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A juristic entity can ratify the acts done on its behalf expressly or impliedly

In United India Periodicals Pvt. Ltd, vs CMYK Printech Ltd., the defendant had argued that the compromise settlement has been fraudulently signed by one of its old employees, who earlier had the authority of the board but the same permission have been revoked by the board much before the impugned settlement. The defendants argued that under the provisions of Order XXIII Rule 3 CPC satisfaction of the Court about a valid agreement or compromise is a mandatory requirement. According to him, a settlement agreement entered into by a person acting on behalf of the company ostensibly on the basis of a general authorization made fifteen years before and the manner in which the settlement took place without any opportunity for the Board of Directors of the company being apprised about the proposed terms of settlement was illegal.

The Delhi High Court deciding against the defendant referred to Valapad Co-operative Stores Limited Vs. Srinivasa Iyer, AIR 1964 Kerala 176 it has been held as under:-

"7. In the case of an apparent authority, one has first of all to find out in respect of what transaction an agent has apparent authority and towards whom. That the apparent or the ostensible authority is no authority at all as between the principal and the agent and that it is different from express or implied authority is clear from the following statement of law by Mr. J.H. Watts, the learned editor of Smith's Mercantile Law:
"There is a clear distinction between the proper use of the two expressions "implied authority" and "ostensible authority." The former is a real authority, the exercise of which is binding not only as between the principal and third parties, but also as between principal and agent. It differs only from an express authority in that it is conferred by no express words in writing, but is to be gathered from surrounding circumstances. The term "ostensible authority", on the other hand, denotes no authority at all. It is a phrase conveniently used to describe the position which arises when one person has clothed another with, or allowed him to assume, an appearance of authority to act on his behalf, without actually giving him an authority either express of implied, by which appearance of authority a third party is misled into believing that a real authority exists. As between the so-called principal and agent such "ostensible authority" is of no effect. As between such principal, however, and the third party it is binding, on the ground that the principal is estopped from averring that the person whom he has held out and pretended to be his agent is not in fact so." (Smith and Watts' Mercantile Law 8th Ed. 1924, P. 177, note (a).)

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