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      Non-reportable

    IN THE SUPREME COURT OF INDIA     CIVIL APPELLATE JURISDICTION

CIVIL APPEAL No.2014 OF 2011     (Arising out of SLP(C)No.18179 of 2009)

STATE BANK OF TRAVANCORE                           .......APPELLANT

VERSUS

M/S KINGSTON COMPUTERS(I) P.LTD.                  .......RESPONDENT  

        J U D G M E N T

Delay condoned.

Leave granted.

This appeal is directed against the judgment of the Division  

Bench of the Delhi High Court whereby the appeal preferred by  

respondent–M/s.Kingston Computers (I) Private Limited (hereinafter  

referred to as “the company”) was allowed and the suit filed by it  

for recovery of Rs.8,50,952/- along with interest of Rs.3,06,342/-  

was  decreed  by  reversing  the  judgment  of  Additional  District  

Judge, Delhi (hereinafter referred to as “the trial Court”).

The  suit  was  filed  by  the  respondent  through  Shri  Ashok  

K.Shukla, who described himself as one of the Directors of the  

company and claimed that he was authorised by Shri Raj K.Shukla,  

the Chief Executive Officer of the company vide authority letter

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dated 02.01.2003 to sign, verify and file suit for recovery on  

behalf of the company.  A copy of the authority letter allegedly  

signed by Shri Raj K.Shukla was also annexed with the plaint.  In  

the  written  statement  filed  on  behalf  of  the  appellant,  a  

preliminary objection was taken to the maintainability of the suit  

on the ground that Shri Ashok K.Shukla was not authorised by the  

company to file the suit and the authority letter given by Shri  

Raj K.Shukla was not sufficient to entitle him to do so.  The  

respondent filed replication but did not plead that Shri Ashok  

K.Shukla was authorised by the company to file the suit.

On the pleadings of the parties, the trial Court framed the  

following issues :-

“1.  Whether the suit has been signed, verified  and filed by a duly authorised person?

2.   What  is  the  effect  of  not  joining  Sh.Debashish  Saraswati  in  the  present  suit?

3.   Whether any loss has been caused by the  defendant  to  the  plaintiff?

4.   Whether  payments  have  been  made  by  the  defendant  in  due  course  and  in  good  faith  as  alleged in para-3 of the preliminary objections  of the written statement if so its effect?

5.   Whether the plaintiff is entitled to the  suit amount?

6.   Whether  the  plaintiff  is  entitled  to  interest, if so at what rate and for what period?

 7.     Relief.”

After considering the pleadings and evidence of the parties,

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the trial Court decided all the issues except issue No.1 in favour  

of the company but dismissed the suit on the ground that Shri  

Ashok K.Shukla was not authorised to file the same.   

The Division Bench of the High Court allowed the appeal of  

the company, reversed the judgment of the trial Court and decreed  

the suit by relying upon the letter of authority issued by Shri  

Raj K.Shukla in favour of Shri Ashok K.Shukla.

Shri J.L. Gupta, learned senior counsel appearing for the  

appellant assailed the impugned judgment and argued that the High  

Court committed serious error by reversing the finding recorded by  

the trial Court on issue No.1 totally ignoring that the respondent  

had not produced any evidence to prove that Shri Ashok K.Shukla  

was a Director of the company and he had been authorised by the  

company to file the suit.  Learned senior counsel  extensively  

referred to the pleadings of the parties including the rejoinder  

filed on behalf of the company before the trial Court, evidence of  

Shri Ashok K.Shukla and argued that the suit could not have been  

decreed because no evidence was produced on behalf of the company  

to  prove  that  Shri  Ashok  K.Shukla  was  authorised  to  file  the  

suit.  Shri Gupta pointed out that resolutions dated 14.2.2001 and  

19.4.2001 passed by the Board of Directors of the company had  

bearing only on the issue of operating the bank account and not on  

the issue of filing the suit and the Division Bench of the High  

Court gravely erred in relying upon those resolutions and the

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authority letter issued by Shri Raj K. Shukla in favour of Shri  

Ashok K. Shukla.

We have considered the submissions of the learned counsel and  

scrutinized the record.  

In paragraph 1 of the suit filed on behalf of the company, it  

was pleaded that Shri Ashok K.Shukla is one of the Directors of  

the company and he has been authorised by Shri Raj K.Shukla, the  

Chief Executive Officer vide authority letter dated 2.1.2003 to do  

the following things:

(i) to sign, verify and file a suit for recovery on behalf  

of the company against the State Bank of Travancore, R.K.  

Puram Branch, New Delhi,

(ii) to sign, verify and file any document, application to  

lead evidence, make statement or compromise the matter before  

the Hon'ble Court,  

(iii)to appoint any advocate or pleader or counsel and to  

sign vakalatnama,

(iv)to represent the company or appear on its behalf before  

the concerned Court, any public authority or Tribunal and to  

represent for the purpose of representing the company, and  

(v) to  do  all  other  acts,  deeds  and  things  whatever  is  

necessary for pursuing the case of recovery against State  

Bank of Travancore which are not specifically mentioned.   

In the written statement filed on behalf of the appellant, an

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objection was taken to the maintainability of the suit on the  

ground that the plaint has not been signed, verified and filed by  

a competent and authorised representative on behalf of the company  

and that there is neither any valid Board resolution nor any valid  

authorisation  on  behalf  of  the  company  nor  a  copy  of  the  

resolution  has  been  filed  along  with  the  suit.   It  was  also  

pleaded that the person who has instituted the suit on behalf of  

the company is not shown to be a power of attorney holder nor a  

copy of such power of attorney has been filed with the plaint and  

the authorisation letter purported to have been given by the so-

called Chief Executive Officer is not a valid authorisation.   

In  the  rejoinder  filed  on  behalf  of  the  company,  it  was  

reiterated that Shri Ashok K.Shukla, who has signed, verified and  

filed  the  plaint  was  authorised  by  Shri  Raj  K.Shukla  vide  

authority letter dated 2.1.2003.   

In his evidence, which was filed in the form of an affidavit,  

Shri Ashok K.Shukla claimed that he is one of the Directors of the  

company  and  has  been  authorised  by  Shri  Raj  K.Shukla  vide  

authority  letter  dated  2.1.2003  to  file  the  suit.   In  cross-

examination, Shri Ashok K.Shukla claimed that he was the only  

Director in the company and that the Board of Directors of the  

company had passed resolution authorising Shri Raj K.Shukla to  

take decisions independently. He also claimed that he had been  

given power of attorney on behalf of the company, which was filed

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on record. He however admitted that no resolution was passed by  

the Board of Directors authorising him to sign, verify and file  

the plaint.

The  trial  Court  analyzed  the  pleadings  and  evaluated  the  

evidence produced by the parties, referred to authority letter  

dated 2.1.2003 issued by Shri Raj K.Shukla in favour of Shri Ashok  

K.Shukla and observed:

“A  perusal  of  the  aforesaid  authority  letter  shows that Shri Raj K.Shukla in his capacity as  CEO of the plaintiff company had authorised Shri  A.K. Shukla to sign, verify and file the present  suit.   Apart  from  this  authority  letter,  the  plaintiff  company  has  not  filed  on  record  any  board resolution authorising Sh. A.K. Shukla to  sign, verify and institute the present suit.  The  plaintiff  has  also  not  filed  on  record  its  memorandum/articles to show that Shri Raj Kumar  Shukla  had  been  vested  with  the  powers  or  had  been given a general power of attorney on behalf  of the company to sign, verify and institute the  suit on behalf of the company.  The present suit,  therefore, has been filed merely on the strength  of the authority letter Ex.PW1/A............”

The trial Court then referred to the judgment of the Delhi  

High Court in M/s. Nibro Limited v. National Insurance Company  

Limited  AIR  1991  Delhi  25,  Shubh  Shanti  Services  Limited  v.  

Manjula S.Agarwalla and others (2005) 5 SCC 30, Delhi High Court  

(original side) Rules, 1967 and proceeded to observe:

“..............As already stated, it has not been  averred in the plaint nor sought to be proved that  any resolution had been passed by the Board of  Directors  of  the  plaintiff  company  authorising  Shri A.K. Shukla to sign, verify and institute the  suit.   It  has  also  not  been  averred  that  the  memorandum/articles of the plaintiff company give

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any right to Shri A.K. Shukla to sign, verify and  institute  a  suit  on  behalf  of  the  plaintiff  company.  It, therefore, follows that the plaint  has been instituted by Shri A.K. Shukla only on  the  authority  of  Sh.  Raj  K.Shukla,  CEO  of  the  plaintiff  company.   Such  an  authority  is  not  recognized under law and, therefore, I held that  the  plaint  has  not  been  instituted  by  an  authorised  person.   Issue  No.1  is  accordingly,  decided against the plaintiff and in favour of the  defendants.”

The Division Bench of the High Court did take cognizance of  

the fact that the company had not summoned any witness from the  

office  of  the  Registrar  of  Company  to  prove  that  Shri  Ashok  

K.Shukla was a Director of the company and that the minute book of  

the company had not been produced to prove the appointment of Shri  

Ashok K.Shukla as a Director, but reversed the finding of the  

trial Court on issue No.1 on the basis of the authority letter  

issued by Shri Raj K.Shukla and resolutions dated 14.2.2001 and  

19.4.2001, by which the Board of Directors of the company had  

authorised some persons to operate the bank account.

In our view, the judgment under challenge is liable to be set  

aside because the respondent had not produced any evidence to  

prove that Shri Ashok K.Shukla was appointed as a Director of the  

company and a resolution was passed by the Board of Directors of  

the company to file suit against the appellant and authorised Shri  

Ashok K.Shukla to do so. The letter of authority issued by Shri  

Raj K.Shukla, who described himself as the Chief Executive Officer  

of  the  company,  was  nothing  but  a  scrap  of  paper  because  no

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resolution was passed by the Board of Directors delegating its  

powers to Shri Raj K.Shukla to authorise another person to file  

suit on behalf of the company.

In the result, the appeal is allowed, the impugned judgment  

is set aside and the one passed by the trial Court dismissing the  

suit of the respondent is restored.  The appellant shall be free  

to withdraw the amount deposited by it in the trial Court in terms  

of this Court's order dated 24.7.2009.   

Since the respondent has not appeared to contest the appeal,  

the costs are made easy.

               ...........................J.         ( G.S.SINGHVI )  

                ............................J.         ( ASOK KUMAR GANGULY )

NEW DELHI; FEBRUARY 22, 2011.

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