Doctrine of Substantial Representation in Suits

Notice to one in Tenants-in-Common and Joint Tenants; and Notice to Societies

Jojy George Koduvath

Sec. 6 of the Societies Registration Act provides that a registered society must sue or be sued through the office bearer or a nominee, as provided in that section. Therefore it can be concluded that Sec. 6 impliedly bars filing a suit in the name of the society, otherwise than through its President, Secretary or the nominated person.

It is noteworthy that the diktats in Sec. 6 of the So. Registration Act are not invariably followed by our courts; but, adopted the doctrine of ‘substantial representation’ (Subramania Pillai Vs. Masterly, AIR1976 Mad 303). 

In Singhai Lal Chand Jain Vs. Rashtriya Swayamsewak Sangh, Panna, AIR 1996 SC 1211, the High Court had held that the objection was sustainable as to the maintainability of representative suit for eviction against an unregistered association, Rashtriya Swayamsewak Sangh (RSS), without Order 1 Rule 8 CPC steps; and that the decree was a nullity and non est; and the execution was not maintainable. Our Apex Court observed as under:

  • “Procedure is the handmaid to the substantive justice. …. It is true that no permission of the Court was taken to be sued in a representative capacity by or on behalf of the Sangh. But Clause (b) of Order 1, Rule 8 indicates that it may sue or be sued, or may defend such suit, on behalf of, or for the benefit of all persons so interested. Clause (b) clearly applies to the facts in this case. The President of the Sangh, the Manager of the Sangh and a Member have duly represented the Sangh and defended the suit for the benefit of all the persons so interested in the Sangh.”

It was also pointed out:

  • “Thus it could be held that the Sangh having been duly represented in the previous proceedings and conducted the litigation on behalf of the Sangh bona fide and were unsuccessful in the suit, no one on behalf of the Sangh can lay any objection in the execution nor plead nullity of the decree. The doctrine of res judicata prohibited the members of the Sangh to obstruct the execution of the decree. The decree of ejectment binds every member of the Sangh and, therefore, the appellant is entitled to have the decree executed and possession taken.”

In this decision the following passage from Surayya Begum Vs. Mohd. Usman, (1991) 3 SCC 114, was quoted:

  • “The principle of representation of the interest of a person, not impleaded by name in a judicial proceeding, through a named party is not unknown. A karta of a Joint Hindu Family has always been recognised as a representative of the other members of the Joint Hindu Family, and so has been a trustee. In cases where the provisions of Order 1, Rule 8 of the Civil Procedure Code are attracted a named party in a suit represents the other persons interested in the litigation, and likewise a receiver appointed in one case represents the interest of the litigating parties in another case against a stranger. Similarly the real owner is entitled to the benefits under a decree obtained by his benamidar against a stranger and at the same time is also bound by the decision. Examples can be multiplied. It is for this reason that we find Explanation VI in the following words in Section 11 of the Code of Civil Procedure: ‘Explanation VI. – Where persons litigate bona fide in respect of a public right or of a private right claimed in common for themselves and others, all persons interested in such right shall, for the purposes of this section, be deemed to claim under the persons so litigating’.”
  • Note:
    • 1. RSS was a defendant in Singhai Lal Chand Jain Vs. Rashtriya Swayamsewak Sangh, Panna (supra); and the suit was for eviction of RSS through its Manager, its President; and the Head Master of Saraswati Shishu Mandiras a member of the Sangh.
    • 2, It is not legitimate to take this decision as an authority for ‘substantial representation’ in an internal matter of an association in which all members of the association may be ‘interested’ or ‘affected’.

Notice to one in Tenants-in-Common and Joint Tenants

In Ramubai v. Jiyaram Sharma, AIR 1964 Bom  96, it was held as under:

  • “18. Another aspect of the question may be considered so far as the facts of the case are concerned. The interest claimed is an interest in the leasehold property. That interest is claimed by defendants 9 to 11 who are admittedly residing out of the town in which the premises are located. The nexus which creates a relationship between the lessors and the defendants claiming interest in the leasehold is the leasehold property which is occupied by defendants 1 to 8. The question is whether there could be implied in such circumstances a jointness in interest which would clothe the persons in occupation the capacity to receive notice or to do acts which will be binding on all those joint tenants. It is urged on behalf of the defendants that the moment it is held that the leasehold interest is inherited as ten-ants-in-common with defined shares inter se among them, the capacity of any one of those tenants-in-common to represent the other is at an end. Such a capacity to represent others could only be assumed or inferred in the case of persons who own only as joint tenants, but never in case of persons who hold as tenants-in-common. I find it difficult to accept this interpretation. If there is a unity of interest, common enjoyment and possession of the property, if all these joint tenants hold qua landlord as one tenant, if each of these joint tenants had an interest in the whole of the leasehold, if the acts of any one of them are the acts of all such tenants, such as act of re-entry or act of wrongful conversion, then it is difficult to hold why a notice received by one of them should not have the effect of a valid notice in respect of all on whom the notice is meant to operate. There is sufficient community of interest and joint interest inter se in them which clothes everyone of them with a representative, character vis-a-vis the landlord. I therefore hold agreeing with the Court below, that notice to one ; of them was enough and served as a good notice I to all as the notice was meant to be/ operative against all the joint tenants.”

Ramubai v. Jiyaram Sharma, AIR 1964 Bom  96, is referred to in the following decisions:

  • Chinta John Sundar v. State of Andhra Pradesh, 2023-2 ALD 282; 2023-1 ALT 170
  • Sagar Bhagwat v. Kiran, 2016 5 AIR(Bom)(R) 366; 2016-5 AllMR 826; 2017-1 BomCR 476; 2016-6 MhLJ 368
  • Vasant Raghu Bhingardive v. Nagori Muslim Misgar Jamat Trust, 2007- 3 AIR(Bom)(R) 435; 2007-2 AllMR 504; 2007-4 MhLJ 216,
  • Emilia Tinoco v. Shashikant Naguesh Gad, 1997AIR(Bom) 319
  • Dashrathlal v. Kanhaiyalal Daga, 1977-2 MPWN 412.

Who is a Necessary Party

The ‘necessary party’ is not defined in the Code of Civil Procedure. But, from the judicial dicta following are the matters that come for consideration:

  • There must be a right to some relief against such party in respect of the matter involved in the proceedings in question, and
  • It will not be possible to pass an effective decree in the absence of such a party (The Banaras Bank Ltd. Vs. Bhagwan Das: AIR 1947 All 18; Udit Narain Singh, Malpatharia vs. Additional Member Board of Revenue, Bihar, AIR 1963 SC 786).
  • Whether such a party is directly affected by the decision (Udit Narain Singh, Malpatharia vs. Additional Member Board of Revenue, Bihar, AIR 1963 SC 786).

In Udit Narain Singh, Malpatharia vs. Additional Member Board of Revenue, Bihar, AIR 1963 SC 786, the Constitution Bench held as under:

  • “7. A necessary party is one without whom no order can be made effectively; a proper party is one in whose absence an effective order can be made but whose presence is necessary for a complete and final decision on the question involved in the proceeding.
  • 9. The next question is whether the parties whose rights are directly affected are the necessary parties to a writ petition to quash the order of a tribunal. … Without the presence of the successful party the High Court cannot issue a substantial order affecting his right. Any order that may be issued behind the back of such a party can be ignored by the said party, with the result that the tribunal’s order would be quashed but the right vested in that party by the wrong order of the tribunal would continue to be effective. Such a party, therefore, is a necessary party and a petition filed for the issue of a writ of certiorari without making him a party or without impleading him subsequently, if allowed by the court, would certainly be incompetent. A party whose interests are directly affected is, therefore, a necessary party.”

Suit to protect or recover property

The Privy Council in Jagadinadra Nath Vs.  Hemanta Kumari Debi, (1904) 31 Ind App 203 (PC), and our Apex Court in Vemareddi Ramaraghava Reddi Vs. Kondaru Seshu Reddi,  AIR 1967 SC 436, (Referring: Pramathanath Nath Vs. Pradyumna: AIR 1925 PC 139) held that Shebait of a temple has the authority to institute a suit in his own name to protect and recover property belonging to the deity. (Also see: Kishore Joo Vs. Guman Behari Joo Deo, AIR  1978  All  1 – Referring: Jagadindra Nath Vs. Hemanta Kumari, (1904) 31 Ind App 203.)

By various authoritative decisions, it is made clear that when the trust is admitted, or where the right or title over the property is not in dispute the deity will not be a necessary party, in suits for protection of the property and the rights of the trust (Hangi Mal Vs. Panna Lal:  AIR 1957 All 743).

The same is the case for framing a scheme also (Bimal Krishna Vs. Iswar Radha Ealla:  AIR 1937 Cal 338).

In Monindra Mohan Vs.  Shamnagar Jute Factory, AIR 1939 Cal 699, a Division Bench held that the deity is not a necessary party in a suit filed on behalf of the Hindu public for declaration that the land in question was a debasthan of the idol and that it is a public place of warship.

It is appropriate to import this analogy to matters of societies also. Where the right or title over the property is not in dispute, and the suit is filed by a person who is bound to protect the property of a society, it can be concluded that the suit is not liable to be dismissed holding that the society as such (that is, all its members) is a necessary party.

It is observed in Latin Archdiocese of Trivandrum Vs. Seline Fernandez, 2013(4) Ker LT 283, that, though, as per the Canon Law the church property vests in the hands of the Bishop or the Vicar, the parish being by law a public juridic person, and the plaintiffs (the elected representatives of the parishioners entrusted with the administration of the church) were entitled to represent the juridic person, the plaintiffs were competent to initiate civil proceedings (with the ultimate  aim of  protecting  the  property belonging  to  the church) before a Civil Court. 

Is Society, a Necessary Party?

Kania, J., in AS Krishnan Vs. M. Sundaram,  AIR 1941 Bom. 312, laid down (earlier view) as under:

  • “In my opinion as the position of the members of this society is similar to that of the share holders of the company and as the acts of the defendants which are challenged are in respect of the society it is necessary that the society should be a party to this litigation. I do not think it is competent to the plaintiff either alone or representing himself and the other members of the society other than defendants to bring a suit. …… In the absence of the society as a party to this litigation, I am of opinion that the suit as framed is not maintainable and the Court has no jurisdiction to try the suit in the absence of the society.”

Since it is unequivocally held by our Apex Court in Illachi Devi case, AIR 2003 SC 3397, that a (registered) society cannot sue or be sued in its name, it is peremptory that the suit by or against a society should be brought as provided under Sec. 6 of the So. Regn. Act.

Notice to a Society, Notice to all Members

The notice to a Co-operative Society will be deemed as notice to all its members. In Daman Singh Vs. State of Punjab and Haryana, AIR1985 SC 973, it is pointed out by our Apex Court, with respect to a Co-operative Society, that S. 13(9)(a) provides for the issue of notice to the societies and not to individual members and that S. 13(9)(b), however, gives the members an opportunity to be heard.

It is legitimate to maintain that, in appropriate cases, it may be proper to extend these principles as to service of notice, to both registered and unregistered societies, and a club also, with regard to the matters-touching-rights-or-duties of the society ‘as a body’; for example, notice as to nonpayment of tax or revenue. The notice to the society or a proper office bearer will be deemed as notice to all its members.

Read Blog: Vesting of Property in Societies and Clubs

Our Law Does Not Favour ‘Corporation Sole’  

Our law does not favour characterising a ‘Corporation Sole’ as a Juristic Person except officials such as President of India, District Collectors, Secretaries/Office-Heads of various Departments of Government, Village Officers, etc.  [See: Samatha Hyderabad Abrasives And Minerals Vs. State of AP: AIR 1997 SC 3297; T.K. Santhanagopala Chettiar Vs. Thimmi M. Seetharama Chettiar 1968-2 Mad LJ  41; S Govinda Menon Vs. Union of India: AIR 1967 SC 1274; S C Sreemanavikraman Raja Vs. Controller of Estate Duty: 1957-2 Mad LJ  226].

S Govinda Menon Vs. Union of India: AIR 1967 SC 1274

Our Apex Court held in S Govinda Menon Vs. Union of India: AIR 1967 SC 1274 as under:

  • “It was also contended by the appellant in this connection that as the Commissioner was made a Corporation sole under s. 80 of the Act as a separate and independent personality, he was not subject to the control of the Government and no disciplinary proceedings ‘Could be initiated against him. We do not think there is any substance in this argument. It is true that the Commissioner has been made a Corporation sole under s. 80 of the Act which states that the Commissioner shall have perpetual succession and a common seal and may sue and be sued in his corporate name. Section 81(1) of the Act provides for the establishment of a Fund called ‘The Madras Hindu Religious and Charitable Endowments Administration Fund’ and further states that the Fund shall vest in the Commissioner. It was argued for the appellant that the corporate entity created by s. 80 of the Act has a separate legal personality. But there is a juristic distinction between a Corporation sole and a Corporation aggregate, and the Corporation sole is not endowed with a separate legal personality as the Corporation aggregate. As Maitland said:
    • “If our corporation sole really were an artificial person created by the policy of man we ought to marvel at its incompetence. Unless custom or statute aids it, it cannot (so we are told) own a chattel, not even a chattel real. A different and an equally inelegant device was adopted to provide an owning ‘subject’ for the ornaments of the church and the minister thereof-adopted at the end of the Middle Ages by lawyers who held themselves debarred by the theory of corporations from frankly saying that the body of parishioners is a corporation aggregate. And then, we are also told that in all probability a corporation sole ‘Cannot enter into a contract except with statutory authority or as incidental to an interest in land ………. Be that as it may, the ecclesiastical corporation sole is no juristic person‘; he or it is either natural man or juristic abortion.” (See ‘Selected Essays of’ Maitland” pp. 100 & 103).
  • Keeton has also observed as follows
    • “It was a device for transmitting real property to a, succession of persons without the necessity for periodic. conveyances. It was never intended that this device should’ be erected into a psychological person with a developed existence of its own In dealing with a corporation sole, the courts have never treated it as a conception similar in essential characteristics to a corporation aggregate. They have restricted its utility to the transmission of real, or exceptionally, by custom, as in Byrd v. Wilford, and now by statute, personal property from one holder of an office, lay or ecclesiastical, to his successor” (See ‘Elementary Principles of Jurisprudence’ by Keeton, 2nd Edn. pp. 155 & 162).”
  • We accordingly reject the contention of the appellant that the Commissioner has a separate legal personality as corporation sole under s. 80 of the Act and that he is exempt from disciplinary proceedings for any act or omission committed in his capacity as. Commissioner. In our opinion, the object of the legislature in enacting ss. 80 and 81 of the Act was to constitute a separate Fund and to provide for the vesting of that Fund in the Commissioner as a corporation sole and thereby avoid the necessity of periodic conveyances in the transmission of title to that Fund.”

How to Sue an Unregistered Society or a Club

An unregistered society or a club is not a legal person; and therefore, it has to sue or be sued only in the name of all its members. It can be done by invoking Order I Rule 8 CPC which enables one or more of ‘numerous’ persons having common (community of) interest to sue or be sued in a representative character. (Board of Trustees, Ayurvedic & Unani Tibia College, Delhi Vs. The State, AIR 1962 SC 458; Illachi Devi Vs. Jain Society Protection of Orphans India, AIR 2003 SC 3397; Tata Vs. Tata,  AIR 2010 SC 2943.)

When an Association be represented by the Plaintiff; when by the Defendants?

When a suit is filed by a member seeking reliefs concerning the society or a club, relating to a matter common to all members, he has to file it (also) as representing other members of the society other than the defendants (usually office-bearers of the society or club); and if it is a personal matter of the plaintiff, seeking relief against all other members, the plaintiff has to sue against one or two members (usually office-bearers) as representatives of others.

Order I Rule 8 CPC

The objective of the enabling provision, Order I Rule 8 CPC, is avoidance of multiplicity in litigation; and the decision in such a suit binds all present and future members. (TN Housing Board Vs. TN Ganapathy, (1990) 1 SCC 608: AIR 1990 SC 642; Jamiat Ulama Vs. Maulana Mahmood Asad Madni: ILR 2008-17 Dlh 1950).

TN Housing Board Vs. TN Ganapathy, (1990) 1 SCC 608, was a case where the suit was filed by allottees of plots of low-income groups against the appellant-Housing Board seeking injunction from demanding and collecting any additional price and the suit was held maintainable under Order I Rule 8, even though separate demand notices were issued to each allottees (Referred to in Manish Kumar v. Union of India, 2021-5 SCC 1).

Decision Binds all Represented, and Constitute Res Judicata

The condition necessary for the application of Order I Rule 8 is that the persons on whose behalf the suit is brought must have the same interest and the decision in a representative suit would bind all the persons sought to be represented, and constitute res judicata, under Section 11, CPC. (Mahboob Sahab Vs. Syed Ismail: AIR1995 SC 1205; T N Housing Board Vs. T N Ganapathy, (1990) 1 SCC 608: AIR 1990 SC 642; Venugopala Naidu Vs. Venkatarayulu: (1989) Supp 2 SCC 3 56: AIR 1990 SC 444. Ahmed Adam Sait Vs. M. E. Makhri AIR 1964 SC 107. C Arumughathan Vs. S Muthusami Naidu: 1993-1 CivCC 79: 1992-1 Mad LJ 532

Registration does not Confer Juristic Personality

In Board of Trustees, Ayurvedic & Unani Tibia College, Delhi Vs. The State, AIR 1962 SC 458, it is held that the registration of Societies under the Central or State Societies Registration Act does not give the society a corporate status.

In Illachi Devi Vs. Jain Society Protection of Orphans India: AIR 2003 SC 3397, it is held that a society registered under the Societies Registration Act as a society even after registration does not become distinct from its members and does not become a separate legal person like a company. (Referred to in Vivek Narayan Sharma Vs. Union of India, 2023-3 SCC 1)

In Illachi Devi Vs. Jain Society Protection of Orphans India, AIR2003 SC 3397, says as under: 

  • i) The mere fact of registration will not make a society distinct from association of persons. (Para 20)
  • ii) A Society registered under the Societies Registration Act is not a body-corporate as is the case in respect of a company registered under the Companies Act. In that view of the matter, a Society registered under the Societies Registration Act is not a juristic person.  (Para 21)
  • iii) A society, whether registered or unregistered, may not be prosecuted in criminal court, nor is it capable of ownership of any property or of suing or being sued in its own name. (Para 22) Vesting of property does not take place in the Society. Similarly, the society cannot sue or be sued. It must sue or be sued through a person nominated in that behalf. (Para 26)

Society is the Compendium of its Members

A society or a club, both registered and unregistered, is the compendium of its members. When it sues or is sued all its members should be made parties. Registration of Societies under the Central or State Societies Registration Act does not give the society a corporate status. (Board of Trustees, Ayurvedic & Unani Tibia College, Delhi Vs. The State: AIR 1962 SC 458. Illachi Devi Vs. Jain Society Protection of Orphans India: AIR 2003 SC 3397; Tata Vs. Tata, AIR 2010 SC 2943)

‘Property Belonging to a Society’, “Merely Describes” Property Vests in Gover. Body

Expressions in the Societies Registration Act, ‘property belonging to a society’ (Societies Registration Act: Sec. 5) and  ‘property of the society’, (Societies Registration Act: Sec. 8 and 10) do not give the society a corporate status; and it “merely describes the property which vests in trustees or Governing Body”. (Board of Trustees, Ayurvedic & Unani Tibia College, Delhi Vs. The State: AIR 1962 SC 458)

‘Suit By or Against a Regd. So.’ is Virtually Suit By or Against Entire Members

Following the above propositions, it can be legitimately concluded that the common expression, ‘suit by or against a society’, legally and virtually denotes suit by or against its entire members.

How Sec. 6 is an Enabling Provision

The earlier view taken by various courts in India was that the registered societies were legal persons and they could sue or be sued in their own name; and that Sec. 6 was only an enabling (or added) provision to sue or be sued in the name of the president, secretary, etc.. (Shanti Sarup Vs. Radhaswami Satsang Sabha, Dayalbagh Agra: AIR 1969 All. 248; K.C. Thomas Vs. R.B. Gadaook, AIR 1970 Pat 163;  Khiri Ram Gupta and Another versus Nana Lal:  AIR 1964 Pat. 114, Satyavart Sidhantalankar Vs. Arya Samaj, Bombay : AIR 1946 Bom. 516; Nabadwip Bhajan Asram Vs. Commissioner of Nabadwip Municipality : AIR 1959 Cal 361; Sonar Bangala Bank Vs. Calcutta Engineering College: AIR 1960 Cal 409)

This view does not hold good in the light of Unani Tibia College case, AIR 1962 SC 458, Illachi Devi case,  AIR 2003 SC 3397, and Tata Vs. Tata,  AIR 2010 SC 2943.

Suing entire members of the society, either in person or invoking Order I Rule 8 CPC, is the normal rule. But, Sec. 6 enables ‘to sue or be sued’ every registered society in the name of its president, secretary, etc., as shall be determined by the rules and regulations of the society (or through such person as shall be appointed by the governing body for the occasion).

Suit shall be in the Personal Name of President, Chairman, etc.

From the expression in Sec. 7 of the Societies Registration Act that ‘proceedings shall be continued in the name of or against the successor of such person’, it is clear that the words in Sec. 6 of the Societies Registration Act, ‘sue or be sued in the name of President, Chairman, or Principal Secretary, or Trustees,’ refers to filing suit by or against the President, Chairman, Principal Secretary or Trustees in their ‘personal name’; and not in their ‘official status’ as President, Chairman, Principal Secretary or Trustees.

Sec. 6 Impliedly Bars Filing a Suit in the Name of Society

As already stated, our Apex Court has repeatedly  made it clear that Sec. 6 of the Societies Registration Act provides that a registered society must sue or be sued through the office bearer or a nominee, as provided in that section. Therefore, it can be concluded that Sec. 6 impliedly bars filing a suit in the name of the society, otherwise than through its President, Secretary or the nominated person. (Board of Trustees, Ayurvedic & Unani Tibia College, Delhi Vs. The State: AIR 1962 SC 458; Illachi Devi Vs. Jain Society Protection of Orphans India AIR 2003 SC 3397; Tata Vs. Tata,  AIR 2010 SC 2943.)

Procedural Defects Should Not Defeat A Just Cause

It is trite law that one should not be non-suited for technical reasons, and that procedural defects or curable procedural irregularity which is curable or which does not go to the root of the matter should not be permitted to defeat a just cause. (United Bank of India Vs. Naresh Kumar: AIR 1997 SC 3; Uday Shankar Triyar Vs. Ram Kalewar Prasad Singh: AIR  2006 SC 269; Varun Pahwa Vs. Mrs. Renu Chaudhary: AIR  2019 SC 1186: 2019-3 JT 109.)

It was pointed out in United Bank of India Vs. Naresh Kumar, AIR 1997 SC 3, by our Apex Court that there is sufficient power in the Courts, under the Code of Civil Procedure, to ensure that injustice is not done to any party who has a just case.  

Supreme Court Expanded Powers of Authorities of Companies in Filing Pleadings

Under Order 29 Rule 1 of the CPC, Secretary or any Director or other Principal officer of a Corporation can sign pleadings by virtue of their office. A company being a juristic entity, Board of Directors can authorise any person to sign pleadings by passing a resolution or giving a power of attorney, by virtue of Order 6 Rule 14 read with Order 29 Rule 1 CPC. If pleadings have been signed by one of its officers, a Company can ratify it. Such action can be express or implied.

It is held in United Bank of India Vs. Naresh Kumar (1997), AIR 1997 SC 3, that a Court can, after taking all the circumstances of the case, come to the conclusion that the company must have ratified the act of signing the pleading. It was pointed out that the courts below should have, in any case, directed the company to produce a proper power of attorney or they must have allowed a competent person to be examined to prove ratification.

United Bank of India Vs. Naresh Kumar (1997), AIR 1997 SC 3, reads as under:

  • “10. 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 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 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 or 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.”

Proper Authorisation Essential

It is beyond doubt that a proper authorisation is essential for filing suit by a Company. Though, Secretary or any Director or other Principal officer can sign pleadings by virtue of their office, as per Order 29 Rule 1 of the CPC, the view followed in some earlier decisions was that neither the directors nor the managing director would have the right to represent the Company in the suit unless duly authorised by a resolution taken by the Board of Directors to that effect, at a meeting duly constituted for the said purpose.(B. Mookerjee Vs State Bank of India: AIR 1992 Cal 250; Nibro Limited Vs National Insurance Co:  AIR 1991  Del 25)

In State Bank of Travancore Vs. Kingston Computers, 2011-11 SCC 524, it is held by our Apex Court as under:

  • “14. In our view, the judgment under challenge is liable to be set aside because the Respondent had not produced any evidence to prove that Shri Ashok K. Shukla was appointed as a Director of the company and a resolution was passed by the Board of Directors of the company to file suit against the Appellant and authorised Shri Ashok K. Shukla to do so. The letter of authority issued by Shri Raj K. Shukla, who described himself as the Chief Executive Officer of the company, was nothing but a scrap of paper because no resolution was passed by the Board of Directors delegating its powers to Shri Raj K. Shukla to authorise another person to file suit on behalf of the company.”

In this decision (State Bank of Travancore Vs. Kingston Computers) there was no scope to ponder on the doctrines as to ‘technical or procedural defects’ as done in the earlier decision in United Bank of India Vs. Naresh Kumar,  AIR 1997 SC 3.

The decision, State Bank of Travancore Vs. Kingston Computers may be distinguishable from United Bank of India Vs. Naresh Kumar. In State Bank of Travancore Vs. Kingston Computers there was no evidence to show that the signatory was a Director of the Company, and no resolution of the Board of Directors was produced to prove that the signatory was authorized  to file the suit. 

It was observed by Delhi High Court in Nibro Limited Vs National Insurance Co., AIR 1991  Del 25, that if a director or a secretary was authorised by law to file a suit on behalf of a company, then he could certainly give the authority to another person as provided under Order III Rule 1 CPC. Order III Rule 1 provides that ‘any appearance, application or act in or to any Court, required or authorised 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 recognised agent, or by a pleader appearing, applying or acting, as the case may be, on his behalf. Provided, that any such appearance shall, if the Court so directs, be made by the party in person’. However, if there is an express provision of law, then that will prevail. Thus, if an authority is given to a pleader or a recognised agent as provided by law, the recognised agent or pleader can file an appearance or file a suit in court if the party himself is not in a position to file it.

The Bombay High Court held, in Alcon Electronics Pvt. Ltd Vs.  (2015), 2015-1 Mh L 852, with respect to the source of power of the Directors, as under:

  •  “The essential requirement of this provision is that the Company which is a juristic person must itself decide to sue. Once that is done, it would authorise one of its Directors who is the agent of the Company or its principal officers the Secretary of the Company or the Managing Director to file the Suit. The suing in each case is a separate act. The Company acts only through its meetings. Hence the Board of Directors in the day to day management of the company must decide and resolve to sue or not to sue. A blanket authority cannot be given to a particular Managing Director or Director to sign the papers and document/s, including the power to sue. The power to sue requires application of mind upon the particular cause of action. It requires the Company to pay the requisite Court fee. It requires the Company to be represented by a legal officer being an Advocate of the Court. It is an act which, therefore, is not a part of the day to day management of the Company. A Company would decide in a given case upon legal advice or otherwise whether or not it would sue upon a given cause of action. Such exercise is imperatively required to be performed if the intention of the Company, which is only a juristic person, is to be deciphered. That act, of course, may be undertaken even after the filing of the Suit and ratified by the Board as all other acts of management. However, the seminal requirement is to see the act of the Company though its Board or members (dependent upon whether the resolution is passed in the Board meeting or a general meeting) or is given by the Company itself (under its Articles of Association).”

In Nibro Limited Vs. National Insurance Company Ltd., AIR 1991 Delhi 25, it is observed, with regard to the source of power of the Directors, as under:

  • “25. It is well-settled that under Section 291 of the Companies Act except where express provision is made that the powers of a company in respect of a particular matter are to be exercised by the company in general meeting–in all others cases the Board of Directors are entitled to exercise all its powers. Individual directors have such powers only as are vested in them by the Memorandum and Articles. It is true that ordinarily the court will not unsuit a person on account of technicalities. However, the question of authority to institute a suit on behalf of a company is not a technical matter. It has far-reaching effects. It often affects policy and finances of the company. Thus, unless a power to 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.” Quoted in: United India Periodicals Pvt. Ltd.  Vs. CMYK Printech Ltd. : 2018-248 DLT 227

The law as to the authority of ratification of the act of the officers in signing pleadings, by a Company is detailed by the Delhi High Court in Radico Khaitan Limited Vs. J D Wines,  2020-2 AD(Del)  421, .

Persons Represented need not have “same cause of action“; must have “common interest”

In Chairman, Tamil Nadu Housing Board, Madras vs. T. N. Ganapathy, (1990) 1 SCC 608, it was held by this Court that the persons who may be represented in a suit under Order 1 Rule 8 of Civil Procedure Code need not have the same cause of action and all that is required for application of said provision is that the persons concerned must have common interest or common grievance. What is required is sameness of interest. Paragraphs 7 and 9 of the decision says as under:

  • 7. On the question of maintainability of the suit in a representative capacity under Order I, Rule 8 of the Code of Civil Procedure, it has been contended that since the injury complained of is in regard to demand of money and that too by a separate demand against each of the allottees, giving rise to different causes of action, Rule 1 has no application. … The provisions of Order I of Rule 8 have been included in the Code in the public interest so as to avoid multiplicity of litigation. The condition necessary for application of the provisions is that the persons on whose behalf the suit is being brought must have the same interest. In other words either the interest must be common or they must have a common grievance which they seek to get redressed. In Kodia Goundar v. Velandi Goundar (ILR 1955 Mad 339: AIR 1955 Mad 281) a Full Bench of the Madras High Court observed that on the plain language of Order I Rule 8, the principal requirement to bring a suit within that rule is the sameness of interest of the numerous persons on whose behalf or for whose benefit the suit is instituted. The court, while considering whether leave under the rule should be granted or not, should examine whether there is sufficient community of interest to justify the adoption of the procedure provided under the rule. The object for which this provision is enacted is really to facilitate the decision of questions, in which a large number of persons are interested, without recourse to the ordinary procedure. The provision must, therefore, receive an interpretation which will subserve the object for its enactment. There are no words in the rule to limit its scope to any particular category of suits or to exclude a suit in regard to a claim for money or for injunction as the present one. … … …
  • 9. It is true that each of the allottees is interested individually in fighting out the demand separately made or going to be made on him and, thus, separate causes of action arise in the case, but, that does not make Order I Rule 8 inapplicable. Earlier there was some doubt about the rule covering such a case which now stands clarified by the Explanation introduced by the Code of Civil Procedure (Amendment) Act, 1976, which reads as follows:
  • “Explanation.— For the purpose of determining whether the persons who sue or are sued, or defend, have the same interest in one suit, it is not necessary to establish that such persons have the same cause of action as the persons on whose behalf, or for whose benefit, they sue or are sued, or defend the suit, as the case may be.” (Quoted in: Anjum Hussain Vs. Intellicity Business Park Pvt.  Ltd., 2019-6 SCC 519)

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