Ostensible authority and estoppel bind a company where its board holds out a director as managing representative.

A company is not bound by a director's actual authority unless a valid board resolution, formal appointment, or other corporate act confers that power; absent such authority, the director cannot alone retain agents for the company. Where, however, the board knowingly permits the director to act as the company's managing representative in the ordinary course of business, the company may be bound by ostensible authority and estopped from denying it. On the stated facts, the plaintiffs' engagement was within the ordinary scope of the business, the company's conduct amounted to a holding out, and liability for the fees followed.

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Issues: (i) Whether Kapoor had actual authority to engage the plaintiffs on behalf of the company. (ii) Whether the company was bound by Kapoor's ostensible authority and was estopped from denying his authority to contract for the plaintiffs' services.

Issue (i): Whether Kapoor had actual authority to engage the plaintiffs on behalf of the company.

Analysis: No board resolution specifically authorised Kapoor to retain the plaintiffs, and there was no valid resolution or written consent showing that he had been formally appointed to an office carrying that power. The articles permitted delegation and appointment of a managing director, but the requisite corporate action to confer actual authority was absent.

Conclusion: Kapoor did not have actual authority.

Issue (ii): Whether the company was bound by Kapoor's ostensible authority and was estopped from denying his authority to contract for the plaintiffs' services.

Analysis: The board knew that Kapoor was acting as the person managing the property and taking steps to secure its sale and development. The plaintiffs were engaged for work of the kind normally within the authority of a managing director or executive director conducting the company's business. The company's conduct amounted to a representation that Kapoor had authority to act for it, and the plaintiffs relied on that representation. The company's constitution did not prevent such delegation or representation, so the requirements for apparent authority and estoppel were satisfied.

Conclusion: The company was bound by Kapoor's ostensible authority and could not deny liability for the plaintiffs' fees.

Final Conclusion: The plaintiffs' contract claim succeeded because the company, by its board's conduct, held Kapoor out as authorised to transact the company's ordinary business, and the appeal failed.

Ratio Decidendi: Where a company's board knowingly permits a director to act as the company's managing representative in the ordinary course of its business, the company is bound by contracts within that ordinary scope entered into on its behalf, even if no formal appointment or express resolution conferring actual authority was recorded.

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