Kalyan Jyoti Sengupta, J. - (1.) This Motion has been taken out by the defendant No. 8 for dismissal of the suit under Order 7 Rule 11 of the Civil Procedure Code on the following grounds:- (i) The plaint was signed and verified by the person who was not duly authorised by the Board of Directors of the Allahbad Patrika Pvt. Ltd. (ii) The plaintiffs were not appointed as Directors either in terms of the Articles of Association or in terms of Section 255 of the Companies Act, 1956. (iii) Similarly, plaintiff No. 3 viz., Projesh Kumar Ray was not appointed as Director of the plaintiff company. (iv) The suit has been filed in contravention of provisions of the Companies Act, 1956. (v) No cause of action has been disclosed. (vi) The suit appears to be barred under the provisions of the Companies Act, 1956. This application has been opposed by the plaintiffs by filing written statement.
(2.) Mr. Das, learned Senior Counsel, in support of the Motion contends that the suit in the name of the Company cannot be filed unless it is authorised by the Board of Directors in its meeting and there was no resolution authorising any one to file the suit in the name of the Company and the same is hit by the provision of Section 291 of the Companies Act, 1956.
(3.) His next contention is that the instant suit is based on allegation of fraud, there is no particulars of fraud. Without the particulars of allegation of fraud and undue influence the suit cannot be maintained. Contention and claim in the present suit are false and vexatious. Therefore, this suit should be dismissed at this stage even without requiring the defendants or any of the defendants to file written statement. In support ission he has relied on the decisions reported in AIR 1995 Bombay 43, Industries Pvt. Ltd v. Manju Ravindra prasad Khetan ; AIR 1977 Supreme Court 2421, T. dam v. T.V. Saryapal ; AIR 1998 Supreme Court 634, I. T. C. Limited v. Debts Recovery Tribunal and AIR 1995 Calcutta 169, Al-Amin Seatrans Ltd. v. Owners and ,interested Vessel M.V. 'Loyal Bird'. At the time of argument, no learned Advocate for the plaintiff appeared, however, osequently notes of argument have been filed after hearing is concluded. 5. Having considered the argument of the learend Senior Counsel Mr. Das and also the written notes of argument it is settled law that an application of this nature has to be dealt with going by the averments made in the plaint. Upon careful perusal of the plaint not in form but in substance if it appears suit cannot be maintained, the plaint can be rejected or the suit may be dismissed, if necessary. Of course, there is no provision in Order 7 Rule 11 of the Civil Procedure Code for dismissal of a suit but for rejection of a plaint. However, I take note of the substance and the object of the instant application. In the decision of the Supreme Court reported in AIR 1977 Supreme Court 2421, T. Arivandandam v. T.V. Saryapal it is observed by the Apex Court in paragraphs 5 and 6 amongst other as follows:- "If on a meaningful - not formal - reading of the plaint it is manifestly vexatious, and meritless, in the sense of not disclosing a clear right to sue, the trial Court should exercise its power under Order 7, Rule 11, C.P.C. taking care to see that the ground mentioned therein is fulfilled. The trial Courts should insist imperatively on examining the party at the first hearing so that bogus litigation can be shot down at the earliest state. The Penal Code is also resourceful enough to meet such men, (Ch. XI) and must be triggered against them. (Para 5) If the trial Court is satisfied that the litigation was inspired by vexatious motives and altogether groundless it should take deterrent action under Section 35A. (Para 6)". 6. The above decision of the Supreme Court was also taken note in a subsequent decision of the Apex Court in the I.T.C.'s case reported in AIR 1998 Supreme Court 634 cited by Mr. Das. In this decision it has been held by the Apex Court in paragraph 16 as follows:- " 16. Question is whether a real cause of action has been set out in the plaint or something purely illusory has been stated with a view to get out of Order 7 Rule 11, Civil Procedure Code. Clever drafting creating illusions of cause of action are not permitted in law and a clear right to sue should be shown in the plaint." 7. On the anvil of the aforesaid principle of law enunciated by the Apex Court, now I examine the plaint reading within its four corners. So, it is appropriate to reproduce the prayers of the plaint hereunder : "a) Perpetual injunction restraining the defendant Nos. 1 to 8 and each of them from claiming and/or asserting and/or holding out and/or representing in any manner whatsoever as director of the Company being Allahabad Patrika Private Limited or otherwise having any connection or right pertaining to the management of the affairs of the Company or otherwise in any manner whatsoever; b) Perpetual injunction restraining the defendant Nos. 1 to 8 and each of them from interfering with the plaintiffs management of the affairs of the Company in any manner whatsoever ; c) Perpetual injunction restraining the defendant Nos. 1 to 8 and each of them from creating any interference or obstruction or disturbance or entering into either premises No. 3, Chittaranjan Avenue, Calcutta or the property and Printing Press at 10, Tashkent Marg and also 6A, Patrika Marg, Allahabad, in any manner whatsoever; d) Delivery up and cancellation of the purported Forms No. 32 as mentioned in paragraph 13 above and all documents allegedly filed by the defendant Nos. I to 8 with the Registrar of Companies, West Bengal; e) If necessary, declaration that the alleged resolution dated 5th May, 1998 and November 13, 1999 referred to in the letter paragraphs 10(a), 10(b) and 13 hereof are null and void, non binding on.any of the plaintiffs; f) Perpetual injunction restraining the defendant Nos. 1 to 8 from write, letter to any of the Bankers of the Company Allahabad Patrika Pvt. Limited intended to create disturbance in the operation of any of the accounts of the Company by the plaintiff Nos. 1 to 3 as per the existing arrangement in any manner whatsoever; g) Perpetual injunction restraining the defendant Nos. 1 to 8 or any of them relying on any of the alleged Board resolutions allegedly dated 5th May, 1997, 8th May, 1998 and 13th November, 1999 or on any of the said purported Form No. 32 mentioned in paragraph 13 above; h) Temporary injunction in terms of prayers (a) to (f) above; i) Attachment; j) Receiver; k) Costs; l) Further or other reliefs." 8. It appears that the Company itself has been made a party as plaintiff No. 5. Upon careful perusal of the plaint it appears to me that the plaintiff Nos. 1 to 4 have really sought to establish a case that defendant Nos. 1 to 8 are not the Directors nor having any connection and/or relation with the business, assets and properties of the plaintiff No. 5. It appears from paragraph 18 of the plaint that the plaintiffs have attempted to establish that the resolution dated 5th May, 1997 and 13th November, 1999 and consequential filing of Forms No. 32 under the Companies Act are null and void, non est and are not and cannot be binding on the plaintiffs or any of them and the aforesaid resolution and the forms are liable to be so adjudged and are further liable to be delivered up and cancelled. It is further grievance of the plaintiffs that the defendant Nos. 1 to 8 having no iota of right, title and interest being interlopers have been holding themselves as Directors of the plaintiff No. 5. 9. It is more or less settled principle of law in demurrer action of this nature only the plaint and plaint alone are to be looked into nothing more or beyond. The correctness and truthfulness of allegations of the plaintiffs cannot be decided on this summary proceedings unless, of course, on rare cases on the basis of unimpeachable document if produced, and is found that such claims are wholly false and invalid and the same are not maintained. In this case I find from the petition that the defendant No. 8 viz., Tamal Kanti Ghosh has sought to bring such facts (only) that need to be tried on evidence to establish the falsity of the plaintiffs claims. This cannot, however, be done at this interlocutory stage. This may be a defence in the written statement followed by evidence and witness action. Therefore, I am of the view that the plaintiff Nos. 1 to 4 have been able to disclose the cause of action as the petitioner/defendant has sought to controvert the allegation of the plaintiffs. There is a distinction between non-disclosure of cause of action and not having cause of action. I do not find either of them in the plaint of these two elements. There are plethora of decisions on this point some of them have been cited by both the parties. So, I need not repeat the position of law in this regard. 10. Now, it appears to me that this suit is also sought to be filed on behalf of the plaintiff No. 5 Company. I accept argument of Mr. Das that this suit filed on behalf of the Company cannot be maintained unless there is specific authorisation by the Board of Directors by a valid resolution to file a suit on behalf of the Company. This is a compulsory legal requirement. It will appear from the provision of Section 291 of the Companies Act that a specific authority is required to be given to institute a suit on behalf of the Company. In a decision of the learned Single Judge of this Court. 189 AIR 1995 Calcutta 169, Al-Amin Seatrans Ltd. v. Owners and Party interested M.V. 'Loyal Bird' it has been held in paragraph 23 as follows:- "It is well settled that under Section 291 of the Companies Act except where Gress provision is made that the powers of a company in respect of a particular after are to be exercised by the company in general meeting in all other cases,the Board of Directors are entitled to exercise all its powers. Individual directors have such powers only as are vested in them by the Memorandum and Articles. It is true that ordinarily the Court will not unsuit a person on account of technicalities. However, the question of authority to institute a suit on behalf of a company is not a technical matter. It has far reaching effects. It often affects policy and finances of the company. Thus, unless a power to institute a suit is specifically conferred on a particular director, he has no authority to institute a suit on behalf of the company. Needless to say that such a power can be conferred by the Board of Directors only by passing a resolution in that regard." 11. Under Order 29 of the Civil Procedure Code a Director and/or Principal Officer of a Company can sign or verify the pleading, but in order to bring suit or defend a suit in the name and on behalf of the Company, an authority, as stated above, is required. Unless that is done, the very action or defence on behalf of the Company cannot be said to be lawful. Authority by a valid resolution is a sine qua non and signing of the pleading of such an action is a subsequent affair for which no authorisation is required, only a principal officer may be a director or any other fit and competent person can do it. 12. It is, however, difficult to apply the above principle of law as in the petition it has not been stated at all that no Board resolution was there to authorise for filing a suit in the name or on behalf of the plaintiff Company. Instead of pleading the same in order to afford the plaintiffs to meet the same, the petitioner/defendant merely stated the position of law mentioning judgments of this Court and other Courts. This factual aspect has been sought to be established by oral argument. This aspect too cannot be dealt with unless specific pleading is there. 13. The plaintiff Nos. 1 to 4 have their own individual rights to establish a case that the defendant Nos. 1 to 8 are not Directors. Though, such relief and/or claim may have an effect in the administration and affairs of the plaintiff No. 5 but then independent and separate action on behalf of the plaintiff Nos. 1 to 4 are maintainable and sustainable, as I find there is disclosure of cause of action to that effect. The plaintiffs case is not solely based on the allegation of fraud or forgery. There are other grounds to maintain a suit for perpetual injunction. So, I cannot hold going by the averments of the plaint that the suit is meritless or vexatious so far the claims of the plaintiff Nos. 1 to 4 are concerned. The decisions cited by Mr. Das in this regard, however, in this case, are quite distinguishable. The law laid down cannot be disputed. The decision of learned Single Judge of Bombay High Court reported in AIR 1995 Bombay 43 cited by Mr. Das is not applicable as it is not suit for removal of Directors rather perpetual injunction- restraining them from interfering with functioning of the plaintiffs. In the Bombay case it was admitted that the defendants therein were directors. 14. All points and issues which are stated in the petition are left for trial. So, it would be decided at the time of trial. However, there shall be preliminary issue as to maintainability on the question of authority at the time of trial. Thus, there is no order on this application. 15. Stay of operation of the judgment and order is granted for three weeks from date. However, this order will not be inconsistent with any order which has been passed already or in operation by any of the learned Judge in this suit. Xerox certified copy of this Judgment shall be supplied as expeditiously as possible upon proper application being made. . ( Previous Hitlist Next );