M/S. Madras Cements Ltd. v. K. Wioson

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE P.BHAVADASAN THURSDAY, THE 4TH AUGUST 2011 / 13TH SRAVANA 1933 AS.No. 276 of 2001(B) --------------------OS.594/1992 of PRINCIPAL SUB COURT,TRIVANDRUM .................... APPELLANT(S)/PLAINTIFF: -------------- M/S. MADRAS CEMENTS LTD., HAVING ITS REGISTERED OFFICE AT RAMAMANDIRAM, RAJAPALAYAM AND HAVING ONE OF ITS AREA SALES OFFICE AT BEACH ROAD, KOLLAM AND ONE OF ITS SALES DEPORT AT BALARAMAPURAM AND ADMINISTRATIVE OFFICE A T VANCHIYOOR, THIRUVANANTHAPURAM, REP. BY ITS ACCOUNTS OFFICER (COMMERCIAL), SRI. R. RAJESH BY ADV. SRI.P.B.SURESH KUMAR(QUILON) RESPONDENT(S)/DEFENDANT: --------------- K.WIOSON, S/O. KOCHUKUNJU, RESIDING AT MAYA MANDIRAM, KUNNAPUZHA, ARAMADA P.O., THIRUVANANTHAPURAM ADV. SRI.K.B.PRADEEP THIS APPEAL SUITS HAVING COME UP FOR ADMISSION ON 04/08/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: **P. BHAVADASAN, J.** ........................................... A.S.NO.276 OF 2001 ............................................. Dated this the 4[th] day of August, 2011. ## **JUDGMENT** The plaintiff in O.S.No.594/1992 before the Principal Sub Judge, Thiruvananthapuram is the appellant. 2. The plaintiff is a company registered under the Indian Companies Act having a registered office at Rajapalayam. According to the plaintiff, Sri. Natarajan - President of the company was authorized to nominate any of its employees and to authorize him to file suits, sign and verify and prosecute the suits and to represent the company. According to the plaintiff, the defendant was appointed as stockist of the plaintiff company's products upon deposit of Rs.20,000/-. Plaintiff used to supply their products to the defendant and the defendant used to remit the price of the goods to the plaintiff. The plaintiff was keeping true and correct account in respect of their transactions with the defendant in the ordinary course of their business. The security amount would accrue interest at the rate of 12%. After adjusting the security amount together with accrued interest the amount was A.S.NO.276 OF 2001 : 2 : calculated to Rs.22,400/= which was adjusted towards the outstanding dues. After adjusting the security amount and interest, a sum of Rs.96,884/= was outstanding as on 8.6.1991. Despite repeated requests the defendant refused to settle the account. Hence registered notice was issued to the defendant. The defendant sent a reply raising untenable contentions. Hence the suit. 3. The suit was resisted by the defendant. It is contended that the person who has signed the plaint had no authority to do so and the suit has been instituted by an incompetent person. The suit is not maintainable because the company has not authorized Sri. Natarajan to nominate and to authorize anybody to represent the plaintiff company. Therefore the plaint signed and verified by another person is without any authority. It is pointed out by the defendant that he had not taken delivery of cement covered by invoice No.4587 dated 30.11.1990. He also made mention of certain payments made by him which according to him has not been given credit to. For the goods not delivered or taken delivery of, the defendant had no obligation at all to pay the amount. There was no amount A.S.NO.276 OF 2001 : 3 : due from the defendant as per the account. The statement of accounts given by the plaintiff are incorrect. Only a copy of the computerized account has been produced along with the plaint. It is the contention of the defendant that the company is bound to produce the books of account and the documents on the basis of which the statement of accounts has been prepared. The computerized account is neither primary evidence nor secondary evidence. Pointing out the above facts, the defendant prayed for dismissal of the suit. 4. On the above pleadings, issues were raised. Evidence consists of testimony of Pws 1 and 2 and documents marked as Exts.A1 to A6. The defendant had examined DW1 and Exts. B1 to B7 were marked on his side. On appreciation of the evidence in the case, the trial court came to the conclusion that the plaintiff had miserably failed to establish that the suit is filed by a competent person on behalf of the company and therefore the suit is not maintainable. Since the company had not produced better primary or secondary copies of statement of account and there was no attempt on the part of the plaintiff to A.S.NO.276 OF 2001 : 4 : produce the originals of Exts.A1 and A2 for comparison, the suit was dismissed. 5. The said judgment and decree are assailed in the appeal. 6. The learned counsel appearing for the appellant very strongly pointed out two principal issues. They are (1) the lower court was not justified in holding that the suit was not instituted by an authorized person. (2) The reason given for rejecting the computerized statement of accounts is not sustainable in law. 7. Elaborating on the first point, the learned counsel appearing for the appellant pointed out that any principal officer of the company is competent to sign the plaint on behalf of the appellant. The learned counsel relied on a decision of the Supreme Court reported in **United Bank of India v. Naresh Kumar** (1996 (6) SCC 650) for the proposition that even assuming that there is defect in the initial filing of the complaint, the company concerned could ratify the action by the officer and the ratification may be either expressed or implied. The learned counsel also informs this Court that in fact copies of Exts.A1 and A2 A.S.NO.276 OF 2001 : 5 : signed by the competent authority as true copy were produced before the court below. Due to an inadvertent omission they were not marked. It is also pointed out that at any rate, filing of the appeal by the company is an indication that the company has ratified the action of PW1 in filing the suit. As regards the second point, the learned counsel pointed out that copy of the computerized statement of accounts is admissible in evidence in view of Sections 65 B to D. of the Indian Evidence Act. It is also emphasized that in fact the defendant has not seriously disputed the statement of accounts. The learned counsel also pointed out that statement of accounts were produced along with the plaint and that forms part of the pleadings. If the defendant had objection to any of the entries he should have specifically mentioned the same in the written statement. At any rate, the learned counsel pointed out that the lower court was not justified in dismissing the suit. 8. Per contra the learned counsel for the respondent contended that the court below has considered the various aspects in right perspective and the conclusions drawn are based on the appreciation of evidence in the case. The A.S.NO.276 OF 2001 : 6 : incompetency of the plaintiff to lay the suit was specifically mentioned in the written statement and the plaintiff did nothing except for producing copies of the document. The plaintiff did not take adequate steps to have the proper documents proved to prove the authorization for PW1 to lay the suit. According to the learned counsel, the fact that the company has filed an appeal cannot be treated as ratification of the act of PW1. If the plaintiff had produced copies of Exts.A1 and A2 as required under the Companies Act, probably they could have been accepted, nothing prevented them from having the true and correct documents produced. There was ample opportunity provided to the plaintiff to produce all the necessary documents and there was no reason as to why the plaintiff should not have availed of the opportunity so granted. 9. The suit has been instituted by an area Manager of the company. Order XXIX Rule 1 of the Code of Civil Procedure reads as follows: “Subscription and verification of pleading:- In suits by or against a corporation, any pleading may be signed and verified on behalf of the corporation by the secretary or by any director or other principal A.S.NO.276 OF 2001 : 7 : officer of the corporation who is able to depose to the facts of the case”. 10. It implies that 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 the pleadings on behalf of the company. In the third case, it has been held that the person who claims to be principal officer should have authorization for instituting the proceedings. The issue was considered in **Kalpaka Shrimp Exports v. Kerala Financial Corporation** (1989 (2) KLT 18) wherein it is held as follows: “Rule 1 of Order XXIX CPC states that in suits by or against a corporation, any pleading may be signed and verified on behalf of corporation by the Secretary or by any director or other principal officer of the corporation who is able to depose to the facts of the case. The learned Judge felt that since the Kerala Financial Corporation has officers superior to the Deputy Legal Manager who has signed and verified the plaint, he is not the principal officer to file the suit. We are unable to agree with this view. The expression “principal officer” has not been defined in the C.P.C. If the word is to mean the most important officer, then not more than one officer in the corporation will be able to sign the petition. S.31 of the Act states, inter alia, that in cases of default in A.S.NO.276 OF 2001 : 8 : repayment of any loan or advance or any instalment thereof, any officer of the Financial Corporation, generally or specially authorised by the Board in this behalf may apply to the District Judge for one or more of the reliefs contemplated therein. Reading Rule 1 of Order XXIX and S.31 of the Act together and harmoniously it must follow that any officer generally or specially authorised by the Board in that behalf can be regarded as principal officer for the purpose of Order XXIX C.P.C. Even otherwise it is necessary to remember that Rule 1 of Order XXIX C.P.C is not exhaustive of the persons or officers who can sign and verify the plaint. There is no dispute before us that the Deputy Legal Manager who actually signed and verified the petition was duly authorised to do so by the Board as per Ext.A5 resolution. We, therefore, find that the petition filed before the District Judge was by a competent officer”. 11. The issue was also considered by the Supreme Court in the decision reported in **United Bank of India v. Naresh Kumar** (1996 (6) SCC 660). There an identical question was considered. In that decision it was also held that any principal officer who is duly authorized may lay the suit. 12. To treat the area of the sales manager in the light of the above decision as a principal office it is necessary that there should be proper authorization. As noticed by the ## A.S.NO.276 OF 2001 : 9 : Apex Court as laid down in the decision reported above, ratification may be expressed or implied. One has to remember in this context that there was a specific contention in the written statement that PW1 was incompetent to lay the suit as he has no authorization. At the time of evidence also the documents on which the plaintiff relied on were marked were subject to objection. The court below has considered all the relevant aspects and had come to the conclusion that the documents produced are not admissible in evidence for cogent and convincing reasons and therefore it could not be said that the suit is instituted by a competent person. There is nothing to show that the above finding of the lower court is incorrect. 13. Coming to the second aspect regarding the accounts in the light of the provisions incorporated under the Indian Evidence Act, a fresh look at the issue may be necessary. Going by section 65 B of the Indian Evidence Act electronic records are made admissible in evidence subject to conditions. It is true that the relevant provisions under the Indian Evidence Act are not looked into. As to A.S.NO.276 OF 2001 : 10 : the veracity of the various entries in the suit, the court below has not gone into the matter. The court below has considered only on the basis of the provisions as it was then existing and on the basis of the decisions referred to, by this Court, the court below has come to the conclusion that they are not admissible. As regards the evidenciary value of Exts.A3 and A6, the situation is different now. 14. Though it has been pointed out by the appellant specifically that proper documents attested by the competent authority has been produced before the lower court to show that PW1 was competent to lay the suit, unfortunately, they were not marked in evidence. The learned counsel also pointed out that except for certain entries of the accountant the defendant does not dispute the veracity of the account maintained by the company. 15. In the light of the provisions under the Indian Evidence Act, the issue needs to be reconsidered by the courts below. It is also necessary that the plaintiff should be given an opportunity to substantiate the claim made in the plaint by producing proper documents. 16. In the light of the facts and circumstances of the ## A.S.NO.276 OF 2001 : 11 : case, the matter to be reconsidered by the trial court. In the result, the appeal is allowed. The judgment and decree of the lower courts are set aside and the matter is remanded back to the trial court for a fresh consideration in accordance with law and in the light of the decisions cited above. Parties will be given opportunity to adduce further evidence, if they re-choose. Parties shall appear before the lower court on 27.09.2011. The lower court may make every endaevour to dispose of the suit as expeditiously a s possible at any rate within six months from the date of appearance of the parties. ## **P. BHAVADASAN, JUDGE.** ## **cl** A.S.NO.276 OF 2001 : 12 : ## **P. BHAVADASAN, J.** ........................................... A.S.NO.276 OF 2001 ............................................. 4[th] day of August, 2011. ## **JUDGMENT**