Manager, MD can be company’s person in-charge for its management, representation in court: Supreme Court

A bench comprising justices S K Kaul and M M Sundresh said if a complaint is made in the name of the company, it is necessary that a “natural person” represents such a “juristic person” in the court and the court looks upon the natural person for all practical purposes.

“It is in this context that observations were made that the body corporate is a de jure complainant while the human being is a de facto complainant to represent the former in the court proceedings. Thus, no magistrate could insist that the particular person whose statement was taken on oath alone can continue to represent the company till the end of the proceedings.

“Not only that, even if there was initially no authority the company can at any stage rectify that defect by sending a competent person,” the bench said.

The observations came while hearing an appeal filed by Bhupesh Rathod, who was managing director of Bell Marshall Telesystems Ltd against an order of the Bombay High Court which dismissed his plea against a trial court direction acquitting a man named Dayashankar Chaurasia whose cheques were dishonoured.

Rathod had filed a complaint on behalf of the company before the special metropolitan magistrate, Mumbai.

The complaint was accompanied by a board resolution of the company authorising him to initiate legal action against the respondent on behalf of the firm.

Chaurasia objected that the complaint was filed in the personal capacity of Rathod and not on behalf of the company.

While on the other hand it was contended by Rathod that the complaint was in the name of the company and in the cause title of the complaint he had described himself as the managing director.

The top court said one of the most material aspects is that the signatures on the cheques were not denied.

“Neither was it explained by way of an alternative story as to why the duly signed cheques were handed over to the company. There was no plea of any fraud or misrepresentation.

“It does, thus, appear that faced with the aforesaid position, the respondent only sought to take a technical plea arising from the format of the complaint to evade his liability. There was no requirement of a loan agreement to be executed separately as any alternative nature of transaction was never stated,” the bench said.