LexTHE ORIOL INDUSTRIES LTD. versus THE BOMBAY MERCANTILE BANK LTD
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Governor·General
in Council
v.
Musaddi Lal
Shah].
January JI.
652
SUPREME COURT REPORTS
[1961)
of the Limitation Act upon ss. 72. and 77 of the Rail-
ways Act and to hold that a suit 'for compensation for
loss because of non-delivery of goods does not fall
withins. 77. The view we have expressed is supported
by a large volume of authority in the c.ourts in India.
-for instance The Madras and Southern M ahratta Rail-
way Co., Ltd. v. Haridoss Banmalidoss ('), Hill Sawyers
and Co. v. Secretary of State('), Martah Ali v. Union
of India('), Union of India v. M itayagiri Pullappa (' ),
Assam Bengal Railway Co., Ltd. v. Radhika Mohan
Nath(') and Bengal Nagpur Railu;ay Co. Ltd. v. Hamir
.Wull Chhagan Mull(').
The view expressed to the contrary in the Allahabad
High Court in Governor-General in Council v ~ Mahabir
Ram (7) and by the Patna. High Court in Jais Ram
Ramrekha Das v. G. I. P. Railway('), is in our judg-
ment erroneous.
This appeal will therefore be allowed and the
respondent's suit will stand dismissed. As the Union
of India was permitted to appeal for obtaining the
decision of this Court which may settle the conflict of
views even though the amount involved is small, we
think that it is just and proper that there should be
no order as to costs throughout.
Appeal allowed.
THE ORIOL INDUSTRIES LTD.
v.
THE BOMBAY MERCANTILE BANK LTD.
(P. B. GAJENDRAGADKAR, K. N. WANCHOO and
K. c. DAS GUPTA, JJ.)
Bank-Payment in company's account-Cheques drawn by
authorised agents without so describing themselves or stating as on
behalf of the company-Payment if wrongfully made-Indian Com-
panies Act, I9I3 (VII of I9IJ), s. 89.
The Managing Agents of the appellant company withdrew
certain sums of money from its account with the respondent
(1) (1918) I.L.R. 41 Mad. 871.
(5) A.LR. 1923 Cal. 397.
(2) (1921) !.L.R. 2 Lah. 133.
(61 (1926) I.L.R. 5 Pat. 106.
I .
)
I
(3) [1954] 56 Bom. L.R. 150.
(71 (19531 I.L.R. l All. 64.
I~
(4) I.L.R. [1958) A.P. 323.
(8) (1929) I.L.R. B Pat. 545·
3 S.C.R.
SUPREME COURT REPORTS
653
Bank, which the company had by a resolution authorised the
r96r
Managing Agents to operate on.
The Managing Agents had no
other account with the said Bank. The company brought the Oriol Industries
suit, out of which the present appeal arises, against the Bank for
Ltd.
recovery of the said amounts on the ground that the cheques
v.
issued by the Managing Agents had been wrongfully honoured Bombay Mmantile
by the Bank in that they were signed by them without describ-
Bank Ltd.
ing themselves as Directors of the Managing Agents firm and on
behalf of the company, as required by the resolution. The trial
Judge decreed the suit except with regard to a part of the claim
which he found to have actually been received by the company.
The appeal court dismissed the suit holding that the Bank had
paid in good faith and that the company was not entitled to rely
on s. 89 of the Indian Companies Act.
Held, that the court of appeal' was right in holding that
s. 89 of the Indian Companies Act could not be invoked by the
appellant in the present case.
There can be no doubt that before a negotiable in·strument can
be enforced against a company under s. 89 of the Indian Com-
panies Act, it must on the face of it show that it was drawn,
made, accepted or endorsed by the company, and this may be
done either by showing the name of the company itself on the
instrument, or by statement of the person making the instrument
that he was doing so on behalf of the company.
Sadasuk fanki Das v. Sir Kishan Pershad, (1919) I.L.R. 46
Cal. 663, applied.
•The Bank of Bombay v. H. R. Cormack, (1880) I.L.R. 4 Born.
275 and Miles' claim, L.R. 9 Ch. App. 635, referred to.
But the said principle is applicable only to the claim made
against a company on a negotiable instrument and cannot be
extended to a dispute between a bank and its constituent where
the claim is not so based and proceeds on the basis that in
honouring the cheques wrongfully drawn the bank acted
improperly.
Mahony v. East Holiford Mining Co., (1875) 7 Eng. & Irish
Reports 869, referred to.
Held, further, that the object of the resolution as well as its
effect was merely to conform to the requirements of s. 89 of the
Indian Companies Act, 1913, and not to prescribe any condition
precedent independently of that section.
CIVIL APPELLATE JURISDICTION:
Civil Appeal No.
221of1956.
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