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Civil Appeal No. 21 of 1980, decided on 1st September, 1986.

‑‑‑O. XXIX, R. 1‑‑Suit filed against appellant by officer of respondent‑ Company who had no authority to do so‑‑Suit, held, nullity in eye of taw and plaint was non‑existent for all intents and purposes.

P L D 1971 S C 550ref.

‑‑‑O. XXIX, R. 1‑‑Provisions of R.1 of O. XXIX, Civil Procedure Code, came into operation only after proceedings validly started and could not be utilised for unauthorised persons to prosecute suits on behalf of corporation.

A I R 1961 Bom. 292 rel.

1980 C L C 1932ref.

‑‑‑O. XXIX, R. 1‑‑Suit by or against Corporation‑‑A Company cannot orally authorise another person to sign a plaint on its behalf and even subsequent ratification would not cure illegality committed at time of institution of suit‑‑Business of Company/ Corporation has to be run under its Articles of Association.

P L D 1978 Kar. 1027 ref.

A I R 1936 Lah. 321 and A I R 1935 Lah. 345rel.

‑‑‑S. 16 & O. XXIX, R. 1‑‑Suit for recovery‑‑Suit instituted by respondent‑company against appellant through attorney who was not authorised to institute suit against appellant‑‑Respondent‑Company unable or merits to show that appellant was liable to make any payment‑ Witnesses produced by respondent admitting that goods had not been delivered direct to appellant‑‑No notice was issued to appellant and notice demanding amount was issued only to another respondent and respondent failing to establish relationship between appellant and other respondent‑‑Judgment and decree of lower Court against appellant set aside in circumstances.

‑‑‑S. 102‑‑Fact‑‑Proof of‑‑Onus of a fact in issue, held, would always be upon a person who asserted affirmative of that issue and if that person failed to discharge that burden then other person would not be burdened with liability.‑‑[Burden of proof].

Iqbal Kazi for Appellant.

Muhammad Naeem for Respondents.

Date of hearing: 1st September, 1986.

This appeal is directed against the order of Senior Civil Judge, Karachi whereby the suit of the plaintiff /respondent was decreed against the defendants jointly and severally.

2. The facts in brief are that on 24‑8‑1972 the respondent No. 1 filed a suit against the appellant and respondent No.2 alleging therein that respondent No.l sold and delivered to them and they acknowledged delivery of the Abbot Products on respondent No.l's delivery challan. It was further averred that the total price 'of the Abbot Products supplied worked out to Rs.63,083.88 per invoice dated 28‑1‑1971 and after deduction of commission net amount payable was Rs.40.902.47.

The appellant filed written statement wherein all the allegations of the respondent No.l were denied. It was asserted that no goods are delivered to the appellant or any one on his behalf and that respondent had no cause of action against the appellant. It was further stated that the suit as filed was not maintainable and that the persons signing, presenting and instituting the suit had no authority to do so. The respondents could not be served and service was affected by publication and respondent No. 2 was declared ex parte. On the pleadings of the parties following issues were framed by the trial Court:

(1) Whether the suit as filed is not maintainable

(2) Whether the plaintiff sold and delivered to defendant Abbot Products and the defendant acknowledged delivery of the same

(3) Whether the total price of the products supplied to the defendant amount to Rs.63,083.88

(4) Whether after deducting discount payable on the sale price of products the net amount payable by defendant works out to Rs.40,902.47

(5) Whether defendant have failed and neglected to pay a sum of Rs.40,902.47

(6) What relief are plaintiff entitled

(7) What should the decree be

The respondent No.l examined M.Hussain on 8‑11‑1978 and closed the side but on 19‑2‑1979, respondent No.l moved an application o reopen its side to enable him to produce material evidence in the matter. It was stated that the side was closed without examining important witness Kamran Mirza, Manager of the respondent. The respondent No.l on 29‑8‑1979 moved another application for production of Memorandum and Articles of Association, certified copy of the power of attorney dated 15‑7‑1975 and certified copy of minutes of Board dated 30‑11‑1978. The trial Court allowed both the applications and permitted the respondent No.l to lead evidence of Kamran Mirza and exhibit the aforesaid documents. The appellant did not lead any evidence. The trial Court decided all the issues against the appellant. The appellant being aggrieved has filed the present appeal against the judgment and decree of the trial Court.

3. The first objection taken by the learned counsel for the appellant is that the finding of the trial Court on issue No.l is not correct. The trial Court has held that the plaint was signed by Manager who is responsible Officer of the plaintiffs firm and, therefore, the suit is maintainable Under Order XXIX, C.P.C. in suits by or against a Corporation, any pleading may be signed and verified on behalf of the Corporation by the Secretary or by any Director or other Principal officer of the corporation who is able to depose to the facts of the case. The plaint was verified by Kamran Mirza Manager and Principal officer of the plaintiff Company. Kamran Mirza has been examined and as has deposed that he was Manager and Principal Officer of the plaintiff Compan at the time of filing of suit. He was authorised to sign the plaint and to contest the suit by Directors verbally. He was also authorised by Directors through resolution. The power of attorney Exh.6/3 is dated 15‑7‑1975. It means when the suit was filed the plaintiff was not authorised to file a suit on behalf of the plaintiff. Minutes of the Company, dated 14‑7‑975 Exh.6/2 show that the Company authorised Kamran Mirza to institute the suit against Messrs Zahoor Enterprises pending in the Court of Senior Civil Judge Lahore and all other documents in connection with that suit on behalf of the Company. This resolution further authorise Mr. M.B. Shaikh and Mr.Kamran Mirza to enable them to prosecute and defend all leg81 proceedings on behalf of the Company and to take all other actions incidental thereto. This power of attorney does not indicate that Mr. Kamran Mirza was empowered to file the suit on behalf of the Company against the present appellant. This is not a General Power of Attorney and as the recital show the Company authorised Kamran Mirza to file suit against Messrs Zahoor Enterprises but this authority did not empower gamran Mirza to institute the present suit. Therefore, the suit filed by the respondent No.l against the appellant is a nullity in the eye of law. The same was instituted by a person who had no authority t0 institute the suit and the plaint is not existent for all intents and purposes. Reliance as stated above has been placed on Order XXIX. Order XXIX only permits the persons mentioned in it to sign and verify the plaint. The Company can always authorise some person on its behalf. The Company does not choose to do so. It can act under rule 1 in that way. All suits on behalf of the Company are properly instituted if the plaint is duly signed and verified by the Secretary who is autrorised by the Company expressly to conduct the suit. Rule 1 comes into operation only after the proceedings have been validly started and cannot be utilised for unauthorised persons to prosecute the suits on behalf of the Corporation. The Articles of Association does not empower the Manager of the Principal Officer institute or conduct the suit on behalf of the Company. Learned counsel for the appellant has referred to Articles 93, 94 and 95 of the Articles of Association of the Company. The business of the Company shall be managed by the Directors and the Directors may from time to time delegate certain of their powers to one or more members of the Board of Directors. There is no Article which gives power to Secretary and Manager to file a suit.

Learned counsel for the appellant has referred to P L D 1971 SC 550. In this case in the written statement a preliminary objection was taken that Mr. Khursheed Mahmood who claimed to be the Director in charge of the respondent Company and who had signed the plaint was not competent to institute the suit. On the facts of the cited case it was held that in law a meeting of Directors is not duly convened unless due notice has been given to all the Directors. Therefore the resolution passed in the meeting of 28‑9‑1951 cannot be said to be a valid one. It was held that no valid authority was conferred to Mr. Khursheed Mahmood and, therefore, he was not competent to institute the suit.

In A I R 1961 Bom. 292 it was held that in the case of companies the plaint can be signed by either a Secretary or a Director or other Principal Officer under Order XXIX, Rule 1, Civil Procedure Code or by any person duly authorised by the Company under Order VI, Rule 14.

In this case Kamran Mirza has stated that he was orally authorized by the Directors to institute the suit. In the Bombay case referred to above it was held that a Company cannot orally authorise another person to sign a plaint on its behalf. A Company cannot only under its Articles of Association. If a power of attorney is to be executed for a Company, it must satisfy the requirements of its Article of Associations.

As such even if statement of Kamran Mirza be accepted that he was authorised orally by the directors to institute the suit that authorisation has no sanction under the law. The business of the Corporation is to be run under the Articles of Association and a verbal, instruction by a Director which he is not competent under the Articles of Association does not bind the opposite party.

In 1980 C L C 1932 it has been observed that Order XXIX merely authorises certain persons to sign an 1 verify pleadings on behalf of Corporation and does not authorise to institute suits of initiate legal action which is to be done by party in person or its recognised agent or by pleader acting on its behalf.

Learned counsel for the respondent No.l has referred to PLD 1978 Kar. 1027 but his authority is not applicable to the facts of the present case because in the cited case attorneys were holding general powers of attorneys executed by two Directors who executed general power of attorney in favour of the attorneys and the Directors were authorised by the Memorandum of Association to appoint attorneys. It has been canvassed by the learned counsel for the respondent that the Board had ratified by the resolution. This contention is devoid of force. There is no subsequent ratification in respect of the present suit. Minutes Exh.6/2 are silent about the ratification in respect of the present suit. Even otherwise subsequent ratification does not cure the illegality committed at the time of institution of suit.

In A I R 1936 Lah. 321 it has been held where the act of an agent is ratifed by the principal but the ratification is made after the expiry of the period of limitation, the ratification has no effect.

In A I R 1935 Lah. 345 it has been observed that "counsel also relies on the so‑called subsequent ratification by the Committee of the act of its Secretary in instituting these suits but here also he has mistaken. An illegal act cannot be legalised subsequently".

The upshot of the above discussion is that the suit was instituted by a person who was not legally authorised to institute the suit and, therefore, this issue should have been decided in favour of the appellant. The finding of the trial Court on this issue is set aside and decided in favour of the appellant.

4. Even on merits the respondent No.l has failed to show that the appellant is liable to make any payment. P.W. M. Hussain in his deposition has deposed that the goods were delivered to the respondent No.2. He has admitted that they had not delivered the goods direct to the present appellant. The other witness Kamran Mirza in his deposition has not said a word against the appellant. He has admitted that he had not delivered the goods to the appellant. He has not recognised the signature. The onus was upon the respondent to prove that the appellant and respondent No.2 have business connections. It has not been established that the appellant had received the goods. The respondent has also failed to establish relationship between the two defendants. No notice was issued to the appellant and notice demanding the amount was issued only to the respondent No. 2. There is no evidence connecting the appellant with the liability. There is no allegation either in the plaint or in the documentary evidence showing the delivery of the goods to the appellant.

Learned counsel for the respondent No. 1 had conceded that the plaintiff had not been able to show any connection between the two defendants but he has referred to the title of the plaint where the defendant No. 2, the present appellant was shown as partner of the defendant No. 1. Mere mentioning the name of the appellant as a partner in the title of the suit does not mean that the respondent No. 1 had discharged the onus. There is nothing in the plaint to show that the two defendants have any real connection with each other. The onus of a fact in issue is always upon a person who asserts affirmative of that issue and if the person fails to discharge that burden then the other person would not be burdened with liability. It was the duty of the plaintiff /respondent No. 1 to categorically state in the plaint that the appellant is a partner of respondent No. 2 so that the appellant would have a chance either to admit or rebut the allegation. In the absence of any allegation to the contrary no adverse inference can be drawn against the appellant. In such view of the matter the findings of the trial Court on this issue with regard to the appellant are also erroneous and they are set aside.

5. The appeal is consequently accepted and judgment and decree against the appellant is set aside. There will be no order as to costs.

M. Y. H. ‑‑‑‑‑ Appeal accepted

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