How to Prove Resolutions of a Company; Are Minutes Necessary?

Jojy George Koduvath.

How to Prove the Validity of Resolutions of a Company: Are Minutes Essential?

  • Yes.

Section 118 of the Companies Act, 2013 speaks about ‘Minutes’. It reads as under:

  • 118:  Minutes of proceedings of general meeting, meeting of Board of Directors and other meeting and resolutions passed by postal ballot.
  • .(1) Every company shall cause minutes of the proceedings of every general meeting of any class of shareholders or creditors, and every resolution passed by postal ballot and every meeting of its Board of Directors or of every committee of the Board, to be prepared and signed in such manner as may be prescribed and kept within thirty days of the conclusion of every such meeting concerned, or passing of resolution by postal ballot in books kept for that purpose with their pages consecutively numbered.
  • (2) The minutes of each meeting shall contain a fair and correct summary of the proceedings thereat.
  • (3) All appointments made at any of the meetings aforesaid shall be included in the minutes of the meeting.
  • (4) In the case of a meeting of the Board of Directors or of a committee of the Board, the minutes shall also contain–
    • (a) the names of the directors present at the meeting; and
    • (b) in the case of each resolution passed at the meeting, the names of the directors, if any, dissenting from, or not concurring with the resolution.
  • (5) There shall not be included in the minutes, any matter which, in the opinion of the Chairman of the meeting,–
    • (a) is or could reasonably be regarded as defamatory of any person; or
    • (b) is irrelevant or immaterial to the proceedings; or
    • (c) is detrimental to the interests of the company.
  • (6) The Chairman shall exercise absolute discretion in regard to the inclusion or non-inclusion of any matter in the minutes on the grounds specified in sub-section (5).
  • (7) The minutes kept in accordance with the provisions of this section shall be evidence of the proceedings recorded therein.
  • (8) Where the minutes have been kept in accordance with sub-section (1) then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place, and the resolutions passed by postal ballot to have been duly passed and in particular, all appointments of directors, key managerial personnel, auditors or company secretary in practice, shall be deemed to be valid.
  • (9) No document purporting to be a report of the proceedings of any general meeting of a company shall be circulated or advertised at the expense of the company, unless it includes the matters required by this section to be contained in the minutes of the proceedings of such meeting.
  • (10) Every company shall observe secretarial standards with respect to general and Board meetings specified by the Institute of Company Secretaries of India constituted under section 3 of the Company Secretaries Act, 1980 (56 of 1980), and approved as such by the Central Government.
  • (11) If any default is made in complying with the provisions of this section in respect of any meeting, the company shall be liable to a penalty of twenty-five thousand rupees and every officer of the company who is in default shall be liable to a penalty of five thousand rupees.
  • (12) If a person is found guilty of tampering with the minutes of the proceedings of meeting, he shall be punishable with imprisonment for a term which may extend to two years and with fine which shall not be less than twenty-five thousand rupees but which may extend to one lakh rupees.

‘Minutes’ must be “Proved” by Producing the Original

From Sec. 118(8) it is clear that the ‘Minutes’ must be “proved” by a competent witness like signatory or a person who wrote or who has seen it recording.

There is no provision in the Companies Act or in any other Act which allows ‘extracts’ of the board minutes, or a certified copy to be given in evidence without producing the original. Therefore only way to prove a ‘resolution’ is to prove the ‘minutes’.

Only way to prove a resolution is “Proving” the Minutes

In Escorts Ltd. v. Sai Autos , (1991) 72 Comp Cas. 483 (Delhi); 42(1990) DLT 446, it is observed as under:

  • “(14) The manner in which such a resolution of the Board of Directors of Companies are to be proved, is clearly stated by Hardayal Hardy, J. in a judgment passed in Suit No. 469 of 1986 in M/s. Oberoi Hotels (India) Pvt. Ltd. v. M/s. Observer Publications (P) Ltd. and others. In this judgment it has been stated that “the ONLY WAY to prove that a particular resolution was passed at a meeting of the Board of Directors of a company is that the minutes book in which the said resolution was recorded as having been passed should be produced in Court as that alone can form evidence of the fact under section 194 of the Act”. Section 194 of the Companies Act reads as under :
    • “194. Minutes of meetings kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein”.
  • (Escorts Ltd. v. Sai Autos is referred to in: Havells India Ltd.  v. Dilip Rathi, 16 Feb 2018, Delhi High Court;  Manoj Kumar Kanuga v. Marudhar Power Pvt.  Ltd. , 23 Apr 2013, AP High Court).

Even when exhibit number is given, it cannot be treated as proved

In Ashish C. Shah v. M/s. Sheth Developers Pvt. Ltd., CDJ 2011 BHC 339: 2011 KHC 6506, it is held as under:

  • “Section 194 of the Companies Act provides that the minutes of meetings kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein. However, no provision in the Companies Act is brought to my notice which provides that the certified copy or extract of the minutes would be admissible in evidence without proof of the original. Section 65(f) of the Evidence Act provides that secondary evidence may be given of the existence, condition and contents of the document when the original is the document of which a certified copy is permitted by the Evidence Act or by any other law in force in India to be given in evidence. As no provision from the Companies Act is brought to my notice under which the certified copy of the minutes of the meetings of the board of directors is admissible in evidence without proof of the original, it must be said that the copy of the minutes cannot be admitted in evidence directly unless the original is proved or the copy is admitted by opposite party. Therefore, even though that document is given exhibit number, it cannot be treated to have been proved unless the  complainant leads appropriate evidence to prove the minutes.”

Minute Books Not open for inspection to the Strangers

In Shri Kishan Rathi v.  Mondal Brothers And Co. (Private) Ltd. , AIR 1967 (Cal) 75, [1967] 37 Comp Cas 256, it is held as under:

  • “The minute books and the book of resolution of the board of directors are books of the company and are not open to strangers and outsiders. This was also within the special knowledge of the defendant company. If the defendant company was trying to prove that its manager and director had no authority to borrow money, then it was for the company to prove from its own books of minutes and resolutions that no authority was given to Naresh Chandra Mondal, its manager and director. Section 106 of the Evidence Act says that when any fact is specially within the knowledge of any person, the burden of proving that fact is upon him. It is strange that neither the defendant company nor its witness, director Sambhu Nath Mondal, produced the minute book or the book of resolutions in this case. The only inference that can be drawn from such non-production on the facts and circumstances of this case is that, had they been produced, they would have shown that there was good authority and resolution in favour of Naresh Chandra Mondal. That presumption is irresistible in this case. Articles 103 and 114 of the articles of association of this company cast a mandatory duty upon the directors to record minutes of the proceedings of all meetings of the directors in the minute book. The defendant company or its director witness, Sambhu Nath Mondal, being in possession of such minute book and being in special knowledge of the contents of that minute book, it was their duty to produce them and not the duty of the plaintiff.”

It continued as under:

  • “Whether there was resolution by Board of Directors delegating such power again is a fact within the special knowledge of the defendant company and its Directors. They could have easily produced the resolution book or the minute book to show that there was no such delegation But they had not done so and therefore, an adverse inference must be drawn against them to the effect that had they produced them, they would have shown such delegation to the Manager, Naresh Chandra Mondal.” (Quoted in: Hoshiarpur Azad Transport Co. Ltd.  v. Sutlej Land Finance Pvt. Ltd., 2001-103 CC 969; 1995-109 PLR 506 (P&H).

It is held in Hoshiarpur Azad Transport Co. Ltd.  v. Sutlej Land Finance Pvt. Ltd. (P&H, Ashok Bhan, J.), 2001-103 CC 969; 1995-109 PLR 506, (quoting above passage in Shri Kishan Rathi v.  Mondal Brothers And Co. (Private) Ltd. , AIR 1967 (Cal) 75, [1967] 37 Comp Cas 256) as under:

  • “The petitioner-company did not produce its book of resolution. The minutes regarding the resolution passed are in possession of the company and are not open for inspection to the strangers. Since the petitioner had taken the stand that its general manager had no authority to borrow the money, it was for the company to prove from its own books of minutes and resolution that no authority was given to its general manager to borrow any money. The only inference which under the circumstances can be drawn from the non-production of these books would be that had these books been produced then the same would have shown that there was a resolution passed by the company authorising its general manager to borrow the money.”

Unpleasant and Inharmonious Judgment of Kerala High Court

Kerala High Court (Single Judge) in Sree Gokulam Chit & Finance Co.(P) v. P.R. Balakrishnan on 8 November, 2024,Crl. A No. 1029 of 2008, 2024: KER:82742, distinguished (i) Escorts Ltd. v. Sai Autos, (1991) 72 Comp Cas. 483 (Delhi); 42(1990) DLT 446, and (ii) Ashish C. Shah v. M/s. Sheth Developers Pvt. Ltd., CDJ 2011 BHC 339: 2011 KHC 6506, saying as under:

  • “8. Learned counsel for respondents 1 and 2 would contend that, Ext.P8 extract of the minutes is not admissible in evidence and the minutes has to be proved by producing the original. He would rely on a decision of the High Court of Judicature at Bombay in Ashish C. Shah v. M/s. Sheth Developers Pvt. Ltd. & Others reported in [CDJ 2011 BHC 339: 2011 KHC 6506], to say that, Section 194 of the Companies Act provides that, the minutes of meetings kept in accordance with the provisions of Section 193, shall be evidence of the proceedings recorded therein. No provision in the Companies Act was brought to the notice of that court(see End Notes) which provides that, certified copy or extract of the minutes would be admissible in evidence, without proof of the original. Section 65(f) of the Evidence Act provides that, secondary evidence may be given, of the existence, condition and contents of the document, when the original is the document, of which a certified copy is permitted by the Evidence Act or by any other law in force in India, to be given in evidence.
  • He would rely on another decision of the Delhi High Court in Escorts Ltd. v. Sai Autos and Others [1991 Company Cases Volume 72 Page 483] to say that, copy of resolution was not enough and the original of the minutes book, containing the resolution relied on, has to be brought to the court.
  • 9. Section 119 of the Companies Act, 2013 which corresponds to Section 196 of the Companies Act, 1956 says that, the books containing the minutes of the proceedings of any general meeting of a company or of a resolution passed by postal ballot shall be kept at the registered office of the company, and it shall be open for inspection by any member during business hours and if any member make a request, for a copy of the minutes, it shall be furnished within seven days, on payment of prescribed fees. So, Section 119 of the Companies Act provides for copy of the minutes, and moreover, learned counsel for the appellant would say that, copy of every resolution shall be sent to the Registrar for recording the same within 30 days of passing the same.
  • Moreover, as per Section 54 of the Companies Act, 1956, a document which requires authentication by a company may be signed by a director, the manager, the secretary or other authorised officer of the company, and need not be under its common seal. So, according to the appellant, Ext.P8 extract of the minutes, which contains the resolution authorising the Assistant Manager to file criminal or civil cases or to give evidence etc., signed by the director of Sree Gokulam Chit & Finance Co. (P) Ltd., was sufficient authority for PW1, to file the complaint and to give evidence, on behalf of the company.

The Single Judge took the stand – the requirement that some law must have been “permitted” to give certified copy in evidence, as provided in Sec. 65 (f), is satisfied (and a resolution or extract can be exhibited), for the Companies Act “provides for copy of the minutes” to “any member“. The stance is totally baseless. Because, a member’s right to to get copy of the minutes is different from the right to “be given“ in evidence the certified copy, as “permitted by the Evidence Act or by any other law in force in India“.

  • The minutes is not a document “open for inspection to the strangers” as held by Ashok Bhan, J. in Hoshiarpur Azad Transport Co. Ltd.  v. Sutlej Land Finance Pvt. Ltd., 2001-103 CC 969; 1995-109 PLR 506).

And, the aforesaid legal position has no connection at all with Section 54 of the Companies Act, 1956, also.

In any event, if Sec. 65 (f) is attracted, “a certified copy of document, but no other kind of secondary evidence, is admissible”; and the certified extract or copy of “resolution” (other than the certified copy of the “minutes”) is insufficient.

End Notes I

Ashish C. Shah v. M/s. Sheth Developers Pvt. Ltd., CDJ 2011 BHC 339: 2011 KHC 6506, observed as under:

  • “15. Next comes the document No.1 – the certified true copy of the resolution dated 16.2.2009, whereby the complainant company had allegedly resolved to give consent of the Board of Directors to execute power of attorney in favour of Ashwin Sheth, Managing Director and/or Sharad Doshi, Executive Assistant to the Managing Director to institute or defend any suit or criminal proceedings. The learned trial Court observed in the impugned order that there is no clear-cut provision about issuance of certified copy of extract of minutes book but if sub-sec. (2) of Section 196 of the Companies Act is read, it may be stated that certified copy of the minutes can be given. The learned trial Court observed that the witness Sharad Doshi in his affidavit had deposed about the said document and thereby he has proved the genuineness of the document. Under Section 195 of the Companies Act, where minutes of the proceedings of any general meeting of the company have been kept in accordance with the 17 WP-40-11.sxw provisions of section 193, then, until the contrary is proved, the meeting shall be deemed to have been duly called and held, and all proceedings thereat to have duly taken place. Section 194 of the Companies Act provides that the minutes of meetings kept in accordance with the provisions of section 193 shall be evidence of the proceedings recorded therein. However, no provision in the Companies Act is brought to my notice which provides that the certified copy or extract of the minutes would be admissible in evidence without proof of the original. Section 65(f) of the Evidence Act provides that secondary evidence may be given of the existence, condition and contents of the document when the original is the document of which a certified copy is permitted by the Evidence Act or by any other law in force in India to be given in evidence. As no provision from the Companies Act is brought to my notice under which the certified copy of the minutes of the meetings of the board of directors is admissible in evidence without proof of the original, it must be said that the copy of the minutes cannot be admitted in evidence directly unless the original is proved or the copy is admitted by opposite party. Therefore, even though that document is given exhibit number, it cannot be treated to have been proved, unless the 18 WP-40-11.sxw complainant leads appropriate evidence to prove the minutes.”

In Escorts Limited vs Sai Autos, (1991)72 Comp Cas 483 (Delhi), 42(1990) DLT 446, it is observed as under:

  • “(16) The next question that arises is what amount is due from defendants No. to 3 to the plaintiff company. For this purpose, copies of accounts have been produced by the plaintiff company. Copies of the accounts produced by the plaintiff company deals with the transaction between the plaintiff defendants No. to 3. In none of the affidavits filed by the plaintiff, have these accounts been proved in accordance with the provision of section 34 of the Evidence Act, which sets out the manner in which any person can be charged with liability on accounts, and how the liability is to be proved.
  • (17) Section 34 of the Evidence Act reads as under:
    • “Entries in books of account regularly kept in the course of business are relevant whenever they refer to a matter into which the Court has to inquire, but each statements shall not alone be sufficient evidence to charge any person with liability”.
  • (18) In view of the provisions of section 34 of the Evidence Act, entries in the books of account are not alone sufficient evidence to charge any person with liability. Nor can copies of entries in the books of account be sufficient to charge any person with liability. The manner in which entries in the books df account are to be proved to charge any person with liability, has been dealt with by the Supreme Court in (Chandradhar Goswami & others v. Gauhati Bank Ltd., AIR 1967 SC 1058), the Supreme Court has clearly stated that the entries in the books of account are not primary evidence of indebtedness. A plaintiff has to lead evidence in the shape of vouchers, bills etc. to prove the entries in the books of account.
  • (19) In this view of the matter, neither the copy of the ledger account, nor the ledgers themselves, in respect of account of defendants No. 1, 2 and 3 is enough evidence to charge them with liability, and no decree can be passed against the defendants on the basis thereof.”

End Notes III

Section 34 in The Indian Evidence Act, 1872 reads as under:

  • 34. Entries in books of accounts including those maintained in an electronic form, when relevant: Entries in books of accounts, including those maintained in an electronic form, regularly kept in the course of business, are relevant whenever they refer to a matter into which the Court has to inquire, but such statements shall not alone be sufficient evidence to charge any person with liability.

Section 4 in The Bankers Books Evidence Act, 1891 reads as under:

  • 4. Mode of proof of entries in bankers books: Subject to the provisions of this Act, a certified copy of any entry in a bankers book shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise.

S. 4 Banker’s Books Evidence Act cannot charge any person liability

In Chandradhar Goswami v. Gauhati Bank Ltd., AIR 1967 SC 1058, it is held, after quoting Sec. 34, Evidence Act, as under:

  • “It is clear from a bare perusal of the section that no person can be charged with liability merely on the basis of entries in books of account, even where such books of account are kept in the regular course of business. There has to be further evidence to prove payment of the money which may appear in the books of account in order that a person may be charged with liability thereunder, except where the person to be charged accepts the correctness of the books of account and does not challenge them. In the present case, however, the appellants did not accept the correctness of the books of account.
  • …. But all that the bank did was to produce a certified copy of account under s. 4 of the Banker’s Books Evidence Act, No. XVIII of 1891. Section 4 of that Act reads thus-
  • “Subject to the provisions of this Act, a certified copy of any entry in a banker’s book shall in all legal proceedings be received as prima facie evidence of the existence of such entry, and shall be admitted as evidence of the matters, transactions and accounts therein recorded in every case where, and to the same extent as, the original entry itself is now by law admissible, but not further or otherwise”.
  • It will be clear that s. 4 gives a special privilege to banks and allows certified copies of their accounts to be produced by them and those certified copies become prima facie evidence of the existence of the original entries in the accounts and are admitted as evidence of matters, transactions and accounts therein, but such admission is only where, and to the same extent as, the original entry itself would be admissible by law and not further or otherwise.
  • Original entries alone under s. 34 of the Evidence Act would not be sufficient to charge any person with liability and as such copies produced under s. 4 of the Banker’s Books Evidence Act obviously cannot charge any person with liability.
  • Therefore, where the entries are not admitted it is the duty of the bank if it relies on such entries to charge any person with liability, to produce evidence in support of the entries to show that the money was advanced as indicated therein and thereafter the entries would be of use as corroborative evidence. But no person can be charged with liability on the basis of mere entries whether the entries produced are the original entries or copies under s. 4 of the Banker’s Books Evidence Act.
  • … We are therefore of opinion that in view of s. 34 of the Evidence Act the appellants cannot be saddled with liability for the sum of Rs. 10,000/- said to have been advanced on March, 19,1947 on the basis of a mere entry in the amount. Section 34 says that such entry alone shall not be sufficient evidence, and so some independent evidence had to be given by the bank to show that this sum was advanced.”

This decision (Chandradhar Goswami v. Gauhati Bank Ltd.) is referred to in:

  • Kottayam District Co-operative Bank Ltd.  v. P. S. Mohanan Nair, 2008-2 KerHC 125,
  • Gobind Singh v. State Bank of India, AIR 2016 CC 2225; ILR 2016-3 HP 336,
  • Corporation Bank v. Shri Ganpati, 1992-2 WLC 48,
  • State Bank of India v. Hegde and Golay Limited, ILR 1987 Kar 2364

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