Implied authority to endorse negotiable instruments upheld where company articles and conduct supported branch manager's power.

A company branch manager may validly endorse a promissory note on implied authority where the articles authorise the managing director to negotiate negotiable instruments and to delegate those powers, and section 89 of the Indian Companies Act, 1913 recognises acts done under express or implied authority. In such a case, a transferee may rely on the company's constitution and claim as a holder in due course unless the defendants displace authority under section 118 of the Negotiable Instruments Act. The endorsement was treated as valid, but the amount already paid before assignment was conclusive, so liability remained only for the proved balance.

---

---

Issues: Whether the manager of a company branch, in the absence of express delegation, had implied authority under the company's constitution and section 89 of the Indian Companies Act, 1913, to endorse a promissory note so as to bind the company and enable the transferee to claim as a holder in due course; and whether the decree should be reduced to the amount proved outstanding.

Analysis: The articles of association empowered the managing director to draw, accept, endorse and negotiate negotiable instruments and to delegate those powers to managers or other persons. The manager was in sole charge of the branch and was taking promissory notes from constituents. Although no express delegation was proved, section 89 of the Indian Companies Act, 1913 treats a promissory note as made or endorsed on behalf of a company when done by a person acting under its express or implied authority. The legal position under section 118 of the Negotiable Instruments Act placed the burden on the defendants to show lack of authority and to displace the transferee's status. On the facts, the transferee was entitled to assume authority from the company's constitution, and the endorsement was valid. At the same time, the first appellate court's finding that Rs. 400 had already been paid before assignment was treated as conclusive, leaving only Rs. 600 due.

Conclusion: The endorsement by the branch manager was upheld as valid on implied authority, and the plaintiff was entitled to a decree only for the balance of Rs. 600 with interest.

Final Conclusion: The appeal succeeded to the extent of restoring liability on the note but only for the unpaid balance proved on the record, with costs adjusted according to success.

Ratio Decidendi: Where a company's constitution authorises the making and negotiation of negotiable instruments through officers capable of delegation, a person dealing with the company may assume implied authority in the absence of proof to the contrary, and the transferee's rights as holder in due course are not defeated merely because express delegation is not established.

---