2015 PLP 1973 (CLD)

ROOH-UL-AMIN KHAN, J.

The instant Regular First Appeal has been filed against the judgment and decree dated 28-1-2010 passed by Civil Judge-X, Peshawar whereby the suit for recovery of Rs.20,28,742 filed by the respondent was decreed against the appellant with cost. The following prayer has been made in the appeal. "On acceptance of the instant appeal (RFA) the impugned judgment and decree dated 28-1-2010 passed by Civil Judge-X, Peshawar may be graciously set aside and dismissed the suit of the plaintiff with cost throughout."

2. Brief but relevant facts of the case are that the plaintiff, hereinafter referred to as respondent, filed a suit for recovery of amount of Rs. 20,28,742 on account of damages to the tune of Rs. 1 million; outstanding amount of Rs. 65,000 as provident fund, and Rs. 45,000 as gratuity amount for six years. As per averment of the plaint, the respondent was inducted in service of the defendants, hereinafter referred to as appellants, as sale promotion officer, vide order dated 2-4-1996, and since then was performing his duties to the best of his abilities. On 24-6-2002 the appellants terminated his service without any notice, thus the same was challenged before the Presiding Officer Labour Court, Peshawar, but the same was returned to him for want of jurisdiction. The order of the Presiding Officer, Labour Court was assailed in appeal before this court which met the same fate and was dismissed vide order dated 16-2-2005. The respondent filed the subject suit, which was contested by the appellant, by filing written statement. After recording pro and contra evidence of the parties respectively, the learned trial court decreed the suit as prayed for, vide judgment and decree dated 28-1-2010, hence the present appeal.

3. The appeal was fixed on 1-6-2015 and at the moment it was taken for hearing, the learned counsel for respondents, at the very outset, raised a preliminary objection that admittedly the appellants Messrs Pharmatec Pakistan (Pvt.) Ltd. is a company registered under the Companies Ordinance 1984. The memorandum of appeal would reveal that it has been filed through Managing Director (unnamed) of the company, who is not competently authorized by the resolution, passed by the Board of Directors of the company in a properly requisitioned/ convened meeting, thus the appeal being not maintainable is liable to be dismissed.

4. The learned counsel for appellant when confronted with the situation, he sought time to prepare the case and reply the arguments, in rebuttal of the preliminary objection raised by the counsel for the respondent. The case was adjourned and posted for today dated 8-6-2015. The learned counsel for appellant argued that a proper resolution has been passed by the Board of Directors of the company by circulation dated 12-8-1997 in favour of Mr. S.H. Shah, Managing Director and Mr. Mansoor Ahmad, Finance Manager authorizing them for taking whatever action necessary on behalf of the company in matter of legal cases in court and in government offices. Through the same resolution, it was further resolved that a special power of attorney be issued on the line of a drafted attorney dated 12-8-1997 and the same be signed by Mr. Zahoor Hayat Noon, on behalf of the company. In pursuance of the resolution Mr. Shafqat Hussain Shah and Mansoor Ahmad were appointed as attorney to jointly and severally represent and act for the company in all the matters enumerated in the power of attorney, therefore, the appeal filed by the Managing Director of the company is competent and maintainable.

5. Having heard the learned counsel for the parties, perusal of record would reveal that the appeal has been filed by Messrs Pharmatec Pakistan (Pvt.) Ltd. through Managing Director (name unknown) and three others. The appeal is not signed by any of the appellant, however, the worthy counsel Mr. Farid Ullah Khan Kundi, Advocate has made his signature over it. The power of attorney/wakalatnama depict that it is signed and executed in favour of the learned counsel by four persons comprising Dr. Shahida Qaiser as Managing Director, Rao Riaz Muhammad Khan, Head of Human Resources of the company and two others. The above named persons are admittedly not authorized by resolution of the Board of Directors of the company to file the instant appeal before this court. The alleged resolution by circulation passed on 12-8-1997 reflect that the same has been passed in favour of M.H. Shafqat Hussain Shah, Managing Director and Mr. Mansoor Ahmad, Finance Manager.

6. The controversy regarding initiating any legal proceedings before the competent court of law by a person not authorized through a drafted resolution in his favour by the Board of Directors of the company, cropped up before the august Supreme Court of Pakistan in case titled "Khan Iftikhar Hussain Khan of Mamdot v. Messrs Ghulam Nabi Corporation Ltd Lahore" (PLD 1971 Supreme Court 550) wherein it was held that the suit on behalf of company by a person (Director and incharge of company) would not be competent, unless he is so authorized through resolution passed by the Board of Directors of the company, in a duly convened meeting, after giving notice to all directors. The same view was reiterated by Sindh High Court in case titled "Messrs Razo (Pvt.) Ltd. v. Director Karachi City Region Employees Old Age Benefit Institution and others" (2005 CLD 1208) wherein it was held that a person not duly authorized/empowered by means of the resolution of Board of Directors of Company, passed in properly convened meeting of the Board, would not be competent to institute legal proceedings in the court, on behalf of the company. The relevant portion of the judgment is reproduced as below:- "From the discussion on this issue there is hardly any doubt with regard to the maintainability of this Constitutional petition. The Constitutional petition was filed by a person who was not authorized/empowered to file the same on behalf of the petitioner-Company Messrs Razo (Pvt.) Ltd. as he was not duly authorized/empowered by means of a Resolution of the Board of Directors passed in a proper meeting of the Board of Directors. There is also no dispute with regard to the fact that the illegal/unauthorized act of Saeed Ahmad Memon in filing/instituting the above Constitutional petition without authority or power could not be ratified or clothed with legality by a subsequent Resolution by the Board of Directors conferring on him to file/institute, conduct, defend, compound or abandon the legal proceedings as the Supreme Court in the cases of (1) Messrs Muhammad Siddique Muhammad Umar and another (supra) and (2) Khan Iftikhar Hussain Khan of Mamdot (supra) had pronounced that any proceedings or pleadings filed/instituted by a Director, Secretary or Principal Officer on behalf of a private limited company not having been duly authorized by Resolution by the Board of Directors to do so was liable to be dismissed on this ground alone."

7. This court while dilating upon the subject controversy expressed its view in case titled "Hasnain Cotex Ltd. and 2 others v. Jasim Khan" (2012 YLR 2743) in the following manner:- "We have noticed that the said Directors have not been authorized by the Board of Directors of the Company by means of a resolution passed in a proper meeting of the Board of Directors. Law requires that the persons filing/instituting legal proceedings on behalf of a company incorporated under the Companies Ordinance, 1984 should be duly empowered/ authorized through a resolution by the Board of Directors in a meeting of the Board of Directors duly convened in accordance with the Article of Association of the Company."

8. From the bare reading of the above referred judgments it is manifest that any proceedings on behalf of the corporation or company cannot be filed by a person unless duly authorized by the Board of Directors of the company through a proper drafted resolution passed in meeting of Board of Directors, duly convened for the purpose. The learned counsel for appellant could not point out any averment in the appeal confirming that either signatory of the vakalatnama in his favour was competent to file the appeal on behalf of the company. It has also been noted that the memorandum of appeal is not signed and verified by the Chief Executive or legally authorized person which is against the mandate of Order XXIX, Rule 1, C.P.C., according to which, in suit by or against the corporation any pleading may be signed and verified on behalf of the corporation by Secretary or Director or other principal officer of the corporation, who is able to depose to the facts of the case. The alleged resolution produced by the appellant drafted at letter pad of the company may not be termed as valid resolution of the Board of Directors of the company and at the most can be treated as an authority letter enabling one Zahoor Hayat Noon for signing special power of attorney on behalf of the company.

9. The above referred alleged resolution is also silent about referral to any meeting of the Board. The appellant failed to produce an extract from the minutes book of the company, which is, in fact of great importance as the same contain minutes of solemn proceedings of the company. The indecipherable, uncleared and scanty letter, without referring to a particular meeting being not supported by minutes of meeting of board of directors convened for the purpose, might not be given any sanctity and could not be treated as substitute of resolution of the Board.

10. In essence, the law requires that a person filing legal proceedings on behalf of the company, must be authorized by the board of directors in a duly convened meeting, according to Article of Association of the company, failing which the proceedings before any court would be nullity. By now, it is settled principle of law that when the law requires the doing of any thing in a particular manner, then it must be done in that manner only and all other manner of doing such an act cannot be resorted. In this respect, reliance may be placed on case titled "Hakim Ali v. Muhammad Saleem and others" (1992 SCMR 46).

11. In wake of the above, the appeal in hand being filed by incompetent person is not maintainable under the law stands dismissed, with no order as to costs. ZC/275/P Appeal dismissed.