Case Note & Summary
The suit was filed by Subhiksha Trading Services Ltd. (Plaintiff No.1) and its Managing Director R. Subramanian (Plaintiff No.2) against Azim Premji alleging defamation. The Defendant challenged maintainability on the ground that Plaintiff No.2 had no authority to file the suit on behalf of the company. The court framed Issue No.3: 'Whether the plaintiff No.2 has authority to file suit on behalf of plaintiff No.1.' The Defendant sought to try this as a preliminary issue under Order 14 Rule 2 CPC, which was allowed. The court examined the Articles of Association of Plaintiff No.1, which required consent of a director nominated by the VC Investor (ICICI Trusteeship Services Ltd.) for commencement or discontinuance of litigation. Plaintiff No.2 relied on a board resolution dated 9th April 2000 authorizing him to deal with legal matters, but the court found that resolution did not specifically authorize filing of suits. The court held that the issue was a pure question of law based on undisputed documents and decided it against the Plaintiffs, dismissing the suit as not maintainable against Plaintiff No.1. The suit proceeded only in the name of Plaintiff No.2.
Headnote
A) Civil Procedure - Preliminary Issue - Order 14 Rule 2 CPC - Maintainability of Suit - Issue of authority to file suit on behalf of company can be tried as preliminary issue if it is a pure question of law based on undisputed documents - Held that the issue of authority based on Articles of Association and board resolution is a pure issue of law and can be decided as a preliminary issue (Paras 4-5). B) Company Law - Authority to Sue - Board Resolution - Articles of Association - Managing Director cannot file suit on behalf of company without board resolution if Articles require consent of nominated director - Held that Plaintiff No.2 lacked authority to file suit as the resolution of 9th April 2000 did not authorize filing of suits and the Articles required consent of VC Investor's nominee (Paras 6-10).
Issue of Consideration
Whether Plaintiff No.2 had authority to file the suit on behalf of Plaintiff No.1 company in the absence of a board resolution as required by the Articles of Association.
Final Decision
The court held that Plaintiff No.2 lacked authority to file the suit on behalf of Plaintiff No.1. Consequently, the suit was dismissed as against Plaintiff No.1. The suit proceeded only in the name of Plaintiff No.2.
Law Points
- Authority to file suit on behalf of company
- Board resolution requirement
- Articles of Association
- Order 14 Rule 2 CPC
- Preliminary issue of law
