Karnataka High Court

C Krishniah Chetty And Sons ... vs Deepali Company Private Limited on 27 May, 2021

Author: Satish Chandra Shetty

                                 COM.APPEAL.61/2021
                                                      R
                         1


 IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 27TH DAY OF MAY 2021

                      PRESENT

THE HON'BLE MR.JUSTICE SATISH CHANDRA SHARMA

                        AND

     THE HON'BLE MR. JUSTICE S.VISHWAJITH SHETTY

          COMMERCIAL APPEAL No.61/2021

BETWEEN:

C.KRISHNIAH CHETTY & SONS PRIVATE LIMITED
AN INDIAN COMPANY INCORPORATED UNDER
THE COMPANIES ACT, 1956
CIN: U27205KA1979PTC003692
HAVING ITS REGISTERED OFFICE AT
35, COMMERCIAL STREET
BENGALURU-560 001.

AND CORPORATE OFFICE AT
THE TOUCHSTONE, A BLOCK
3-3/1 MAIN GUARD CROSS ROAD
BENGALURU-560 001.
REPRESENTED HEREIN BY ITS
CHIEF FINANCIAL OFFICER
SRI S.A.SURESH
S/O SRI A.S.ARUNACHALAM.            ... APPELLANT

(BY SRI.AMIT SIBAL, SENIOR COUNSEL FOR
 SRI SIVARAMAN VAIDYANATHAN, ADV.)

AND:

1.     DEEPALI COMPANY PRIVATE LIMITED
       AN INDIAN COMPANY INCORPORATED
       UNDER THE COMPANIES ACT, 1956
       CIN: U03691K1982PTCOO4687
       35, COMMERCIAL STREET
                                   COM.APPEAL.61/2021
                          2


     BENGALURU-560 001
     REPRESENTED HEREIN BY ITS DIRECTOR
     SRI C.GANESH NARAYAN
     S/O LATE SRI C.V.NARAYAN.

2.   SRI C.GANESH NARAYAN
     S/O LATE SRI C.V.NARAYAN
     INDIAN, HINDU, AGED ABOUT 42 YEARS
     RESIDING AT 2A, NITESH MAYFAIR
     KASTURBA CROSS ROAD
     BENGALURU-560 001.

3.   SMT.C.VALLI NARAYAN
     W/O LATE SRI C.V.NARAYAN
     INDIAN, HINDU, AGED ABOUT 77 YEARS
     RESIDING AT 44 OSBORNE ROAD
     ULSOOR, BENGALURU-560 042.

4.   SMT.VIDYA NATARAJ
     W/O SRI C.GANESH NARAYAN
     INDIAN, HINDU, AGED ABOUT 42 YEARS
     RESIDING AT 2A, NITESH MAYFAIR
     KASTURBA CROSS ROAD
     BENGALURU-560 001.

5.   BLUESTONE JEWELLERY &
     LIFESTYLE PRIVATE LIMITED
     AN INDIAN COMPANY INCORPORATED
     UNDER THE COMPANIES ACT, 1956
     CIN: U72900KA2011PTC059678
     SITE NO.89/2, LAVA KUSHA ARCADE
     MUNNEKOLAL VILLAGE
     OUTER RING ROAD,
     MARATHALLI
     BENGALURU-560 037.
     REPRESENTED HEREIN BY ITS
     CHIEF EXECUTIVE OFFICER
     SRI GAURAV SINGH KUSHWAHA.
                            . . . . . .RESPONDENTS

(BY SRI UDAY HOLLA, SR.COUNSEL FOR
Ms.KRUTIKA RAGHAVAN, ADV. FOR C/R1 TO R3)
                                          COM.APPEAL.61/2021
                               3


      THIS COMMMERCIAL APPEAL IS FILED UNDER
SECTION     13(1A)   OF  THE    COMMERCIAL      COURTS,
COMMERCIAL DIVISION AND COMMERCIAL APPELLATE
DIVISION OF HIGH COURTS ACT, 2015 R/W ORDER 43 RULE
1(r) OF THE CPC, PRAYING TO SET ASIDE THE IMPUGNED
ORDER AT ANNEXURE-A DATED 20.02.2021 PASSED BY THE
HON'BLE LXXXII ADDL. CITY CIVIL AND SESSIONS JUDGE,
COMMERCIAL      COURT-CCH    83   AT   BENGALURU     IN
I.A.NOs.1,2 AND 3 IN COM.O.S.No.306/2020, ETC.,

     THIS   APPEAL HAVING BEEN       HEARD   AND
RESERVED FOR JUDGMENT ON 23.04.2021 AND COMING
ON FOR PRONOUNCEMENT OF JUDGMENT THIS DAY,
VISHWAJITH SHETTY J., DELIVERED THE FOLLOWING:



                    JUDGMENT

The instant commercial appeal is filed by the

appellant, who is the plaintiff before the trial court

seeking to set aside the order dated 20th February 2021

passed by the LXXXII Addl.City Civil and Sessions

Judge and Commercial Court, Bengaluru, on I.A.Nos.1

to 3 in Commercial O.S.No.306/2020 and the appellant

has also filed the following I.As. in this appeal:

a) I.A.No.1/2021 seeking stay of the impugned order;

b) I.A.No.2/2021 for production of additional documents;

c) I.A.No.3/2021 for an order of temporary injunction restraining the respondent No.1 to 3 from using the disputed registered trademarks until final disposal of the appeal;

COM.APPEAL.61/2021

d) I.A.No.4/2021 for an order of temporary injunction restraining the respondent Nos.1 to 3 from using any products or services connected with the jewellery business, the disputed trademarks until final disposal of the appeal;

e) I.A.No.5/2021 for staying the operation of the common order in I.A.Nos.1 to 3 dated 20.2.2021 and all further proceedings in Com.O.S.No.306/2020 and all further proceedings therein.

2. The appellant, a Private Limited Company had

filed Commercial O.S.No.306/2020 before the trial

court praying for a judgment and decree of perpetual

injunction restraining the respondents and persons

claiming through or under them from using the

trademarks "C.Krishniah Chetty Corp., C.Krishniah

Chetty & Co., Chetty & Co. Chetty, C.Krishniah Chetty

& Co.1869, Chetty & Co. 1869, Chetty 1869."

3. The appellant Company is engaged in the

business of Gems and Jewellery. In the year 1869

Sri.C.Krishnaiah Chetty had commenced the jewellery

business in the property bearing No.35, Commercial

Street, Bangalore. After his death, the business was

carried on by his son Sri.Adinarayana Chetty and COM.APPEAL.61/2021

grandson Sri.Venkatachalapathy Chetty until their

demise in the year 1955 and 1956 respectively.

Subsequently C.V.Narayana, who is the father of

respondent No.2 and late husband of respondent No.3

herein and C.V.Hayagriv carried on the said family

business as a partnership firm with equal share in the

profits.

4. On 01.04.1958, a partnership firm was

constituted by Sri.C.V.Hayagriv and late

Smt.C.V.Ashwathamma acting for herself and as a

guardian of her minor son C.V.Narayana and the

aforesaid first partners had admitted the minor

C.V.Narayana to the benefits of the partnership and it

was also recognized and agreed by the parties that the

jewellery business was taken over as a family assets

and divided into equal shares between C.V.Hayagriv

and minor C.V.Narayana represented by his mother and

guardian Smt.Ashwathamma. The Deed of Partnership

dated 01.04.1958 was amended and re-constituted on

02.10.1978. The appellant Company was incorporated COM.APPEAL.61/2021

on 24.12.1979 by Sri.C.V.Narayana and C.V.Hayagriv

and subsequently the appellant Company was included

as a partner of the partnership firm under a Deed dated

03.01.1980. In a Board Meeting dated 19.03.1980, a

decision was taken to dissolve the partnership firm and

the business and assets of the said firm was taken over

by the appellant Company and by Deed of Dissolution

dated 28.04.1980, the partnership firm was dissolved

and the business of the said firm was taken over by the

appellant Company along with all its assets and

liabilities which included the trademark of the

partnership firm.

5. The family of C.V.Narayana and C.V.Hayagriv

held 50% equity shares each in the company. After the

death of C.V.Hayagriv, his son C.Vinod Hayagriv, wife

Vishala Hayagriv and daughter-in-law Triveni Vinod are

holding 50% equity shares in the company while the

remaining 50% shareholding of the company is held by

respondent Nos.2 and 3, who are the son and widow of

C.V.Narayana.

COM.APPEAL.61/2021

6. Respondent No.1 is a Company engaged in the

business of Gems and Jewellery and was incorporated

in the year 1982 by Vinod Hayagriv, C.Vishala Hayagriv

and C.V.Narayana. Initially both branches of family

held shares in respondent No.1 Company.

Subsequently the entire shareholding of respondent

No.1 Company was transferred to the name of

respondent No.2 herein at a fair market value.

7. Presently respondent Nos.2 and 3 are the

Directors and shareholders of respondent No.1

Company. The appellant and respondent No.1 carried

on their business in the same premises and the

registered office of both the companies is also located

in a common premises. Respondent no.4 is the wife of

second respondent and respondent no.5 is a Company,

which has been marketing the business of the first

respondent Company online.

8. Sri.C.V.Hayagriv's family later on had

incorporated Company known as "C.Krishnaiah Chetty

Jewellery Pvt.Ltd." and allegedly diverted the business COM.APPEAL.61/2021

of the appellant Company to the newly incorporated

Company. In view of various acts of oppression and

mismanagement including diversion of business from

the appellant Company, there was discord in the family

and therefore, a family settlement agreement was

entered into between the two branches of the family on

09.01.2014 for amicable division of the business of the

appellant Company and the appellant, all C.K.C.

entities, all shareholders of both the branches of the

family, respondent No.1 and C.Krishnaiah Chetty

Jewelleries Private Limited, which was a Company

incorporated by the family of C.V.Hayagriv, were the

signatories to the family settlement agreement.

9. After the execution of the family settlement

agreement, alleging that C.V.Hayagriv and his family

members had further indulged in oppression and

mismanagement, respondent no.3 herein filed a

Company Petition on 16.09.2014 before the Company

Law Board, Chennai interalia seeking proportional

representation on the Board, maintenance of status quo COM.APPEAL.61/2021

until the family settlement agreement is final and to

restrain C.V.Hayagriv and his family members from

diverting the business of appellant Company.

10. The said case was subsequently transferred

to N.C.L.T., Bangalore and numbered as

T.P.No.65/2016. During the pendency of the said

petition, on 05.03.2018 C.V.Hayagriv and his family

had filed I.A.No.54/2018 in the said case interalia

seeking to restrain respondent Nos.2 and 3 herein from

carrying on competing business in the very same

premises. The said application and the main petition

were subsequently dismissed by N.C.L.T., Bangalore on

24.01.2019. Being aggrieved by the order dated

24.01.2019, C.V.Hayagriv and his family members had

filed Company Appeal No.33/2019 while Company

Appeal No.65/2019 was filed by the third respondent

herein challenging the very same order before the

N.C.L.A.T., New Delhi. Subsequently Company Appeal

no.33/2019 was withdrawn before the N.C.L.A.T. while

Company Appeal no.65/2019 is pending consideration.

COM.APPEAL.61/2021

On 19.12.2019, the appellant Company had undertaken

before the N.C.L.A.T., New Delhi in Company Appeal

No.65/2019 that no Board meeting will be held until

further orders from the said Tribunal. The said order is

still in force.

11. In the meanwhile, it appears that the first

respondent Company had filed certain applications for

registration of identical trademarks and objections were

filed by the appellant Company for the same. The

competent authority while allowing some of the

applications had also rejected a few applications. Being

aggrieved by the registration of certain trademarks in

favour of the first respondent Company, the appellant

had filed rectification proceedings before the

Intellectual Property Appellate Board on 14.09.2020.

During the pendency of the said proceedings, the

present suit was filed on 02.11.2020. During the

pendency of this suit, the Intellectual Property

Appellate Board had granted an interim order staying COM.APPEAL.61/2021

the operation of the first respondent's trademarks vide

its order dated 19.01.2021.

12. The respondents after service of notice in the

present suit had filed a detailed written statement.

According to the respondents, C.Vinod Hayagriv and his

family members, who have got 50% shareholdings in

the appellant Company, had got this suit filed against

the respondents for the alleged infringement of

trademarks of the appellant by the respondent Nos.2

and 3 who are the holders of remaining 50% shares of

the appellant Company. The respondents in their

written statement in addition to traversing the plaint

averments have also raised an objection with regard to

the maintainability of the suit on the ground that the

suit has not been instituted by a competent person and

the person who has signed the pleadings and instituted

the suit has not been authorised by the company by

passing a Board resolution to the said effect.

13. In the suit, the appellant had also filed three

applications. I.A.Nos.1 and 2 are filed by the appellant COM.APPEAL.61/2021

under Order XXXIX Rule 1 and 2 read with Section 151

of CPC and I.A.No.3 is filed under Order XXXIX Rule 7

read with Section 151 of CPC. I.A.No.1 is filed seeking

for grant of ad-interim order of temporary injunction

restraining the opponents/defendants from using in

relation to any products or services connected with the

jewellery business in classes 14, 16, 21, 35, 36, 37 and

42 and the disputed trademarks. I.A.No.2 is filed

seeking to grant an ad-interim order of temporary

injunction restraining the opponents/defendants from

using any other trademark in relation to any business

amounting to passing off of the goodwill and reputation

in and to the plaintiff's earlier well known house marks

till disposal of the suit. I.A.No.3 is filed seeking for an

order to direct the defendants to preserve any/all

materials bearing the identical and deceptively similar

trademarks mentioned in the application. The

respondents had filed objections to the said

applications.

COM.APPEAL.61/2021

14. The trial court after hearing the arguments of

the learned counsel appearing on both sides had

formulated the following points for consideration :

"1. Whether the applicant/plaintiff proves the prima facie case about alleged using of Trademarks by the defendants as contended in I.A.Nos.I and II?

            2.     Whether         the      balance    of
      convenience      lies   in     favour     of    the
      applicant/plaintiff:


            3.    Whether     the    applicant/plaintiff

suffers any irreparable injury which cannot be compensated in terms of money if the temporary injunction is not granted?

4. Whether the defendants are directed to be ordered to preserve any/all materials bearing the identical and similar trademarks to that of the plaintiff as prayed in I.A.No.III?

5. What order?"

15. The trial court vide the order impugned

having answered all the points for consideration in the COM.APPEAL.61/2021

negative has also observed that the suit itself is not

maintainable without resolution of Board of Directors of

the Company delegating authority to file the suit and it

has been made clear that such an observation about

maintainability of the suit is made only for the purpose

of deciding the applications.

16. In the present appeal, after service of notice,

the defendants have filed a detailed statement of

objections and have raised preliminary objection with

regard to the maintainability of the appeal on the

ground that no Board resolution or authorisation has

been submitted by the signatory to the appeal who is

the alleged Chief Financial Officer of the appellant

Company to file the present appeal on behalf of the

appellant. Having regard to this preliminary objection,

this court on 20.04.2021 at the request of learned

counsel for the appellant had granted time to argue the

matter on the issue of maintainability and directed

relisting of the matter on 23.04.2021. On 23.04.2021,

learned Senior Counsel Sri. Amit Sibal appearing on COM.APPEAL.61/2021

behalf of the appellant and learned Senior Counsel

Sri.Uday Holla appearing on behalf of the respondents

have made their submissions regarding maintainability

of the present appeal.

17. Learned Senior Counsel for the appellant

submitted that the present appeal is maintainable and

is validly filed. He has relied upon the judgment of the

High Court of Delhi in the case of Glaxo Group Ltd.

and Another -vs- Sunlife Sciences Pvt.Ltd.1

wherein in paragraphs-19 and 20, it is observed as

under:

"19. In case titled Haryana Financial Corp. & Anr. v. Jagdamba Oil Mills & Anr., AIR 2002 SC 834, the Supreme Court has very categorically laid down that while applying the law enunciated in the particular case, the Court should not act mathematically and the law which is laid down in the reported case should not be applied like theorems. The facts of the reported judgment in Electric Construction Company case (supra) must be seen in the light of these facts. The reasons for distinguishing the facts of that case have been given herein before, which was primarily the nature of the suit as well as the fact that the said suit was being

2011(45) PTC 561 ((Del) COM.APPEAL.61/2021

decided finally on merits while as in the instant case Court has to decide the application under Order XXXIX Rules 1 and 2 CPC only at this stage.

20. In addition to this, the Apex Court in Sangram Singh v. Election Tribunal (AIR 195 SC 425) observed that:

'A code of procedure is procedure, something designed to facilitate justice and further its ends : not a Penal enactment for punishment and penalties; not a thing designed to trip people up. Too technical construction of sections that leaves no room for reasonable elasticity of interpretation should therefore be guarded against (provided always that justice is done to both sides) lest the very means designed for the furtherance of justice be used to frustrate it."

18. He has also relied upon Order XXIX Rule 1 of

CPC and contended that the present appeal filed by the

Company represented by its Chief Financial Officer is

valid and in support of his contention, he has relied

upon a judgment of the Bombay High Court in the case

of The Calico Printers' Association Ltd. -vs-

COM.APPEAL.61/2021

A.A.Karim and Bros.,2 wherein it has been held as

follows:

". . . . . .the proper construction to put upon the two rules taken together is this, that under Order VI, Rule 14, the pleading must be signed by the party, but where the party is a company and therefore unable to sign, it necessarily follows, having regard to the words " or for other good cause," that the last part of the section always applies in the case of a company, and that the company therefore can always authorise some person to sign on behalf of the company. If the company does not choose to do that, it can act under Order XXIX, Rule 1, i.e., it can rely on that order as in fact constituting an agent to sign without the necessity of giving any express authority. In that way Order XXIX is read as merely permissive and not mandatory, In point of form it is clearly permissive and not mandatory."

19. He has also relied upon the judgment of the

High Court of Allahabad in Bhanu Pratap Mehta -vs-

AIR 1930 BOM 566 COM.APPEAL.61/2021

Brij Leasing (P) Ltd. and Others3 wherein in

paragraphs -13 and 14 it is held as follows:

13) In the case of Bharat Petroleum Corporation Limited v. M/s. Amar Autos, 2008(5) ADJ 584 (DB), a similar argument has been raised by the learned counsel for the respondent relying upon the decision of the Delhi High Court in the case of M/s. Nibro Limited v. National Insurance Company Ltd. (supra). This Court negated the submissions and held as follows :

"Upon considering the pros and cons of the matter we are of the view that the learned Judge of the Court below has proceeded in a wrong premises and with hot-haste. According to us, a power of attorney or an affidavit of such nature is only required to prima facie satisfy the Court that a company or corporation or a body corporate has presumably proceeded with the suit under its seal and signature, it has nothing to do with the registration of the document unless it is compulsorily remittable. Persuasive value of M/s Nibro Ltd. (supra) cannot pursue us. There is a thinner line in between authorization to sign and verify the pleadings, and to institute a suit on behalf of the corporation, company or a body corporate. Whenever a person is authorised to sign and verify the pleadings other than verification of plaint, written statement, memorandum of appeal, etc., it is doing so by filing affidavit in support of

2011(4) ADJ 125 COM.APPEAL.61/2021

such contentions. Therefore, it stands on a better position than ordinary verification.

But a person when verifies the plaint, written statement or memorandum of appeal, it is a verification simplicitor, meaning thereby that the verification part is also to be evidently proved unlike an affidavit, which itself is an evidence. Hence, authorization to institute a suit stands in the lower side than putting signature and verifying a pleading by way of an affidavit. On the other hand, signature and verification of the pleading of a plaint cannot be made for the sake of signature and verification alone but for the purpose of filing of the same before the Court either by him or by his learned Advocate. As soon as it is filed, the same will be treated to be institution of such proceeding by the person who has signed and verified. It is automatic. Institution of suit and right to institute the suit are distinct and different. The argument of Mr. Shashi Nandan restricted only to the first part of Order XXIX, Rule 1 of C.P.C. but not to the last part. If the suit is proceeded and the evidence is led and if any of the defendants want to challenge the verification of the plaint, he can call the deponent as witness for the purpose of examination. But Court cannot prevent any one from instituting a suit when his authority is apparently satisfactory. No body will be prevented from enforcing his legal right. It is a gross mistake on the part of the Court below to construe that the power of attorney should be registered and then only the suit can be instituted by a representative of the company or corporation. Moreover justification of filing the plaint by the authorised representative of the corporation or company will be COM.APPEAL.61/2021

considered from the practical point of view. If the Court below is not happy, it could have called upon the company to file an affidavit of competency, which is desirable under such circumstances, but not outright rejection of the plaint. Therefore, from any angle the order/s impugned appear to be perverse in nature. Thus, in totality the orders impugned in both the appeal cannot be sustained. Hence, the orders dated 24th January, 2008 passed by the Court below in the above referred suits, impugned in the instant appeals, are set aside. Thus, both the appeals are allowed without imposing any cost.

(14) In my view the Division Bench decision of this Court referred hereinabove squarely covers the issue."

20. He has further relied upon the judgment of

the High court of Delhi in the case of Seritec

Electronics Pvt.Ltd. -vs- M/s.Computer Peripheral

Solutions4wherein it is observed as follows:

"A similar issue has been dealt with by me in the judgment reported as Mahanagar Telephone Nigam Ltd. Vs. Smt. Suman Sharma 2011 (I) AD Delhi 331 wherein I have relied upon the judgment of the Supreme Court in the case of United Bank of India Vs. Naresh Kumar & others

MANU/DE/0763/2014 COM.APPEAL.61/2021

(1996) 6 SCC 660 to hold that on technical grounds suits should not be dismissed if they are contested to the hilt i.e till last stage. I have also held in the judgment in the case of Smt. Suman Sharma (supra) that issue of authorization for filing of the suit is only relevant when there are disputes inter se shareholders i.e there are two groups of shareholders with respect to control of the company, and otherwise Order 29 Rule 1 CPC empowers any principal officer of a company to institute and continue the suit. The relevant paras of the judgment in the case of Smt. Suman Sharma (supra) read as under:-

"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."

21. Learned Senior Counsel has also argued that

the defect in the present appeal is a curable defect and

the same is not fatal. He has submitted that such

defect can be cured subsequently by ratification. In COM.APPEAL.61/2021

support of his argument, he has relied upon the

judgment of the High Court of Bombay in Alcon

Electronics Pvt.Ltd. -vs- Celem S.A.5. wherein it is

held as follows:

"In my view the suit did not suffer from any jurisdictional infirmity and even if there was any such defect in not passing a specific resolution for filing a suit against the defendant, the same was curable and thus plaint could not have been rejected on the ground of non-compliance of passing of a specific resolution."

"The Supreme Court has held that disputed questions cannot be decided at the time of considering an application filed under Order VII Rule 11(d) of the Code of Civil Procedure. Such provision applies in cases only where the statement made by the plaintiff in the plaint, without any doubt or dispute shows that the suit is barred by any law in force. The averments in the plaint are the germane, the pleas taken by the defendant in the written statement would be wholly irrelevant at that stage. Supreme Court has held that it should

2015 (4) BomCR 107 COM.APPEAL.61/2021

appear from the averments in the plaint itself that the same is barred by any law. It is not the case of the respondent that the suit, from the averments in the plaint itself, can be said to be barred by law. Learned counsel appearing for the respondent does not dispute the statement of the appellant that the defect if any in not passing any specific resolution authorising a Director to file a suit on behalf of the company against the defendant is a curable defect."

22. Per contra, learned senior counsel Sri.Uday

Holla appearing for the respondents has contended that

in the written statement filed in the suit and also in the

statement of objections filed in the present appeal, the

respondents have categorically raised a preliminary

objection with regard to the locus of the Chief Financial

Officer to represent the Company in the suit and in the

appeal, in the absence of a valid resolution to the said

effect by the Board of Directors of the Company as

required under Section 291 of the Companies Act,

1956. In support of his argument, he has relied upon COM.APPEAL.61/2021

the judgment of the Delhi High Court in the case of

M/s.Nibro Limited -vs- National Insurance

Co.Ltd.6 wherein at paragraphs-12, 13, 14 and 22 it is

observed as follows:

"12. Order 3 Rule 1 of the Code of Civil Procedure reads thus :

"Any appearance, application or act in or to any court, required or authorised by law to be made or done by a party in such court, may except where otherwise expressly provided by any law for the time being in force, be made or done by the party in person, or by his recognized agent or by a pleader appearing, applying or action, as the case may be, on his behalf:

Provided that any such appearance shall, if the court so directs, be made by the party in person."

Order 29 Rule 1 of the Code of Civil Procedure reads thus :

"In suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or be any director or other principal officer of the corporation who is able to depose to the facts of the case."

13. Order 3, rule 1 provides that any appearance, application or act in or to any

AIR 1991 DELHI 25 COM.APPEAL.61/2021

court required or authorise by law can be made or done by the party in person or by his recognized agent or by a pleader appearing, applying or acting, as the case may be, on his behalf. Provided of course, such an appearance, application or act in or to any court is required or authorised by law to be done or done by a party in such court.

Where, however, there is an express provision of law, then that provision will prevail. Thus, if an authority is given to a pleader or a recognised agent as provided by law, the recognised agent or pleader can file an appearance or file a suit in court if the party himself is not in a position to file it. In my view, if a party is a company or a corporation, the recognised agent or a pleader has to be authorise by law to file such a plaint. Such an authority can be given to a pleader or an agent in the case of a company by a person specifically authorised in this behalf. In other words, a pleader or an agent can be authorised to file a suit on behalf of a company only by an authorised representative of the company. If a director or a secretary is authorised by law, then he can certainly give the authority to another person as provided under Order 3, rule 1.

14. Order 29, rule 1 of the Code of Civil Procedure provides for subscription and verification of pleadings and states that in suits by or against the corporation, any pleadings may be 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.

........

COM.APPEAL.61/2021

22. On the analysis of the judgments, it is clear that Order 29, rule 1 of the Code of Civil Procedure does not authorise persons mentioned therein to institute suits on behalf of the corporation. It only authorises them to sign and verify the pleadings on behalf of the Corporation.. .

23. He submits that the said judgment in the case

of M/s.Nibro(supra)has been confirmed by the Hon'ble

Supreme Court in the case of State Bank of

Travancore -vs- Kingston Computers India Private

Limited7 Bank and he refers to paragraph-12 and 14

of the said judgment which reads as follows:

"12. The trial Court then referred to the judgments of the Delhi High Court in M/s. Nibro Limited v. National Insurance Company Limited AIR 1991 Delhi 25, Shubh Shanti Services Limited v. Manjula S.Agarwalla and others (2005) 5 SCC 30, Delhi High Court (original side) Rules, 1967 and proceeded to observe:

"..............As already stated, it has not been averred in the plaint nor sought to be proved that any resolution had been passed by the Board of Directors of the plaintiff company authorising Shri A.K.

(2011) 11 SCC 524 COM.APPEAL.61/2021

Shukla to sign, verify and institute the suit. It has also not been averred that the memorandum/articles of the plaintiff company give any right to Shri A.K. Shukla to sign, verify and institute a suit on behalf of the plaintiff company. It, therefore, follows that the plaint has been instituted by Shri A.K. Shukla only on the authority of Sh. Raj K.Shukla, CEO of the plaintiff company. Such an authority is not recognized under law and, therefore, I held that the plaint has not been instituted by an authorised person. Issue No.1 is accordingly, decided against the plaintiff and in favour of the defendants."

13. . . . . . . . . .

14. In our view, the judgment under challenge is liable to be set aside because the respondent had not produced any evidence to prove that Shri Ashok K.Shukla was appointed as a Director of the company and a resolution was passed by the Board of Directors of the company to file suit against the appellant and authorised Shri Ashok K.Shukla to do so. The letter of authority issued by Shri Raj K.Shukla, who described himself as the Chief Executive Officer of the company, was nothing but a scrap of paper because COM.APPEAL.61/2021

no resolution was passed by the Board of Directors delegating its powers to Shri Raj K.Shukla to authorise another person to file suit on behalf of the Company."

24. He submits that when the suit is not properly

instituted and when final relief cannot be granted in

such a suit, there cannot be any interim orders or

orders of injunction granted in such a suit. In support

of his contention, he has relied upon the judgment of

the Apex Court in the case of Cotton Corporation of

India Limited -vs- United Industrial Bank Limited

and Others8, by referring to para-10 of the said

judgment, which reads as under:

"10. Mr Sen, learned counsel for the respondent Bank, contended that Section 41(b) is not at all attracted because it deals with perpetual injunction and the temporary or interim injunction is regulated by the Code of Civil Procedure specially so provided in Section 37 of the Act. Expression 'injunction' in Section 41(b) is not qualified by an adjective and therefore, it would comprehend both interim and perpetual injunction. It is, however,

(1983) 4 SCC 625 COM.APPEAL.61/2021

true that Section 37 specifically provides that temporary injunctions which have to continue until a specified time or until further order of the court are regulated by the Code of Civil Procedure. But if a dichotomy is introduced by confining Section 41 to perpetual injunction only and Section 37 read with Order 39 of the Code of Civil Procedure being confined to temporary injunction, an unnecessary grey area will develop. It is indisputable that temporary injunction is granted during the pendency of the proceeding so that while granting final relief the court is not faced with a situation that the relief becomes infructuous or that during the pendency of the proceeding an unfair advantage is not taken by the party in default or against whom temporary injunction is sought. But power to grant temporary injunction was conferred in aid or as auxiliary to the final relief that may be granted. If the final relief cannot be granted in terms as prayed for, temporary relief in the same terms can hardly if ever be granted. In State of Orissa v. Madan Gopal Rungta [AIR 1952 SC 12 : 1952 SCR 28 : 1951 SCJ 764] a Constitution Bench of this Court clearly spelt out the contours within which interim relief can be granted. The Court said that 'an interim relief can be granted only in aid of, and as ancillary to, the main relief which may be available to the party on final determination of his rights in a suit or proceeding'. If this be the purpose to achieve which COM.APPEAL.61/2021

power to grant temporary relief is conferred, it is inconceivable that where the final relief cannot be granted in the terms sought for because the statute bars granting such a relief ipso facto the temporary relief of the same nature cannot be granted. To illustrate this point, let us take the relief which the Bank seeks in its suit. The prayer is that the Corporation be restrained by an injunction of the court from presenting a winding-up petition under the Companies Act, 1956 or under the Banking Regulation Act, 1949. In other words, the Bank seeks to restrain the Corporation by an injunction of the court from instituting a proceeding for winding up of the Bank. There is a clear bar in Section 41(b) against granting this relief. The court has no jurisdiction to grant a perpetual injunction restraining a person from instituting a proceeding in a court not subordinate to it, as a relief, ipso facto temporary relief cannot be granted in the same terms The interim relief can obviously be not granted also because the object behind granting interim relief is to maintain status quo ante so that the final relief can be appropriately moulded without the party's position being altered during the pendency of the proceedings."

25. We have carefully considered the arguments

addressed by the learned Senior Counsels appearing for COM.APPEAL.61/2021

the rival parties and also perused the entire material

available on record.

26. The question that arises for consideration in

this appeal is:

"Whether, in the absence of the Board

Resolution, can a Chief Financial Officer or any

other Principal Officer of a Private Limited

Company institute a suit/appeal or any other

legal proceedings on behalf of the Company

against its shareholders on the strength of

Order XXIX Rule 1 of the Code of Civil

Procedure, 1908?"

27. Learned Senior Counsel Sri. Amit Sibal

appearing on behalf of the appellant has strongly relied

upon Order XXIX Rule 1 of CPC in support of his

argument that the present appeal filed by the Chief

Financial Officer of the appellant Company is

maintainable and he has also contended that the

defect, if any, in instituting the suit or filing the appeal COM.APPEAL.61/2021

is a curable defect. Order XXIX Rule 1 CPC reads as

follows:

"1. Subscription and verification of pleading.- In suits by or against a corporation, any pleading may be 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."

28. On the reading of said provision of law, it is

very clear that Order XXIX Rule 1 CPC only defines the

person who is authorised to sign or verify the pleadings

on behalf of the Company and it does not authorise any

person mentioned therein to institute suits or appeals

on behalf of the Company. The said provision of law

comes into operation only after proceedings have been

validly commenced and itself does not authorise a

person to institute suits or any other legal proceedings.

Defect in filing of a suit or appeal would go to the very

root of the matter.

COM.APPEAL.61/2021

29. It is true that a suit cannot be thrown out at

the inception or a party cannot be non-sued on the

ground of technicalities but while considering an

application for interim orders or interim injunctions, the

court must prima facie satisfy itself that "a triable case"

is prima facie made out by the party approaching the

court. Each case has to be considered on the facts of

the said case and merely for the reason that a suit

cannot be thrown away at the inception level on the

ground of technicalities, it does not give a right to a

party to seek any interim orders or interim injunctions

in such suits unless the party prima facie satisfies with

regard to the maintainability of the suit. When the

question of maintainability of a suit or any other legal

proceedings is raised, which would go to the root of the

matter, the same requires to be considered by the court

for its prima facie satisfaction before proceeding further

in the matter.

30. Section 291 of the Companies Act, 1956 reads

as follows:

"291. GENERAL POWERS OF BOARD.-

COM.APPEAL.61/2021

(1) Subject to the provisions of this Act, the 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 authorised to exercise and do :

Provided that the Board shall not exercise any power or do any act or thing which is directed or required, whether by this or any other Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the company in general meeting :

Provided further that in exercising any such power or doing any such act or thing, the Board shall be subject to the provisions contained in that behalf in this or any other Act, or in the memorandum or articles of the company, or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting.

(2) No regulation made by the company in general meeting shall invalidate any prior act of the Board which would have been valid if that regulation had not been made."

31. A Company duly incorporated and registered

is a distinct and independent legal person and its assets

are separate from its members, it can sue and be sued

in its own name. The Company being a juristic person

needs somebody to act on its behalf and manage the

affairs of the Company. A reading of Section 291 of the COM.APPEAL.61/2021

Companies Act makes it clear that the Board of

Directors have been given all the powers of the

Company except those which are required to be

exercised in the General Meeting of the Company.

32. The learned counsel for the appellant has

relied upon the judgment of High Court of Delhi in

Seritec Electronics Pvt.Ltd.'s case (supra) and in the

said case, a reference has been made to the case of

Mahanagar Telephone Nigam Limited -vs-

Smt.Suman Sharma (2011(I) AD Delhi 331) which

interalia refers to the decision of the Hon'ble Apex Court

in the case of United Bank of India -vs- Naresh

Kumar and others ((1996) 6 SCC 660), wherein it is

held that on technical grounds, suit shall not be

dismissed. In para-5 of Mahanagar Telephone Nigam

Limited's case (supra), it is observed as follows:

"5. Reference may also be made usefully to the judgment of the Supreme Court in the United Bank of India -vs- Naresh Kumar and 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 COM.APPEAL.61/2021

inasmuch as the suit in fact has been prosecuted for about two 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."

33. Therefore, it is very clear that in the case of

Mahanagar Telephone Nigam (supra), a distinction

has been made with regard to a public undertaking

company and a private limited company. The court has

observed that in a private company, there could be

dispute between two sets of shareholders claiming right

to management and one set of shareholders opposing

another set of shareholders with respect to control and

management of the Company and in such an event,

there can be a dispute as to the authority of a person

signing/verifying in instituting the same. In the present

case, the dispute is admittedly interse between the two COM.APPEAL.61/2021

branches of a family, who are equal shareholders of the

Company and the respondent Nos.2 and 3 being 50%

shareholders of appellant Company have questioned the

authority of the Chief Financial Officer of the Company

to file the appeal in the absence of a Board Resolution

duly authorising him.

34. In the case of Al-Amin Seatrans Ltd. -vs-

Owners and Party interested in Vessel M.V.9it has

been observed in paragraphs-23, 33, 50 and 53 as

follows:

"23. 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 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

AIR 1995 CALCUTTA 169 COM.APPEAL.61/2021

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.

......

33. In the instant case it is quite clear that there were talks and consultations between the Managing Director and the Chairman which are reflected, inter alia, by the agreement between the Managing Director and the Chairman dated 12-9-91. The said agreement provided that money given as loan by the Managing Director of the plaintiff to any companies except Loyal Shipping Pvt. Ltd. would be recovered by Managing Director within 3 months time. So there was not only consultation between them, but there was an agreement that money due from Loyal Shipping Pvt. Ltd. would not be recovered. It has not also not been alleged anywhere that COM.APPEAL.61/2021

there was any further or other consultation. The Managing Director knew sufficiently well that he could not get any resolution passed by the Board of Directors giving him power to institute a suit against the Loyal Shipping Pvt. Ltd. After all the Managing Director as also the Chairman of the two companies are common. It is also quite clear that no attempt was made by the Managing Director to get any specific authority to institute the suit by or in the name of the plaintiff company against Loyal Shipping Pvt. Ltd. or its vessel. The Managing Director also knew very well that he could not even get a resolution or authority in his favour even in a general meeting because he could not get any resolution passed due to the equal division in two groups and the casting vote which the Chairman could exercise. In my opinion, the right of management of the company's affairs was vested in the Board of Directors and the Managing Director could only act subject to the control and supervision of the Board of Directors. There was no specific authority granted to the Managing Director either to institute any suit or to appoint any Constituted Attorney of the plaintiff company. In my opinion, the Managing Director did not have COM.APPEAL.61/2021

any power or authority in the facts and circumstances of this case to institute any suit on behalf of the plaintiff or to appoint any Constituted Attorney of the Company without prior approval of the Board of Directors. ......

50. In my opinion, there are serious disputes and difference as between the Board of Directors of the plaintiff. All the four directors of plaintiff are directors or Loyal Shipping Pvt. Ltd. which has only one more director. The Chairman and the Managing Director of plaintiff and the Loyal Shipping Pvt. Ltd. which has only one more director. The Chairman and the Managing Director of plaintiff and the Loyal Shipping Pvt. Ltd. are same. There was an agreement between the Chairman and the Managing Director plaintiff in 1991 that the dues from Local Shipping Pvt. Ltd. were not to be realised. In any event, the disputes have been going on since 1991 and no subsequent accounts have been disclosed since after the accounting year 1991.

......

COM.APPEAL.61/2021

53. I, therefore, hold that the suit has been instituted at the instance of the Managing Director alone without any specific power or authority in him to institute the suit and the Managing Director had no power either to institute the suit by himself or through his agent or to appoint any Constituted Attorney for the said purpose. The suit has been instituted without due and proper authority and the suit is, therefore, liable to be dismissed on that ground alone and all interim orders are liable to be vacated. I also hold that in any event the order dated 7th July, 1994 for arrest of the said vessel, namely Loyal Bird was obtained by suppression of material facts and/or by making false and incorrect allegations as to the material facts and the said order dated 7th July, 1994 is in any event liable to be vacated. The petitioner, in my opinion, is entitled to an order for release of the said vessel without security."

35. In the case of M/s.Schmenger GMBH and

Company Leder -vs- M/s.Saddler Shoes Pvt.Ltd. in

Civil Suit No.689/1999 decided on 29.10.2010, the COM.APPEAL.61/2021

High Court of Judicature at Madras at paras-20 and 21,

it has been observed as follows:

"20. The abovesaid decision reported in 1996(60 SCC 660 = 1997(90) Comp. Cases 329 = AIR 1997 SC 3 (United Bank of India

-vs- Naresh Kumar) (cited supra), has been referred to by the High Court of Himachal Pradesh in the decision reported in 2004 (118) Comp. Cases 328 (Apple Valley Resort Vs. H.P.State Elec.Board), in which it was observed by the High Court of Himachal Pradesh that Order 29, Rule 1 of CPC only authorises the persons mentioned therein to sign and verify the pleadings on behalf of a Corporation/Company and it does not authorise such persons to institute an action on behalf of a Corporation/Company; the question of authority to institute an action on behalf of a Company is not a technical matter; it has far-reaching effects and it often affects policy and finances of the Company; therefore, unless a power to institute an action is specifically conferred on a particular Director, he would have no authority to bring an action on behalf of the Company; the power to institute an action on behalf of the Company can be conferred on a Director or any other Officer of the Company only by the Board of Directors by way of a Resolution in that regard; in the absence of a specific provision of the Board of Directors authorising the Liaison Officer to institute the petition (suit) for and on behalf of the Company or power conferred on the Director by the Memorandum and Articles of Association, the petition (suit) cannot be said to have been laid by a duly authorised and competent person for and on behalf of the Company; the High Court of COM.APPEAL.61/2021

Himachal Pradesh further held that the suit was bad and liable to be dismissed on that ground alone.

21. Since the plaintiff neither filed the Memorandum/Articles of Association, nor the Resolution of the Board of Directors of the Company, authorising the Liaison Officer namely the person to verify the plaint and institute the suit. Hence, as per the decisions cited above, I am of the view that the suit itself is not maintainable."

36. In the case of Naresh Kumar (supra) the

Hon'ble Supreme Court in para-10 has observed as

follows:

"10. 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 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 COM.APPEAL.61/2021

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 complaint 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."

37. The Hon'ble Supreme Court in Naresh

Kumar's case (supra) has therefore stated that a suit

filed on the strength of Order XXIX Rule 1 of CPC needs

ratification which could be either express or implied.

38. Even in the case of Alcon Electronics

Pvt.Ltd. (supra), it has been held that the defect, if COM.APPEAL.61/2021

any, in not passing any specific resolution authorizing

the Director to file a suit on behalf of the Company

against the defendant is a curable defect, which means

such action needs to be ratified.

39. In the present case, the dispute is interse

between the two branches of a family holding equal

shareholdings in the Company. Though the defect in

filing the suit or an appeal in the absence of a Board

Resolution by a Company is a curable defect, which can

be cured by a express or implied ratification by a Board

Resolution, such an eventuality is completely ruled out

in the present case having regard to the fact that the

present case has been initiated by the Company by its

Chief Financial Officer against 50% shareholders of the

Company. Therefore, since the possibilities of a

ratification being not there, the defect in instituting the

suit or appeal for want of Board Resolution of the

Company cannot be said to be a curable defect in the

present case.

COM.APPEAL.61/2021

40. The judgments relied upon by the learned

counsel for the appellants are either in the cases of a

Public Sector Undertaking Company or in respect of a

Private Company instituting a suit against a third party

where the defect in instituting the suit/appeal for want

of Board Resolution could be cured by ratification. But

the said principle cannot be made applicable to the

facts of the present case, as admittedly the dispute in

the present case is interse between the two branches of

a family, who hold equal shareholdings in the Company.

41. In none of the judgments relied upon by the

appellant, it has been held that without there being a

ratification by the Company, solely on the basis of

Order XXIX Rule 1 of CPC, a suit can be instituted by a

Director or any other principal officer of the Company.

Legal proceedings initiated to protect the interest of the

Company against third party and a proceedings

initiated on behalf of the Company against its own

shareholders stand on altogether different footings.

COM.APPEAL.61/2021

42. In the case of Nibro Limited (supra), the

suit was instituted by a Director of the Company

without the Board Resolution of the Company

authorizing him to institute the suit. Even after the suit

was instituted, no resolution was passed by the

Company ratifying the action. Though a plea was taken

that on the strength of Order XXIX Rule 1 of CPC, a suit

could be maintained by the Director of the Company

even in the absence of a Board Resolution, it was held

that Order XXIX Rule 1 of CPC does not authorize

persons mentioned therein to institute suit on behalf of

the Corporation but only authorizes them to sign and

verify the pleadings on behalf of the Corporation and

unless a power to institute the suit is specifically

conferred on a particular Director, by a resolution to the

said effect, he has no authority to institute a suit on

behalf of the Company. The judgment in Nibro

Limited's case has been confirmed by the Hon'ble

Apex Court in the case of State Bank of Travancore

(supra) and therefore, it can be safely held that a suit

or any other legal proceedings can be instituted by a COM.APPEAL.61/2021

Director or Officer of the Company only on the strength

of Board Resolution by the Company to the said effect

and in the absence of such a Board Resolution, if a suit

or legal proceedings is instituted, then necessarily there

has to be a resolution by the Company ratifying the

defect, failing which the suit or legal proceedings

cannot be maintained. Therefore, the question framed

for consideration in this appeal is answered negatively.

43. In the case of Kashi Math Samsthan -vs-

Srimad Sudhindra Thirtha Samsthan10, the Hon'ble

Supreme Court in para-13 has observed as follows:

"13. It is well settled that in order to obtain an order of injunction, the party who seeks for grant of such injunction has to prove that he has made out a prima facie case to go for trial, the balance of convenience is also in his favour and he will suffer irreparable loss and injury if injunction is not granted. But it is equally well settled that when a party fails to prove prima facie case to go for trial, question of considering the balance of convenience or irreparable loss and injury to the party concerned

AIR 2010 SC 296 COM.APPEAL.61/2021

would not be material at all, that is to say, if that party fails to prove prima facie case to go for trial, it is not open to the Court to grant injunction in his favour even if, he has made out a case of balance of convenience being in his favour and would suffer irreparable loss and injury if no injunction order is granted. . . . . ."

44. In the present case, it is not in dispute that

the Company has not authorized the Chief Financial

Officer by passing a Board Resolution to institute the

suit or appeal on behalf of the Company. In a suit or

appeal, "a prima facie case" would depend upon the

facts of the said case and in the present appeal having

regard to the undisputed facts of the case, wherein

equal shareholders of the Company have been fighting

against each other, in the absence of a Board

Resolution, the suit or appeal instituted by the Chief

Financial Officer of the Company is definitely defective

and therefore, there is no prima facie case made out for