Match the signature to actual authority
Section 21 of the Companies Act, 2013 addresses authentication of company documents or proceedings and contracts made by or on behalf of the company. Subject to other provisions of the Act, it permits signing by key managerial personnel or an officer or employee duly authorised by the Board in this behalf. The practical question is whether the actual signer and document fall within the relevant authority. A company email address or procurement designation does not alone establish the complete authority trail.
Read the applicable text: Companies Act, 2013: sections 21 and 22.
Read the resolution as a scope document
Obtain the Board authority, identify the person or office covered, document types, value boundaries, joint-signature conditions and effective period. The Act does not prescribe the monetary limits used in the illustrations below; those are fictional company controls. Read an internal delegation alongside the Board authority rather than assuming it extends it. Check whether an amendment, renewal, guarantee, settlement or change order is included. Signing the original purchase contract does not automatically establish authority for every later variation.
Separate ordinary signing from special execution
Section 21 begins with a saving for other provisions. Do not use it to bypass specific financial-statement signing, statutory-form certification, borrowing, guarantee or transaction-approval requirements. Under section 22(1), a bill of exchange, hundi or promissory note can bind the company when executed in the stated manner by a person acting under its express or implied authority. Section 22(2) separately permits written authority to an attorney to execute deeds; if the company has no common seal, that authorisation must be made by two directors or by a director and the company secretary where one is appointed. Determine the instrument and applicable execution formalities before treating an ordinary procurement-signature workflow as sufficient. This article does not decide stamp duty, registration, electronic-signature validity or the enforceability consequences of a disputed signature.
Test the commercial amount against the defined limit
A resolution may define authority by contract value, aggregate commitment, period, tax-inclusive amount or another measure. Preserve the actual wording and calculate that measure. Do not split a single commitment into documents merely to fit an authority band. If the resolution is silent or ambiguous, obtain clarification through the proper corporate process; the numerical examples do not supply a statutory interpretation of every delegation. Document the exchange rate or contingent exposure only where the authority requires that measure.
Keep a reproducible evidence file
Link the executed version, amendments, signatory identity, office held at signing, Board authority and any required joint signatures. Keep the evidence that the version signed matches the version approved. A scanned signature page detached from the contract cannot by itself establish the scope of what was signed. Where there is a gap, preserve it and seek an appropriate authorised correction or legal assessment; do not backdate minutes or claim automatic validation through a later email.
Six worked illustrations
All facts and amounts are fictional. Calculations illustrate the stated assumptions, not a predetermined legal outcome.
Illustrative example 1: Within the defined band
A fictional resolution authorises the named employee to sign purchase contracts up to ₹10,00,000, measured on the stated contract basis. A ₹9,60,000 contract has ₹40,000 headroom. Confirm all non-value conditions too; arithmetic alone does not establish authority.
Illustrative example 2: An amendment exceeds the ceiling
An original ₹8,00,000 commitment increases by ₹2,50,000. Under an assumed aggregate-commitment ceiling of ₹10,00,000, the total is ₹10,50,000, exceeding it by ₹50,000. Review authority for the amended total rather than only the amendment amount.
Illustrative example 3: Joint signatures are a separate condition
A resolution requires two specified authorised signers for a ₹15,00,000 contract. Only one signs. One of two required signatures is missing; the value being within an assumed ₹20,00,000 band does not satisfy that documentary condition. Obtain proper resolution of the gap without asserting an automatic legal outcome.
Illustrative example 4: Tax-inclusive internal limit
Assume authority explicitly measures gross commitment and the contract contains base value ₹5,00,000 plus contractual tax ₹90,000. Gross value is ₹5,90,000 against a ₹5,50,000 limit, an excess of ₹40,000. The tax is an assumed contract amount, not a rate determination.
Illustrative example 5: Multiple orders under one aggregate authority
A resolution expressly caps an identified project’s aggregate orders at ₹12,00,000. Existing orders are ₹7,50,000 and a proposed order ₹5,00,000. Total commitment becomes ₹12,50,000, exceeding the cap by ₹50,000. Independent per-order arithmetic would miss the defined aggregate test.
Illustrative example 6: Term and value are independent
Authority applies through 30 September and covers contracts up to ₹6,00,000. A ₹5,80,000 document is signed on 2 October, two days after that date. Although value headroom is ₹20,000, the period condition needs resolution. A low amount does not extend the authority’s duration.
Ten-step verification table
| Step | Action | Evidence |
|---|---|---|
| 1 | Identify the instrument | Contract, proceeding, statutory document or deed. |
| 2 | Identify the signer | Status and office at the signing date. |
| 3 | Obtain Board authority | Resolution and effective version. |
| 4 | Read covered transactions | Original, amendment and settlement scope. |
| 5 | Read the value measure | Gross/net, aggregate and currency basis. |
| 6 | Recalculate exposure | Contract and variations on the stated measure. |
| 7 | Check signature conditions | Required joint signers and document version. |
| 8 | Check special provisions | Separate statutory approvals and execution requirements. |
| 9 | Record exceptions | Gap, responsible person and appropriate corrective route. |
| 10 | Preserve execution evidence | Signed instrument and linked authority file. |
Sixteen practitioner FAQs
1. Is every employee automatically authorised?
No. Verify the relevant Board authority and scope rather than employment alone.
2. Does section 21 set a ₹10 lakh ceiling?
No. Example limits are fictional internal conditions.
3. Is a company email enough evidence?
It helps identify correspondence but does not replace the authority analysis.
4. Does a procurement title prove unlimited power?
No. Check the actual delegation and document type.
5. What if the contract is an amendment?
Verify authority for variations and the applicable total commitment.
6. Can orders always be tested individually?
Only if that matches the authority. An aggregate cap needs aggregation.
7. Should tax be included in the authority test?
Follow the actual measure prescribed by the authority; do not assume a universal basis.
8. Does an amount within the limit satisfy joint-signature requirements?
No. Those are separate conditions.
9. Can a later email justify backdated minutes?
No. Preserve the true chronology and obtain a proper corrective assessment.
10. Does section 21 override special statutory signing rules?
Its opening saving requires attention to other provisions.
11. Are deeds always ordinary contracts for execution purposes?
Review section 22 and applicable instrument formalities separately.
12. Does this article decide stamp duty?
No. Stamp and registration requirements require their own review.
13. Should the signed version be retained?
Yes, with amendments and a link to the approved version.
14. Is office held today enough?
Confirm the person’s status and authority when signing occurred.
15. Is every authority defect automatically fatal to the contract?
Do not make that conclusion from a checklist alone; legal consequences depend on the facts and applicable law.
16. What closes the authority review?
A documented match between signer, instrument, scope, amount, period and any additional requirements.