National Company Law Appellate Tribunal
Arjandas B. Khatri vs Pure Pharma Ltd & Ors on 12 April, 2017
NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI Company Appeals (AT) No.Ol of 2017 IN THE MATTER OF: Arjandas B. Khatri . Appellants Vs Pure Pharma Lid & Ors. .. Respondents Present: Ms. Reema Jain, PCS for appellants. Mr. Vijay Assudani and Mr. Ankit Bhattacjaruua. Advacates for the Respondent. ORDER
12.04.2017- This appeal has been preferred by the appellant agamst the order dated 31.1.2017 passed by the National Company Law Tribunal, Ahmedabad Bench, Ahmedabad (hereinafter referred to as the "Tribunal" for short) in TP No.l 14/997-398/NCLTYANM/2016 (CA No. 86997-398/CL B/MB/20 1 S(O}. By the impugned order the Tribunal dismissed the application preferred by the appellant under Sections 398 and 399 of the Companies Act, 1956 on the ground that the appellant has no right to apply for relics under Sections 397 and 398 since he does nat filfl the pre-requisite of Section 399 of the Companies Act, 1956.
The Tribunal while dealing with the matter has observed as follows:
"81. Seetion 389 of the Companies det, 1936 contemplates consent of the ather members in writing to the petitioner that made the application, Rezulation 18, SLNeo2? af Annexure -3 ofthe Company Law Board Regulations 188) contemplates that letter of consent given by other members shall be annexed {9 fhe petition.
82. dy the case on hand, no doubt that, the letter of cansent has been annexed to the petition but it does not bear signatures of the other three members vis. Sint Shakuntala Khatri, Més Rohit Khatri and Forun Khetri Even if is not the case af the petitioner that consent in writing is not necessary. In fact, the petitioner filed cansent in writing but it is not duly signed by other members vis. Smt Shakwitaia Khatri, Ad's Rohit Khatri and Varw: Khatri. in order fo cover up tile same, in the rejoinder, the petitioner relied upon Atterney Deed dated 03.07.2009 which also do not stipulate consent by the other three members. The Attorney Deed gives authority to the petitioner only to deal with the shares of Smt Shakuntala Khatri, Mes Rohit Kharrl and Varun Khatri. But that does net amount te consent of other members to file Nix petition."
ft is the contention of the appellant that he has given Power of Attorney by other family member shareholder which is sufficient compliance of Section 399 of Companies Act, 1956 and therefore the appellant is entitled to file the petition. Learned Counsel for the appellant relied upon the original Hind! version of the Power of Attorney dated 3° July, 2009 given by the other shareholders. Learned Counsel appearing on behalf of the Respondent submits that consent in writing under Section 399 of the Companies Act, 1956 means the conscious approval of the action proposed to be taken by the person to whom the consent has been given. He relied on Hon'ble Delhi High Court decision in Omni India Limited and others Vs Balbir Singh reported in (1989) 66 Company Cases
903. In the said case the Hon'ble High Court has held as follows:
"the word "eonsent", according ta Webster's Third New laternational Dictionary, inter alia, means campliance or approval of what is done or prapoxed by another, acquiescence, permission, capable, deliberate and voluntary agreement to ar concurrence in some act or purpose implying physical and mental power and free action. According to Mosley and Whiteley': Law Dictionary, Tenth Edifien, "consent"
presupposes a physical power, mental pawer and oa free and serious use ofthem, Examined in the light of these meanings and keeping in view the purpose for enacting sectian 399. we have no doubt, that the expression "consent in writing" used In Section 3969/3) means conscians appraval of the action proposed fo be taken by the persens fo wham the consent has been given. We are alse af the view that the writing itself shoud indicate that the persons who have signed the cansent letters have applied their minds to the question before thes and on anplication of minds have given consent for a certain action, Under Section 402 of the det, the court on an appleation under Section 307-398 and without prefudice to the generalities af the powers of the court, can grant several tupex of reliefs. fn tus buckeround, if is necessary that the writing must indicate tut ihe members piving consent had applied their minds to the allegations to be made and the reliefs sought to be prayed for in the proposed action and have given their consent for seeking those reliefs. This is apparent froni the expression "consent" in writing. Hoel the intention been that the writing should net ineicate the application of mind, then there was no necessity for using the term "consent in writing" and mere word "cansen?"
could have been used. To hold that the requixife members can give their consent in writtig without applying their minds or withant considering the nature of the allegatice and the reliefs sought would frustrate the entire purpose af sectian 399 which prohibits the filing ef an apnlication weder Section 397 or 388 of the Act, inter alla, by nat lexs than 100 members.
The view taken by us finds support from the decisions of ihe Allahabad High Court, Madfras High Court and Madiva Pradesh High Court. in Makhan Lal Jain V Amrit Banaspati Ca Ltd (953) 23 Comp Cas 100: AIR 1953 all 326, a learned single judge held tat Page 102 af 23 Com Cax}:
"The expression Ccansent in writing" abviously implies that he wrinng itself should indicate that the persons who have affixed their signatures have applied thelr minax ta te question before then and have given their consent to certain action being faker,"
dn ALC. Duraiswami V Sakthi Sugars Lid (1 88G) 30 Comp Cas i34, a Division Bench af Madrax Hiek Court examined the expression "consent in writing" in the background oF fre requirements of sections 397 and 398. On such exantination, it was held fat page 138):
"Fram the very nature af the case, "consent in writing "
contemplated in section 399/3) of the Act is a consent to ihe filling of a particular petition with a particular allegation jor a particular relief under Section 397 ar Section 398 or wrder hath, There cannot be a blanket consent like a certain member or members consenting fo some ather member filing a petition under Section 397 or section 398 or under both."
Similar view was taken by the Division Bench ef Madhya Pradesh High Court in Kilpest Pvt Lad Y Shekhar Mehra (1887) "yp 82 Comp Case 7 ir"
We have heard the Learned Counsel for the parties and perused the record. From the Power of Attorney dated 3 July, 2009 we find that the members of the family have delegated limited power of attorney in favour of the appellant to sell all their shares, to determine valuation and te de other misecllancous work to use the money for proper purpose. The power of attorney being specific, and as itdo not relate to filing petition under Sections 397, 398 of the Companies Act, 1956, we agree with the findings of the Tribunal that the application Nied by the appellant was not maintainable.
We find no merit in this appeal. It is accordingly, dismissed. No cost.
(Justice S.J. Mukhopadhays} Chairperson (Mr, Balvinder Singh} Member (Technical) brn