Rajasthan State Electricity Board vs Central Bank of India

Instant first appeal is directed against the judgment and

decree dt. 06.09.1996 passed by the Additional District & Sessions

Judge No.6, Jaipur City, Jaipur in Civil Suit No.248/1995.

The brief facts noticed are that the appellants-plaintiff filed a

civil suit alleging that the respondents-Bank had given Bank

Guarantee on behalf of Indo Engineering (Kota) Private Limited.

The Company had agreed to take the electric supply by following

the orders issued from time to time as per the general conditions

of supplies. The appellants-plaintiffs directed that the security for

average charges of three months has to be given. In pursuance

thereto, the Indo Engineering (Kota) Private Limited offered to

give Bank Guarantee for Rs.28,712/- which was accepted by the

appellants-plaintiffs and consequently, the respondents-bank gave

Bank Guarantee No.75500 dt.03.12.1986 and the same was

renewed from time to time. The payment of consumption of

electricity was not made and, therefore, an amount of

Rs.2,78,538.44/- remain outstanding, the appellants-plaintiffs

asked the respondents-bank to encash the Bank Guarantee as the

amount was not paid by the limited Company but the same was

not done and therefore, the suit for recovery of Rs.28,712/- along

with interest was filed before the Trial Court.

The respondents had filed their written statement and denied

the allegations made in the plaint and particularly averred that the

signatory of the plaint Shri Madan Lal (Assistant Account Officer)

was not authorized officer for instituting the suit and as such he

has no authority to institute the suit. It was further stated that

within the time limit, the Bank Guarantee was not invoked,

therefore, they are not under obligation to make the payment. It

was also alleged that the Bank Guarantee was executed at

Bombay and therefore, the same should have been invoked at

Bombay only and as such the Trial Court has no jurisdiction. On

the basis of the pleadings of the parties, seven issues were

framed. On behalf of the appellant, two witnesses were produced.

The respondents did not produce any evidence. The Trial Court in

the impugned order decided all the issues in favour of the

appellants-plaintiffs except issue No-1 which related to the fact

about competence of the signatory of the plaint being Shri Madan

Lal, who was merely Assistant Account Officer and thus, the suit

was dismissed.

Learned counsel for the appellants-plaintiffs vehemently

contended that Shri Madan Lal (Assistant Account Officer) was

duly authorized to file a suit on behalf of the appellants-plaintiffs

and proper power was delegated by the appellants-plaintiffs in this

regard. There was a Board resolution of the appellants-plaintiffs as

also an office order (Exhibit-21, 22 & 23) which too prove that the

Chairman had delegated powers to the lower authorities to

institute the suit in respect of the court cases on behalf of the

appellants-Board.

Counsel further contends that it was a mere technicality and

the Trial Court was unjustified in carrying ahead such technicalities

which could have been cured, if an opportunity would have been

granted by the Trial Court to rectify by filing or amending the suit

on behalf of the competent person. Counsel contends that the

Apex Court in the case of United Bank of India Vs. Naresh

Kumar & Others reported in (1996) 6 SCC 660 has held that

mere signatory being someone else it being a technicality should

not come in the way of granting substantial justice. Counsel thus,

contends that when all the other six issues are decided in favour

of the appellants then on the facts noticed herein before, this

issue for the reasons assigned, deserves to be considered and the

appeal deserves to be allowed.

It is noticed that none appeared on behalf of the

respondents on 08.02.2017 & 05.05.2017. Today also, none

appeared on behalf of the respondent despite name of the counsel

being shown in the cause list and the said appeal is pending for

last almost 20 years and after hearing counsel for the appellant is

being decided.

I have considered the arguments advanced by the counsel

for the appellants and have perused the material including the

record of the Trial Court.

On perusal of the same, it is noticed that the Board

resolution/office orders (Exhibit-21, 22 & 23) are there delegating

powers to the Officers subordinate to the Chairman/Secretary and

once the powers have been delegated by the competent Authority

to Shri Madan Lal (Assistant Account Officer), in my view, the Trial

Court was unjustified in coming to the conclusion that the

appellant fails only on this ground.

I also agree with the arguments of the counsel for the

appellants-plaintiffs that if the Trial Court was not satisfied, an

opportunity must have been afforded to the appellants-plaintiffs to

amend/rectify the appeal filed by competent authority and no

harm was caused, if only the plaintiff was allowed to amend.

In my view, it is a mere irregularity and such technicalities

need not come in the way of granting substantial justice in the

contested matter between the parties.

It would be appropriate to quote from the judgment of the

Apex Court in the case of United Bank of India Vs. Naresh

Kumar & Others (supra) which has also taken into consideration

the identical fact situation:-

"10. It cannot be disputed that a company like the appellant can sue and be sued in its 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 or 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 an dehors 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 its officers a corporation can ratify the said action of its 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 its 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 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 in not done by rejection of a genuine claim.

The courts below having come to a conclusion that money had been taken by respondent 1 and that respondent 2 and the husband of respondent 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."

This Court in the case of Bank of Baroda Vs. Narendra Kumar

Yadav & Ors. in SB Civil First Appeal No.294/1996 vide judgment

& order dt16.05.2017 has taken into consideration the identical

fact situation, which is also squarely applicable on the facts of

instant case.

Admittedly, in the instant case, seven issues were framed

and all other issues on merits were decided against the

respondents-Bank-defendants and the Trial Court has rightly found

that the respondents-bank ought to have invoked the Bank

Guarantee which was issued by the respodents-bank in favour of

Indo Engineering (Kota) Private Limited which had defaulted in

paying the electricity charges. There is no cross appeal or cross

objections on behalf of the respondents-Bank about the six issues

having been decided by the Trial Court against the respondents-

Bank on merits, thus when Trial Court has held all other issues in

favour of appellant then the claim is allowed.

In view of what has been observed herein before, the appeal

deserves to be allowed and the same is accordingly allowed. The

appellants-plaintiffs is liable to recover the amount as claimed by

the appellants-plaintiffs from the respondents-Bank alongwith

interest. Let a copy of this judgment be sent/forwarded to the

respondents-Bank for information.