The main legal point established in the judgment is the requirement for a plaintiff to have the authority to file a suit on behalf of a company, as per the Companies Act, 1956 and the Indian Evidence Act.

1. The plaintiff, a German Company, filed the suit praying for a judgment and decree to direct the defendant-Company, a Chennai based Company, to pay a sum of Rs.38,87,148.61/- together with interest at 18% per annum on the said amount from 30.6.1999 to the date of payment in full to the plaintiff and for costs of the suit.

2. The averments in the plaint are as follows:

(a) The plaintiff-Company is doing business of procuring orders for the sellers of shoe uppers and finished leather in India, from Overseas buyers. The plaintiff also collected commission for the services rendered ranging from 4% to 6% of invoice amount as mutually decided.

(b) During the course of business, the plaintiff-Company procured various purchase orders from the defendant-Company by overseas buyers and the defendant-Company failed to pay the commission amount and so, a meeting was arranged on 25.2.1998, in which, the defendant-Company agreed to clear the outstanding amount due to the plaintiff-Company within a time frame.

(c) On 2.2.1999, the defendant-Company issued a Demand Draft for DM 14,089/- and after giving credit to the above payment, the balance amount due from the defendant is Rs.38,87,148.61 as on 30.6.1999. So, the plaintiff-Company was constrained to issue notice on 19.7.1999 to the defendant-Company and though reply was received by the plaintiff-Company, the defendant-Company did not make payments, and hence, the plaintiff-Company was constrained to file the suit for recovery of amount of Rs.38,87,148.61 with interest @ 18% p.a. on the said amount from 30.6.1999 to the date of payment in full to the plaintiff.

3. The gist and essence of the written statement filed by the defendant-Company, are as follows:

(a) Since the suit was filed by the Liaison Officer of the plaintiff-Company, the suit is not maintainable. From 1995, the defendant-Company honoured all the orders placed through the plaintiff-Company and the plaintiff-Company earned handsome commission on account of such business. In June 1996, the plaintiff-Company intimated the defendant-Company that they were expecting orders from a very reputed client of theirs for about 20,000 pairs of shoe uppers and consequently directly, the defendant-Company has not accepted any orders from August 1996 to December 1996. In October 1996, the plaintiff-Company informed the defendant-Company that the expected orders would not be materialised. The defendant lost nearly DM.2,00,000/-on account of the fact that the expected orders did not materialise. So, the defendant-Company raised the claim against the plaintiff-Company.

(b) The plaintiff-Company has been evading to settle the claim and it has placed some further orders with the defendant-Company, and the defendant-Company properly and diligently processed the same. In February 1998, the plaintiff-Company raised the issue of Commission.

The defendant-Company also reiterated the claim for just compensation for keeping the factory premises idle for nearly five months and so, the discussion has taken place on 25.2.1998 and it was agreed that the defendant-Company would pay the following amounts:-

(i) Invoice-Hoegl 1996 – DM.13,617.45;

(ii) Invoice-EURO 1996 – DM.14,089.19 and

(iii) Invoice-Marc 1996 – DM.19,846.82.

(c) The defendant paid the sums of DM 13,617.45 and DM 14,080.19 to the plaintiff. No date was fixed for payment of DM.19,846.82, because the plaintiff agreed that they would in the meantime talk to the principals regarding the compensation to be paid to the defendant-Company and secondly they would in any case continue to place orders with the defendant-Company and so, the defendant-Company at last, partly recovered his loss. The defendant-Company, in total satisfaction of their part, paid DM.13,617.45 and DM.14,089.19 to the plaintiff-Company. As far as sum of DM.19,846.82 is concerned, there was no concluded contract to pay the said amount, and so, the defendant-Company is not liable to pay for the amount of loss @ Rs.38,87,1