State Bank of Patiala vs Zimidara Cold Storage and ICE Factory

K. Kannan

The following substantial question of law arises for consideration in the second appeal:

Whether the Appellate Court was justified in dismissing the suit finding that the Branch Manager did not have an authority to institute the suit and duly represent the bank on behalf of which the suit had been instituted?

A frivolous defence taken by the defendants was unfortunately accepted by the Appellate Court that has resulted in this exercise of second appeal by the bank. The suit instituted by the bank through the Assistant General Manager was resisted not on the ground that the loan was not availed but on the ground that the suit was instituted by a person who had not been shown to be duly authorized to verify the plaint and represent the bank. The trial Court decreed the suit but the Lower Appellate Court reversed the judgment on a reasoning that the witness who gave evidence on behalf of bank could not identify the signature in the resolution of Executive body meeting, authorizing the Assistant General Manager to institute the suit. It turned out therefore that the proceedings of the meeting with authority to the Manager to institute the suit became a subject for consideration by the Appellate Court. The Appellate Court held that the signatory to the plaint had not established his authority.

I have seen through the original records that the plaint has been signed by the Assistant General Manager with the official seal on 1.12.1980 and the verification to the effect that the averments in the plaint were derived from official records maintained by the bank in the normal course of business and the details as set forth in the plaint regarding the transactions of the bank with the defendants had been on the basis of information received by the Assistant General Manager. Ex. P2 is the copy of the minutes of the meeting of the Executive Committee held on 3.8.1981 which approved as item No. 8, the institution of the suit against M/s. Zimidara Cold Storage & Ice Factory and another for recovery of the bank dues. This was signed on 14.2.1981. The objection against this letter of authority is the suit had been instituted under the verification of the Assistant General Manager on 4.12.1980. I find that the plaint has been returned on several dates for compliance of defects and ultimately taken on file only on 25.8.1983. By that time, the verification minutes of the meeting giving the authorization to institute the suit had come about. It must be remembered that the day of institution of the suit must be taken only when the date when it is filed and not when it is assigned the number and taken on file. The fact that the case was numbered later ought not to be taken as an institution which was bad. If there was any defect in institution it must be taken as duly rectified and taken on file subsequently. Even the issue of resolution for institution of suit cannot be rendered invalid if it had been instituted without a resolution. If a resolution has come about subsequently it would amount to a due ratification of the original institution. Either as a resolution passed before the due registration of the plaint or as a transaction by way of ratification for the institution of the suit actually made before that date, the suit was still competent.

The Appellate Court has also held that the signatures found in the copy of resolution book had not been proved. It is too much to expect that the directors of the bank must be before Court to testify to the genuineness of the signatures. The requirement of law must be taken on satisfied if copies are produced before Court and responsible official of the bank testifies from the record about the loan. After all the decree is not passed in favour of the person who signs the document. The procedures under Order 29 CPC to satisfy, about the authority of the person is only to ensure that the public institution is represented by a person who brings a litigation with due authority. So long as the debt is admitted, the decree would become justified by the liability as shown to exist and there cannot be a defence that the signature found in the copy of the resolution produced by the bank was not proved by the person who have signed the document. Same way the observation of the Appellate Court that the official who gave evidence was not present at the time to identify the signature of Executive Committee is absolutely untenable. The Lower Appellate Court was speaking on the resolution and the authority in the most unreasonable way to throw out an enforcement of a debt against the defendants who had a liability to repay.

Strangely the learned Sr. counsel appearing on behalf of the defendants argues with the passion that the signature found in the Executive Committee was not proved. It is also his submission that the resolution had been passed subsequent to the first date of institution. Both the submissions are untenable as the reasonings found in the Appellate Court judgment. The defence was wholly vexatious. Public institutions or banks have to depend on human agencies and public sector banks which have branches in distant locations cannot, by filing suits, invite a situation of the top officials such as Directors of the bank touring to each court to explain their own signatures in Executive Committee meeting. The Subsidiary Banks General Regulations, 1959 issued by the State Bank of India with the approval of Reserve Bank authorize through Clause 56 that plaints may be signed, sealed and delivered by any officer or employee empowered under the Regulation 55 to sign on behalf of the bank. Regulation 55 authorize the Managing Director and any other officer or employee as the Board may think to authorize in turn any other employee to act on behalf of the bank. A Bench of this Court held in State Bank of India v. M/s. Kashmir Art Printing Press, Sirsa and others, AIR 1981 (Punjab) 188 that even in the absence of the resolution passed by the Directors, Branch Manager will have authority to sign vakalatnama and authorize an advocate to file the suit. In this case we have an authorization of the Executive Committee to institute the suit and we have the AGM of the bank verifying the plaint to institute the suit. The suit has been properly filed and the suit could not have been dismissed in the manner as the Appellate Court did. For a loan transaction which had fructified and became enforceable debt against the defendant as early as in the year 1980, to stand unsatisfied by an untenable defence by the defendants is most unfortunate. The judgment of the Appellate Court is set aside and the appeal is allowed with costs. Counsel fee is assessed to be Rs. 25,000/-. There shall also be compensatory cost against the defendants which shall Rs. 3,500/-, the maximum amount permissible u/s 35-A of the Civil Procedure Act.