TMI Blog1972 (10) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. The 3rd defendant Sri Rajagopal Transports Private Ltd. was incorporated on April 7, 1959, with the 1st defendant and his two wives as its only shareholders. The 1st defendant by a resolution dated April 8, 1959, was appointed as the managing director of the company. The suit promissory note was executed by the 1st defendant on August 12,1960, and he described himself as the proprietor of Sri Rajagopal Transports P. Ltd. Subsequently, on July 29, 1961, all the shares of the company were transferred in the name of the 2nd defendant and his son, Rajaram. It was the case of the plaintiff that the money was borrowed by the 1st defendant for the purchase of a bus for the company and that when the shares were transferred to the 2nd defendant, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s authority, express or implied. It is clear, therefore, that in order to make the company liable, the instrument on the face of it must show that it was executed on behalf of the company. Normally, if the promissory note had been in English one would have expected a recital that the promissor is executing the document for and on behalf of the company. But the promissory note is in vernacular and the promissor is given as Sri Rajagopal Transport bus proprietor Ramanatha Reddiar. If really the promissor was not executing the document on behalf of the company it would not have been necessary for giving such a description. It is true that no evidence de hors the instrument would be admissible to prove that the promissory note was executed on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the 1st defendant was appointed as the managing director. Resolution 6 vested in him full powers for the management of the company's affairs and also authorised him to sign all papers of the company. The transaction is, therefore, one which could be entered into on behalf of the company by the first defendant. In such a circumstance, the creditor is entitled to presume that all formalities required in connection therewith have been complied with. A bona fide creditor in the absence of any suspicious circumstance is also entitled to presume its existence. The creditor being an outsider or a third party so far as the company is concerned is entitled to proceed on the assumption of the existence of such a power. That in fact the money was u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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