2010 (7) TMI 827 - HC - Companies Law

Power of - Board of directors of petitioner-company had passed a resolution authorising a director to represent company to institute proceedings on behalf of company

Summary

Issues:
1. Maintainability of the writ petition filed by a company represented by its sales manager based on a power of attorney given by the director.

Analysis:
1. The petitioner's counsel argued that the sales manager, acting as the power of attorney holder of the director authorized by the company's resolution, can file the writ petition on behalf of the company. Citing the Supreme Court's decision in Sarguja Transport Service v. State Transport Appellate Tribunal, it was contended that the provisions of Order 29, Rule 1 of the Code of Civil Procedure do not apply to the writ petition by the company. The counsel for the respondent challenged the legality of the documents presented, referring to the decision in Nibro Ltd. v. National Insurance Co. Ltd., emphasizing that the board of directors must authorize legal actions under section 291 of the Companies Act.

2. The respondent's counsel argued that the sales manager cannot file a writ petition on behalf of the company based on the documents provided, as per the decision in Nibro Ltd. The respondent contended that the principles of the Civil Procedure Code apply to writ proceedings, citing various Supreme Court decisions that establish who can file a writ petition to enforce legal and fundamental rights. The respondent emphasized that the sales manager, acting on a power of attorney from the director, lacks the legal standing to maintain the writ petition under Article 226 of the Constitution.

3. The court examined the documents presented, including the power of attorney and the resolution passed by the company's board of directors authorizing the director to represent the company in legal proceedings. The court found that the director cannot further delegate authority to the sales manager without specific authorization from the board of directors under section 291 of the Companies Act. The court dismissed the petitioner's contention, citing relevant Supreme Court decisions such as Charanjit Lal Chowdhury, Madan Gopal Rungta, and Calcutta Gas Co. The court concluded that the writ petition filed by the company through its sales manager was not maintainable in law and therefore dismissed the petition.

4. In conclusion, the court found no merit in the petitioner's case and dismissed the writ petition, upholding the order dated July 7, 2010. The court's decision was based on the lack of proper authorization for the sales manager to represent the company in legal proceedings, emphasizing the necessity for authorization by the board of directors as per the Companies Act and established legal principles regarding the filing of writ petitions to enforce legal rights.