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2018 Supreme(Del) 404
IN THE HIGH COURT OF DELHI AT NEW DELHI
NAJMI WAZIRI, J.
HAVELLS INDIA LTD - Appellant
Versus
DILIP RATHI - Respondent
RFA 10 of 2017 & CM APPL.245 of 2017
Decided on : 16-02-2018
Advocate Appeared:
For the Appellant : Mr. R.S. Kela and Mr. Sanjeev Bindal, Adv.
The main legal point established in the judgment is the requirement to lawfully prove the authority of the signatory in suits filed by corporations, and the mandatory nature of producing primary evidence and certificates for admissibility of evidence.
Headnote:
Institution of Suit - Authority of Signatory - Indian Evidence Act, 1972 - Order 29 Rule 1 CPC - Failure to Produce Minutes' Book - Admissibility of Evidence - Suit Dismissed
Fact of the Case:
The appellant's suit was dismissed on the grounds of improper institution and lack of evidence to support the claim. The suit was signed by a person allegedly authorized by the appellant company, but the resolution authorizing him was not properly proved as the Minutes' Book was not produced. Additionally, the evidence to prove the ledger account was not supported by an affidavit as required under Section 65(b)(ii) of the Indian Evidence Act, 1972.
Finding of the Court:
The court found that the suit was not properly instituted as the authority of the signatory was not lawfully proved. The evidence presented was deemed inadmissible due to the failure to produce the necessary documents and certificates. The court also noted that the witnesses lacked first-hand knowledge of the transaction, and their evidence was considered evasive and vague.
Issues: The issues revolved around the proper institution of the suit, admissibility of evidence, and the sufficiency of witness testimony to establish the appellant's claim.
Ratio Decidendi: The court emphasized the requirement to lawfully prove the authority of the signatory in suits filed by corporations, as per Order 29 Rule 1 CPC. It also highlighted the necessity of producing primary evidence, such as the Minutes' Book, to prove resolutions. Additionally, the court emphasized the mandatory requirement of a certificate under Section 65(b)(ii) of the Indian Evidence Act for electronic evidence.
Final Decision: The court dismissed the appeal, affirming the lower court's decision to dismiss the suit due to improper institution and lack of admissible evidence.
NAJMI WAZIRI, J.
1. This appeal impugns a judgment and decree dated 03.09.2016 passed by the Additional District Judge-16 (Central), Tis Hazari Court, Delhi, dismissing the appellant’s suit, inter alia, on the grounds that the suit was not properly instituted and that no case was made out apropos the facts pleaded. The question of law raised by the appellant is whether the suit was properly instituted i.e. whether it was signed by a person duly authorised to do so. The suit had been signed by one Mr. S.R. Arora, a functionary of the appellant company. Its resolution allegedly authorising him was recorded in the Minutes’ Book of the company. This book, although in possession of the appellant, was never produced and no explanation for the default was furnished. A mere extract of the resolution, authenticated by the Company Secretary, was filed; however, for the document to be admissible the primary evidence i.e. the Minutes’ Book should have been produced. Furthermore, the evidence to prove the ledger account was not supported by an affidavit as required under Section 65(b)(ii) of the Indian Evidence Act, 1972. The applications for bringing on record the requisite affidavit and necessary documents were dismissed on 05.09.2016 and 27.07.2016 respectively. The impugned order held as under:
“..... 18. While taking such evidence into consideration, the first authorization in favour of S.R.Arora is dt 24.08.05 which is Ex. PWl/2. Perusal of this document shows that same is true copy of extract of Resolution passed by finance committee in the meeting of Board of Directors of plaintiff company held on 24.08.2005. admittedly, by then M/s. Crabtree India Ltd. had not merged into plaintiff company. It is also admitted fact that suit is in respect of transaction between Crabtree India Ltd. and defendant. As such in respect of transaction in question plaintiff company had no legal claim by 24.08.05, but this is not explained as to how Havells India Ltd. was passing any Resolution in favour of Sh. S.R.Arora for prosecuting the legal proceedings on behalf of that company whereas by then M/s. Crabtree India Ltd have not merged into it.
19. In order to remove such difficulty, apparently PW-1 has also referred in his evidence another authorization dt 06.10.2008, which is Ex.PW1/2A. Obvious objection regarding this document can be that such document is not pleaded in the plaint and thus is liable to be ignored. Even if such document Ex. PW1/2A is taken into consideration, I find that any Resolution of Board of Directors either Ex.PW1/2 or Ex.PW1/2A do not satisfy the legal requirement so far as proving the due authorization on behalf of plaintiff company in favour of said S.R.Arora because at the time when these documents were exhibited admittedly witness has not brought the minutes book regarding the extract of resolution which were exhibited as Ex.PW1/2 and Ex.PW1/2A.
20. Law is well settled that mere exhibition of documents does not dispense with the proof of that documents as per law. As per the requirement of order 29 Rule 1 CPC in case suit filed by or against the corporation , pleadings on behalf of corporation / company may be signed and verified on its behalf by Secretary, Director or other Principal Officer of the company who is able to depose on behalf of plaintiff company. It has been held by Delhi High Court in "Escorts Ltd. Vs. Sai Autos and Ors," 42(1990) DLT 446 that only way to prove that a particular resolution at a meeting of Board of Directors of Company is that the minutes book in which said Resolution was recorded as having been so passed, should be produced in the court as that can form evidence of the fact that such a Resolution was passed. In that judgment Hon'ble High Court while referring to the provisions of Section 194 of Companies Act and also relying upon earlier judgment has held that Resolution of Board of Directors can be proved only by bringing minutes book of the Board of Directors Meeting. In the present
