Company petition under Sections 433, 434 and 439 of the Companies Act, 1956 - GPA- presented - threshold objection - not specifically authorised to file winding up petition - refused to number - as the respondent failed to discharge the debts of Bank despite of repeated demands - Objection that the GPA not authorised to file company winding up proceedings - Defect is a curable defect - as a new document is filed rectifying the defect - it can be considered as valid presentation - company court orders refusal is set aside =
the original power of attorney itself authorized the person to
institute the proceedings, but on noticing that the expression "to institute
winding up proceedings" was not incorporated, the deficiency was rectified by
executing the document dated 24-01-2000. On noticing that the authority to
file a company petition was not conferred upon the GPA, the appellant herein
filed an application to receive a document dated 24-01-2000, which is said to
have cured the defect. The learned single Judge refused to receive the same,
through the order under appeal. =
An objection raised about the form of GPA, who instituted
proceedings, was considered at length. The appellant itself was satisfied that
unless specific authorization is given to the GPA to institute the proceedings
for winding up of a company, there cannot be any valid institution.
Accordingly, the document dated 24-01-2000 was filed before the company Court
with an application.
6. The proceedings that are instituted through GPA do not get completely
vitiated on account of defect in the form of GPA. The defect is certainly
curable. In M.M.T.C's. Case (Supra 1), the Supreme Court took the view that the
defect of such a nature can be cured or rectified by the concerned parties.
At any rate, once the appellant
has taken steps to rectify the defect pointed out by the respondent, the matter
must rest at that, at least for the present. If the dispute still persists, it
can constitute the basis for framing an issue, but cannot be a ground to reject
the company petition, or to keep it aside.
8. Hence, the appeal is allowed and the order passed by the learned single
Judge is set aside. For the present, the company petition shall be treated as
having been instituted properly. If the respondent still persists with its
objection in this behalf, the company Court shall consider the feasibility of
framing an issue on it. There shall be no order as to costs.
HONOURABLE SRI JUSTICE L. NARASIMHA REDDY AND HONOURABLE SRI JUSTICE M.S.K. JAISWAL
O.S.A. No.1 OF 2012
11-11-2013
Deutsche Bank AG, a banking company, having its office at Raheja Towers,
Mezannine Floor 26 - 27, MG Road, P.O. Box 5002, Bangalore, rep. by its
authorized signatory Mr. Damodharan Sreeniwasan .. Appellant
Prithvi Information Solutions Limited,having its office at 10 Q 3-A1, 10th
floor, Cyber Towers Hitech City, Madhapur, Hyderabad, rep. by its authorized
signatory Mr. Satish V. Kumar .. Respondent
Counsel for the appellants : Sri C.R. Sridharan
Counsel for the respondent:Sri D. Prakash Reddy,
Senior Counsel
<GIST:
>HEAD NOTE:
?CASES REFERRED:
1.(2002) 1 SCC 234
2.2011 11 SCC 524
HONOURABLE SRI JUSTICE L. NARASIMHA REDDY
AND
HONOURABLE SRI JUSTICE M.S.K. JAISWAL
O.S.A. No.1 OF 2012
JUDGMENT: (Per Hon'ble Sri Justice L. Narasimha Reddy)
The appellant feels aggrieved by the order dated 26-12-2011 passed by a learned
single Judge of this Court in C.P. No.165 of 2009.
2. The background, in brief, pertaining to the appeal is as under:
The appellant is a foreign bank having its operations in India.
It is stated that credit facility for considerable amount was extended by the
appellant in favour of the respondent.
Alleging that the respondent committed
default in repayment of the amount availed through credit facility, the
appellant filed the company petition under Sections 433, 434 and 439 of the
Companies Act, 1956 with a prayer to order winding up of the respondent company.
At the preliminary stage, a plea was raised to the effect that the company
petition was filed through a General Power of Attorney (for short "GPA") and
that the same was not properly constituted.
On noticing that the authority to
file a company petition was not conferred upon the GPA, the appellant herein
filed an application to receive a document dated 24-01-2000, which is said to
have cured the defect.
The learned single Judge refused to receive the same,
through the order under appeal. It was pointed out that the original power of
attorney as well as the deed, which is sought to be filed, do not empower the
concerned person to institute the proceedings for winding up of the respondent
company. Reference was also made to the articles of association of the
appellant company.
3. Sri C.R. Sridharan, learned counsel for the appellant, submits that it is
only the principal that can doubt the correctness of a GPA and as long as the
appellant company did not doubt the GPA, there was no basis for the learned
single Judge to refuse to accept the authorization. He submits that strictly
speaking, the original power of attorney itself authorized the person to
institute the proceedings, but on noticing that the expression "to institute
winding up proceedings" was not incorporated, the deficiency was rectified by
executing the document dated 24-01-2000. Learned counsel submits that the
defect noticed by the company Court is certainly curable. He placed reliance
upon the judgment of the Supreme Court in M.M.T.C. LIMITED v. MEDCHL CHEMICALS
AND PHARMA (P) LIMITED1.
4. Sri D. Prakash Reddy, learned senior counsel for the respondent, on the
other hand, submits that since the consequences that flow from a company
petition filed for winding up are serious in nature, the Court is required to
ensure that every step is meticulously followed. He submits that even according
to the appellant, the original power of attorney is defective and inadequate and
though an attempt was made to rectify it, the same did not accord with the
articles of association of the appellant itself. He relied upon the judgment of
the Supreme Court in STATE BANK OF TRAVANCORE v. KINGSTON COMPUTERS INDIA
PRIVATE LIMITED2.
5. The appellant instituted proceedings for winding up of the respondent
company. Though the company petition was filed in 2009, it is still at the
threshold. An objection raised about the form of GPA, who instituted
proceedings, was considered at length. The appellant itself was satisfied that
unless specific authorization is given to the GPA to institute the proceedings
for winding up of a company, there cannot be any valid institution.
Accordingly, the document dated 24-01-2000 was filed before the company Court
with an application.
6. The proceedings that are instituted through GPA do not get completely
vitiated on account of defect in the form of GPA. The defect is certainly
curable. In M.M.T.C's. Case (Supra 1), the Supreme Court took the view that the
defect of such a nature can be cured or rectified by the concerned parties.
7. The judgment cited by the learned senior counsel for the respondent was in
relation to a different factual situation. In that case, the defect as to the
competence of the person, who instituted the proceedings, was noticed and still
no efforts were made to rectify it. Their Lordships took the view that as long
as the defect remains unattended to, the proceedings cannot be said to be
validly instituted. Such is not the case here. At any rate, once the appellant
has taken steps to rectify the defect pointed out by the respondent, the matter
must rest at that, at least for the present. If the dispute still persists, it
can constitute the basis for framing an issue, but cannot be a ground to reject
the company petition, or to keep it aside.
8. Hence, the appeal is allowed and the order passed by the learned single
Judge is set aside. For the present, the company petition shall be treated as
having been instituted properly. If the respondent still persists with its
objection in this behalf, the company Court shall consider the feasibility of
framing an issue on it. There shall be no order as to costs.
_______________________
L.NARASIMHA REDDY, J
_______________________
M.S.K. JAISWAL, J
November 11, 2013.
the original power of attorney itself authorized the person to
institute the proceedings, but on noticing that the expression "to institute
winding up proceedings" was not incorporated, the deficiency was rectified by
executing the document dated 24-01-2000. On noticing that the authority to
file a company petition was not conferred upon the GPA, the appellant herein
filed an application to receive a document dated 24-01-2000, which is said to
have cured the defect. The learned single Judge refused to receive the same,
through the order under appeal. =
An objection raised about the form of GPA, who instituted
proceedings, was considered at length. The appellant itself was satisfied that
unless specific authorization is given to the GPA to institute the proceedings
for winding up of a company, there cannot be any valid institution.
Accordingly, the document dated 24-01-2000 was filed before the company Court
with an application.
6. The proceedings that are instituted through GPA do not get completely
vitiated on account of defect in the form of GPA. The defect is certainly
curable. In M.M.T.C's. Case (Supra 1), the Supreme Court took the view that the
defect of such a nature can be cured or rectified by the concerned parties.
At any rate, once the appellant
has taken steps to rectify the defect pointed out by the respondent, the matter
must rest at that, at least for the present. If the dispute still persists, it
can constitute the basis for framing an issue, but cannot be a ground to reject
the company petition, or to keep it aside.
8. Hence, the appeal is allowed and the order passed by the learned single
Judge is set aside. For the present, the company petition shall be treated as
having been instituted properly. If the respondent still persists with its
objection in this behalf, the company Court shall consider the feasibility of
framing an issue on it. There shall be no order as to costs.
HONOURABLE SRI JUSTICE L. NARASIMHA REDDY AND HONOURABLE SRI JUSTICE M.S.K. JAISWAL
O.S.A. No.1 OF 2012
11-11-2013
Deutsche Bank AG, a banking company, having its office at Raheja Towers,
Mezannine Floor 26 - 27, MG Road, P.O. Box 5002, Bangalore, rep. by its
authorized signatory Mr. Damodharan Sreeniwasan .. Appellant
Prithvi Information Solutions Limited,having its office at 10 Q 3-A1, 10th
floor, Cyber Towers Hitech City, Madhapur, Hyderabad, rep. by its authorized
signatory Mr. Satish V. Kumar .. Respondent
Counsel for the appellants : Sri C.R. Sridharan
Counsel for the respondent:Sri D. Prakash Reddy,
Senior Counsel
<GIST:
>HEAD NOTE:
?CASES REFERRED:
1.(2002) 1 SCC 234
2.2011 11 SCC 524
HONOURABLE SRI JUSTICE L. NARASIMHA REDDY
AND
HONOURABLE SRI JUSTICE M.S.K. JAISWAL
O.S.A. No.1 OF 2012
JUDGMENT: (Per Hon'ble Sri Justice L. Narasimha Reddy)
The appellant feels aggrieved by the order dated 26-12-2011 passed by a learned
single Judge of this Court in C.P. No.165 of 2009.
2. The background, in brief, pertaining to the appeal is as under:
The appellant is a foreign bank having its operations in India.
It is stated that credit facility for considerable amount was extended by the
appellant in favour of the respondent.
Alleging that the respondent committed
default in repayment of the amount availed through credit facility, the
appellant filed the company petition under Sections 433, 434 and 439 of the
Companies Act, 1956 with a prayer to order winding up of the respondent company.
At the preliminary stage, a plea was raised to the effect that the company
petition was filed through a General Power of Attorney (for short "GPA") and
that the same was not properly constituted.
On noticing that the authority to
file a company petition was not conferred upon the GPA, the appellant herein
filed an application to receive a document dated 24-01-2000, which is said to
have cured the defect.
The learned single Judge refused to receive the same,
through the order under appeal. It was pointed out that the original power of
attorney as well as the deed, which is sought to be filed, do not empower the
concerned person to institute the proceedings for winding up of the respondent
company. Reference was also made to the articles of association of the
appellant company.
3. Sri C.R. Sridharan, learned counsel for the appellant, submits that it is
only the principal that can doubt the correctness of a GPA and as long as the
appellant company did not doubt the GPA, there was no basis for the learned
single Judge to refuse to accept the authorization. He submits that strictly
speaking, the original power of attorney itself authorized the person to
institute the proceedings, but on noticing that the expression "to institute
winding up proceedings" was not incorporated, the deficiency was rectified by
executing the document dated 24-01-2000. Learned counsel submits that the
defect noticed by the company Court is certainly curable. He placed reliance
upon the judgment of the Supreme Court in M.M.T.C. LIMITED v. MEDCHL CHEMICALS
AND PHARMA (P) LIMITED1.
4. Sri D. Prakash Reddy, learned senior counsel for the respondent, on the
other hand, submits that since the consequences that flow from a company
petition filed for winding up are serious in nature, the Court is required to
ensure that every step is meticulously followed. He submits that even according
to the appellant, the original power of attorney is defective and inadequate and
though an attempt was made to rectify it, the same did not accord with the
articles of association of the appellant itself. He relied upon the judgment of
the Supreme Court in STATE BANK OF TRAVANCORE v. KINGSTON COMPUTERS INDIA
PRIVATE LIMITED2.
5. The appellant instituted proceedings for winding up of the respondent
company. Though the company petition was filed in 2009, it is still at the
threshold. An objection raised about the form of GPA, who instituted
proceedings, was considered at length. The appellant itself was satisfied that
unless specific authorization is given to the GPA to institute the proceedings
for winding up of a company, there cannot be any valid institution.
Accordingly, the document dated 24-01-2000 was filed before the company Court
with an application.
6. The proceedings that are instituted through GPA do not get completely
vitiated on account of defect in the form of GPA. The defect is certainly
curable. In M.M.T.C's. Case (Supra 1), the Supreme Court took the view that the
defect of such a nature can be cured or rectified by the concerned parties.
7. The judgment cited by the learned senior counsel for the respondent was in
relation to a different factual situation. In that case, the defect as to the
competence of the person, who instituted the proceedings, was noticed and still
no efforts were made to rectify it. Their Lordships took the view that as long
as the defect remains unattended to, the proceedings cannot be said to be
validly instituted. Such is not the case here. At any rate, once the appellant
has taken steps to rectify the defect pointed out by the respondent, the matter
must rest at that, at least for the present. If the dispute still persists, it
can constitute the basis for framing an issue, but cannot be a ground to reject
the company petition, or to keep it aside.
8. Hence, the appeal is allowed and the order passed by the learned single
Judge is set aside. For the present, the company petition shall be treated as
having been instituted properly. If the respondent still persists with its
objection in this behalf, the company Court shall consider the feasibility of
framing an issue on it. There shall be no order as to costs.
_______________________
L.NARASIMHA REDDY, J
_______________________
M.S.K. JAISWAL, J
November 11, 2013.
No comments:
Post a Comment
Note: Only a member of this blog may post a comment.