SUBHIKSHA TRADING SERVICES LTD Vs. AZIM PREMJI

JUDGEMENT

(1.) The present suit is a defamation action filed by Plaintiff Nos.1 and 2 against the Defendant. It is the case of the Plaintiffs that Plaintiff No.2, who is also a promoter and Managing Director of Plaintiff No.1, is conversant with the facts of the case and able to depose to the same and also to sign and verify the plaint on behalf of Plaintiff No.1. The Plaintiffs rely upon a resolution of Plaintiff No.1 dated 9 April 2000, which authorises Plaintiff No.2 to sign all court papers for and on behalf of Plaintiff No.1 including vakalats, affidavits, petitions or any other instruments, papers or writings, as may be required from time to time, in connection with petitions / writs / appeals / memoranda in all courts, tribunals, etc. The Plaintiffs claim that under this resolution, Plaintiff No.2 has the requisite authority to sign and verify the plaint on behalf of Plaintiff No.1. This position is contested by the Defendant in his written statement. It is the case of the Defendant that under the Articles of Association of Plaintiff No.1 (the Articles having since the date of the aforesaid resolution been amended), the commencement or discontinuance of any litigation, as set out therein, is required to be authorized by a resolution of the Board of Directors of the company and no such resolution could be passed or legally acted upon unless at least one Director nominated by the "V-C Investor" (i.e. ICICI Venture Funds Management Company Ltd. - I-Ven) votes in favour of consents to, such resolution. It is the case of the Defendant that no such consent being there in the present case and therefore, no valid board resolution for commencement of the present litigation, the suit instituted by Plaintiff No.2 for and on behalf of Plaintiff No.1 is not maintainable. Based on these pleadings, an issue (Issue No.3) has been framed by this Court as under :-

(2.) The Defendant applies for trial of this issue (Issue No.3) first before the other issues are determined. It is submitted that the Defendant accepts and does not dispute the factum of the alleged resolution referred to above. The Defendant's case is that the Articles of Association of Plaintiff No.1 having been amended subsequent to this resolution, introducing the mandatory provision of the consent of V-C Investor for the validity of any resolution for commencement of litigation on behalf of Plaintiff No.1, the present suit is devoid of any authority of law for its commencement. It is submitted that since the resolution, on the basis of which the Plaintiffs claim authority in Plaintiff No.2 to sign and verify the plaint and commence a legal action on behalf of Plaintiff No.1, not having been disputed, there is no factual inquiry necessary for determination of this issue. It is submitted that this issue is a pure question of law and a substantial part of the case, which concerns defamation of Plaintiff No.1 by the Defendant, can be disposed of on this issue itself and that, accordingly, this issue should be tried by the Court first.

(3.) On the other hand, it is submitted by learned Counsel for the Plaintiffs that the issue is not only both of law and fact, but that, assuming without admitting that the factual inquiry is done away with by reason of the Defendant having accepted the factum of the resolution, the issue does not relate to either the jurisdiction of the Court or the bar to the suit created by any law for the time being in force. It is submitted that unless and until an issue relates to the jurisdiction of the court or a bar to the suit created by any law for the time being in force, the same cannot be tried even if such trial were to dispose of a part of the case. Secondly, it is submitted that the question of trial of the issue before the trial of other issues has to be determined at the time of framing or settlement of issues and not thereafter.