984. Accordingly, in the suit, it was

prayed that the plaintiffs are entitled to claim a sum of Rs.40,748/- by

way of compensation from the respondent/transporter as he was a

courier and therefore absolutely liable for any damage during the

transportation of the subject goods.

3. The suit was contested by the respondent and the following

RFA 160/1991 Page 2 issues were framed:-

1. Whether the plaintiff company is duly incorporated under the Indian Companies Act and the plaint has been signed, verified and filed by a duly authorized person? OPP

2. Whether there is no previty of contract between the parties? OPC

3. Whether the plaintiff is entitled to recover interest, if so at what rate and for what period? OPP

4. Whether the plaintiffs are entitled to recover any amount from the defendants? OPP

5. Relief.

4. The findings with respect to Issue No.2 was in favour of the

plaintiffs and also the findings with respect to Issue No.3 for interest.

However, the findings with respect to Issue No.4 went against the

plaintiff no.1 and findings with respect to Issue No.1 with regard to

institution of the suit went against the plaintiff no.2. Since the

discussion of these issues would be relevant for disposal of the present

appeal, the same are reproduced hereunder.

"8. The plaintiffs have proved on record the copy of the incorporation certificate of the plaintiff No.1 as Ex.Pw-2/1 and the resolution passed by the Board of Directors of plaintiff No.1 as Ex.PW-2/2 and PW-2/3 from which it stands proved that the Senior Divisional Manager of the plaintiff No.1 company was fully authorized and was competent to sign, verify and institute the suit on behalf of the plaintiff No.1. The plaintiffs have also proved on record the copy of the incorporation certificate of the

RFA 160/1991 Page 3 plaintiff No.2 as Ex.P-1 and the copy of the power of attorney in favour of Shri M.M.Kapoor as Ex.P-2, executed by the Managing Director of the plaintiff No.2. The learned counsel for the defendant has argued that the suit has not been filed on behalf of the plaintiff No.2, by any authorized person, because the plaintiffs have not proved on record, the copy of any resolution passed by the Board of Directors of the plaintiff No.2, to execute the power of attorney in favour of Shri M.M.Kapoor for instituting the suit on behalf of the plaintiff No.2. On the other hand the learned counsel for the plaintiffs has argued that even if no resolution of the plaintiff No.2 authorising its Managing Director to execute the power of attorney , has been proved, even then it cannot be said that the suit has not been signed, verified and instituted by a duly authorized person on behalf of the plaintiff No.2, because Sh. M.M.Kapoor was duly authorized through power of attorney Ex.PW2/2.

13. The learned counsel for the plaintiffs have argued that the plaintiff No.1 is entitled to recover the suit amount from the defendant on the basis of the subrogation deed Ex.P-7, which was executed by the plaintiff No.2 in favour of plaintiff No.1, after the settlement of the claim of the plaintiff No.2 and the payments made by the plaintiff No.1. This argument of the learned counsel for the plaintiff is devoid of any force because the plaintiff No.1 is not entitled to sue the carrier, in its own name on the basis of deed of subrogation, as it has been held in A.I.R..1973 S.C. 281 Union of India Vs. Sri Sarda Mills that the insurer on subrogation is not entitled to sue in his name, it can only sue in the name of the insured. The same proposition of law has been laid down in 1968 A.C.J. 296 "The Oriental Fire and General Insurance Co. Ltd. Vs. Americal President Lines Ltd. and A.I.R. 1978 Punjab & Haryana 336 M/s. Jullundur Ex.

Servicemen Motor Transport Cooperative Society Ld. Vs the General Assurance Society

RFA 160/1991 Page 4 Ltd. Calcutta and another.

14. For the forgoing reasons I am of the view that the suit filed by the plaintiff No.1 against the defendant is not maintainable in law. Even if it is held for the sale of arguments that the suit of the plaintiff No.1 on the basis of subrogation deed Ex.P-7, is maintainable in law, even then I am of the view that the suit filed by the plaintiff No.1 on the basis of the said subrogation deed cannot be decreed, as the plaintiffs have failed to prove that the official of the plaintiff No.2 who has executed the deed of subrogation, was ever authorized by the Board of Directors of the plaintiff No.2, to execute any deed of subrogation on behalf of the plaintiff No.2, in favour of the plaintiff No.1. The plaintiff No.2 having become the owner of the suit consignment as discussed above and the defendant having also issued the damage certificate to the plaintiff No.2, was entitled to recover the amount from the defendant.

However, as I have already held, while deciding issue No.1 that the present suit has not been instituted by a duly authorized person on behalf of the plaintiff No.2, so the claim of the plaintiff No.2 against the defendant also cannot be decreed. Accordingly this issue is decided against plaintiffs and in favour of the defendant."

5. Learned counsel for the appellants has vehemently argued that

dismissing the suit on the findings given with respect to the

disentitlement of the appellant nos.1 &2 although on merits the

appellant no.2 company was held entitled to damages, is clearly

vitiated because the plaintiff no.1/appellant no.1 would be satisfied if

the suit is decreed in favour of appellant no.2 only and the amount is

RFA 160/1991 Page 5 received by the appellant no.2 inasmuch as appellant no.2 has agreed

to pay over this amount to the appellant no.1 and therefore decree be

passed in favour of the appellant no.2 only. It was argued that

consequently there was no need to go into the issue of applicability of

the decision in the case of U.O.I Vs. Sardar Mills, AIR 1973 SC 281

as the said judgment would only apply if the decree was prayed in

favour of the appellant no.1 insurance company. The counsel has also

argued that the suit on behalf of appellant no.2 was validly instituted

and the findings of the trial court that the suit was not vitiated is

wholly illegal in view of the provision of Section 85 of the Evidence Act,

1872 and Order 29 Rule 1 of CPC.

6. In my opinion, the trial court has clearly fallen into an error in

dismissing the suit on behalf of the appellant no.2/plaintiff no.2 on the

ground that it was not validly instituted. A reference to the power of

attorney exhibited as P-2 shows that the same was duly notarized.

Once the same is notarized then under Section 85 of the Evidence Act,

1872 there is a presumption that all necessary acts have been

performed for execution of the power of attorney. Thus, the finding of

the trial court that Sh. M.M.Kapoor, the attorney holder was not

authorized to verify and sign the pleadings on behalf of appellant

no.2/plaintiff no.2. is clearly illegal. In fact this finding is also illegal

because Sh. M.M.Kapoor was the General Manager of the plaintiff

RFA 160/1991 Page 6 no.2/appellant no.2 company and a General Manager is a principal

officer within the meaning of Order 29 Rule 1 of the CPC and he was

therefore duly authorized to sign the pleadings and institute the suit. I

have had an occasion to consider this aspect only yesterday on

6.12.2010 as regards the effect of Order 29 Rule 1 CPC in the

judgment in RFA No. 343/2001 titled as MTNL Vs.Bharat Bhushan

Sharma. Paras 3 to 5 of the said judgment are relevant and the same

read as under:-

3. In my opinion the court below has clearly fallen into an error in dismissing the suit on the ground that the plaint was not duly signed and verified. In terms of Order 29 Rule 1 of the CPC, any principal officer of a corporation, such as the appellant, can sign and verify the pleadings. It need not be gainsaid and that an Accounts Officer (Legal) is definitely a principal officer of the appellant corporation. In this regard reference may be made to Section 2(30) of the Companies Act, 1956 which defines an „officer‟ and which provision reads:-

""officer" includes any director, manager or secretary, or any person in accordance with whose directions or instructions the Board of directors or any one or more of the directors is or are accustomed to act;"

The aforesaid is an inclusive definition. Though there appears to be possibly a mistake in the language of the said sub-section because it is an officer who acts on the instructions of the board and not vice versa which appears to be wrongly stated in this section, however it is quite clear that an officer of a corporation includes besides a Director or Manager or Secretary, a person who is having duties as cast upon him by the Board of Directors and an Accounts Officer thus would also be a principal officer within the meaning of Order 29 Rule 1 CPC.

RFA 160/1991 Page 7

4. This aspect, with respect to the authority to sign and verify the suit by a principal officer has been dealt with by a Division Bench of this Court in the case of Kingston Computers (I) P. Ltd. Vs. State Bank of Travancore 153 (2008) DLT 239 (DB) and in which, it has been held that a principal officer is authorized by virtue of Order 29 Rule 1 CPC not only to sign and verify the pleadings, but also therefore to institute the suit. Paras 23 to 26 of this judgment are relevant and the same read as under:-

23. This then is the short issue which needs to be considered by us exercising appellate jurisdiction.

24. Order 29 Rule 1 of the Code of Civil Procedure reads as under:-

" 1 . Subscription and verification of pleading.-

In suits by or against a corporation, any pleading maybe 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."

25. Discussing Order 29 Rule 1 of the Code of Civil Procedure, in the decision in United Bank of India's case (supra),in para 10, Hon'ble Supreme Court held as under:-

"Reading Order 6 Rule 14 together with Order 29 Rule1 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 dehors Order 29 Rule 1 of the Code of Civil Procedure, as a company is a juristic entity, it can duly authorize any person to sign the plaint or

RFA 160/1991 Page 8 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."

26. Suffice would it be to state that in law, the Secretary, Director or a Principal Officer of a company would be treated as duly authorized to institute suit on behalf of a company. This flows out from a bare reading of Order 29 Rule 1 of the Code of Civil Procedure and as further explained in the decision in UnitedBank of India's case."

5. Reference may also be made usefully to the judgment of the Supreme Court in the United Bank of India Vs. Naresh Kumar & others (1996) 6 SCC 660, in which, in para 13, it is said that there is a presumption of valid institution of a suit once the same is prosecuted for a number of years. This test as laid down by the Supreme Court is also satisfied in the present case inasmuch as the suit in fact has been prosecuted for four years by the appellant corporation for seeking an appropriate decree against the respondent by adducing evidence.

I may note that the appellant is a public sector undertaking and not a private company where there would be disputes between two sets of shareholders claiming right to management and one set of shareholders are opposing another set of shareholders with respect to control and management of the company. This thus is an additional fact that there can be no dispute as to the authority of the person signing /verifying the pleadings and instituting the suit."

7. Therefore, the finding of the trial court is completely illegal and

perverse that Sh. M.M.Kapur was not authorized on behalf of the

appellant no.2/plaintiff no.2 to file the suit. Not only Sh. M.M.Kapur

was authorized under Order 29 Rule 1 CPC being the General Manager

and the principal officer of the appellant no.2 company but he was duly RFA 160/1991 Page 9 authorized by the notarized power of attorney proved as Ex.P-2.

8. Since the findings of the other issues are in any case in favour of

the appellants that loss in fact has been caused and on account of the

damages to the goods for which the respondent itself gave a

certificate, it is quite clear that the appeal of the appellants is entitled

to be allowed and the impugned judgment and decree is liable to be

set aside. Accordingly, while setting aside the impugned judgment and

decree, the suit of the appellants/plaintiffs for the recovery of

Rs.40,603/- is decreed in favour of the appellant no.2/plaintiff no.2 with

pendent lite and future interest till realization of the decretal amount

at the rate of 14% per annum simple along with the costs of the suit.

The appeal is accordingly allowed as above. Decree sheet be

drawn.

Trial court record be sent back.

DECEMBER 07, 2010                                 VALMIKI J. MEHTA,J
ib




RFA 160/1991                                                         Page 10