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1996 Supreme(P&H) 1392
PUNJAB & HARYANA HIGH COURT
N.K.Kapoor, J.
Indian Overseas Bank
Versus
Shree Saraswati Spinning Mills
Regular Second Appeal No. 2678 of 1988,
Civil Miscellaneous No. 2913 of 1996,
Decided On : SEPTEMBER 11, 1996
A Branch Manager of a bank, even though a principal officer, requires a valid resolution of the Board of Directors to institute a suit on behalf of the bank.
Headnote:
BANKING - SUIT BY BANK - AUTHORITY OF BRANCH MANAGER TO FILE SUIT - POWER OF ATTORNEY - RESOLUTION OF BOARD OF DIRECTORS - ADMISSIBILITY OF ADDITIONAL EVIDENCE - ORDER 41 RULE 27 CPC - INTERPRETATION.
Fact of the Case:
Indian Overseas Bank, a corporate body, filed a suit for recovery of Rs. 21,16,837.19 paise and for mortgage decree through its Branch Manager, Shri J.R. Tutlani. The defendants contested the suit on various grounds, including the authority of Shri Tutlani to file the suit. The trial court found in favor of the plaintiff, but the lower appellate court reversed the decision, holding that Shri Tutlani lacked the necessary authorization.
Finding of the Court:
The High Court allowed the plaintiff's appeal and remanded the case to the trial court for fresh adjudication. It held that Shri Tutlani, as the Branch Manager and Principal Officer of the Bank, had the authority to sign and verify the pleadings on behalf of the Bank under Order 29 Rule 1 CPC. However, the authority to institute the suit required a valid resolution of the Board of Directors. The court also permitted the plaintiff to adduce additional evidence, including the resolution of the Board of Directors, memorandum of Association and Articles of Association, and a supplemental power of attorney, to prove Shri Tutlani's authority.
Issues: 1. Whether Shri J.R. Tutlani had the authority to file the suit on behalf of the plaintiff bank? 2. Whether the plaintiff could adduce additional evidence to prove Shri Tutlani's authority under Order 41 Rule 27 CPC?
Ratio Decidendi: 1. The court interpreted Order 29 Rule 1 CPC, holding that while it allows a principal officer of a corporation to sign and verify pleadings, it does not confer the authority to institute a suit without a valid resolution of the Board of Directors. 2. The court applied Order 41 Rule 27 CPC, which allows the court to admit additional evidence at any stage of the proceedings if it is satisfied that such evidence is necessary for the just decision of the case. The court found that the additional evidence sought to be adduced by the plaintiff was relevant to the issue of Shri Tutlani's authority and that it could have a material bearing on the outcome of the case.
Final Decision: The High Court allowed the plaintiff's appeal, set aside the judgments and decrees of the lower courts, and remanded the case to the trial court for fresh adjudication. The trial court was directed to expeditiously dispose of the case within six months from the receipt of the High Court's order.
N.K.Kapoor, J.
1. This is plaintiffs regular second appeal against the judgment and decree of the Additional District Judge whereby decree awarded by the trial Court has been reversed, thus, dismissing the suit filed by the plaintiff.
2. Plaintiff-Bank through its Branch Manager Shri J.R. Tutlani filed suit for recovery of Rs. 21,16,837.19 paise and for mortgage decree under Order 34 CPC.
3. The suit was contested by the defendants on a number of grounds, namely, filing of the suit by a duly authorised person; execution of mortgage deed as an additional security; execution of other documents for the grant of credit facilities; amount due towards the defendants; rate of interest; suit being bad for misjoinder and non-joinder of parties; bar of limitation etc.
4. Trial Court on the basis of evidence i.e. documentary as well as oral adduced by the respective parties finally found merit in the case of the plaintiff and so awarded a preliminary decree for a sum of Rs. 21,16,837.19 paise with costs. Defendants were allowed six months time to pay or deposit the decretal amount. Interest at the rate of 14% per annum was allowed from the date of suit till 11.2.1987, the time fixed by the Court for payment the decretal amount and thereafter the plaintiff was entitled to interest at the rate of 14% per annum at the aggrieved amount of principal, interest and costs upto the date of realisation of actual payment. In case the defendants fail to comply with the aforesaid decree plaintiff was held entitled to move the Court for final decree under Order 34 Rule 5 CPC.
5. Feeling aggrieved by the judgment and decree of the trial Court the defendants preferred an appeal before Additional District Judge. Counsel for the appellant at the out set challenged the finding of the trial Court in respect of issue No. 1. Counsel for the appellant urged that Shri J.R. Tutlani had no valid authority in his favour for filing of a suit. According to the counsel, in the absence of any resolution having been passed by the Board of Directors the alleged authority given by the Directors to Shri. Tutlani to institute the suit is infact no authority in law and so the appeal deserves to be allowed on this ground. Further arguing the counsel drew the attention of the Court to Photostat copy of General power of attorney in favour of Shri Tutlani, Exhibit P-1, and argued that the document has not been attested and in the absence of the same no reliance can be placed upon such a document especially when Shri Tutlani could not state as to who was the third Director who had appended signatures upon the power of attorney exhibit P-1. Power of attorney is also not a registered document. Lower appellate Court found substance in this plea of the appellants and so reversed the findings of the trial Court in respect of issue No. 1. Other issues too were examined by the Court but the same need not be dilated for the reason that the appeal has been primarily accepted on account of reversal of finding of trial Court in respect of issue No. 1. The lower appellate Court while allowing the appeal specifically observed that the "plaintiff bank failed to produce resolution authorising J.R. Tutlani to file this suit; the power of attorney photostat copy of the same is Ex.P.l is neither attested nor it is registered. Even it was not executed in the presence of J.R. Tutlani. He is not in a position to identify even signatures of one of the Directors of the Board. All this shows that the suit is not instituted by duly authorised person, thus deserves to be dismissed on this very preliminary objection alone.-..." Appeal was accepted, thus, dismissing the suit of the plaintiff: -
6. Feeling aggrieved by the judgment and decree of the lower appellate Court the plaintiff has filed this appeal with a view to seek reversal of the judgment and decree of the lower appellate Court. Appellant has termed the conclusion arrived at by the lower appellate Court in respect of issue No. 1 to be to
