Hpsebl Vs M/S Sri Rama Steel Ltd. and Others

This application has been filed by the respondents/ defendants raising objection regarding maintainability of the appeal as well as Civil Suit No. 31/2016 preferred by the appellant wherein plaint filed by the plaintiff has already been rejected on the ground that it was barred by the provisions of Section 56(2) of the Electricity Act, 2003, vide judgment dated 14.09.2022 by learned Single Judge, which is under challenge in present appeal i.e. OSA No. 05 of 2023.

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Question related to maintainability of the suit was to be decided in the suit itself. Now for rejection of plaint there is no suit pending adjudication and, therefore, question of maintainability of suit has no relevance in present appeal. However, question of maintainability of appeal has to be adjudicated.

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According to respondent, appellant is a company registered under the Companies Act, and in terms of Section 179 of the Companies Act, 2013, except where there is an express provision, in respect to particular matter, power of the Company is to be exercised by Company in general meeting in all other matters, and it is the Board of Directors, which is entitled to exercise all its powers on behalf of Company.

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It has been contended that for instituting and filing present appeal, no authority letter has been placed on record with the appeal. It is the case of the applicants/respondents that though after listing of the matter in the Court, authority letters dated 15.10.1988, 24.08.2009 and extract of instructions No. 53.1 of Sales Manual Instructions issued by petitioner’s Company were supplied by learned counsel for the appellant, however, all these documents indicate that authorisation given to the person/officer, through whom appeal has been preferred, is only qua signing, attestation and authentication only but not qua the institution of the suit or appeal. Therefore, it has been contended

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that the appeal has been instituted without any authority to institute the same.

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According to the applicants/respondents, provisions of Order 29 Rule 1 of the CPC are not relevant for determining the issue raised with respect to maintainability of the appeal. Further that in view of provisions of Section 179 of the Companies Act, 2013 read with Order 3 Rule 1 of the CPC, there must be specific authorisation to institute a suit or appeal.

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In response to the plea raised by the applicants/ respondents, non-applicant/appellant has filed detailed reply with the submission that appellant-Company has been converted into a Company from erstwhile H. P. State Electricity Board and, therefore, instructions/ authorisation/ notification issued by the erstwhile Board, for the regulating affairs of the Company are, in succession, applicable for institution and filing of the proceedings in the Court including the present appeal. By placing on record various documents i.e. Copy(ies) of order dated 15.03.1986, addendum dated 17.03.1986, order dated 24.08.2009, notification dated 28.01.2011, relevant extract of the Sales Manual Instruction No. 53, authorisation/Delegation of the Administrative Powers by the Board of Directors of the HPSEB Ltd. dated 30.07.2022 and 02.03.2024, it has been contended that the civil suit was as well as present appeal has been filed by duly authorised and competent person.

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Admittedly, present appeal, on behalf of Electricity Board, has been preferred by Superintending Engineer (OP) Circle HPSEBL, Solan, who is in the list of officer upon whom power has been delegated to sign and verify plaints etc. as evident from the extract of Manual dealing with HPSEBL’s Delegation of (Financial, Administrative and HR) Power, 2024 placed on record on behalf of Electricity Board, which was approved by the Board of Directors of the appellant in the meeting held on 27.02.2024.

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Supplementary Guidelines for operating powers under Section III dealing with Delegation of PowersAdministrative Functions, placed on record, contain relevant Entry No. 45, which reads as under:-

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To sign and verify plaints, ED/CAO/CE/SE/ExEn/ Full Power written statements, affidavits, Deputy/Under objections, memorandum of Secretary (Law) appeal, writ, SLP or other pleadings to be filed before any Court of Law/ADR (like DRB)/Arbitrator on behalf of HPSEBL.

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Relevant portion of Section 179 of the Companies Act, reads as under:-

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“179. Powers of Board:-

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( 1 ) The Board of Directors of a company shall be entitled to exercise all such powers, and to do all such acts and things, as the company is authorised to exercise and do:

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Provided that in exercising such power or doing such act or thing, the Board shall be subject to the provisions contained in that behalf in this Act, or in the memorandum or articles , or in any regulations not inconsistent therewith and duly made thereunder, including regulations made by the company in general meeting:

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Provided further that the Board shall not exercise any power or do any act or thing which is directed or required, whether under this Act or by the memorandum or articles of the company or otherwise, to be exercised or done by the company in general meeting.

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...”

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Order III Rule 1 and Order XXIX Rule 1 of the CPC

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read as under:-

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“Order III Rule 1

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Appearances, etc., may be in person, by recognized agent or by pleader.—Any appearance, application or act in or to any Court, required or authorized by law to be made or done by a party in such Court, may, except where otherwise expressly provided by any law for the time being in force, be made or done by the party in person, or by his recognized agent, or by a pleader [appearing, applying or acting, as the case may be,] on his behalf :

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Provided that any such appearance shall, if the Court so directs, be made by the party in person.

Order XXIX Rule 1

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Subscription and verification of pleading.—In suits by or against a corporation, any pleading

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may be signed and verified on behalf of the corporation by the secretary or by any director or other

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principal officer of the corporation who is able to depose to the facts of the case.”

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Learned counsel for the applicants/respondents has placed reliance on the judgments i.e. Apple Valley Resorts vs. H.P. State Electricity Board & Anr. Reported in 2003(3) SLC 205: (2004) 1 Latest HLJ 128; State Bank of Travancore vs. Kingston Computers India Pvt. Ltd. 2011 (11) SCC 524; Shubh Shanti Services Ltd. vs. Manjula S. Agarwalla & Ors. 2005 (5) SCC 30; Schmenger CMBH and Company Leder vs. Saddler Shoes Pvt. Ltd. 2010 SCC OnLine Mad 6539 and M/s Nibro Ltd. vs. National Insurance Co. Ltd. AIR 1991 Del 25, to substantiate the plea that in absence of resolution passed by the Board of Directors, delegating its powers to authorise a person to file a suit on behalf of Company, thus, appeal is liable to be dismissed. It has been contended that authorisation for filing and institution of suit/appeal is altogether different than delegation of signing and verifying the pleadings on behalf of Company.

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Learned counsel for the non-applicant/appellant has placed reliance on M/s Nibro Ltd. vs. National Insurance Co. Ltd. AIR 1991 Del 25; State Bank of Travancore vs. Kingston Computers India Pvt. Ltd. 2011 (11) SCC 524; United Bank of

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India vs. Naresh Kumar & Ors. (1996) 6 SCC 660, with submission that the appeal as well as suit has been filed by duly authorised person and even if it is considered by the Court that there is absence of authorisation in instituting or filing the suit, such defect is a curable defect and can be cured by filing or placing on record appropriate authorisation at any time.

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Though Entry No. 45 of Section III referred supra dealing with delegation of powers relied by the appellant empowers Superintending Engineer to sign and verify the plaint, memorandum of appeal or other pleadings to be filed before any Court of law, however, it does not say that the Superintending Engineer is competent to decide to file/institute a suit or an appeal. No doubt he is a authorised person to sign and verify the plaint/appeal but delegation of power of signing and verifying the plaint and appeal does not delegate the power to file or institute a legal proceeding including suit and appeal. Decision and authority to file or to institute a suit or appeal mean authority and competency to commence a law suit or to begin or start or commence legal proceedings.

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Order XXIX Rule 1 deals with signing and verification of pleadings on behalf of Corporation. Order III Rule 1 provides that any appearance, application or act in or to any Court can be made by a party in such court on the basis of authorisation by

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law or in case of express provisions by any law, according to the such provision.

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Section 179 of the Companies Act provides that it is the Board of Directors of the Company, which shall be entitled to exercise all such powers as the Company is authorised to exercise and do. Delegation of powers to sign and verify the plaint and appeal does not include automatic authorisation to decide to commence, to file or institute an appeal or suit. Decision to file a suit or an appeal has to be taken by the Board of Directors of Company. After taking such decision, Company has to authorise someone to act on its behalf by passing a resolution authorising the said person to do the said act. Signing of pleading comes thereafter.

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Despite granting opportunities, respondent/appellant has not placed on record any resolution or decision of Board of Directors communicating decision to commence, to file or to institute the suit or appeal. Signing and verification of plaint or appeal is an act to be performed subsequent to the decision of the Company through its Board of Directors to file to commence or to institute the suit or appeal. In absence of decision of the Company for doing so, powers conferred upon the Superintending Engineer to sign and verify the plaint cannot cure the defect. It does not authorise the Superintending Engineer to

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decide to institute an action on behalf of the Corporation/Company.

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Order XXIX Rule 1 of CPC does not authorise persons mentioned in this rule to institute suit or appeal on behalf of Corporation. It only authorises them to sign and verify the pleadings on behalf of Corporation.

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In view of above discussion, I am of the considered opinion that there is nothing on record to establish that the appeal has been instituted or filed in furtherance to decision taken by the Company through its Board of Directors to file the same.

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At this stage, it is also apt to record that the defect pointed out by the respondents is a curable defect and it can be cured by placing on record appropriate resolution/decision of Board of Directors of the Company indicating the decision to institute or to file the appeal or the suit, and in case such resolution or decision is placed on record, the appeal/suit filed under the signature of the Superintending Engineer shall be considered to have been put on behalf of the Company in pursuance to the said decision taken to file or institute the appeal, by the Company.

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With respect to curing of defect, following para of the judgment of the Apex Court United Bank of India vs. Naresh

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Kumar & Ors. (1996) 6 SCC 660 shall be relevant, which reads as under:-

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“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

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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.”

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Para of 17 of pronouncement of the Apex Court in Uday Shankar Triyar vs. Ram Kalewar Prasad Singh reported in (2006) 1 SCC 75, is also relevant to be referred, which reads as under:-

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“17. Non-compliance with any procedural requirement relating to a pleading, memorandum of appeal or application or petition for relief should not entail automatic dismissal or rejection, unless the relevant statute or rule so mandates. Procedural defects and irregularities which are curable should not be allowed to defeat substantive rights or to cause injustice. Procedure, a handmaiden to justice, should never be made a tool to deny justice or perpetuate injustice, by any oppressive or punitive use. The well recognized exceptions to this principle are :-

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i) where the Statute prescribing the procedure, also prescribes specifically the consequence of noncompliance.

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ii) where the procedural defect is not rectified, even after it is pointed out and due opportunity is given for rectifying it;

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iii) where the non-compliance or violation is proved to be deliberate or mischievous;

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iv) where the rectification of defect would affect the case on merits or will affect the jurisdiction of the court.

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v) in case of Memorandum of Appeal, there is complete absence of authority and the appeal is presented without the knowledge, consent and authority of the appellant.”

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In view of the aforesaid exposition of law settled by the Supreme Court, present application is disposed of with observation that as on date there is no authorisation or decision on record empowering the Superintending Engineer to commence the present proceedings by filing/instituting appeal. However, appellant, if advised so, may rectify the defect, by placing on record decision to institute or commence the appeal/suit taken by the competent authority with ratification of the act already done by the Superintending Engineer, within four weeks, failing which natural consequence for failure in rectifying the defect, for want of authorisation to file or institute the appeal, shall follow.

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Application is disposed of in the aforesaid terms.

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(Vivek Singh Thakur) Judge

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(Ranjan Sharma) 16^th September, 2025 Judge (sanjeev)

Hpsebl v. M/S Sri Rama Steel Ltd. and Others

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Hpsebl v. M/S Sri Rama Steel Ltd. and Others

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