IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 17.08.2011 CORAM: THE HONOURABLE MR.JUSTICE ELIPE DHARMA RAO AND THE HONOURABLE MR.JUSTICE M.VENUGOPAL O.S.A.Nos.359 and 360 of 2008 T. Mohanraj ... Appellant in both the Appeals Vs. Akila Thiruvidancore Siddha Vaidhya Sangam, Munchirai, Puddukkadai Post, K.K.District, having its Branch Office at 17, C.K. Street, Aynavaram, Chennai-23 represented by L.N.Noelraj, Director/Acting President ... Respondent in both the Appeals Prayer: Appeals filed under Order XXXVI Rule 11 of the O.S. Rules read with Clause 15 of the Letters Patent against the common order dated 07.03.2008 in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 on the file of this Court. For Appellant : Mr.V.Selvaraj in both the Appeals For Respondent : Ms.Kanimozhi Mathi in both the Appeals COMMON JUDGMENT M.VENUGOPAL,J.
The Appellant/Defendant has filed the O.S.A.Nos.359 and 360 of 2008 as against the common order dated 07.03.2008 in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 passed by the Learned Single Judge.
2.The Learned Single Judge, while passing orders in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005, has, among other things, observed that '... the Respondent/Plaintiff is not a commercial venture registered as a Limited Company under the Companies Act, 1956. It is an Association registered under Section 25 of the Companies Act, 1956, with the object of promoting Siddha System of Medicine. It is a non profitable organisation, which got registered under the Companies Act, 1956, instead of getting registered under the Societies Registration Act or under the Trusts Act. Therefore, a suit by such a non profitable organisation filed with a view to seek rendition of accounts from one of the erstwhile office bearers, cannot be thrown out under Order 7 Rule 11 of the Civil Procedure Code, on the ground of such a technical objection and further opined that, it is seen that a part of the cause of action allegedly arose within the jurisdiction of this Court. This is disclosed in Paragraph 30 of the Plaint. What is stated in Paragraph 30 of the Plaint may be true or false. But for the present, they have to be assumed to be true to decide the Application under Order 7 Rule 11 of the Civil Procedure Code. Moreover, Item-3 of the suit schedule property is stated to be a Dispensary in Ayanavaram, Chennai-600 023. Therefore, the other grounds on which the rejection of the Plaint is sought for, also cannot be sustained and resultantly dismissed both the Applications.
3.The Learned Counsel for the Appellant/Defendant urges before this Court that the common order of the Learned Single Judge passed in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005, dated 07.03.2008, is contrary to law and therefore, it is liable to be set aside.
4.It is the further contention of the Learned Counsel for the Appellant/Defendant that the Learned Single Judge erred in holding that though L.N.Noel Raj, who filed the suit is not a Member of the Company as per the Document No.10, dated 04.01.2003, filed along with the Plaint and Additional Document No.9, dated 30.09.2004, filed during the course of the arguments are set to be by the General Body and that the validity of the Resolution cannot be gone into an Application as per Order 7 Rule 11 of the Civil Procedure Code.
5.Advancing his arguments, it is the submission of the Learned Counsel for the Appellant/Defendant that the Learned Single Judge is not correct in coming to the conclusion that whether the suit is filed by a person who is authorised or not, is a disputed question of fact and the same cannot be decided in the present Interlocutory proceedings.
6.The Learned Counsel for the Appellant/Defendant strenuously contends that the Authority to file a suit is not a technical matter and a person who is neither a Member nor a Director of the Company, cannot file a suit on behalf of the Company.
7.The Learned Counsel for the Appellant/Defendant projects an argument that the Appellant/Defendant has raised a plea relating to the Authority to institute the suit on behalf of the Company and not the manner of verification of the pleadings. As such, the reference made by the Learned Single Judge to the decisions of the Honourable Supreme Court in Ramesh B. Desai and others v. Bipin Vadilal Mehta and others, [(2006) 5 Supreme Court Cases 638] and All India Reporter Ltd., Bombay with Branch Office at Nagpur and another v. Ramchandra Dhondo Datar, [AIR 1961 Bombay 292], are not applicable to the facts of the present case.
8.Expatiating his submissions, the Learned Counsel for the Appellant/Defendant contends that the Learned Single Judge is not correct in holding that the Plaint cannot be rejected on technical objections.
9.Apart from the above, the Learned Counsel for the Appellant/ Defendant submits that the filing of the Civil Suit No.752 of 2005 on the file of this Court by L.N.Noel Raj is an abuse of process of Court in view of the order passed in O.S.No.272 of 2003 on the file of District Munsif Court, Kuzhithurai and the Judgment in O.S.No.316 of 1995 on the file of District Munsif Court, Kuzhithurai and as such the suit ought to have been dismissed by the Learned Single Judge as not maintainable.
10.The pith and substance of the contention of the Learned Counsel for the Appellant/Defendant is that the present C.S.No.752 of 2005 has been projected by L.N.Noel Raj at the instance of Abraham and Sasidharan and further that, repeatedly filing suits on the same cause of action amounts to gross abuse of process of this Court.
11.In response, it is the contention of the Learned Counsel for the Respondent/Plaintiff that the Learned Single Judge has rightly dismissed the Application Nos.7131 and 4527 of 2007 by assigning cogent and proper reasons and therefore, the same need not be interfered with in Appeals.
12.In O.A.No.7131 of 2007, the Appellant/Defendant has averred that L.N.Noel Raj (who represents the Respondent/Plaintiff Company) is neither a Member of the Respondent/Plaintiff Company nor a Director and that the Company never authorised him to file any suit on behalf of it.
13.Added further, the suit filed by the said L.N.Noel Raj representing the Respondent/Plaintiff as its Director/Acting President is not maintainable, especially, when he has nothing to do with the Company. Therefore, the Appellant/Defendant has sought for the dismissal of the suit as not maintainable.
14.In the counter filed by the Director/Acting President of the Respondent/Company represented by L.N.Noel Raj, it is stated that he is the Acting President, pursuant to a Resolution of the Respondent/Plaintiff Sangam and he has sworn to the Plaint and the other proceedings and that the Resolution of the Sangam dated 04.01.2003 has been filed by him in the typed set of papers No.1 filed against the O.A.No.4527 of 2007 filed by the applicant to reject the Plaint and in the said Resolution, he has been elected as Acting President by the Executive Committee and, as such, his description in the Plaint and all further proceedings instituted before this Court is duly authorised and legal one.
15.It is the case of the Respondent/Plaintiff that from the documents filed by the Appellant/Defendant in support of O.A.No.7131 of 2007, the Minutes of the General Body at Page 53 at Page 55, dated 12.09.1992, of the typed set of papers, it is clear that he is a Member of the Executive Committee, Sl.No.12. Further, the Appellant/Defendant takes a plea that the Appellant relied upon the Minutes of the General Body before the City Civil Court in I.A.No.21115 of 2002 in O.S.No.15290 of 1996, while B.Abraham the applicant in I.A.No.21115 of 2002, relied upon the Minutes of the General Body dated 31.08.2002. In the order of the City Civil Court dated 12.03.2003, it is observed that 'As well as the genuineness of the resolution in the resolution book Ex.R.1 becomes highly doubtful.'
16.The Appellant/Defendant filed CRP No.914 of 2003 as against the order dated 12.03.2003 passed by the City Civil Court, Chennai, in I.A.No.21115 of 2002 in O.S.No.15290 of 1996 and the same was dismissed by this Court on 14.08.2002. The Appellant was discharged from the Receivership, after a compromise decree has been passed in the main suit.
17.It is the case of the Respondent/Plaintiff that the Appellant by virtue of the orders of the City Civil Court and this Court cannot place reliance upon the Minutes of the General Body dated 31.08.2002, conducted by the Appellant in which he has been allegedly removed.
18.The other contention of the Respondent/Plaintiff is that he being a Member of the Executive Committee in the year 1992 by means of Minutes of the General Body, dated 12.09.1992 and the Minutes of the General Body relied upon by the Appellant being doubted by the City Civil Court, Chennai, the Appellant cannot rely on the said Minutes, nor it is open to him to contend that he is not the Member of the Respondent/Plaintiff Company nor the Director nor authorised to file the suit. After the dispute and subsequent to 31.08.2002, the further General Body Meeting has been conducted by the Appellant on 30.08.2003, 21.08.2004, 28.09.2005 and 27.05.2006 and the list of Directors and Members has no relevance to issue on hand. Moreover, all these matters are for evidence and to be established at the trial of the suit.
19.According to the Respondent/Plaintiff, because of the Appellant's wrong acts, an Interim Administrator has been appointed earlier, but he has been discharged from the receivership on 14.08.2003 by an order of this Court. The misdeeds of the Appellant have been clearly mentioned in the Plaint and till date, no written statement has been filed by the Appellant/Defendant denying those allegations. However, the Appellant has been projecting applications after applications for rejection of the Plaint.
20.The case of the Respondent/Plaintiff is that a suit cannot be rejected based on the whims and fancies of the Appellant/Defendant, but it can be based only on the grounds mentioned in Order 7 Rule 11 of the Civil Procedure Code. Further, the present suit is maintainable in view of the fact that a Company can maintain a suit of the present nature against a wrong doer.
21.In O.S.No.843 of 2005, this Court appointed Thiru.Hari Chandran, Retired District Judge, as Interim Administrator on 16.03.2003 and he has not taken charge. Therefore, an Application has been filed for modification of the order appointing Thiru. Hari Chandran as Interim Administrator and the same has been modified by appointing Honourable Mr.Justice A.Ramamurthi (Retired), as Interim Administrator by means of an order 20.06.2006 who has taken charge on 10.07.2006. The Appellant filed O.S.A.No.243 of 2007 challenging the order dated 18.03.2006 and not the order dated 20.06.1986 and obtained an order of Stay for appointment of Mr.Hari Chandran, Retired District Judge, as Interim Administrator on 04.10.2007. The Respondent/Plaintiff immediately filed necessary Applications and in M.P.Nos.2 and 3 of 2007 in O.S.A.No.243 of 2007, this Court has passed the following orders on 30.10.2007.
The Administrator, Justice A.Ramamurthi has already taken charge of the Trust and its properties and he is presently acting as Administrator of the Trust. The prayer for interim relief is already rejected, and therefore, the order of interim stay dt: 04.10.2007 stands vacated. M.P.No.2 of 2007 and M.P.No.3 of 2007 are accordingly disposed of. The appellant is directed not to interfere with the administration of the Trust by the Administrator. The Administrator can continue to file interim reports and appropriate directions may be passed by the learned Single Judge on the reports that may be filed by the Administrator.
22.The stand of the Respondent/Plaintiff is to the effect that the Appellant/Defendant has been swallowing the fees of the students and also removing the articles of the College in connivance with the staff, who are under the control of the Principal, etc. Further, the Appellant has not filed his written statement in the suit though summons have been served on him two years before and also that, the Appellant has not made out the prima facie case in these two applications.
23.In the affidavit in O.A.No.4527 of 2007, the Appellant/ Defendant has stated that the Respondent/Plaintiff has no locus standi to file the suit and that the Respondent/Plaintiff is neither a Director nor the Acting President as claimed by him and further, there is no such post of Acting President in the Bye-Laws of the Respondent Sangam. Also, the Respondent/Plaintiff is neither a person aggrieved nor a person interested in the subject matter.
24.The Appellant/Defendant has also averred in O.A.No.4527 of 2007 that the Respondent L.N.Noel Raj and one D.Abraham have been removed from the rolls of the Sangam and indulged in various sorts of harassment to him and tried to disrupt the administration. They have neither any legal right nor any lawful claim over the Sangam, the Hospital or the College. D.Abraham filed O.S.No.272 of 2003 before the Learned I Additional District Munsif, Kuzhithurai, on 10.09.2003 seeking the relief of permanent injunction restraining the Appellant/Defendant from the administration of the Siddha Medical College and I.A.No.382 of 2003 (Interim Injunction) has been dismissed on 30.09.2003. The Appellant/Defendant referred to the Contempt Petition No.960 of 2003 filed against him before this Court stating that he has been functioning as the President and Officer in violation of the Order dated 14.08.2003 in CRP No.914 of 2003 and the same has been dismissed by this Court on 09.02.2004.
25.L.N.Noel Raj and others arranged to file another suit against the Appellant/Defendant in O.S.No.18 of 2004 in the name of four persons before the Principal Sub Judge, Nagercoil, seeking for a declaration and injunction that the meeting convened by them on 31.08.2002 is a valid one and obtained an Ex parte Order of injunction. However, the Learned Sub Judge suspended the forcible police action on 09.02.2004 and returned the Plaint itself on 25.02.2004 for want of jurisdiction. The Plaint has not been represented till date.
26.D.Abraham projected one P.Dhasan to file a suit against the Appellant/Defendant in O.S.No.463 of 2004 before the Learned Principal District Munsif, Kuzhithurai (mentioning the Plaintiffs in O.S.No.18 of 2004 in Sub Court, Nagercoil, as D2 to D5) and sought for an injunction restraining the Management of the Sangam and the Medical College. An I.A.No.389 of 2004 has been filed for interim injunction. But, the Court has not issued any orders in favour of P.Dhasan. Now, the proceedings are stayed by the Madurai Bench of this Court in C.M.P.No.657 in CRP No.140 of 2004.
27.The Revenue Divisional Officer, Padmanabhapuram initiated similar proceedings and called the Appellant to appear for enquiry on 20.09.2004. In W.P.No.2619 of 2004, the Madurai Bench of this Court on 19.10.2004 stayed the Revenue Divisional Officer's proceedings. Subsequently, the Revenue Divisional Officer dropped all further proceedings.
28.The Respondent/Plaintiff L.N.Noel Raj, suppressing the above facts, filed W.P.No.4500 of 2004 before the Madurai Bench of this Court as though he submitted his representation to the Superintendent of Police of Nagercoil on 07.09.2004 and he obtained an order dated 22.12.2004 behind his back directing the Superintendent of Police to consider his petition. Though the Appellant has been cited as the third respondent in the writ petition, no notice has been given to him before passing of the order.
29.The Appellant filed Review Petition No.7 of 2005 after coming to know the order dated 22.12.2004 passed in W.P.No.4500 of 2004 by the Madurai Bench of this Court. On 16.04.2005, the Review Petition has been admitted and in W.P.M.P.No.2954 of 2005, the order passed in the W.P.No.4500 of 2004 has been suspended. The Respondent/Plaintiff filed W.A.No.331 of 2005 and the same is pending.
30.Thereafter, the Respondent/Plaintiff projected another W.P.No.6432 of 2005 before the Madurai Bench of this Court seeking a direction for the issuance of a Writ of Mandamus, directing the police to give protection and assistance in safeguarding the interest of Sangam and forbearing the Appellant, his men, etc., in any manner interfering with the functioning and the management of the Sangam, the College and the properties. Also, W.P.M.P.No.6985 of 2005 has been filed praying for an order of injunction. The Respondent/Plaintiff has filed the present suit without any valid reason or cause of action.
31.Even according to the Bye-Laws, the President is the Officer competent to represent the ATSVS Sangam in all Court matters.
32.Assuming the suit in C.S.No.752 of 2005 is maintainable under Section 10 of the Civil Procedure Code. The suit filed by D.Abraham as Administrative Secretary of Akila Thiruvidancore Siddha Vaidhya Sangam, Munchirai, in O.S.No.272 of 2003 in the Court of I Additional District Munsif, Kuzhithurai on 10.09.2003 seeking for a permanent injunction restraining the applicant from the Siddha Medical College and the present suit are one and the same. The cause of action and the Issues in both the suits are similar. Also, the subject matter, the reliefs sought and the parties are substantially identical.
33.According to the Appellant/Defendant, no cause of action has arisen within the territorial limits of this Court either in part or in full. The ATSVS Sangam, the Medical College and all the properties are situate outside the territorial limits. The said Sangam has no properties now (neither at the time of institution of the suit nor till date) outside the Revenue District of Kanyakumari.
34.The Learned Single Judge in the course of his order dated 07.03.2008 in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 in Paragraphs 13 to 20 has observed as follows:
13.The learned counsel also relied upon the decision of the learned Single Judge of the Delhi High Court in Nibro Ltd. -vs- National Insurance Company Ltd. (Company Cases Vo.70 page 388), for the preposition that unless a Director is authorised to file a suit on behalf of the Company, by a Resolution, the suit is not maintainable. It is held in the said judgment as follows:-
"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 authority to institute a suit on behalf of a company is not a technical matter. It has far-reaching effects. It often affects the 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 such a power can be conferred by the board of directors only by passing a resolution in that regard."
14. In short, the contention of the learned counsel for the applicant/defendant is-
(a)that the person, who instituted the suit on behalf of the Company is not a Director;
(b)that the fact, that the person, who instituted the suit is not a Director, is borne out by the statutory forms filed on the file of the Registrar of Companies; and
(c)that there is no Resolution of the Board of Directors of the Company authorising the person concerned to institute the present suit.
15.There is no dispute about the fact that the person, who has instituted the suit, has not filed any Form No.32 or Form No.36 before the Registrar of Companies. The forms filed before the Registrar of Companies do not contain the name of Mr.Noel Raj, who has instituted the suit. However, the plaintiff has filed a document along with the plaint. Document No.10 filed along with the plaint is purported to be the Minutes of the Executive Committee of the plaintiff electing Mr.Noel Raj as the Acting President. It is dated 04.01.2003.
16.Similarly in the course of arguments, the respondent/plaintiff filed a set of additional documents. The additional document No.9 is the Resolution allegedly passed by the General Body of the respondent/ plaintiff on 30.09.2004. The aforesaid Noel Raj has been purportedly authorised under Resolution No.2 passed in the said General Body Meeting for instituting a suit against the applicant/defendant on the file of this Court.
17.Though the respondent/plaintiff ought to have filed the alleged Resolution dated 30.09.2004 at the time of institution of the suit itself, I cannot brush it aside, at this stage. Under normal circumstances, the suit should not have been numbered without demanding a copy of the resolution. It a demand had been raised at the time of scrutiny, the plaintiff would have had an opportunity to file the document, which is now filed as additional document No.9. Since a question is raised only now, the plaintiff has filed the said document.
18.Therefore, now a factual dispute has arisen as to whether the person, who instituted the suit on behalf of the Company, was really authorised to institute the suit and as to whether he was actually an Office bearer competent to verify and sign the pleadings. While the case of the applicant/ defendant is based upon the statutory returns and statutory provisions, the defence of the respondent/plaintiff is based upon an alleged Resolution.
19.But if the General Body of the plaintiff had, in fact, passed a Resolution as alleged by the plaintiff on 30.09.2004, then it cannot be said that the suit was instituted by an incompetent person, not authorised in this regard. If no such Resolution had been passed, as claimed by the plaintiff, then the very institution of the suit is bad and unauthorised. Therefore, the answer to the question raised by the applicant/defendant lies in finding out, as a matter of fact, whether there was any Resolution actually passed on 30.09.2004 or not. This finding of fact cannot be arrived at, in an application under Order VII Rule 11 C.P.C.
20.It is true that there is a statutory presumption in favour of the contents of the forms filed with the Registrar of Companies. But, as admitted by Mr.V.Selvaraj, learned counsel for the applicant/defendant, it is a rebuttable presumption. Section 164 itself says that the returns filed are only prima facie evidence of their contents. Therefore, it is always open to the respondent/ plaintiff to show that the forms were actually filed by a person, who was not in the Board and who was not authorised to file them. It is always open to the persons, who are the actual office bearers, to come and rebut the presumption created under Section 164. But the opportunity to do so will arise only at the time of trial. In other words, the question as to whether Mr.Noel Raj was a Director, whether the Company authorised him to institute the suit and whether the suit was properly instituted or not, are all questions of fact, which can be decided only at the time of trial especially when the plaintiff has produced a document to show his authority. The jurisdiction to reject a plaint either under Order VII Rule 11, C.P.C. or to dismiss the suit on any technical ground, cannot be exercised, if the dispute raised is on a question of fact, which can be established only by evidence. It is only on admitted plaint averments that a suit can be dismissed or plaint rejected, if no further evidence is necessary. I find in this case that a disputed question of fact has arisen about the status of a person, who has filed a suit on behalf of the Company and also about his authority to institute the suit. This disputed fact cannot be decided at this stage.
35.The Learned Counsel for the Appellant/Defendant cites the decision of the Honourable Supreme Court in State Trading Corporation of India Limited (in all the Petitions) v. The Commercial Tax Officer and Others, (In petns.Nos.202, 203 of 1961) and The Asst. Supdt. Of Commercial Taxes, Bihar and Others (In Petn.No.204 of 1961), [AIR 1963 Supreme Court 1811], at Page 1813 whereby and whereunder it is observed thus:
Unlike an unincorporated company, which has no separate existence and which the law does not distinguish from its members, an incorporated company has a separate existence and the law recognises it as a legal person separate and distinct from its members. This new legal personality emerges from the moment of incorporation and from that date the persons subscribing to the memorandum of association and other persons Joining as members are regarded as a body corporate or a corporation aggregate and the new person begins to function as an entity. But the members who form the incorporated company do not pool their status or their personality. If all of them are citizens of India the company does not become a citizen of India any more than if all are married the company would be a married person. The personality of the members has little to do with the persona of the incorporated company. The persona that comes into being is not the aggregate of the persona either in law or in metaphor. The corporation really has no physical existence; it is a mere 'abstraction of law'. (1872) 8 Ch A 149 and (1897) AC 22, Ref.to.
36.He also relies upon the decision of the Honourable Supreme Court in Hakam Singh v. M/s.Gammon (India) Limited, AIR 1971 SUPREME COURT 740, at Page 741 wherein in Paragraphs 3 and 5, it is laid down as follows:
3.Section 41 of the Arbitration Act, 1940, provides in so far as it is relevant :
"Subject to the provisions of this Act and of rules made thereunder:
(a)the provisions of the Code of Civil procedure, 1908, shall apply to all proceedings before the court, and to all appeals under this Act."
The Code of Civil Procedure in its entirety applies to proceedings under the Arbitration Act. The jurisdiction of the Courts under the Arbitration Act to entertain a proceeding for filing an award is accordingly governed by the provisions of the Code of Civil Procedure. By Cl.13 of the agreement it was expressly stipulated between the parties that the contract shall be deemed to have been entered into by the parties concerned in the City of Bombay. In any event the, respondent have their principal office in Bombay and they were liable in respect of a cause of action- arising under the terms of the tender to be sued in the Courts at Bombay. It is not open to the parties by agreement to confer by their agreement jurisdiction on a Court which it does not possess under the Code. But where two courts or more have under the Code of Civil Procedure jurisdiction to try a suit or proceeding an agreement between the parties that the dispute between them shall be tried in one of such Courts is not contrary to public policy. Such an agreement does not contravene S. 28 of the Contract Act.
5.The argument of counsel for the appellant that the expression "corporation" in Explanation II includes only a statutory corporation and not a company registered under the Indian Companies Act is, in our judgment, without substance. The Code of Civil Procedure uses the expression "corporation" as meaning a legal person and includes a company registered under the Indian Companies Act. Order 29 of the Code of Civil Procedure deals with suits by or against a corporation and there is nothing in the Code of Civil Procedure that a corporation referred to under S.20 means only a statutory corporation and not a company registered under the Indian Companies Act.
37.The Learned Counsel for the Appellant/Defendant draws the attention of this Court to the decision of the Delhi High Court in FERRUCCIO SIAS AND ANOTHER V. JAI MANGA RAM MUKHI AND OTHERS, [(1994) 1 COMPS LJ 345 (DEL)], wherein it is held that the petitioner having no authority to institute a suit on behalf of the Company is not entitled to obtain an interim order.
38.The Learned Counsel for the Appellant/Defendant also seeks in the aid of the decision of the Delhi High Court in M/s.Nibro Limited v. National Insurance Co. Limited, [AIR 1991 DELHI 25], wherein it is held as follows:
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. It is well settled that under S.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. 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 such a power can be conferred by the board of directors only by passing a resolution in that regard.
39.Yet another decision in LALITHAMBA BAI V. HARRISONS MALAYALAM LTD. AND ANOTHER [Vol.63 COMPANY CASES 662], is relied on the side of the Appellant/Defendant, wherein it is held as follows:
Under section 41 of the Companies Act, 1956, two essential conditions have to be satisfied to constitute a member of a company, other than a subscriber to the memorandum of association: (1) an agreement in writing to become a member, and (2) an entry on the register. These two conditions are cumulative. Both these conditions have to be satisfied and if both these conditions are not satisfied, the person in question cannot claim the status of a member. The position in the English Act is also almost identical.
40.Apart from the above, the Learned Counsel for the Appellant/Defendant cites the following decision:
(a)In Swadharma Swarajya Sangha rep. by its Director Mrs.Lalitha Rathnam, Madras-1 v. Indian Commerce & Industries Company Private Ltd., having its Registered Office at No.29, Broadway, Madras-1, [1998-1-L.W.203], this Court has held as follows:
A reading of the Art.104 of the Memorandum of Articles of the Company leads to an inference that it is the Directors who should jointly authorise to decide to institute or institute a suit. Concedingly, the Directors have passed no resolution deciding to institute a suit binding the institution with the result of the suit. The suit having been filed without there being any resolution and as the corporation can only file a suit if there is a resolution for the same, the suit was not filed by an authorised person under Order 29, Rule 1 of the Code of Civil Procedure. The suit as such is not maintainable.
(b)In Nelamega Bhatachariar v T.R.Govindaraghavan and others [AIR 2001 NOC 99 (MADRAS) = 2001 AIHC 2869], it is observed that Objection as to maintainability of the suit, requested to be tried as preliminary issue and to reject the plaint, it is held that merely because evidence has begun or trial is in progress and the objection can be decided along with the suit is not proper. Also, it is further observed that when on preliminary issue, entire suit itself can be disposed of as not maintainable or is barred under O.7 and R.11 of the Civil Procedure Code, Court should not wait till entire evidence is over.
(c)In Bijendra Prasad and others v. Smt.Duleshwari Devi and others, [AIR 1998 PATNA 122], at Page 125, it is among other things observed as follows:
A perusal of the provisions of Order 7, Rule 11 of the Code do not envisage any limitation or restrictions on the exercise of Court's power at any stage. Besides this, it does not either expressly or by: necessary implication provide that jurisdiction under Order 7, Rule 11 of the Code should be exercised at a particular stage only. Therefore, in the absence of any statutory restrictions placed under Order 7, Rule 11 of the Code it is open to the Court to exercise its jurisdiction under this provision at any stage, may be during the trial or at the appellate stage. No doubt, such objections are expected to be raised at the very threshold so that unnecessarily Court's time may not be wasted, but, all the same, if the plea is raised in the written statement and ultimately the Court decides the issue in favour of the defend-ants in non-suiting the plaintiffs even after the settlement of the issues or trial, it cannot be deemed that at subsequent stage the trial Court or the appellate Court does not get any jurisdiction. In Samar Singh v. Kedarnath, AIR 1987 SC 1926, it has been ruled that plaint can be rejected even alter the stage of settlement of issues etc. Thus, when the dismissal of the suit in the instant case amounts to rejection of the plaint under Order 7, Rule 11(1)(d) of the Code, we fail to understand how question arises forgiving finding on all other issues relating to the merits of the suit, and if other issues are not dealt with by discussing the oral and documentary evidence on record, how applying the ratio in Sundra Naicka Vadiyar (AIR 1994 SC 532) and Dilbagrai Punjabi's case (AIR 1988 SC 1858) (supra) the judgment and decree under appeal become ineffective. On the other hand, under the facts and circumstances narrated above when the dismissal of the suit resulted in dismissal of the plaint, for want of non-observance of the provisions of Section 69 of the Partnership Act, the question of dealing with other issues and discussing the other evidence, oral and documentary, does not arise. Therefore, the ratio laid down in Sundra Naicka Vadiyar and Dilbagrai Punjabi's cases (supra) are of no avail to the appellants.
(d)In Nesammal and 3 others v. Edward and another [1998-3-L.W.505], at Page 506, it is held hereunder:
The provisions of Order 7 Rule 11 are not exhaustive and the Court has got inherent powers to see that the vexatious litigations are not allowed to take or consume the time of the court. In appropriate cases, directions can be given by this court as well as the Court in which the suit is filed not to entertain the suit, if on reading the allegations in the plaint it reveals that the same is abuse of process of law. In this case all the grounds are made out and the very same plaintiff who got defeated in the litigation has agitated the very same issue by filing the present plaint. That apart, in this case, on a reading of the plaint, it is clear that the petitioners want to re-agitate the entire matter once again. It is for that reason the Lower Court held that the plaint is liable to be rejected. It is this conduct on the part of the litigant is commonly known as abuse of process of Law. As early as in A.I.R. 1915 Madras 483= (1914) 1 LW.875 (Lakshmanan Chetty v. Lakshmanam Chettiar and others) their Lordships held that the provisions of Order 7, Rule 11 of Code of Civil procedure are not exhaustive. That is a case where the next friend filed the suit on behalf of the minor. The Court found that the litigation is not for the benefit of the minor and rejected it. The decision was confirmed by this Court.
(e)In K.K.Somanathan v. K.K.Ramachandran Master and others, [AIR 1988 KERALA 259], it is laid down as follows:
The Court has not only the power but the imperative duty also to strike out pleading in appropriate cases under Order 6, Rule 16, at any stage and to reject the petition itself under Order 7, Rule 11 if no cause of action remains. An election petition can be summarily rejected at the threshold of the proceeding and equally so at any subsequent stage if the basic defect persists even at that stage. The starting of the trial or settlement of issues is no bar to such an action. Order 7, Rule 11 does not place any restriction in that respect. Order 7, Rule 11 does not restrict the power of the Court or say that it could be only at any particular stage. Especially in an election petition this power has to be freely exercised. An election petition which does not disclose any cause of action and which is likely to prove abortive should not be allowed to engage the time of the Court or act as the Sword of Damocles hanging over the head of the returned candidate deterring him from discharging his duties to the nation. AIR 1987 SC 1926, Rel. on.
41.The Learned Counsel for the Appellant/Defendant cites the decision of the Honourable Supreme Court in Samar Singh v. Kedar Nath and others, [AIR 1987 SUPREME COURT 1926], wherein the Honourable Supreme Court has observed hereunder:
If an election petition does not disclose cause of action, it can be dismissed summarily at the threshold of the proceeding under Order 7 Rule 11 of the Code of Civil Procedure. If an election petition can be summarily rejected at the threshold of the proceeding the same cannot be rejected at any stage of subsequent proceeding. If after framing of issues basic defect in the election petition persists (absence of cause of action) it is always open to the contesting respondent to insist that the petition be rejected, under Order 7 Rule 11 and the Court would be acting within its jurisdiction, in considering the objection. Order 7 Rule 11 does not place any restriction or limitation on the exercise of Court's power; it does not either expressly or by necessary implication provide that power under Order 7 Rule 11 CPC should be exercised at a particular stage only. In the absence of any restriction placed by the statutory provision, it is open to the court to exercise that power at any stage. While it is true the ordinarily preliminary objection as to maintainability of the petition on the ground of absence of cause of action should be raised by the respondent as early as possible but if a party raises objections after filing written statement the preliminary objection can not be ignored. If the election petition does not disclose any cause of action, the respondent's right to raise objection to the maintainability of the petition, or the Court's power to consider the objection is not affected adversely merely because the objection is raised after filing of written statement or framing of issues. The Court would be acting within its jurisdiction in exercise of its power under Order 7 Rule 11 in rejecting the same even after settlement of issues. AIR 1963 Guj 79 Overruled.
42.Continuing further, the Learned Counsel for the Appellant/defendant relies on the decision of the Honourable Supreme Court in RAMESH B. DESAI AND OTHERS V. BIPIN VADILAL MEHTA AND OTHERS, [(2006) 5 Supreme Court Cases 638], at Page 639, wherein it is held as follows:
The principle is well settled that in order to examine whether the plaint is barred by any law, as contemplated by Order 7 Rule 11(d) CPC, the averments made in the plaint alone have to be seen and they have to be assumed to be correct. It is not permissible to look into the pleas raised in the written statement or to any piece of evidence. Applying the said principle, the plea raised by the contesting respondents that the Company Petition was barred by limitation has to be examined by looking into the averments made in the Company Petition alone and any affidavit filed in reply to the Company Petition or the contents of the affidavit filed in support of Company Application No.113 of 1995 filed by the respondents seeking dismissal of the Company Petition cannot at all be looked into.
43.Another decision of the Honourable Supreme Court in POPAT AND KOTECHA PROPERTY V. STATE BANK OF INDIA STAFF ASSOCIATION, [(2005) 7 Supreme Court Cases 510], is cited by the Learned Counsel for the Appellant/Defendant to the effect that Order 7 Rule 11(d) of the Civil Procedure Code applies only where the statement as made in the plaint without any doubt or dispute shows that the suit is barred by any law in force etc.
44.Besides the above, the Learned Counsel for the Appellant/ Defendant cites the decision in Wali Mohammad Khan v. Ishak Ali Khan and others, [AIR 1931 Allahabad 507 Special Bench], at Page 508, wherein it is held as follows:
Omission to comply with the provisions regarding presentation of plaint is a mere irregularity and not an absence of jurisdiction; and if a person presenting it is not properly authorised the presentation would be irregular and the Court would then have the discretion to allow the irregularity to be cured or not. It the plaintiff has acted in good faith and without gross negligence and it is fair and just to allow the defect to be cured the Court would undoubtedly do so: 18 All. 396 (F.B.); 22 All.55; 40 All. 147; A.I.R. 1927 All. 514; 21 Cal. 866, Appr; 20 All. 90; 45 All. 701=A.I.R. 1924 All. 54=77 I.C.30, Overruled.
45.He also cites the decision of the Bombay High Court in All India Reporter Ltd., Bombay with Branch Office at Nagpur and another v. Ramachandra Dhondo Datar, [AIR 1961 BOMBAY 292], at Page 293, wherein it is held as follows:
The provisions contained in O.6, Rr.14 and 15 Civil P.C. with regard to signing and verification of plaint are mere matters of procedure and if a plaint is not properly signed or verified but is admitted and entered in the register of suits it does not cease to be a plaint and the suit cannot be said not to have been instituted merely because of the existence of some defects or irregularities in the matter of signing and verification of the plaint. AIR 1923 Bom 44(1) and AIR 1936 Bom 418 and AIR 1932 Bom 367, Rel.on. Observations in AIR 1922 Bom 113 (1), held obiter and not foll.
It is open to the court or to the officer of the Court authorized to receive plaints to refuse to admit a plaint if it is not properly signed or properly verified. It is also open to the court at any subsequent stage, on its own initiative or upon objection being taken by the defendant, to require the plaintiff to sign and verify the plaint, and if the plaintiff refuses to do so, the court can refuse to take any further steps. But that does not mean that if the court requires the plaintiff to sign the plaint subsequently, the original plaint ceases to be a plaint.
In the case of companies the plaint can be signed by either a Secretary or a Director or other principal officer under O.29, R.1, Civil Procedure Code, or by any person duly authorised by the Company under O.6, R.14. The words duly authorised in O.6, R.14, need not be restricted to mean authorised by proper written authority or by power of attorney. AIR 1943 Cal 13 and AIR 1948 Mad 369 and AIR 1939 Nag 242 and AIR 1941 Nag 159, Rel. on.
The signature on the plaint not being an act in or to a Court, O.8, Rr.1 and 2 have no application in the matter of signature on the plaint.
A company cannot orally authorise another person to sign a plaint on its behalf. A company can act only under its Articles of Association. If a power of attorney is to be executed for a company, it must satisfy the requirements of its Articles of Association.
46.At this stage, this Court cites the following decisions to promote substantial cause of Justice and to prevent an aberration of Justice.
(1)In T.N.Khambati and other v. Government of A.P. and others, [2004 (6) ALD 243 (DB)], at Page 243 and 244, it is held as follows:
The present case is sought to be brought under Clause (a) thereof to show that there exists no cause of action. Primarily, if on a bare reading of the plaint no cause of action is seen or shown to have been existed, any exercise of power thereunder is perfectly sustainable. However, even for such exercise, if it warrants an ascertainment or verification of such facts, which constitute the foundation for the cause of action, it calls for an enquiry and ultimately both sides have to substantiate their respective pleas. Even on a reading of the main plaint in this case it does not show that no such cause of action exists and the plaintiffs though traced back the cause of action to antedate, but ultimately rests the same on the directions given by the Supreme Court, as per the orders dated 17-9-1997. Therefore, it cannot be said that the plaint does not show any cause of action and it can be thrown out at the threshold, without a proper assessment. In fact, none of the defendants have filed any written statement nor there exists any such denial on facts as alleged in the plaint. On a reading of the affidavit filed in support of the present application, it clearly shows that there is denial as to the agreement or sale deed held by the plaintiffs and also the question as to whether plaintiffs are entitled to benefit under Section 202 of the Indian Contract Act, which again calls for the factual appreciation on the aspect Even on the finding given that the plaint does not show the date of death of the Azizunnisa Begum, it is to be noticed that the defendants have not come out specifically showing the date of death of Azizunnisa Begum. Even in this aspect the matter requires to be enquired into on a proper pleadings and evidence from both sides. That apart, there cannot be any dispute in regard to the permission given by the Supreme Court in the very appeal, to which the predecessor in title is a party. On the face of it, the plaint could not have been rejected without a proper enquiry. Further, all such objections are matter for regular trial and enquiry and not for entertaining any application under Rule 11 of the Order 7 C.P.C. Thus on the entire reading of the orders of the Court below, every finding and the reasons given in support thereof, is virtually embarkment on the merits and a factual appreciation, which traverse beyond the very nature and scope of enquiry as contemplated. (2)In Late Syed Burhan (died) by L.Rs v. Mohammad Jahangir, [2007 (4) ALD 361], at Page 362 and 363, it is held as follows:
The trial Court went wrong in stating that the suit was barred under Order II Rule 2 CPC in view of the fact that the plaintiffs have lost the suit earlier filed for possession. I may state that in the very appeal, the High Court in A.S. No. 565 of 1980 has categorically observed that the trial Court has to proceed with the suit without concern with the findings in O.S. No. 43 of 1978. No appeal was preferred against the said finding and it has become final. The cause of action for filling of the suit was on the ground that the appellants have refused to perform their part of contract and the said finding was confirmed by the Courts consistently. The cause of action in earlier suit was that he terminated the agreement. The cause of action pleaded in the suit is not available to the plaintiffs. They are different. Equally the judgment in A.S. No. 565 of 1980. No issue was held against the plaintiffs so that it can constitute res judicata. (3)In the decision of the Honourable Supreme Court in Deva Ram and Another v. Ishwar Chand and another, [(1995) 6 Supreme Court Cases 733], at Page 733, it is held as follows:
The provisions of Order 2 Rule 2 indicate that if a plaintiff is entitled to several reliefs against the defendant in respect of the same cause of action, he cannot split up the claim so as to omit one part of the claim and sue for the other. If the cause of action is the same, the plaintiff has to place all his claims before the court in one suit as Order 2 Rule 2 is based on the cardinal principle that the defendant should not be vexed twice for the same cause.
Order 2 Rule 2 requires the unity of all claims based on the same cause of action in one suit. If the identity of causes of action is established, the rule would immediately become applicable and it will have to be held that since the relief claimed in the subsequent suit was omitted to be claimed in the earlier suit, without the leave of the court in which the previous suit was originally filed, the subsequent suit for possession is liable to be dismissed as the appellants, being the defendants in both the suits, cannot be vexed twice by two separate suits in respect of the same cause of action. But it does not contemplate unity of distinct and separate causes of action. If, therefore, the subsequent suit is based on a different cause of action, the rule will not operate as a bar. (4)In the decision of the Honourable Supreme Court in Sopan Sukhdeo Sable and others v. Assistant Charity Commissioner and others, [(2004) 3 Supreme Court Cases 137], at Page 138 and 139, it is held as follows:
There is a basic distinction between statements of the facts disclosing cause of action and the reliefs sought for. The reliefs claimed do not constitute the cause of action. On the contrary, they constitute the entitlement, if any, on the basis of pleaded facts. Whether part of the relief cannot be granted by the Civil Court is a different matter from saying that because of a combined claim of reliefs, the jurisdiction is ousted or no cause of action is disclosed. Considering the reliefs claimed vis-a- vis the pleadings would not mean compartmentalization or segregation of the pleadings in a sense opposed to the principle that the plaint has to be read as a whole that is, a giving up or relinquishing of some of the reliefs sought for does not imply that the plaint is not being read in its totality.
Under Order 2 Rule 1 CPC, which contains provisions of mandatory nature, the requirement is that the plaintiffs are duty-bound to claim the entire relief. The suit has to be so framed as to afford ground for final decision upon the subjects in dispute and to prevent further litigation concerning them. Rule 2 further enjoins on the plaintiff to include the whole of the claim which the plaintiff is entitled to make in respect of the cause of action. If the plaintiff omits to sue or intentionally relinquishes any portion of his claim, it is not permissible for him to sue in respect of the portion so omitted or relinquished afterwards. Further, in the aforesaid decision at Page 139 and 140, it is held hereunder:
Order 7 Rule 11 lays down an independent remedy made available to the defendant to challenge the maintainability of the suit itself, irrespective of his right to contest the same on merits. The law ostensibly does not contemplate at any stage when the objections can be raised the trial court can exercise the power at any stage of the suit, that is, before registering the plaint or after issuing summons to the defendant at any time before the conclusion of the trial - and also does not say in express terms about the filing of a written statement: for the purposes of deciding an application under clauses (a) and (d) of Order 7 Rule 11 CPC, 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. Instead, the word 'shall' is used clearly implying thereby that it casts a duty on the Court to perform its obligations in rejecting the plaint when the same is hit by any of the infirmities provided in the four clauses of Order 7 Rule 11, even without intervention of the defendant. In any event, rejection of the plaint under Order 7 Rule 11 does not preclude the plaintiffs from presenting a fresh plaint in terms of Order 7 Rule 13.
Saleem Bhai v. State of Maharashtra, [(2003) I SCC 557], relied on Only a part of the plaint cannot be rejected and if no cause of action is disclosed, the plaint as a whole must be rejected. Order 7 Rule 11 does not justify rejection of any particular portion of the plaint. Order 6 Rule 16 of the Code is relevant in this regard. It deals with 'striking out pleadings'. It has three clauses permitting the Court at any stage of the proceeding to strike out or amend any matter in any pleading.
Roop Lal Sathi v. Nachhattar Singh Gill, [(1982) 3 SCC 487], relied on The real object of Order 7 Rule 11 is to keep out of courts irresponsible law suits. Therefore, the Order 10 CPC is a tool in the hands of the Courts; and by resorting to it and by a searching examination of the party, in case the Court is prima facie persuaded of the view that the suit is an abuse of the process of the court, in the sense that it is a bogus and irresponsible litigation, the jurisdiction under Order 7 Rule 11 can be exercised.
The basic question to be decided while dealing with an application filed under Order 7 Rule 11(a) CPC is whether a real cause of action has been set out in the plaint or something purely illusory has been stated with a view to get around Order 7 Rule 11. The trial Court must remember that if on a meaningful and not formal reading of the plaint it is manifestly vexatious and meritless in the sense of not disclosing a clear right to sue, it should exercise the power under Order 7 Rule 11(a) taking care to see that the ground mentioned therein is fulfilled. If clever drafting has created the illusion of a cause of action, it has to be nipped in the bud at the first hearing by examining the party searchingly under Order 10 of the Code. It is true that by ingenious drafting a cause of action in the nature of red herrings cannot be brought into judicial arena. (5)In the decision of the Honourable Supreme Court in State of Maharashtra and another v. National Construction Company, Bombay and another, [(1996) 1 Supreme Court Cases 735], at Page 736, it is held thus:
Section 11. CPC deals with the doctrine of res judicata and provides that any matter which might or ought to have been made a ground for defence or attack in the former suit shall be deemed to have been a matter directly and substantially in issue in such suit. The important words are "has been heard and finally decided". The bar applies only if the matter directly and substantially in issue in the former suit has been heard and finally decided by a Court competent to try such suit. That clearly means that on the matter or issue in question there has been an application of the judicial mind and a final adjudication made. If the former suit is dismissed without any adjudication on the matter in issue merely on a technical ground of non-joinder, that cannot operate as res judicata.
In the present case in the appeal against dismissal of the first suit the appellate court did not consider the merits of the case, but confirmed the dismissal of the suit by the lower court on a technical ground. Therefore, the dismissal of the short cause suit and the subsequent appeal could not have operated as a bar to the special civil suit. The plea based on the principle of res judicata fails.
Sheodan Singh v. Daryao Kunwar, AIR 1966 SC 1332: (1966) 3 SCR 300 : 1966 All LJ 578; Inacio Martins v. Narayan Hari Naik, (1993) 3 SCC 123, relied on (2)Both the principle of res judicata and Rule 2 of Order 2 are based on the rule of law that a man shall not be twice vexed for one and the same cause. One of the tests for determining whether Order 2 Rule 2 CPC would apply in a particular situation is, whether the claim in the new suit is in fact founded upon a cause of action distinct from that which was the foundation for the former suit. If the answer is in the affirmative, the rule will not apply. The cause of action for a suit comprises all those facts which the plaintiff must aver and, if traversed, prove to support his right to the judgment.
Mohd. Khalil Khan v. Mahbub Ali Mian, AIR 1949 PC 78: 52 CWN 812: 75 IA 121; Kewal Singh v. Lajwanti, (1980) 1 SCC 290: AIR 1980 SC 161, relied on In the plaint of the short cause suit, the foundation of the appellant's claim rested upon the Performance Guarantee. In the plaint of the special suit, the main relief sought by the appellants was on the basis of the contract entered into between the appellants and the contractor. In the first suit, the appellants could only claim reliefs in respect of Rs.14,12,836/- which was the maximum amount stipulated in the performance guarantee. They could not have claimed reliefs of Rs.1,13,27,298.16 which they did in the second suit on the basis of the contract relating to the work to be performed by the contractor. The relief sought in the short cause suit was therefore based on a different cause of action from that upon which the primary relief in the special suit was founded. (6)In the decision of the Honourable Supreme Court in Vishnu Dutt Sharma v. Daya Sapra (Smt), [(2009) 13 Supreme Court Cases 729], at Page 735 in Paragraphs 20 to 22, it is observed as follows:
20.Any person may as of right have access to the courts of justice. Section 9 of the Code of Civil Procedure enables him to file a suit of civil nature excepting those, the cognizance whereof is expressly or by necessary implication barred. Order 7 Rule 11(d) is one of such provision which provides for rejection of plaint, if it is barred by any law. Order 7 Rule 11(d) of the Code being one of the exception, thus, must be strictly construed.
21.This leads us to another question, namely, whether the civil suit was barred on the date on which it was filed. Answer to the question whether the civil suit was barred on the day on which it was filed indisputably must be rendered in the negative. If as on the date of institution of the suit, plaint could not be rejected in terms of Order 7 Rule 11(d) of the Code of Civil Procedure, whether its continuation would attract the principles of abuse of processes of court only because the accused was acquitted in the criminal proceeding is the question.
22.Dismissal of a suit on the ground that it attracts the provisions of Section 12 of the Code, keeping in view of the content of provisions of Section 11 thereof may now be considered. The principle of res-judicata as contained in Section 11of the Code is not attracted in this case. Even general principle of res-judicata would also not be attracted. A suit cannot be held to be barred only because the principle of estoppel subject to requisite pleading and proof may be applied. The said principle may not be held to be applicable only at a later stage of the suit. Also, in the aforesaid decision at Page 738 in Paragraph 27 and 28, it is held hereunder:
42.Relevancy and effect of judgments, orders or decrees, other than those mentioned in Section 41.- Judgments, orders or decrees other than those mentioned in Section 41, are relevant if they relate to matters of a public nature relevant to the inquiry; but such judgments, orders or decrees are not conclusive proof of that which they state.
43.Judgments, etc., other than those mentioned in Sections 40 to 42, when relevant Judgments, order or decrees, other than those mentioned in Sections 40, 41 and 42 are irrelevant, unless the existence of such judgment, order or decree, is a fact in issue, or is relevant, under some provision of this Act.
28.If judgment of a civil court is not binding on a criminal court, it is incomprehensible that a judgment of a criminal court will be binding on a civil court. We have noticed hereinbefore that Section 43 of the Evidence Act categorically states that judgments, orders or decrees, other than those mentioned in Sections 40, 41 and 42 are irrelevant, unless the existence of such judgment, order or decree, is a fact in issue, or is relevant in some other provisions of the Act, no other provisions of the Evidence Act or for that matter any other statute had been brought to our notice. (7)In Mohammad Khalil Khan and others v. Mahbub Ali Mian and others, [A.I.R. (36) 1949 Privy Council 78], it is held that 'in a case of 'same cause of action' and the evidence supporting two claims are the same and further the cause of action in two suits are the same, then, the new suit is barred.' (8)In the decision of the Honourable Supreme Court Vithalbhai (P) Ltd v. Union Bank of India, [(2005) 4 Supreme Court Cases 315], at Page 316, it is held that 'the power of the Court as per Order 7 Rule 11 of the Civil Procedure Code can be exercised both at the threshold of the proceedings and in the absence of in any statutory restriction, at any stage of the subsequent proceedings and that a preliminary objection should be raised at the earliest.' (9)In Ram Raghubirlal v. United Refineries (Burma) Limited, [A.I.R. 1931 Rangoon 54], it is held as follows:
A Judge should not be permitted to preclude a party to an action before him from putting all the available evidence in the case, to render the whole of the meaning of S.86 nugatory. Where therefore the defence raises the question of the competency of the director to sign and verify the plaint, the defendants are entitled so to cross-examine him as to expose all the facts bearing on that question. It is only when all those facts are before it that the Court can properly come to a finding as to whether S.86 covers the case: Bridport Old Brewery Company, In re, (1867)2Ch.191 and Harlan v.Phillips, 23 Ch.D.14, Ref. (10)In Kottayam Bank Ltd. v. Ahammed Kannu Rawther, [AIR 1957 KERALA 164 (V 44 C 85 Nov.)] at 164 and 165, it is held as follows:
There is nothing in law to prevent a corporation from suing by its agent as provided by O.3, R.1 of the C.P.C. Order 29, R.1 is only permissive and does not preclude a corporation from taking advantage of O.3, R.1 and O.6, R.14 and having its pleadings signed by a duly constituted agent. AIR 1930 Bom 566, Ref. (11)In M/s.Crescent Petroleum Ltd. v. Monchegorsk and another, [AIR 2000 BOMBAY 161], at Page 162, it is held as follows:
The Court has the power under Order 7, Rule 11(a) of the Code of Civil Procedure to reject the plaint at the threshold. But in this case the Court would reject the plaint only if it comes to the conclusion that necessary averments and material has not been placed before the Court to show, at least prima facie, that PAL had entered into the contract for bunkers at the instance, authority or faith of the vessel or its owners. In the event the Court comes to the conclusion that necessary averments have been made to disclose a cause of action in personam against the owner of the vessel, then it would not be necessary to decide the question of law raised by Mr. Mukherjee viz. for an action in rem to lie it is essential that the owner of the vessel is liable in personam. It would be necessary to decide this question only if the Court comes to the conclusion that necessary averments have not been made to disclose a cause of action in personam against the owner. Having perused the plaint and the documents which are made available, 1 am prima facie of the opinion that the necessary averments have been made by the plaintiffs to raise a triable issue with regard to the bunkers being supplied to the owners. Therefore, it would not be necessary to decide the question of law at this stage. I am, prima fade, satisfied that this is not the kind of case where the Court can come to the conclusion, at this interlocutory stage, that there are no averments showing that the bunkers have been supplied to the ship on the alleged authority of the owner.
The averments in the plaint and the documents on record showed that the agreement was entered into expressly on the faith and credit of the vessel. It was agreed and acknowledged that a lien on the vessel was thereby created. It was also agreed that the buyer, if not the owner of the vessel, warrants that he has the authority of the owner to pledge the vessel's credit. It also states that he will give notice of the provisions of this Clause to the owner. Prima facie, without going into the merits or evidentiary value of the documents, it is established that the plaintiffs are perfectly within their right to claim that the necessaries / Bunkers were supplied at the instance / authority of the vessel/owners. Thus, at this stage it would not be possible to hold that the contract has not been entered into on behalf of the owners of the vessel. This issue will have to be finally decided on the basis of the evidence which will be adduced at the final hearing of the case. Reading the aforesaid averments together it cannot be said that the plaintiffs have not stated that the supply of necessaries were not made to the owners of the vessel. So, even if the Court proceeds on the basis that action in rem lies only if the owner is liable in personam, the defendant cannot succeed at this stage. Thus the suit could not be dismissed at this interlocutory stage on the ground that it is not maintainable for lack of cause of action. (12)In Hindustan Petroleum Corporation Ltd. and another v. Sardar Chand and another, [AIR 1991 PUNJAB AND HARYANA 185], at Page 186 in Paragraphs 6 and 7, it is observed as follows:
The Board of Directors, thus, was the authority under the Articles of Association, as referred to above to take a decision regarding institution or defending the suits. The power was delegated to Sh. Mohinder Kumar Bagai vide power of attorney Annexure A/2., now produced. Mr. M. K. Bagai was Director Marketing. Under this attorney, Mr. Bagai was further authorised to delegate the aforesaid powers mentioned therein to officer in the Marketing Division. This action of giving authority to Mr. M. K. Bagai was rectified by the Board of Directors in its meeting held on September 30, 1981 vide resolution A-8, copy Annexure A-1. Subsequently, Mr. Bagai delegated the power to Sh. J. Sethi, copy of which was produced along with memorandum bf appeal filed in the lower Appellate Court. Copy has been shown and produced in this Court as well. This authority was executed on September 16, 1983. Under this authority, power was given to prosecute and defend suits under cl.5(1) and to appeal, from any judgment and order adverse to the Company under cl. 5(iv). The matter of taking decision by the Board may differ from Company to Company. In the present, reference has been made to the Articles and Memorandum of Association showing as to how such decisions were required to be taken by the Board or by the authorities delegated. Thus, it was not a case where the defendant-Corporation was required to pass resolution in every case where the suit was to be filed or an appeal was to be filed in the meeting of Board of Directors. Such authority was delegated by the Board to Mr. Bagai, who was also competent to further delegate it and he did so in favour of Mr. J. Sethi. The appeal having been filed by Mr. J. Sethi under such authority was, therefore, competent. This Court in Pepsu Road Transport Corporation, Patialav. Kirat Mohinder Singh, 1983 PLR 219 had held as under:--
"The resolution fully authorised the General Manager to act on behalf of the petitioner in all the cases filed or to be filed by or against it. The passing of any specific resolution is not contemplated under the Act in each and every case. Moreover, it will depend upon the constitution of a Corporation and the manner in which its functions regulated by the State itself. There cannot be any universal rule that every Corporation must act through resolutions passed by it in each and every case."
7.The learned counsel for the respondents has referred to the decision of this Court in Punjab Wakf Board through its Secretary Ambala Cantl. v. Darb Singh (deceased) through his L.Rs. 1988 (1) CLJ 640, a case under the Wakf Act; wherein it was held that the Wakf Board was to take a decision for filing appeals. The Secretary of the Wakf Board of its own could not take such a decision and file the appeal. The ratio of this decision cannot be applied to the case in hand. That was not a case relating to a Company registered under the Companies Act. The present Corporation is a registered Company and is governed by its own rules and regulations provided in the Memorandum and Articles of Association, which have been discussed above.
47.The suit O.S.No.271 of 2003 has been filed by the Respondent/Plaintiff, represented by its Administrative Secretary D.Abraham, against the Appellant/defendant on the file of District Munsif Court, Kuzhithurai, praying for the relief of permanent injunction restraining the Appellant/Defendant, his men and agents, etc., from interfering with the administration of the Management of the Siddha Medical College, Munchirai, run by the Plaintiff Sangam and the other office bearers from causing any disturbance in functioning in any manner.
48.However, the Respondent/Plaintiff and the Appellant/ Defendant have filed O.S.No.147 of 2003 on the file of Learned Sub Judge, Kuzhithurai, praying for the relief of (a) declaration that the alleged resolutions of General Body which is exhibited as P1 in I.A.No.21115 of 2002 in O.S.No.15290 of 1996 of the City Civil Court, Chennai, as fraudulently manipulated, bogus, non-est, invalid and null and void document (b) for declaring that the alleged resignation letter dated 31.08.2002 which is marked as Ext.P2 in C.S.No.15290 of 1996 is a forged as well as bogus, non-est, invalid, null and void document and (c) for the relief of permanent injunction restraining the Respondents, their men and agents, from interfering or disturbing with the peaceful and smooth functioning of the Respondent/Plaintiff Sangam and all its institutions in any manner whatsoever.
49.The Respondent/Plaintiff in C.S.No.752 of 2005 on the file of this Court as against the Appellant/Defendant has sought the following reliefs: (a)For permanent injunction restraining the defendant their men, agents, servants and other office bearers appointed by the defendant from in any manner interfering with the Plaintiff's Administration including the collection of fees from the student of the college Akila Thiruvithancore Siddha Vaidhya Sangam, Ananthasramanm Munchirai, Pudukkadai District, Kanyakumari District and its branches morefully described in the schedule hereunder. (b)directing the defendant to render account with regard to the money collected by the defendant from the students since 15.08.2003 till the date of the plaint and (c)to pay the Plaintiff the cost of this suit etc.
50.That apart, in M/s.Rajghria Paper Mills Ltd. v. General Manager, Indian Security Press and another, [AIR 2000 DELHI 239], at Page 245, it is held that 'unless a power to institute suit is specifically conferred on a particular director he has no authority to institute the suit on behalf of the company. It must, therefore, follow that although the Plaint has been signed and verified properly but the suit has not been instituted by a duly authorised person on behalf of the Plaintiff'.
51.In Wipro Limited and another v. Oushadha Chandrika Ayurvedic India (P) Ltd. and others, [AIR 2008 MADRAS 165 (DB)], at Page 172 in Paragraph 18, it is held that 'in deciding an application under Clauses (a) and (b) of Order 7 Rule 11 of the Civil Procedure Code, the averments made in the Plaint are germane. The pleas taken by the Defendant in the written statement would be wholly irrelevant at that stage.'
52.In the decision of the Honourable Supreme Court in United Bank of India v. Naresh Kumar and others, [(1996) 6 Supreme Court Cases 660], at Page 660 and 661, it is held as follows:
A company like the appellant can sue and be sued in its own name. Reading Order 6 Rule 14 together with Order 29 Rule 1 of the Code of Civil Procedure it would appear that even in the absence of any formal letter of authority or power of attorney having been executed a person referred to in Rule 1 of Order 29 can, by virtue of the office which he holds, sign and verify the pleadings on behalf of the corporation. In addition thereto and dehors Order 29 Rule 1 CPC, as a company is a juristic entity, it can duly authorise any person to sign the plaint or the written statement on its behalf and this would be regarded as sufficient compliance with the provisions of Order 6 Rule 14 CPC. 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.
53.In M/s.Allied Motors v. M/s.Sanderson Agencies, [AIR 1992 DELHI 324], it is held that 'the suit filed by a person authorised by Board of Directors of the Company to verify and institute the same is properly instituted one by the competent person.'
54.In Assam Brookes Ltd. v. Lal Bahadur, [1999 AIHC 1965], it is held that 'the irregularities in signing and verifying the plaints are curable and the suit is not liable to be rejected on mere technicality.'
55.In S.Ganesan v. S.Issac (deceased by Lrs) and others, [AIR 2003 MADRAS 208], it is held as follows:
In order that a plea of the bar under Order 2, Rule 2(3) C.P.C. should succeed, the defendant who raised the plea must make out (1) that the second suit was in respect of the same cause of action as that on which the previous suit was based; (2) that in respect of that cause of action the plaintiff was entitled to more than one relief; (3 ) that being thus entitled to more than one relief the plaintiff, without leave obtained from the Court omitted to sue for the relief for which the second suit had been filed; (4) that the cause of action and the parties to the second suit shall be the same as in the first suit.
As the plea is a technical bar, it has to be established satisfactorily and cannot be presumed merely on the basis of inferential reasoning. In other words, the plea of a bar under Order 2, Rule 2 C.P.C. can be established only if the defendant files in evidence the pleadings of the previous suit and thereby proves to the Court the identity of the cause of action as well as the identity of the parties in the two suits. Thus, where in the earlier suit filed by the defendant in respect of the suit house he had claimed half share in the house property and in the appeal filed against the decree of the suit the appellant Court had directed to file a separate suit in respect of that property and there was no fresh cause of action, the bar of O.2, R.2 read with S.11(4) would not apply.
56.In Gurbux Singh v. Bhooralal, [AIR 1964 Supreme Court 1810], at Page 1810 and 1811, it is held as follows:
in order that a plea of a bar under O.2 R.2(3) Civil Procedure code should succeed the defendant who raises the plea must make out (1) that the second suit was in respect of the same cause of action as that on which the previous suit was based; (2) that in respect of that cause of action the plaintiff was entitled to more that one relief (3) that being thus entitled to more than one relief plaintiff, without leave obtained from the Court omitted to sue for the relief for which the second suit had been filed. From this analysis it would be seen that the defendant would have to establish primarily and to start with, the precise cause of action upon which the previous suit was filed, for unless there is identity between the cause of action on which the earlier suit was filed and that on which the claim in the later suit is based there would be no scope for the application of the bar. No doubt, a relief which is sought in a plaint could ordinarily be traceable to a particular cause of action but this might, by no means, be the universal rule. As the plea is a technical bar it has to be established satisfactorily and cannot be presumed merely on basis of inferential reasoning. It is for this reason that we consider that a plea of a bar under 0. 2. r. 2, Civil Procedure Code can be established only if the defendant files in evidence the pleadings in the previous suit and thereby proves to the Court the identity of the cause of action in the two suits. The cause of action in the previous suit would be the facts which the plaintiff had then alleged to support the right to the relief that he claimed. Without placing before the Court the plaint in which those facts were alleged, the defendant cannot invite the Court to speculate or infer by a process of deduction what those facts might be with reference to the reliefs which were then claimed. It is not impossible that reliefs were claimed without the necessary averments to justify their grant. From the mere use of the words `mesne profits' therefore one need not necessarily infer that the possession of the defendant was alleged to be wrongful. It is also possible that the expression 'mesne profits' has been used in the present plaint without a proper appreciation of its significance in law. What matters is not the characterisation of the particular sum demanded but what in substance is the allegation on which the claim to the sum was based and as regards the legal relationship on the basis of which that relief was sought. It is because of these reasons that we consider that a plea based on the existence of a former pleading cannot be entertained when the pleading on which it rests has not been produced.
57.On a careful consideration of respective contentions, this Court is of the considered view that before the Learned Single Judge in Application Nos.7131 and 4527 of 2007, the Appellant/Defendant or the Respondent/Plaintiff has not let in any oral or documentary evidence to satisfactorily establish the plea of bar under Order 2 Rule 2(3) of Civil Procedure Code and also even for the rejection of Plaint on the basis of cause of action where previous and subsequent suits have arisen out of the same cause of action and between the same parties, which has to be proved by oral and documentary in the manner known to law. If both the suits are on the basis of two different cause of actions for which separate evidence will have to be let in by the parties, then, the ingredients of Order 2 Rule 2 of Civil Procedure Code are not attracted, in the considered opinion of this Court. It is to be borne in mind that the ingredients of Order 2 Rule 2 of Civil Procedure Code are penal in nature and they should be construed strictly, as opined by this Court.
58.A 'cause of action' is a bundle of essential facts and it is necessary for the Plaintiff to establish the same before he can succeed in the suit. The ingredients of Order 2 Rule 2 of Civil Procedure Code are not a meaningless procedural technicalities, but calculate to combat the plurality of proceedings. In order to attract Order 2 Rule 3 of Civil Procedure Code, it must be shown that the second suit is based on an identical cause of action and the criteria for judging the same is whether the same evidence would maintain both the actions.
59.While deciding the application under Order 7 Rule 11 of Civil Procedure Code for rejection of the plaint, the Court would presume facts mentioned in the plaint as correct. It is to be noted that a Court of Law will not embark upon a roving enquiry into the truthfulness or falsity of allegation. One cannot brush aside an important fact that the power under Order 7 Rule 11 of Civil Procedure Code for rejection of plaint will have to be exercised, by a Court of Law with utmost caution, since the dismissal of an application for petition at the nascent stage leads to very serious consequences. Furthermore, a Plaint under Order 7 Rule 11 of Civil Procedure Code cannot be rejected on the basis that there is every likelihood of relief claimed by the Plaintiff not being granted.
60.As a matter of fact, an embargo as regards the maintainability of the suit as per Order 7 Rule 11 of the Civil Procedure Code must be quite apparent from the material averments made in the plaint. In these circumstances, the ingredients of Order 2 Rule 2 of Civil Procedure Code are based on the Rule of Law that no man shall be vexed twice for one and the same cause of action.
61.As far as the present case is concerned, admittedly, before the Learned Single Judge in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005, no oral or documentary evidence have been adduced by the respective sides in support of their claims. No wonder, the plea of bar under Order 2 Rule 2(3) of Civil Procedure Code, is to be established by the Appellant/Defendant with the aid of previous suit by means of adducing oral and documentary evidence in the manner known to law. Therefore, a duty is also cast upon the Court to perform its obligations, in rejecting the Plaint if it is hit by any of the infirmities under Clauses (a) to (f) of Order 7 Rule 11 of Civil Procedure Code even without the intervention of the Defendant, as per the decision in Sopan Sukhdeo Sable and others v. Assistant Charity Commissioner and others, (2004) 3 Supreme Court Cases 137. The object behind Order 7 Rule 11 of Civil Procedure Code is to keep out of Courts irresponsible law suits.
62.A Plaint should not be rejected under Order 7 Rule 11 of Civil Procedure Code at the initial state without proper enquiry. At the same time, a Court of Law has enough powers to see that vexatious litigations are not allowed to consume the time of the Court. However, a Plaint should be rejected as per Order 7 Rule 11 of Civil Procedure Code where it does not disclose a cause of action and not where there is no cause of action. A Plaint would be read as a whole and the merits of the case are not to be considered at this stage.
63.Indeed, the averments made in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 and the counter filed thereto are a mixed question of fact and law, to be traversed in detail and elaborate examination.
64.Further, in view of the fact that for rejection of the plaint in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 on the file of this Court, the oral and documentary evidence are necessarily to be let in by the respective parties, this Court is of the considered view that a technical plea for rejection of the Plaint has to be satisfactorily explained and cannot be presumed merely on the basis of inferential reasoning or based on assumptions, presumptions or suppositions and in that view of the matter, this Court, without expressing any opinion on the merits of the matter and with a view to provide an opportunity to the respective parties to establish their case by means of oral and documentary evidence sets aside the order passed by the Learned Single Judge in both the Applications and resultantly allows the Appeals to prevent an aberration of Justice.
In the result, the O.S.A.Nos.359 and 360 of 2008 are allowed leaving the parties to bear their own costs. Consequently, the Common Order dated 07.03.2008 in Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 passed by the Learned Single Judge, is set aside for the reasons assigned by this Court in these Appeals. The Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 are restored to the file of the Learned Single Judge. The Learned Single Judge is requested to dispose of the Application Nos.7131 and 4527 of 2007 in C.S.No.752 of 2005 after providing due opportunities to the respective parties to let in oral and documentary evidence to prove their case by examining the witnesses and marking documents, if they so desire/advised, in the manner known to law and in accordance with law.
(E.D.R.J.) (M.V.J.) 17.08.2011 Index : Yes/No Internet : yes/No mps ELIPE DHARMA RAO,J. AND M.VENUGOPAL,J. mps O.S.A.Nos.359 & 360 of 2008 17.08.2011