Society loses suit challenging President's lease deed validity due to insufficient proof of authority limits

Bombay HC dismissed a society's suit seeking declaration of invalidity of a lease deed allegedly executed by its President without authority. The court held that the society's charter authorized the President to represent it in all matters, with only restrictions on important subjects requiring Administrative Body resolution. Since no constitutional restriction existed on creating property leases, third parties need not inquire into internal management procedures once authority is established. Under Evidence Act Section 106, the burden of proving lack of authority regarding internal statutes lay with the plaintiff society, which failed to discharge this burden.

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Issues Involved:
1. Validity of the Lease Deed executed by the President of the plaintiff-society.
2. Authority of the President to execute the Lease Deed.
3. Allegation of fraudulent transaction due to meager lease rent.
4. Additional ground of unlawful sub-letting in the companion appeal.

Detailed Analysis:

1. Validity of the Lease Deed:
The core issue in First Appeal No. 6 of 2010 was the challenge to a judgment and decree that declared a Lease Deed invalid. The plaintiff-society claimed that the Lease Deed was executed by its President without authority and contrary to the society's objectives. The learned District Judge found the Lease Deed invalid, noting that the President did not have the authorization from the administrative committee and that the lease rent was disproportionately low, indicating an abuse of authority and causing irreparable loss to the plaintiff.

2. Authority of the President:
The defendants contended that the President had the authority to execute the Lease Deed, citing the society's charter, which allowed the President to represent the society in all matters except those requiring specific resolutions. The doctrine of indoor management was invoked, arguing that the onus to prove lack of authority lay with the plaintiff. The court agreed, stating that the plaintiff failed to produce evidence of any internal statute restricting the President's authority. The court emphasized that the burden of proof was on the plaintiff to demonstrate the lack of authority, which it failed to do.

3. Allegation of Fraudulent Transaction:
The plaintiff argued that the lease rent of `500/- per annum for a 99-year lease indicated fraud. However, the court noted that no specific issue was framed regarding this allegation, and no evidence was provided to support the claim that the rent was unreasonably low. The court also highlighted that community properties are meant for villagers' use, not profit, and the defendants were villagers. Consequently, the court found no merit in the fraud allegation.

4. Additional Ground of Unlawful Sub-letting:
In First Appeal No. 8 of 2010, the plaintiff additionally claimed unlawful sub-letting by the defendants. However, the court found no issue was framed regarding sub-letting, and the plaintiff did not seek relief based on this ground. The court clarified that a mere reference to sub-letting in the plaint, coupled with a prayer for possession, did not constitute a valid claim. The court concluded that the additional ground lacked merit and did not alter the outcome.

Conclusion:
The court set aside the impugned orders and dismissed the suits filed by the plaintiff. It held that the plaintiff failed to prove the lack of authority of the President to execute the Lease Deed and that the burden of proof was on the plaintiff. The court also found no evidence of fraud or unlawful sub-letting. The amount deposited by the appellants was ordered to be refunded with accrued interest.

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