Telangana HC Sets Aside Leave to File Ratification Board Resolution Nine Years After Suit Was Filed With a Foundational Authority Defect

A Division Bench held that describing a non-Director as Director in the 2016 Board Resolution that authorised the suit was a foundational defect, not a curable procedural irregularity, and could not be retrospectively fixed by a 2025 ratification resolution.

The High Court of Telangana, sitting at Hyderabad, has set aside a Commercial Court order that had allowed a plaintiff company to bring a fresh Board Resolution on record to ratify defective authorisation granted nine years earlier. The Division Bench, comprising Justice Moushumi Bhattacharya and Justice Gadi Praveen Kumar, held that the absence of valid authority at the time of institution of a suit is a foundational defect and cannot be treated as a mere procedural irregularity. The Bench further held that the strict disclosure regime under Order XI Rule 1 of the Code of Civil Procedure, 1908, as amended by The Commercial Courts Act, 2015, had been ignored by the Commercial Court, Ranga Reddy District at L.B. Nagar. The judgment was delivered on 1 July 2026 in Civil Revision Petition No.3848 of 2025.

The Dispute Before the High Court

M/s. Pavani Estates Private Limited, the respondent, had filed a commercial suit for recovery of Rs.1,35,25,000 along with interest at 18% per annum from the date of suit till realisation. The suit was filed before the Commercial Court, Ranga Reddy District, in September 2016. In support of the filing, the plaintiff relied on a Board Resolution dated 29.08.2016 (marked as Exhibit A-7), which described Mr. Archit Reddy as a “Director” of the plaintiff Company and authorised him to appear on its behalf.

The difficulty arose when, during cross-examination as PW.1, Mr. Archit Reddy admitted that he had actually become a Director of the Company only on 14.02.2017 — nearly five months after the suit was filed on 28.09.2016. The petitioners, M Divya and three others, who were defendant Nos.1 to 4 in the suit, raised an objection to the authority of Mr. Archit Reddy at the stage of final reply arguments.

In response, instead of advancing reply arguments, the plaintiff passed a fresh Board Resolution on 18.06.2025 and then filed two interlocutory applications, I.A. Nos.467 and 468 of 2025, under Order XI Rule 1(5) read with Section 151 CPC and Rule 32 of the Civil Rules of Practice. The prayers were to permit Mr. Archit Reddy to represent the Company as its duly authorised signatory and to grant leave to bring the Resolution dated 18.06.2025 on record for the purpose of ratifying the earlier Resolution dated 29.08.2016. The Commercial Court allowed both applications on 06.08.2025, holding that the defect was curable and that no prejudice would be caused to the defendants. The defendants filed the present revision before the High Court.

The Legal Issue

The central question was whether the erroneous description of Mr. Archit Reddy as a “Director” in the Resolution dated 29.08.2016, when he admittedly held no such position at the time, could be cured, clarified, or ratified by the subsequent Resolution dated 18.06.2025 as a mere curable defect.

The petitioners argued that parties cannot be permitted to fill up lacunae after deficiencies are exposed during trial. They contended that Mr. Archit Reddy was fully aware he was not a Director in 2016 at the time the suit was instituted, and that the defect was therefore not one that had been subsequently discovered. Counsel pressed that the dispute fell within the definition of a “commercial dispute” under Section 2(1)(c) of The Commercial Courts Act, 2015, and that the strict timelines under Order XI Rule 1 would apply. On this basis, the petitioners argued that a Board Resolution sought to be received at the trial stage, long after completion of evidence, could not be introduced without establishing reasonable cause for its non-disclosure with the plaint.

The respondent contended that the emphasis on the description of Mr. Archit Reddy as “Director” versus “authorised signatory” was hyper-technical, since the plaint was signed under the seal of the Company and the institution of the suit was not disputed on merits. The respondent submitted that the subsequent Resolution merely ratified the authority of the deponent without altering his identity, capacity, or competence, and that no new material affecting the rights of the defendants had been introduced.

How the Bench Reasoned

The Bench first set out the disclosure framework under Order XI of the CPC as amended by The Commercial Courts Act, 2015. Order XI Rule 1 requires the plaintiff to file a list of all documents in its power, possession, control or custody along with the plaint, accompanied by a Declaration on Oath. Sub-rule (4) permits a limited window of thirty days from the date of filing of the suit for urgent additional filings, subject to a further Declaration on Oath. Sub-rule (5) allows a plaintiff to rely on documents not disclosed with the plaint only upon the Court granting leave and the plaintiff establishing “reasonable cause” for such non-disclosure.

The Bench held that this framework, read together, reflects a conscious legislative intent to impose strict discipline on document disclosure in commercial suits. It drew on the Supreme Court's recognition of this rigour in Sudhir Kumar @ S. Baliyan v. Vinay Kumar G.B. (2021) 13 SCC 71, and noted that this Court had addressed the same requirement in M/s. Sri Vishnu Constructions v. State of Telangana, CRP Nos.2677 and 2572 of 2025.

On the distinction between curable procedural defects and foundational defects, the Bench drew a clear line. Defective verification, defective signing, or a delayed filing of an authorisation were given as examples of defects capable of subsequent correction. However, an absence of authority at the very inception of filing cannot be placed in the same category. The Bench held that the present case fell squarely within the latter: Mr. Archit Reddy did not hold the authority claimed under the 2016 Resolution on the date the suit was filed.

The Bench found that the plaintiff had knowledge, at the relevant point of time in 2016, that Mr. Archit Reddy was not a Director of the Company. The Board of Directors had passed the Resolution and the plaintiff was naturally aware that it contained an error in describing him as a Director. This was not a defect discovered subsequently or one that arose through inadvertence. The error had persisted for nearly ten years, was exposed only when Mr. Archit Reddy admitted the fact during cross-examination, and an attempt to cure it was made only when the petitioners raised an objection at the final arguments stage.

The Bench characterised what the plaintiff had done in 2025 not as a ratification but as a replacement of the original basis of authority altogether. The 2025 Resolution described Mr. Archit Reddy as the “then Accounts Manager” and “authorised signatory”, while the 2016 Resolution had described him as “Director”. Bringing the later Resolution on record effectively sought to supplant the foundational document on which the suit had been instituted. The Bench held that “the subsequent Resolution cannot retrospectively convert a non-Director into a Director.”

The Bench also found that the plaintiff had not established “reasonable cause” for the non-disclosure of the 2025 Resolution, as required under Order XI Rule 1(5). The only cause shown was the erroneous description in the 2016 Resolution, which had been known to the plaintiff from the outset. This fell short of the statutory threshold.

The Bench then examined the decisions cited on behalf of the respondent. United Bank of India v. Naresh Kumar (1996) 6 SCC 660 and Uday Shankar Triyar v. Ram Kalewar Prasad Singh (2006) 1 SCC 75 were decided before the enactment of The Commercial Courts Act, 2015 and arose from factual situations where there was no dispute that the concerned person actually held the office in question. Livein Aqua Solutions Private Limited v. HDFC Bank Limited 2025 INSC 1349 dealt with defects in pleadings and affidavits and did not involve a foundational defect in the status of an authorised signatory under the commercial courts regime. The Supreme Court in Maharashtra State Mining Corporation v. Sunil s/o Pundikarao Pathak (2006) 5 SCC 96 had held that ratification presupposes an act capable of ratification, a proposition the Bench found directly applicable here. None of the other cited decisions involved a challenge to the competence of the person who had instituted the suit at the time of its institution.

On the respondent's belated argument that the dispute was not a “commercial dispute” at all, the Bench rejected it outright. The plaintiff had filed the suit before the Commercial Court and submitted to its jurisdiction without objection. The attempt to raise this point before the High Court appeared designed to escape the procedural discipline of Order XI Rule 1 once the defect had been exposed.

The Commercial Court's Error

The Bench identified the specific error in the Commercial Court's reasoning. The Commercial Court had treated the description of Mr. Archit Reddy as “Director” as a procedural defect capable of rectification at any stage and had held that no prejudice would be caused to the defendants. The Bench held that the Commercial Court had failed to first determine whether Mr. Archit Reddy had any authority to institute the suit on 21.09.2016, before considering whether the defect was curable. The undisputed facts before the Commercial Court were: the 2016 Resolution described PW.1 as a Director; PW.1 admitted he was not a Director on 29.08.2016; and PW.1 admitted he became a Director on 14.02.2017, after the suit was filed. With those facts on record, the Commercial Court's characterisation of the defect as procedural and its conclusion that no prejudice would follow amounted to what the Bench described as a casual view of a foundational defect.

Order

The Division Bench allowed CRP No.3848 of 2025 and set aside the Common Order dated 06.08.2025 passed by the Commercial Court, Ranga Reddy District at L.B. Nagar. The leave granted to the plaintiff to file the Board Resolution dated 18.06.2025 and the permission granted to Mr. Archit Reddy to represent the plaintiff Company as its authorised signatory were both set aside. All connected applications were disposed of.