A Chief Financial Officer must be authorized by the company's Board to institute legal proceedings; lack of authorization renders the suit non-maintainable under the Companies Act.

JUDGMENT :

T.M. NADAF, J.

This appeal is directed against the order dated 17.02.2022, passed on I.A. filed by the defendant / respondent Nos.1 to 3, under Order-VII, Rule-11(d) of CPC, read with Commercial Courts Act , 2015 (‘Act of 2015’ for short) for rejection of the plaint in COM.O.S. No.306/2020, passed by the LXXXV Additional City Civil Judge (CCH-86) Bengaluru, along with an application in I.A.No.1/2023 seeking condonation of delay of 366 days in preferring the appeal.

2. The parties will be referred to as per their ranking before the trial court for easy reference.

3. This appeal was listed before this Court on 29.04.2025, for hearing on Interlocutory Application i.e., I.A. No.1/2023 seeking condonation of delay and after hearing both sides, the application was reserved for orders. Though the matter is reserved only for consideration of application seeking condonation of delay in filing the appeal, for better understanding a brief outline of the facts are stated as under:

The plaintiff / appellant filed a suit in Com.O.S.No.306/2020 against the defendants /respondents herein seeking for a judgment and decree, restraining the defendants and persons claiming through them by way of perpetual injunction using the trade marks C.Krishniah Chetty Corp., C. Krishniah Chetty & Co., Chetty & Co., Chetty, C. Krishniah Chetty & Co 1869, Chetty & Co., 1869 at any location in connection with the jewellery business in any manner including sales, promotion and marketing etc., alongwith other reliefs.

4. An application filed along with the plaint for temporary injunction came to be dismissed by an order dated 20.02.2021, on the premise that in view of the undertaking before the National Company Law Appellate Tribunal (for short ‘NCLAT’) dated 19.12.2019, the suit is not maintainable without a resolution of Board of Directors of the company delegating authority to file suit and also in view of Section-430, read with Section-241 of the COMPANIES ACT .

5. Aggrieved by the order, an appeal in Commercial Appeal No.61/2021, was filed before this Court. A Co-ordinate Bench of this Court on 27.05.2021, dismissed the appeal holding that the Trial Court was right in observing that the suit was defective and not maintainable, as per the reasons more particularly stated in paragraph Nos.44 and 45 of the order, which reads as under:

“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 a trial in the suit and in the absence of the party making out a case for trial, the prayer made by the said party for grant of interim orders/interim injunctioris in such a suit cannot be favoured.

45. The trial court has considered all these aspects of the matter and has rightly rejected the applica