Allowed

M/S. Focal Image India Pvt. Ltd. v. M/S. Focal Image Ltd.

Kerala HC23 Aug 2016OP(C)/2551/2015

Case brief

AI extract

What is this about?

The High Court held that a suit instituted by an unauthorised agent is an incurable defect. It quashed the lower court order that allowed return of the plaint to cure this defect and rejected the plaint under Order VII Rule 11 CPC.

What did the court decide?

Impugned orders quashed; Civil Revision Petition and Original Petition allowed; Suit rejected; Applicant's Interlocutory Application allowed.

M/S. Focal Image India Pvt. Ltd. Vs M/S. Focal Image Ltd. — Company and Corporate | Kerala HC (2016)

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IN THE HIGH COURT OF KERALA AT ERNAKULAM

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PRESENT:

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THE HONOURABLE MR.JUSTICE K.HARILAL

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TUESDAY, THE 23RD DAY OF AUGUST 2016/1ST BHADRA, 1938

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OP(C).No. 2551 of 2015 (O)

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[AGAINST ORDER IN I.A.NOS.2678,2713 AND 2714 OF 2015 IN O.S.NO.7 OF 2014 ON THE FILES OF THE ADDITIONAL DISTRICT COURT-V, THIRUVANANTHAPURAM.]

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PETITIONERS:

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1. M/S. FOCAL IMAGE INDIA PVT. LTD., REGISTERED OFFICE AT IV/369, B-H RIVER VALLEY CAMPUS, MEPUKADA, MALAYINKIL, TRIVANDRUM, PIN CODE-695 571,

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REPRESENTED BY ITS VICE PRESIDENT(FINANCE)

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G.S.KRISHNA.

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2. C.V.RADHAKRISHNAN, AGED 62, S/O.K.VASUDEVAN, JWRA 34, JAGATHY, TRIVANDRUM-695 014.

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3. C.V.RAJAGOPAL, AGED 56, S/O.K.VASUDEVAN, SRA 34C, ARAPURA ROAD, ELIPODE, VATTIYOORKAVU, TRIVANDRUM-695 013.

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BY ADVS.SRI.P.VISWANATHAN

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SRI.P.ABRAHAM CHERIAN

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RESPONDENT:

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M/S. FOCAL IMAGE LTD., 64, NEW CAVENDISH STREET, LONDON W1G 8TB, UNITED KINGDOM, A COMPANY REGISTERED AND INCORPORATED UNDER THE LAWS OF UNITED KINGDOM, REPRESENTED BY ITS DIRECTOR.

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BY ADV. SRI.SHAJU AUGUSTINE AKKAR ADV. SRI.BENOJ C AUGUSTIN ADV. SMT.J.KASTHURI ADV. SRI.K.H.MUNEER ADV. SRI.NAGARAJ NARAYANAN ADV. SRI.PRATHAP PILLAI ADV. SRI.SAIJO HASSAN ADV. SRI.SEBIN THOMAS ADV. SRI.VISHNU BHUVANENDRAN

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THIS OP (CIVIL) HAVING BEEN FINALLY HEARD ON 23-082016, ALONG WITH CRP NO.644 OF 2015, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

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OP(C).No. 2551 of 2015 (O)

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APPENDIX

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PETITIONERS' EXHIBITS

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EXT.P1- THE TRUE PHOTOSTAT COPY OF THE PLAINT FILED BY THE RESPONDENT IN O.S.NO.7 OF 2014.

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EXT.P2- THE TRUE PHOTOSTAT COPY OF THE POWER OF ATTORNEY DATED 20.05.2014.

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EXT.P3- THE TRUE PHOTOSTAT COPY OF THE I.A.NO.499 OF 2015.

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EXT.P4- THE TRUE PHOTOSTAT COPY OF THE I.A.NO.2678 OF 2015.

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EXT.P5- THE TRUE PHOTOSTAT COPY OF THE COUNTER AFFIDAVIT FILED ON 19.08.2015.

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EXT.P6- THE TRUE PHOTOSTAT COPY OF THE ORDER OF THE COURT DATED 22.08.2015.

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EXT.P7- A TRUE PHOTOSTAT COPY OF I.A.NO.2714 OF 2015.

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RESPONDENT(S)' EXHIBITS

NIL

//true copy//

P.S. to Judge

'C.R.'

K. HARILAL, J.

O.P. (C) No.2551 of 2015 &

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C.R.P. No.644 of 2015

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Dated this the 23^rd day of August, 2016

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JUDGMENT

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Since the parties and the matters in issue involved in the above Civil Revision Petition and the Original Petition (Civil) are common, both petitions are heard together and disposed of accordingly. The parties are referred to as in the Civil Revision Petition.

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Heard the learned counsel for the petitioners and the learned counsel appearing for the respondents.

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The petitioners are the defendants in O.S. No.7 of 2014 on the files of the Additional District Court, Thiruvananthapuram, which had been instituted by the respondent herein praying for a declaration of ownership of copy right alleged to be subsisting in

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 2 :-

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computer software and consequent injunction. The plaint was seen signed and verified by one Mr. Shaji Albert based on a power of attorney dated 20/5/2014 allegedly executed in his favour by one Dr. Kaveh Bazargan, who is alleged to be the sole shareholder and sole Director of the respondent company. The said power of attorney was executed by the said Dr. Kaveh Bazargan in his personal capacity and not for the respondent company or in the capacity of its Director. Further, there is no specific clause in the power of attorney that authorises the said Shaji Albert to institute the suit for and on behalf of the respondent company; nor was there any authorisation by way of a Board Resolution in favour of the said Dr. Kaveh Bazargan granting him right to institute the suit or represent the respondent company. Hence according to the petitioners/defendants, the plaint itself was defective and consequently ought to have been rejected in limine. Therefore, the petitioners filed

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O.P. (C) No.2551 of 2015 &

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C.R.P. No.644 of 2015

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-: 3 :-

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I.A. No.499 of 2015 under Order VII Rule 11 of the

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Code of Civil Procedure to reject the plaint. Thereafter, the respondent filed another petition seeking permission to substitute another Power-of-Attorney Holder, instead of Mr. Shaji Albert.

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Subsequently, the respondent filed I.A. No.2678/2015 requesting the court below to return the plaint and connected applications to enable Dr.Kavesh Bazargan to sign and thereafter re-present it before the court below. The petitioners filed counter affidavit objecting the said prayer and also filed I.A. No.2713/2015 to dismiss I.A. No.2678/2015. But the court below, without disposing I.A. No.399/2015 filed to reject the plaint and affording an opportunity to the petitioners herein to address the court in the said petition, allowed I.A. No.2678/2015, by the order dated 22/8/2015, which is marked as Ext.P6 in O.P.(C) No.2551/2015.

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O.P.(C) No.2551/2015 is filed challenging the

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 4 :-

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legality and propriety of Ext.P6 common order which is sought to be quashed. Subsequently, the court below passed the order dated 31/8/2015 in I.A. No.499/2015 dismissing the same on the ground that I.A. No.2678/2015 filed subsequently by the respondent was allowed and fresh grounds raised in I.A. No.499/2015 can be considered only after adducing evidence. The aforesaid finding is impugned in C.R.P. No.644/2015.

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Admittedly, Dr. Kaveh Bazargan had executed the power of attorney in favour of Shaji Albert, to institute the suit for and on behalf of the respondent company in his personal capacity and not for the respondent company or in the capacity of its Director. Further, there is no specific clause in the said power of attorney that authorises the said Shaji Albert to institute the suit for and on behalf of the company; nor was there any authorisation by way of a Board Resolution in favour of Dr. Kaveh Bazargan granting

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 5 :-

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him the right to institute the suit or represent the respondent company. In short, the power of attorney is executed in his personal capacity only and no power of attorney has been produced, by the respondent, to show that the respondent company has given power to Shaji Albert to verify the pleadings, sign and institute the suit, on behalf of the respondent company.

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What is the legal status of a company? How can a company entrust a person as its agent to institute suit for and on behalf of the company? According to Sec.3 of the Companies Act, 'the company' means a company formed and registered under the Companies Act. Needless to say, the company being a separate legal entity, it is distinct from shareholders as well as Directors and its Officers. The company can sue and be sued in its own name. Since the company is a juristic entity, it can duly authorise any person to sign the plaint or written

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 6 :-

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statement on its behalf. It follows that company acts through person, when it resolves to initiate action, specifically authorising that person as its agent to act on its behalf, for such act or purpose and such an authorisation only would bind the company. A person may be expressly authorised to sign the pleadings for and on behalf of the company by the Board of Directors, by passing a resolution to that effect or by a power of attorney being executed in favour of an individual. In other words, the power of attorney executed by a person in his individual capacity would not bind the company even though he may otherwise be a Director of the company.

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At this juncture the procedure contemplated under Order XXIX of the C.P.C. assumes much significance and relevance. In suits by or against Corporation, any pleadings may be signed and verified on behalf of the Corporation by the Secretary or by any Director or other principal officer of the

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015

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-: 7 :-

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Corporation who is able to depose to the facts of the case. It is pertinent to note that the court below has not considered these provisions while passing the impugned order. The present suit was instituted in contravention to the procedure contemplated under Order XXIX of the CPC. Here the pleadings are verified and signed by Mr. Shaji Albert. He is not a Secretary or a Director or an Officer of the company. The company has not authorised Mr. Shaji Albert to institute the suit for and on behalf of the company or to represent the company in the suit. The suit was instituted on the basis of a power of attorney executed by Dr. Kaveh Bazargan in his personal capacity only. In view of the above factual matrix, the suit cannot be deemed to be one instituted by the company.

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The aforesaid question has to be considered in another perspective also. According to Order III Rule 1 of the CPC, recognized agents and pleaders are

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O.P. (C) No.2551 of 2015 &

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C.R.P. No.644 of 2015

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-: 8 :-

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allowed to make appearance, application or act in or to any court for and on behalf of the party. In the instant case, plaintiff is a company by name “M/s Focal Image India Pvt. Ltd.,”; but the suit is instituted by Shaji Albert and he has verified the pleadings also. Can he be treated as a recognized agent of the plaintiff company? According to Order III Rule 2(a) of the CPC, the recognized agents of the parties by whom such application, acts may be made or done are the persons holding powers of attorney authorising them to make and do such appearance, applicants and act on behalf of such parties.

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Order III Rule 1 of the C.P.C. has to be read along with Rules 22 and 23 of the Civil Rules of Practice which specifically prescribe the formalities to be complied for making any appearance, application or act in the court by an authorised agent for and on behalf of the party. Rule 22 prescribes that when a party appears by an agent other than pleader, the

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 9 :-

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agent shall before making such appearance or application or doing any act before the court, file in court, the power of attorney or other written authority thereunto authorising him. Further, according to subrule (2) of Order 22, the Judge may thereupon record in writing that the agent is permitted to appear and act on behalf of the party and until the said permission is granted, no appearance or application or act of the agent shall be recognized by the court. That apart, a written authority signed by the party is required for verification and signing of the pleadings by any other person on his behalf, except in the case of person under disability. According to Order VI Rule 14 every pleading shall be signed by the party and his pleader, provided that where a party pleading is, by reason of absence or other good cause, unable to sign the pleading it may signed by any person duly authorised by him to sign the same or to sue or defend.

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The upshot of the above discussion is that

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 10 :-

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unless a power of attorney or written authority authorising the agent to make appearance, application or act in court, is produced and thereupon, the Judge record in writing that the agent is permitted to act or appear on behalf of the party, no appearance, application or act of the agent shall be recognized by the court. Similarly, an agent duly authorised by party alone be permitted to verify and sign the pleadings. Here, the respondent has no case that they have obtained permission of the court, in accordance with the aforesaid provisions.

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The next question to be considered is: Can an inherently defective plaint, which vitiate the original presentation of the plaint be returned, after the appearance of the defendant, to cure the defect and re-present it? Put it differently, can the plaintiff be allowed to verify the pleadings and sign the plaint, after the appearance of the defendant in the suit?

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After the institution of the suit, the pleadings

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 11 :-

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are permitted to be altered only by filing an application for amendment in the manner as provided under Order VI Rule 17 of the CPC. Similarly, the plaint is permitted to be returned in the manner contemplated under Order VII Rule 10 of the CPC for re-presenting the same in a court having proper jurisdiction, if the suit had been presented in the first instance in the court which had no jurisdiction. Here the respondent had sought for return of the plaint in a suit, after the appearance of the defendants, to get proper authorisation for the institution of the suit and to singn it properly. This Court is of the opinion that an inherent defect which would vitiate the original presentation of the suit can never be cured subsequently as the suit ought to have been rejected as contemplated under Order VII Rule 11 of the CPC. At this juncture it is to be remembered that Rules 22 and 23 of the Civil Rules of Practice provide the procedure to be complied with for the institution of the

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 12 :-

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plaint and appearance by an agent on behalf of a party.

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It is not disputed that the institution of the suit was inherently defective and the plaintiff himself admitted the same by filing an application to return the plaint and all Interlocutory Applications filed therein to re-present the same in accordance with law. There is no provision either in the Civil Procedure Code or in the Civil Rules of Practice which permit the plaintiff to verify and sign pleadings or to make institution of the suit by an agent an authorised one, after returning the plaint, after the appearance of the defendant in the suit. The institution of a plaint by an unauthorised agent is an inherent and incurable defect, which would vitiate the institution of the plaint itself. Therefore, the plaintiff, who instituted an inherently invalid and defective plaint through an unauthorised agent, shall not be allowed to make the plaint valid and perfect or authorised one, after

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015

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-: 13 :-

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returning the plaint, by his subsequent act, on the basis of the objection raised by the defendant.

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A plaint instituted by an agent is liable to be rejected in limine, unless he is duly authorised and the power of attorney or other written authority is produced in court to that effect at the time of institution of the plaint itself, as the institution of such a plaint by unauthorised agent is barred by Order III Rules 1 and 2 of the CPC and Rules 22 and 23 of the Civil Rules of Practice.

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The reasons for which a plaint can be returned to cure the defect is specifically mentioned in Rule 32 of the Civil Rules of Practice. It is confined to insufficiency of stamp paper, undervaluation and other pleadings which requires any amendment to conform to the procedure or practice of the court and these defects are curable defects only. It follows that the plaint having an inherently incurable defect which vitiated the institution of the plaint, shall be returned

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 14 :-

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to cure such defects.

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As observed above, in the absence of any specific provision either in the CPC or the Civil Rules of Practice, the said Dr. Kaveh Bazargan should not to have been permitted at this stage, after the suit has been numbered, to sign pleadings and consequently, the petition should have been dismissed in limine. But the court below absolutely went wrong by returning the plaint enabling the respondent to cure the inherently incurable defect, which would vitiate the institution of the suit itself.

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The learned counsel for the respondents cited the decisions reported in J.K. Industries Ltd., and others v. Chief Inspector of Factories and Boilers and others [1996 (6) SCC 665]; Joseph v. Suhara Beevi [1999 (3) KLT 102]; Dahyabhai v. Bobaji [AIR 1953 Bombay 28] and All India Reporters Ltd., v. Ramchandra [AIR 1961 Bombay 292]. In J.K. Industries Ltd's case (supra) an officer of the plaintiff Corporation

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 15 :-

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who is referred to in Order 29 Rule 1 as competent officer to verify and sign pleadings has done so without obtaining a formal letter of authority or power of attorney. In that context, the Apex Court held that further ratification by the Corporation is sufficient to make the institution of the suit valid. But, in the instant case, a stranger to the company who had no authority to institute the suit, instituted the suit on behalf of the company. Therefore, I am of the view that the proposition laid down by the Apex Court in the above decision is not applicable to the case on hand, where facts are entirely different. In Joseph's case (supra), there was a general power of attorney wherein there is no provision specifically authorising to institute the suit. But, there is another provision by which the doner of the power further agreed to ratify all acts taken by the attorney. So, the stand taken by this Court in that decision cannot be imported to the case on hand, where there is no power of attorney at

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 16 :-

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all. In Dahyabhai's case (supra), the Privy Council held that failure of one of the co-plaintiffs to sign the plaint is immaterial and curable and this proposition cannot be applied to the case like this, where defect is inherently incurable and vitiated the institution of the suit.

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On the other hand, the decision cited by the learned counsel for the petitioners fortifies the decision taken by this Court. In Narayanan Nair v. John Kurien [1988 KHC 38] , this Court held as follows:

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“The only question to be determined now is whether the person who signed the plaint is the duly authorised agent of the person who figures as the plaintiff therein. If the answer is in the negative, the suit is liable to be dismissed for want of valid plaint.”

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In M/s. Nibro Ltd., v. National Insurance Co. Ltd., [AIR

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1991 Delhi 25], the High Court held as follows:

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“Thus, unless a power to

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O.P. (C) No.2551 of 2015 & C.R.P. No.644 of 2015 -: 17 :-

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institute a suit is specifically conferred on a particular director, he has no authority to institute a suit on behalf of the company. Needless to say that such a power can be conferred by the Board of Directors only by passing a resolution in that regard.”

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In the above analysis, I find that Ext.P6

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common order in O.P.No.2551/2015 and the order passed in I.A. No.499/2015 are legally unsustainable and liable to be quashed and I do so. Consequently, I.A. No.2713/2015 will stand allowed. The plaint in O.S. No.7/2014 will stand rejected. C.R.P. No. 644/2015 and O.P.(C) No.2551/2015 will stand allowed.

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Sd/-

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(K. HARILAL, JUDGE)

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Nan/

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//true copy//

¶107

P.S. to Judge

M/S. Focal Image India Pvt. Ltd. v. M/S. Focal Image Ltd.

Case brief

What is this about?

What did the court decide?

M/S. Focal Image India Pvt. Ltd. v. M/S. Focal Image Ltd.

Case brief

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