The legal representation of companies in litigation must adhere to proper authorization protocols, confirmed by board resolutions and compliance with the Civil Procedure Code.

JUDGMENT :

Narsing Rao Nandikonda, J.

This first appeal is filed by the appellant/defendant No.1 under Section 96 of the Civil Procedure Code, 1908 (for short, ‘the CPC’) aggrieved by the judgment and decree dated 10.08.2010 passed in O.S. No.418 of 2006 on the file of the learned First Additional Senior Civil Judge, Warangal, wherein the said suit filed by the respondents/plaintiffs was decreed.

2. Heard Sri C.M.R. Velu, learned counsel appearing for the appellant and Sri K.P. Vijay Kumar, learned counsel for respondent No.1 who appeared virtually.

3. For the sake of convenience, the parties herein are referred to as they are arrayed in the suit.

4. The brief facts of the case are that the plaintiff, who is the Chit Fund Company registered under the Companies Act, has filed a suit against defendant No.1 herein and respondents No.2 to 8 for recovery of a sum of Rs.7,57,889/- together with subsequent interest at the rate of 12% per annum and for costs. Defendant No.1 joined as a member of the chit bearing No.WMT 40 M 50. The value of the chit is Rs.10,00,000/- which is to be paid in 50 installments at Rs.20,000/- per month. Accordingly, he executed an agreement of chit in favour of the plaintiff on 23.10.2004. In the auction held on 28.04.2005, defendant No.1 became successful bidder and agreed to forego an amount of Rs.4,50,000/-. Defendant Nos.2 to 8 stood as guarantors and executed a guarantee agreement and also jointly executed a promissory note for Rs.8,80,000/- towards collateral security for future installments. Subsequently, the plaintiff company paid the prize amount of Rs.5,50,000/- to defendant No.1 on 18.08.2005. Subsequently, defendant No.1 committed default in payment of the chit installments from 10.02.2006 onwards. As such, a legal notice was issued to all the defendants. The defendants neither gave any reply to the notice nor paid the amount.

5. Defendant No.1 filed separate written statement and defendant Nos.3 and 7 adopted the written statement of defendant No.2, while defendant No.6 also filed separate written statement and it was adopted by defendant No.4. Defendant No.8 remained ex parte. Defendant No.1 admitted that he was a subscriber of the said chit and there is no dispute regarding defendant No.1 becoming successful bidder, but he denied the execution of agreement of guarantee as well as the pronote and also contended that they are fabricated documents. It is contended that prized money was paid at belated stage and that the plaintiff company did not pay amount of Rs.1,49,397/- to defendant No.1. It was further contended that the company committed breach of terms and conditions of the chit agreement and violated the Rules and further contended that Legal Assistant of the company, who filed the suit, is not competent and authorized to represent the plaintiff’s company. Defendant No.2 filed written statement, which was adopted by defendant Nos.3 to 7, contending that she never executed any agreement of guarantee in favour of the plaintiff’s company and that defendant No.1 obtained some signatures on some papers and printed proformas without informing the purpose. She never stood as guarantor for defendant No.1 in respect of the suit chit and prayed to dismiss the same.

6. Defendant No.6 filed separate written statement, which was adopted by defendant No.4, contended that he never executed any agreement of guarantee in favour of the plaintiff’s company and that defendant No.1 obtained some signatures on blank and printed proformas and no chit amount wa