' ANWAR ZAHEER JAMALI, J.---This High Court Appeal is directed against the order dated 24-11-2004 passed on C.M.A. No,1517 of 2004, in Suit No,851 of 2004, whereby plaint in the suit instituted by the appellant was rejected on the sole ground that there was no board resolution in favour of the Chief Executive of the appellant-Company, empowering him for institution of the suit, therefore, institution of suit under his authority was not valid, and consequently suit was not maintainable in law.
2. In the context of short controversy noted above, we have heard the learned counsel for the parties.
3. Mr. Salman Talibuddin learned counsel for the appellant has vehemently contended that the passing of impugned order by the learned single Judge is the outcome of gross misinterpretation of Article 80 of the Articles of Association of the appellant-Company, which had fully authorized its Chief Executive for undertaking, inter alia, exercise of institution of suit on behalf of the company.
Further dilating upon this aspect of the case, learned counsel contended that the opening phrase of Article 80 "Subject to any resolution or decision of the Board of Directors" of the Articles of Association of appellant-Company was erroneously taken as barring provision for exercise of powers by the Chief Executive as conferred to him by the said article, though as a matter of fact Article 80 had fully authorized the Chief Executive for exercise of all or any of the powers conferred to him under the said Article, while the opening phrase of Article 80 (reproduced above) was only indicative of the fact that such powers exercisable by the Chief Executive were subject to the control of the Board of Directors by way of passing any resolution or taking any decision for this purpose. In support of his arguments, learned counsel has placed reliance upon the cases cited below, which postulate various guiding principles of interpretation of statutes/ documents, and also deals with the issue of filing of legal proceedings on behalf of the company on the basis of powers conferred under the Articles of Association of the Company or its Board resolution:--
(1) Abdul Rahim and 2 others v. Messrs United Bark Ltd. Of Pakistan PLD 1997 Karachi 62;
(2) Messrs Taurus Securities Limited v. Arif Saigol and others 2002 CLD 1665;
(3) Cementation Intrafor and others v. Indus Valley NLR 1989 CLJ 555 and
(4) All India Reporter Ltd. And another v. Rarnchandra Dhondo Datar AIR 1961 Bombay 292.
4. Learned counsel lastly made reference to the letter dated 4th August, 2004, addressed to him by the Chief Executive and Director of the appellant-Company to show valid authority in favour of Messrs Kairas N. Kabraji, Zarmina Dastur and Samina Siddiqui for institution of suit under their signature.
5. Mr. Muhammad Akram Zuberi learned counsel for the respondent in his reply arguments strongly supported the impugned order passed by learned Single Judge regarding rejection of plaint in the suit and contended that for institution of suit on behalf of appellant-Company prior Board resolution in this regard was indispensable, while in the present case the Chief Executive of the company has unauthorizedly exercised such power. Thus, the plaint in the suit instituted under his authority was rightly rejected on this ground by the learned Single Judge. Learned counsel also made reference to Article 70(n) of the Articles of Association to add force to his submission that it was only within the domain of the Board of Directors of the company that they could have delegated such powers to the Chief Executive through prior Board resolution.
6. We have carefully considered the arguments advanced by learned counsel, perused the material placed on record and also the case law cited at the bar. In order to understand properly respective contentions of the learned counsel, it will be useful to reproduce hereunder Articles 70(n) and 80 of the Articles of Association of the appellant-Company, which read thus:-- "70. The Board of Directors, without prejudice or any way restricting or limiting the general powers and authorities heretofore conferred by these .Presents or the Companies Ordinance, 1984 shall have the powers to do or concur in doing all or any of the following acts and things:--- (a)
(b)
(c)
(d)
(e)
(f)
(g)
(h)
(1)
(k)
(1)
(m)
(n) to institute, combat, prosecute, defend, compound, settle, compromise, adjust, refer to arbitration, withdrawal, abandon, any legal proceedings by or against the company or its officers or otherwise concerning the affairs of the company.
(0)
(p)
(q)
"80. Subject to any resolution or decision of the Board of Directors, the Chief Executive shall have the power of engagement, suspension and dismissal of Managers, Secretaries, Engineers, Clerks, Assistants and other employees, and the general direction, management and superintendence of the business of the company with full power to do all acts, matters and things deemed necessary, proper or expedient for carrying on the business and concerns of the company including the power to make such investments, by loan or otherwise of the company's funds as the Chief Executive may think fit, to raise or borrow or secure the payment of, any sum or sums of money for the purposes of the con ipany in such manner and upon such terms and conditions as he thinks fit, including payment of money on the security of the property of the company, and to make and sign all contracts, and to make, draw, accept, endorse, negotiate on behalf of the company all bills of Exchange, Promissory Notes, Hundis, or Cheques, Drafts, Government Promissory Notes, Bonds or Debentures issued by the Government or by any local or public body or authority and other negotiable instruments as shall be necessary, proper or expedient, and to determine the power and duties of the Managers, Secretaries, brokers, Assistants and other employees of the company, and to determine their promotions and to fix and give and award their salaries, allowances, bonuses, commission, pension, gratuity or compensation and other emoluments, and to institute, conduct, defend, compound or abandon any legal proceedings by or against the company or its officers, and to refer any legal proceedings by or demands by or against the company to arbitrations and observe and perform the awards and to compound and allow time for payment or satisfaction of any debts, dues, claims of demands by or against the company, and to purchase or otherwise, acquire for the company, any property, immovable or otherwise, rights or privileges, which the company is authorized to acquire, at such price, and generally on such terms and conditions as he may think fit, and to enter into any partnership or any arrangement for sharing profits, union of interest co-operation, joint venture or otherwise with any person or company, and he shall have the power to exercise all the powers, authority and direction of the company, except only such of them as by the Companies Ordinance for the time being in force, or by the presents are expressly directed to be exercised by the Board of Directors or by the share holders in General Meeting."
7. A plain reading of Article 70 goes to show that the Board of Directors of the company have been conferred powers to do or concur in doing all or any of the acts and things detailed in sub Articles
(a) to (q), including sub-Article (n), but without prejudice or in any way restricting or limiting the general powers and authorities heretofore conferred by the Articles of Association or the Companies Ordinance, 1984 to any other official of the company. Further the language of Article 80 is clearly indicative of the fact that by its insertion the appellant-Company intended to confer all powers provided therein to its Chief Executive. Thus, if the phrase "subject to resolution or decision of the Board of Directors", provided therein is given its interpretation in the same manner as accepted by the learned Single Judge, in our view, it would be contrary to the rule of "harmonious Construction", which is one of the well-accepted principle of interpretation, and will make the whole Article 80 of the Articles of Association, practically redundant, inasmuch as if for every act or action envisaged under the said Article (which even covers petty day to day matters) a prior board resolution is required in favour of the Chief Executive then there was no necessity of insertion of such detailed classification of powers under the said Article.
8. In the same context it will not be out of place to mention here that it is also one of the well- recognized principle of interpretation of statute/document that no redundancy can be attributed to any word, phrase, section, article or clause provided therein by its author, unless it creates an absurd or irreconcilable position. Applying these principles to the facts of the present case the only logical interpretation and import deducible from the language of Article 80, could be that by virtue of this Article the company has delegated all powers to its Chief Executive in terms thereof, but subject to the supervision and control of Board of Directors for which they may pass any resolution
(s) or take decisions for further defining the limits of the powers and acts to be performed by the Chief Executive of the company. Even the language of Article 70 supports such view/interpretation and provides protection to the powers of Chief Executive conferred by Article 80. The cases referred by Mr. Salman Talibuddin also lend full support to such view.
9. We, accordingly hold that order of rejection of plaint in Suit No,851 of 2004 passed by the learned Single Judge, only on such count is illegal, based on misinterpretation of Article 80 of Articles of Association, and thus it is liable to be set aside. Accordingly this appeal is allowed and impugned order is set aside.
10. Foregoing are the reasons for our short order passed on 3-2-2005.