Society management

The local unit of a registered company can sue only if the statutes allow it: Supreme Court

the The Supreme Court observed that a company registered under the Companies Registration Act only has the right to sue and be sued under its articles of association.

The articles of association may authorize the president or the secretary or any other member of the office to bring or defend a lawsuit for and in the name of the company. JWhether the plaintiff in a suit happens to be a local unit or a Sakha unit of a registered company is of no consequence unless the statutes support the institution of such a suit.

Under Section 6 of the Companies Registration Act 1860, “any company registered under the Act may sue or be sued in the name of the chairman, chairman or principal secretary, or directors, as the rules and regulations of the society and, failing such determination, in the name of the person to be appointed by the governing body for the occasion”.

A bench comprising Judge Hemant Gupta and Judge V Ramasubramanian therefore observed that unless the plaintiff in an action claiming to be a corporation demonstrates that it is a registered entity and that the person who signed and verified the pleadings was authorized by the articles of association to do so, the action cannot be allowed.

“A company registered under the Companies Registration Act has the right to sue, and to be sued, only under its articles of association.

“…unless the plaintiff in a lawsuit claiming to be a corporation, demonstrates that it is a registered entity and that the person who signed and verified the pleadings was authorized by the articles of association to to do so, the suit cannot be sustained.The fact that the plaintiff in a suit happens to be a local unit or a Sakha unit of a registered company is of no consequence, unless the articles of association support the introduction of such a pursuit”

The subject of this dispute relates to the right of management and administration of a mosque and its properties.

In this case, the Waqf Tribunal held that the appellant Mahal Committee was a legal person, entitled to sue and be sued only on the ground that it was one of the Sakha units affiliated with a registered company of the name of Kerala Naduvathil Mujahideen.

Disagreeing with the Tribunal’s view, the Chamber held that the Waqf Tribunal had committed gross illegality, first by failing to formulate a question on the status of the Mahal Committee, and then by registering a finding as if the unit local authority of a registered company which enjoys affiliate status, had the right to sue.

The Chamber further observed that such illegality committed by the Tribunal was subject to remedy by the High Court within its review jurisdiction.

The bench therefore dismissed the civil appeal filed challenging the judgment of the Kerala High Court in two civil review petitions filed under the proviso of Subsection (9) of Section 83 of the Waqf Act of 1995, reversing the judgment of the Waqf court and ordering the prosecution. of the respondents in their entirety, but dismissing the action of the appellant.

In this case, the appellants had sought a declaration of nullity in their own action in respect of a certificate issued by the Managing Director of the Kerala Waqf Board dated 24.03.2004 in favor of Salafi Trust.

They requested two rounds of reparations from the Waqf court.

  • Declare null and void the certificate of 24.03.2004 issued by the Managing Director of Kerala Waqf Board in favor of Salafi Trust
  • A permanent injunction prohibiting the defendants from interfering with their management and administration of the mosque and its properties.

The Court granted the injunction waiver, but denied the reporting waiver. However, these three appellants did not choose to challenge the judgment of the Waqf court rejecting the declaration exemption.

Next, respondents asked for two sets of Court remedies:

  • A statement that AK Babu (second defendant) is the secretary of Salafi Trust (first defendant)
  • A permanent injunction prohibiting calling him P.Nazeer, the secretary of the Mahal committee to interfere with their right to manage the mosque.

Here, the Court granted the declaration waiver, but it did not grant the injunction waiver.

The High Court in its contested order found that the Mahal Committee was not a registered entity and therefore had no right to bring an action and that the action was not even brought as a representative after following the procedure prescribed under Ordinance 1 CPC Rule 8.

Furthermore, the Court observed that even if the was the management and administration of a mosque and its real property, no list of property was attached to the complaint in the lawsuit.

It was observed that, according to the evidence on file, it was the Salafi Trust that was responsible for the management and administration of the mosque and its properties. Based on these findings, the High Court ruled on the action brought by the respondents in its entirety and dismissed the action brought by the appellants in its entirety.

The Supreme Court observed that the Mahal committee did not file any review against the Waqf tribunal’s rejection of relief from the statement regarding the certificate dated 24.03.2004 issued by the chief executive of the Kerala State Waqf Board.

While noting that the rejection by the Waqf Tribunal of the request to declare the said certificate null and void was fatal to the request of the Appellants, but the Appellants did not choose to file a revision, the Court observed than today, they cannot take umbrage that the Tribunal found them in the management and administration of the waqf.

According to the Court, once it is admitted that it was the respondent Salafi Trust who had the mosque registered as a waqf under the Waqf law and admitted that the mosque was built on vacant land abandoned by Salafi Trust, it was not open to them. go against the statutory prescriptions and claim to be the Mutwalli.

While observing that the High Court correctly and fairly exercised its review jurisdiction, the Chamber declined to address each of the issues raised in the impugned judgment.

Case details: P Nazeer Etc v Salafi Trust & Anr CA 3132/2016

Citation – 2022 LiveLaw (SC) 334

Companies Registration Act, 1860 – Section 6 – A company registered under the Companies Registration Act has the right to sue, and be sued, only under its articles of association – Unless the plaintiff in a suit claiming to be a corporation demonstrates that it is a registered corporation and that the person who signed and verified the pleadings was authorized by the articles of association to do so, the action is dismissed . The fact that the plaintiff in a suit happens to be a local unit or a Sakha unit of a registered company is of no consequence, unless the statutes support the institution of such a suit (paragraph 15)

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