Post-Suit Board Resolution Cannot Cure Inherent Lack of Authority to Institute Suit by Company

The petitioner company filed a suit against the respondent bank in 2010 for recovery of Rs. 3,99,736/-.

The plaint was signed and verified by a Director, Mr. Meghjibhai Khetani, who also deposed as a witness.

During cross-examination on November 3, 2023, the Director admitted that no Board Resolution had been passed authorizing him to institute or pursue the legal proceedings.

After evidence was closed and final arguments were concluded on April 5, 2025, the petitioner filed an application (Exh. 74) to reopen the evidence stage to produce a post-dated Board Resolution dated March 31, 2025, seeking to ratify the Director's authority.

The Trial Court rejected the application, leading to this challenge under Articles 226 and 227 of the Constitution.

Whether a plaintiff company can be permitted to reopen evidence to produce a Board Resolution passed nearly 15 years after the institution of the suit and after the conclusion of final arguments.

Whether a post-suit resolution can cure the inherent lacuna of lack of authority to institute a suit by a company.

The Court emphasized the procedural requirement that for a juristic person (a company) to institute a suit, a specific Board Resolution authorizing the signatory must exist at the time of institution.

The Court applied the principle that evidence cannot be reopened to fill a "lacuna" once a party has admitted to a deficiency in cross-examination and the defense has disclosed its strategy.

Furthermore, the Court addressed the principle of judicial discipline regarding the timely pronouncement of judgments after the conclusion of arguments.

The High Court found that the petitioner was fully aware of the lack of authorization since the cross-examination in November 2023 but waited until the case arrived at the stage of judgment delivery to create and produce a retrospective resolution.

The Court held that a post-suit resolution is of "no importance" and cannot cure the inherent defect in the suit's institution, as the law expects authorization to precede the filing.

Allowing the application at such a belated stage would cause "great injustice" to the defendant, who had already built a defense based on the plaintiff's admitted lack of authority.

The Court also criticized the Trial Court for "judicial dishonesty" in delaying the judgment through unnecessary adjournments titled "further arguments" despite the conclusion of final submissions.

The Court held that the application was a mala fide attempt to fill a lacuna.

Specifically, the Court directed the Trial Court to pronounce the final judgment within three days of receiving the order and issued a warning to the Judicial Officer against holding judgments beyond a reasonable period.

Rule discharged; no order as to costs.