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PETITIONER: UNITED BANK OF INDIA

       Vs.

RESPONDENT: SH. NARESH KUMAR AND ORS.

DATE OF JUDGMENT:       18/09/1996

BENCH: KIRPAL B.N. (J) BENCH: KIRPAL B.N. (J) BHARUCHA S.P. (J)

ACT:

HEADNOTE:

JUDGMENT:                       J U D G M E N T KIRPAL, J.      The main  question  which  arises  in  this  appeal  by special leave  is whether  the suit  for recovery  of  money filed by the appellant bank was properly instituted.      The appellant’s  branch at Ambala Cantt. had instituted a suit in the Court of Sub-ordinate Judge, Ambala Cantt. for recovery of  Rs. 1,40,553.91 from the respondents.  The case of the  appellant was  that on 12th April, 1984 a sum of Rs. 50,000/- was  advanced as  loan to  respondent no. 1 for the purposes of  his business and on that date he had executed a demand promissory note, hypothecation of goods agreement and other documents.   Respondent no.2 and one Sh. Suresh Kumar, husband of  respondent no.3  had stood as guarantors for the repayment of  the loan.  The respondents were stated to have agreed to  pay interest  at the rate of 18 percent per annum with quarterly  rests. When  default in payment of the money was committed  the aforesaid suit was filed for the recovery of the  principal amount  and the  interest thereon. The sum total came to Rs.1,40,553.91.      In the  written statement  filed by respondent no.1 the plea which  was taken  was that  he had  never taken loan as alleged by  the appellant  bank and respondent no. 2 and Sh. Suresh Kumar  had not  executed any  guarantee deed. It was, however, admitted  that certain blank documents had been got signed but  it was denied that the respondents had agreed to pay interest  at the  rate of 18 percent per annum.  He also took an  additional plea  challenging the  authority of  Sh. L.K. Rohatgi  to sign  and file  the plaint on behalf of the appellant.  Respondent   no.2  filed   a  separate   written statement taking the pleas similar to the one which had been raised by  respondent  no.1  in  his  written  statement.  A further plea  which was  taken by her was that her guarantee was limited  to the  extent of  Rs. 50,000/- and she was not liable to  pay any  more amount  merely  because  additional credit facilities  may have been allowed to respondent no.1. As the other guarantor- Sh. Suresh Kumar had died his widow,

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namely,  respondent   no.3  was  impleaded  as  one  of  the defendants but  as she  did not  appear the case against her proceeded ex parte. The appellant bank filed its replication wherein it  denied the  allegations contained in the written statements filed by respondents 1 and 2.      On the  pleadings of  the parties  the following issues were framed:-      "1.  Whether  the  plaint  is  duly      signed and  verified by a competent      person? OPP      2.  Whether  the  defendant  no.  1      raised a  loan of Rs. 50,000/- from      the plaintiff  bank on  12.4.84 and      executed a  demand promissory note,      hypothecation of  goods  agreement,      letter of  loan and other documents      in favour  of the  plaintiff  bank?      OPP      3. Whether  the defendants no.2 and      3  stood   as  guarantors  for  the      repayment of  the loan  and if  so,      what  is   the  extent   of   their      liability? OPP      4. What is the balance amount? OPP      5. Whether the plaintiff varied the      terms of loan and if so, its effect      qua the  liabilities of  defendants      no.2 and 3, Onus on parties.      6. Whether the statement of account      produced  by   the   plaintiff   is      admissible in evidence? OPP      7. Whether the defendants agreed to      pay interest  if so,  at what  rate      and to what amount? OPP      8. Whether  the  plaintiff  has  no      cause of action? OPP      9. Relief."      The trial  judge by  his judgment  dated 14th November, 1987 decided  issue nos.  1,2 and  7 against  the appellant. Issues 3,4,5  and 6 were held in the appellant’s favour. The trial court,  however, held,  under issues  2  and  3,  that respondent no.3  was  not  liable  to  pay  any  amount  and respondent no.2 was liable to pay only a sum of Rs.55,699.20 as the  principal amount plus interest at the rate or 18 per cent per  annum for  the period  12th April,  1984  to  11th February, 1985.   In  view, however, of the decision against the appellant  of issue no.1 the suit filed by the appellant was dismissed with costs.      The appellant then filed an appeal which was decided on 2nd November, 1992 by the Additional District Judge, Ambala. The Additional  District Judge  reversed the findings of the trial court  in so  far as issues 2 and 7 were concerned and came to  the conclusion  that the appellant had been able to prove that  respondent no.1 had taken a loan of Rs. 50,000/- and had  also proved  the execution of relevant documents by the respondents.  The principal  debtor and  the  guarantors were also held to have agreed to pay interest at the rate of 18 percent  per annum. It affirmed the decision of the trial court limiting  respondent no. 2’& liability to Rs. 50,000/- and interest  thereon.  With  regard  to  the  liability  of respondent no.3  the lower  appellate court held that in the absence of  any evidence to prove that she had inherited any estate from  her deceased  husband  no  liability  could  be fastened on her and the decision of the trial court, to that effect, was  affirmed.   The appeal  was, however, dismissed

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because the Additional District Judge upheld the decision of the trial court with regard to issue no.1.  It was held that it has  not been  proved that  Sh. L.K. Rohatgi had held any valid authority  to file the suit on behalf of the appellant bank.      Against  the   aforesaid  decision  of  the  Additional District Judge  the appellant filed a regular second appeal. By order  dated 30th  August, 1993  a single  judge  of  the Punjab and  Haryana High  Court dismissed the said appeal in limine  by   observing  that   there  was   no  ground   for interference with  the concurrent findings of facts recorded by two courts below. Hence this appeal by special leave.      In this  appeal, therefore,  the  only  question  which arises for  consideration is  whether the  plaint  was  duly signed and verified by a competent person.      In cases like the present where suits are instituted or defended on  behalf of a public corporation, public interest should  not   be  permitted   to  be   defeated  on  a  mere technicality.   Procedural defects  which do  not go  to the root of  the matter should not be permitted to defeat a just cause. There  is sufficient  power in  the Courts, under the Code of  Civil Procedure,  to ensure  that injustice  is not done to  any party who has a just case. As far as possible a substantive right  should not  be allowed  to be defeated on account of a procedural irregularity which is curable.      It cannot be disputed that a company like the appellant can sue  and be  sued in its own name. Under Order 6 Rule 14 of the  Code of Civil Procedure a pleading is required to be signed by the party and its pleader, if any. As a company is a juristic entity it is obvious that some person has to sign the pleadings  on behalf of the company.  Order 29 Rule 1 of the Code  of Civil  Procedure, therefore, provides that in a suit by  against a corporation the Secretary or any Director or other Principal officer of the corporation who is able to depose to  the facts  of the  case might  sign and verify on behalf of  the company.   Reading  Order 6  Rule 14 together with Order 29 Rule 1 of the Code of Civil Procedure it would appear that  even in  the absence  of any  formal letter  of authority or power of attorney having been executed a person referred to  in Rule  1 of  Order 29  can, by  virtue of the office which  he holds,  sign and  verify the  pleadings  on behalf of  the corporation.  In addition thereto and de hors Order 29 Rule 1 of the Code of Civil Procedure, as a company is a  juristic entity,  it can  duly authorise any person to sign the  plaint or  the written statement on its behalf and this would  be regarded  as sufficient  compliance with  the provisions  of  Order  6  Rule  14  of  the  Code  of  Civil Procedure. A  person may be expressly authorised to sign the pleadings on behalf of the company, for example by the Board of Directors  passing a  resolution to  that effect  or by a power  of   attorney  being   executed  in   favour  of  any individual. In  absence thereof and in cases where pleadings have been  signed by  one of it’s officers a Corporation can ratify the  said action  of  it’s  officer  in  signing  the pleadings. Such  ratification can be express or implied. The Court can, on the basis of the evidence on record, and after taking all  the circumstances  of the  case, specially  with regard to  the conduct  of the trial, come to the conclusion that the  corporation had ratified the act of signing of the pleading by it’s officer.      The courts  below could have held that Sh. L.K. Rohatgi must have been empowered to sign the plaint on behalf of the appellant. In  the alternative it would have been legitimate to hold  that the  manner in  which the  suit was  conducted showed that the appellant bank must have ratified the action

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of Sh.  L.K. Rohatgi  in signing  the plaint.  If,  for  any reason whatsoever,  the courts  below were  still unable  to come to this conclusion, then either of the appellate courts ought to  have exercised  their jurisdiction  under Order 41 Rule 27  (1) (b)  of the  Code of Civil Procedure and should have directed  a proper  power of attorney to be produced or they could  have ordered  Sh.  L.K.  Rohatgi  or  any  other competent person  to be  examined as  a witness  in order to prove ratification  or the  authority of Sh. L.K. Rohatgi to sign the plaint. Such a power should be exercised by a court in order  to ensure  that injustice is not done by rejection of a genuine claim.      The Courts below having come to a conclusion that money had been  taken by  respondent no.1 and that respondent no.2 and husband  of respondent  no.3 had stood as guarantors and that the  claim of  the appellant was justified it will be a travesty of justice if the appellant is to be non suited for a technical  reason which  does not  go to  the root  of the matter.   The suit  did not  suffer from  any jurisdictional infirmity and the only defect which was alleged on behalf of the respondents was one which  was curable.      The court  had to  be satisfied  that Sh.  L.K. Rohatgi could sign  the plaint  on behalf of the appellant. The suit had been  filed in  the name  of the appellant company; full amount of  court fee  had been  paid by  the appellant bank; documentary as  well as oral evidence had been led on behalf of the  appellant and  the trial  of the suit before the Sub Judge, Ambala,  had continued  for about  two years.  It  is difficult, in  these circumstances, even to presume that the suit had  been filed  and tried without the appellant having authorised the  institution of the same. The only reasonable conclusion which  we can  come to  is that  Sh. L.K. Rohatgi must have  been authorised  to sign  the plaint  and, in any case, it  must be  held that  the appellant had ratified the action of  Sh.  L.K.  Rohatgi  in  signing  the  plaint  and thereafter it continued with the suit. CONCLUSIONS:      The suit  of the  appellant had  been dismissed because issue no.1  had been  decided against  it. Counsel  for  the parties have  not  challenged  the  decision  of  the  lower appellate court  on the  other issues,  which  decision  was affirmed by  the High  Court when  it dismissed  the  second appeal in limine. For the reasons stated hereinabove we hold that issue  no.1 was  wrongly decided  and this being so the appellant was  entitled to  a decree in view of the decision of the lower appellate court on the other issues.      The appeal of the appellant is, accordingly, allowed in the aforesaid  terms. The  effect of  this would be that the suit of  the appellant  would be  decreed in accordance with the decision  of the  lower appellate  court  on  the  other issues which  that  court  had  decided  in  favour  of  the appellant. The appellant will also be entitled to costs.