Company Law Board
Shri Kiron M. Lulla And Anr. vs Vikron Fashions Pvt. Ltd. And Ors. And ... on 24 March, 1994
Equivalent citations: [1994]81COMPCAS566(CLB)
ORDER
1. Two petitions under Section 397/398 have been filed in the name of Shri Kiron M. Lulla and Smt. Rani K. Lulla by their constituted power of attorney holder, namely, Shri Manoj Kumar Lulla, alleging various acts of oppression and mismanagement in the conduct of the affairs of Vikron Fashions Pvt. Ltd. and Vikron Resorts Pvt. Ltd. Along with the petitions, two applications have also been filed seeking certain interim reliefs. Ms. Nalini Chidambaram, senior advocate appearing on behalf of the petitioners, stated that the petitioners are 50 per cent. stake-holders in each of the two companies. She also gave an over-view of the allegations in the petitions and prayed for interim reliefs sought for. Shri A.N. Haksar, senior advocate appearing on behalf of the respondents, raised a preliminary objection that the powers of attorney executed by the petitioners do not give power to the holder to file these petitions and as such these petitions should be dismissed in limine. According to Ms. Nalini Chidambaram, the attorney is general power of attorney which confers powers on the power of attorney holder to do any such act that could be in the interest of the executors specifically relating to the shareholding interest. We have gone through the power of attorney given by both the petitioners. The preamble to the power of attorney states that in view of the petitioners being away from India, they appoint Shri Manoj Kumar Lulla, as their attorney, "to do, execute and transact all such acts, deeds and things as may be necessary, expedient or conducive to the efficient transaction and carrying on the business of the said firm and company and in particular to do, execute and transact the following acts, deeds and things so long as these powers are not revoked". Following this preamble, there are 19 other clauses. Clauses 4, 9, 10, 11 and 12 deal with proceedings in courts/ tribunals. While Clause 4 relates to discharge of liabilities/recovery of dues, Clause 9 deals with appearing/acting either personally or through agents in courts/tribunals and other governmental agencies. Clause 10 authorises the power of attorney holder to sign and verify plaints, statements, petitions, etc. Clause 11 deals with appointment of advocates and practitioners to appear before various statutory bodies and governmental agencies and Clause 12 deals with compromising, compounding, withdrawing and referring cases to arbitration. There is no specific authority that we could see from the powers of attorney that the power of attorney holder is authorised to file any petition seeking to enforce the rights of the petitioners as members by way of filing these petitions. We have also not been able to construe from the power of attorney any provision relating to vesting with the powers of attorney holder the power to move the instant petitions.
2. In this connection, it is relevant to recall the decision of the Division Bench of the Bombay High Court in Killick Nixon Ltd. v. Bank of India [1985] 57 Comp Cas 831 in which the contents and the scope of a power of attorney have been dealt with in detail in relation to the right of the power of attorney holder to file a petition under Section 397/398 of the Companies Act. In this case when the power of attorney contained a clause to the effect that the power of attorney holder was entitled to exercise all rights and privileges and to perform all duties which a member would have exercised as shareholder, it was held by the court that this power would necessarily include a right to file a petition under Section 397/398 which right the member possesses.
3. This case also highlights certain rules of construction for powers of attorney. The power of attorney must be strictly construed and interpreted as given to such party as they confer expressly or by necessary implication. The recitals may be relevant to the operative part only where there is ambiguity. Where authority is given to do particular acts, followed by general words, the general words are restricted to what is necessary for the proper performance of the particular acts.
4. Keeping these rules in mind, we have studied the power of attorney in the present case. In this case, the recital part docs talk about the petitioner being a director and shareholder in various companies and partners in some firms and that staying away from India he/she is not able to protect his/her interest in the above firms/companies. The operative part specifically confers various powers as stated in paras 1 to 18, keeping in view the objective as stated in the recital. There is nothing in these clauses to specifically authorise the power of attorney holder to exercise rights vested in the shares. Ms. Nalini Chidambaram, however, drew our attention to Clause 19 of the power of attorney, a general clause, which reads as follows :
"19. Generally to act as the attorney in relation to my business, firms and companies mentioned above in which I am a partner and the companies in which I am managing director, director and shareholder and in any matter in which I may be interested or concerned and on behalf of the business to execute and to do all deeds, acts and things as fully and effectually in all respects as I would do if personally present. And I, hereby declare that all acts, deeds, and things lawfully done by the said attorney shall be construed as acts, deeds, and things done by me and I undertake to ratify and confirm all and whatsoever the said attorney shall lawfully do or cause to be done for me or my behalf by virtue of the power hereby given."
5. In view of this clause she stated that the holder of the power of attorney can exercise the power of a shareholder. This contention however is clearly rebutted by one of the principles highlighted in Killick Nixon Ltd.'s case [1985] 57 Comp Cas 831 (Bom) which states (p. 856) "general words do not confer general powers but are limited to the purpose for which the authority is given and are construed as enlarging the special powers only when necessary for that purpose". The judgment also elaborates this principle in the following words (p. 855) :
"However, where specific power is given followed by the conferring of general powers, the rule of ejusdem generis would apply and general powers must be read as being in furtherance of the specific power and not as enlarging specific powers so given."
6. In this case, the case of Timblo Irmaos Ltd. v. Jorge Anibal Matos Sequeira, AIR 1977 SC 734, was also cited to state that "the Supreme Court sets out the rule of construction to the effect that general words following the words conferring specifically enumerated powers cannot be construed so as to enlarge the restricted powers there mentioned". Therefore, the general power in Clause (19) cannot be construed as enlarging the scope of powers beyond the specific powers stated in Clauses (1) to (18). Even otherwise, we do not find that Clause 19 confers any authority to the power of attorney holder to exercise the right vested in the shareholders. In view of this we have to necessarily conclude that the power of attorney does not confer any powers to the holder to file these petitions on behalf of the shareholders. We, therefore, dispose of these two petitions as not maintainable.