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Issues: (i) Whether the plaint and suit on behalf of the company were instituted by a duly authorised person; (ii) whether a contract of insurance had been concluded between the parties before the fire so as to fasten liability on the insurer.
Issue (i): Whether the plaint and suit on behalf of the company were instituted by a duly authorised person.
Analysis: Order 29, Rule 1 of the Code of Civil Procedure, 1908 authorises a director or principal officer to sign and verify pleadings on behalf of a corporation if he is able to depose to the facts of the case. It does not by itself confer authority to institute a suit. The power to commence litigation for a company lies with the board of directors under the Companies Act, 1956, and an individual director can institute proceedings only if specifically empowered by resolution or by the articles. No board resolution, memorandum, articles, or ratification authorising the signatory to institute the suit was proved.
Conclusion: The issue was decided against the plaintiff and in favour of the defendant.
Issue (ii): Whether a contract of insurance had been concluded between the parties before the fire so as to fasten liability on the insurer.
Analysis: A contract of insurance is concluded only on unqualified acceptance of the proposal and communication of that acceptance. A cover note may constitute interim cover, but liability arises only if the proposal is accepted and the cover note is shown to have been issued and delivered. On the evidence, the alleged cover notes were not proved to have been received by the plaintiff, the premium cheque was never encashed, contemporaneous correspondence after the fire did not refer to any completed cover, and the plaintiff did not examine the development officer despite his availability. The materials did not justify an inference of a concluded contract before the fire.
Conclusion: The issue was decided against the plaintiff and in favour of the defendant.
Final Conclusion: The suit failed because the plaintiff could not establish valid institution of proceedings on behalf of the company or a completed contract of insurance binding the defendant; accordingly, the claim for indemnity was not maintainable on the proved facts.
Ratio Decidendi: In the case of a company, Order 29, Rule 1 of the Code of Civil Procedure, 1908 permits signing and verification of pleadings but does not dispense with specific corporate authority to institute the suit, and an insurance contract is not concluded unless the proposal is unconditionally accepted and such acceptance is shown to have been communicated before the loss.
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