Meaning of Capacity to sue and be sued of a Company

A Company, which is a different Legal Entity has various legal rights and liabilities like any other natural person. One such right is that a Company can sue and can be sued in its name i.e. a Company can file a case against some other person or some other Company and also a case can be filed by some other person against the Company. All such litigations / suits / petitions have to be in the name of the Company. However, the mandatory requirement is that such suits / petitions / Complaints have to be through the Authorized Representative of a Company. 

A Company can even file Criminal Complaints although they too have to be through a living person who is so duly authorized by the Company. If a Complaint is filed by a Company however the said Complaint is not filed through a natural living person, the Complaint is liable to be dismissed just like any other Complaint in the absence of the Complainant. 

Accordingly, a Company can file a defamation case against a defamatory article that was published against it. It can also file police complaints for various offences. It can basically undertake all sorts of litigations through an Authorized Representative. 

It is pertinent to note that an Authorized Representative of a Company can be changed during the course of the litigation and doing so would not hamper the pending case before the Courts / Authorities. 

It is interesting to note that a Company or a Public listed Company can also file a case as a forma pauperis (an indigent person) under Order 33 Civil Procedure Code. The Supreme Court of India in the case of Union Bank of India v. Khader International, (2001) 5 SCC 22 has observed that:

“26. Therefore, the word “person” has to be given its meaning in the context in which it is used. It refers to a person who is capable of filing a suit and this being a benevolent provision, it is to be given an extended meaning. Therefore, we are of the view that a public limited company, which is otherwise entitled to maintain a suit as a legal person, can very well maintain an application under Order 33 Rule 1 CPC. We hold that the word “person” mentioned in Order 33 includes not only a natural person but other juridical persons also. …”

This feature of a Company that enables it to sue and to be sued is advantageous to a Company as a Company is able to fight its own battles wherein it can drag any defaulting party / person or an employee to the Court and can get relief from the Court. Allowing a Company to sue and to be sued is necessary for even the common man in order to safeguard its interests as a normal common person can also take the Company to the Courts to get a relief.