JUDGMENT : 1. This is a Defendant's First Appeal against the judgment and decree dated the 15th of January, 1960 passed by the Additional District Judge, Gwalior in Civil Original Suit No. 9 of 1951. 2. The Gwalior Brewary Ltd., now under liquidation (hereinafter referred to as the Company) was registered on 2-6-1943 under the provisions of the Gwalior Companies Act No. 1 of Samvat year 1963. At a meeting of the Board of Directors of the Company held on 27-9-1945 at Sc India House, New Delhi a resolution was passed authorizing the Managing Director, Mr. A.S. De Mello, to negotiate with the Plaintiff (The Central Bank of India Ltd., Gwalior Branch) for a loan for certain purposes against hypothecation and mortgage of the Company's stock and other assets. Mr. A.S. De Mello was further authorized by this resolution to sign and complete all documents and to give effectual discharge on behalf of the Company. A copy of this resolution was issued to Shri A. S De Mello who, acting on its authority, borrowed a sum of Rs. 1,50,000 from the Plaintiff-Bank on 28-10-1945 and by a registered deed effected a mortgage of the factory belonging to the Company in favour of the Plaintiff-Bank. In the cash credit account held by the Company with the Plaintiff-Bank Shri A.S. De Mello passed a pro-note on 28-10-1945 for a sum of Rs. 3,00,000 payable on demand to the Plaintiff with interest. To secure payment of the balance in this account the Defendant hypothecated the raw materials and stock-in-trade of the Company and executed an agreement containing the terms of the pledge. 3. The Defendant made payments from time to time towards the mortgage account, with the result that on 30-6-1949 a sum of Rs. 89,304-2-0 towards principal remained outstanding against the Defendant-Company. On adding to it interest till the 30th of March, 1951, payment of Rs. 1,04,937-13-0 was demanded by the Plaintiff-Bank from the Company. On 1-7-1949, Shri De Mello, in his capacity as Managing Director of the Company, acknowledged in writing the Company's liability to pay this amount. 4. In the cash-credit account an amount of Rs. 18,821-0-6 was found due on 30-6-1949 against the Defendant-Company by way of principal and interest till 30-8-1951. 1,04,937-13-0 was demanded by the Plaintiff-Bank from the Company. On 1-7-1949, Shri De Mello, in his capacity as Managing Director of the Company, acknowledged in writing the Company's liability to pay this amount. 4. In the cash-credit account an amount of Rs. 18,821-0-6 was found due on 30-6-1949 against the Defendant-Company by way of principal and interest till 30-8-1951. Shri A.S. De Mello, in his capacity as the Managing Director of the Company, executed in favour of the Plaintiff-Bank an acknowledgment in respect of this amount also. Since the Defendant did not, in spite of notice, pay the outstanding balance in either account the Plaintiff-Bank filed the suit out of which the present appeal arises. 5. The suit was contested by the Defendant on various grounds; only a few of which need be referred to for the disposal of this appeal. The trial Court held that the mortgage and hypothecation deeds executed by Shri De Mello in favour of the Plaintiff as also the acknowledgments by him of the debts were binding on the Defendant. It, therefore, decreed the suit. 6. In the present appeal it was argued by Shri Patankar, Learned Counsel for the Appellant that (1) No Managing Director for the Defendant-Company could be appointed under the Company Law of the Gwalior State; (2) that the Board of Directors had no authority to pass the resolution Ex. D/2 and that (3) the deeds of mortgage and pledge executed by Shri De Mello not being authorized by the Company are not binding on it and for the same reasons the acknowledgments made by the Shri De Mello in respect of the loans in question would not extend the period of limitation for the present suit. As already stated above the Defendant-Company was registered on 2-6-1943. D.W. 1 Shri Arvind Khare deposed that in the application for registration of the Company Shri De Mello has signed as its Managing Director. A letter Ex. D/2 dated 22-5-1943 written by Shri A.S. De Mello to the Registrar Joint Stock Companies, Gwalior, in his capacity as Managing Director of the Gwalior Brewary, mentioned that a copy of the prospectus was being sent along with it. The prospectus Ex. D/3 makes specific mention of the fact that Managing Director will be a permanent Director. The prospectus-was issued under the signatures of Shri A.S. De Mello as well as the other three Directors. The prospectus Ex. D/3 makes specific mention of the fact that Managing Director will be a permanent Director. The prospectus-was issued under the signatures of Shri A.S. De Mello as well as the other three Directors. The transactions relating to the loans advanced by the Plaintiff-Bank took place on 28-10-1945. It is not contested that during this entire period Shri A.S. De Mello continued to work as the Managing Director of the Company. The question which in these circumstances would arise for const, duration is whether Shri De Mello having been shown as a Managing Director in the prospectus, he having signed the application for registration of the Company in his capacity as its Managing Director and the Company having after its incorporation allowed Shri De Mello to function as its Managing Director for a period of 2 1/2 years till the transactions which form the subject-matter of the present suit were entered into by him, it is now open to the Defendant-Company to turn round and dispute the validity of Shri De Mello's appointment as a Managing Director. I am distinctly of the opinion that it is not open to the Defendant-Company to do so. The prospectus of the Company distinctly makes reference to a Managing Director. The provisions of the Gwalior Companies Act and the Articles in the First Schedule thereto do not contain anything to show that the Company could not appoint a Managing Director. I am, therefore, further of the opinion that Shri De Mello was duly appointed as a Managing Director of the Company. 7. In Clay Hill Brick Company v. Bawlings (1938) 4 All E Rule 100 it was held that a member of the public dealing in good faith with a de facto Managing Director was entitled to assume that the latter had authority to receive on the Company's behalf the payments in cash or sum due to the Company for goods sold and that a cheque drawn in favour of the Managing Director personally was good payment to the Company. 8. In the present case Shri De Mello did not besides act on his own authority as a Managing Director. He was authorized under a resolution Ex. D /3A passed by the Board of Directors to negotiate for a loan with the Central Bank of India, Gwalior, for the purposes mentioned therein. D.W. 3 Shri Bharat-singh admitted that Ex. 8. In the present case Shri De Mello did not besides act on his own authority as a Managing Director. He was authorized under a resolution Ex. D /3A passed by the Board of Directors to negotiate for a loan with the Central Bank of India, Gwalior, for the purposes mentioned therein. D.W. 3 Shri Bharat-singh admitted that Ex. D /3A bears the signatures of Shri K.D. Mahadik, Chairman and Shri A.S. De Mello. A copy of this resolution of the Board of Directors was received by P.W. 1 Shri Mangilal Sharma, the then Agent of the Central Bank of India, Gwalior Branch, who being acquainted with the signatures of Shri De Mello and Shri Mahadik deposed that the signatures on Ex. D/3A of these two Directors were genuine. It was argued that in the Minutes Book a copy of this resolution was not to be found. The Minutes Book does not appear to have been regularly maintained. The fact that a copy of the resolution under the signatures of the Chairman of the Board and the Managing Director was received by the Agent of the Plaintiff-Bank would, in so far as the Plaintiff-Bank was concerned, be sufficient proof of the authenticity of the resolution. The Agent of the Bank was under no obligation further to see whether or not the resolution had duly been entered in the Minutes Book of the Company. The fact that none of the then Directors of the Company was examined in order to show that the resolution Ex. D/3A was not passed by them also points to the conclusion that the said resolution was in fact passed by the Board of Directors. 9. An unrecorded resolution of the Board of Directors can be proved by other means. (See Knight's case (1867) 2 Ch. Appl. 321 and Foster v. Foster (1916) 1 Ch. 532.) 10. The fact that a true copy of the resolution under the signatures of the Chairman of the Board of Directors and the Managing Director was received by the Bank is in the circumstances sufficient to prove that such a resolution was actually passed. 11. The next question which has, therefore, to be considered is whether the Board of Directors had the power to draw the loans in question for the business of the Company on the security of the property and stock-in-trade belonging to the Company. 11. The next question which has, therefore, to be considered is whether the Board of Directors had the power to draw the loans in question for the business of the Company on the security of the property and stock-in-trade belonging to the Company. Clause 20 of the Memorandum of Association filed along with the application for registration provides as under:- (20) To raise or borrow or secure the payment of money in such manner as the Company shall think fit and in particular by the issue of debenture-stock, perpetual or otherwise, charged upon all or any of the Company's property (both present and future), including its uncalled capital and to purchase, redeem and pay off any such securities. 12. Section 86 of the Gwalior Companies Act lays down that in the case of a Company limited by shares, if the Memorandum of Association is not accompanied by the Articles of Association, the Table marked A in the First Schedule to the Act shall be deemed to be the Regulations of the Company. Article 55 in Table A in the First Schedule to the Act lays down that the business of the Company shall be managed by the Directors and that they may exercise all such powers of the Company as are not by the Gwalior Company's Act or these Articles required to be exercised by the Company in its general meeting. It would thus follow that a power of raising a loan on the security of the property belonging to the Company as laid down in Clause 20 of the Memorandum of Association would, by virtue of Article 55 referred to above, be exercisable by the Board of Directors in the absence of any restriction upon the exercise of such power being provided for in the Gwalior Companies Act or the Articles contained in Table A First Schedule thereto. The Learned Counsel for the Appellant was unable to point out to us any provision by which the power to draw a loan and to create a charge on the property of the Company could be exercised only by the Company in its general meeting. The Learned Counsel for the Appellant was unable to point out to us any provision by which the power to draw a loan and to create a charge on the property of the Company could be exercised only by the Company in its general meeting. In respect of all matters not so reserved the Directors, being empowered to run the business of the Company, must be deemed also to be empowered to exercise all powers necessary for that purpose and, therefore, to raise or borrow loans as provided for in Clause 20 of the Memorandum of Association. 13. I would, therefore, hold that the Board of Directors had the power to draw the loans in question and to create a charge on the property belonging to the Company in order to secure repayment thereof. It having been decided by the Board of Directors to raise a loan for the purposes specified in its resolution there would be nothing illegal in the Board of Directors authorizing one of the Directors (who was also the Managing Director) to negotiate the terms upon which the required amount of loan could be had from the Plaintiff-Bank and to execute on behalf of the Company the necessary documents in respect of those transactions. The Company is bound by the contracts made by the Directors acting within the scope of their authority (See In the matter of the Nursey Spinning and Weaving Company Ltd. ILR 5 Bom. 92) Shri A.S. De Mello having been expressly authorized by the Board of Directors to execute the deeds necessary for securing the loans from the Plaintiff-Bank, the mortgage deed as also the agreement containing the terms of pledge executed by Shri De Mello on behalf of the Company in favour of the Plaintiff-Bank would be binding on the Company. 14. The Appellant does not dispute the facts that the entire amount drawn from the Plaintiff-Bank on the basis of the mortgage deed of pledge executed by Shri De Mello was received in the account books of the Company and that the Company utilized these monies in its own business. The Company would even on these facts be liable to pay the balance due on the said loans as money received to the use of the Company. It was held in T.B. Pratt Ltd. v. E.D. Sassoon & Company AIR 1936 Bom. The Company would even on these facts be liable to pay the balance due on the said loans as money received to the use of the Company. It was held in T.B. Pratt Ltd. v. E.D. Sassoon & Company AIR 1936 Bom. 62 that if the money had been borrowed and used for the benefit of the principal either in paying debts or its legitimate business, the Company cannot repudiate its liability to repay the debt on the ground that the agents had no authority from the Company to borrow. Similarly it was held by their Lordships of the Privy Council in T.R. Pratt Ltd. v. M.T. Ltd. AIR 1938 P C 159. That where loans, although in excess of the authority of the Director, are not ultra vires, the money having been received by the Company and applied for its purposes, the Official Liquidator of the Company could not during the winding up proceedings, reduce outstanding amount at the date of liquidation by disputing the liability of the Company to pay the whole sums advanced. 15. The Board of Directors having duly authorized Shri De Mello to sign all necessary documents for the loans to be drawn from the Plaintiff- Bank, he would be deemed to have authority also to acknowledge the balance due on the said loans both as a person having implied authority from the Board of Directors for this porpose, as also in his capacity as at least a de facto Managing Director of the Company. It was held in Amulya v. Coral Engineering Work 33 Cal. WN 833 at p 834 that an acknowledgment made by one of the Directors of the Company who does the ordinary acts necessary in the conduct of the business on behalf of the Company was a sufficient acknowledgment. In the present case Shri A.S. De Mello was, ever since the Company was incorporated, doing the work of its Managing Director. I would, therefore, hold that Shri A.S. De Mello has authority to acknowledge the balances due on the two loans advanced to the Company by the Plaintiff-Bank on basis of the copy of the resolution of the Board of Directors Ex. D/3A received by it. 16. For the reasons stated above, we would dismiss this appeal with costs to be paid by the liquidator.