Rajasthan High Court - Jaipur
Vijay Solvex Ltd And Others vs Babu Lal Data And Others on 19 April, 2018
HIGH COURT OF JUDICATURE FOR RAJASTHAN
BENCH AT JAIPUR
S.B. Company Appeal No. 4/2015
1. Vijay Solvex Ltd., Bhagwati Sadan, SD Marg, Alwar- 301001
(Rajasthan)
2. Niranjan Lal Data, Bhagwati Sadan, Swami Dayanand Marg,
Alwar- 301001 (Rajasthan)
3. Vijay Data, Bhagwati Sadan, Swami Dayanand Marg, Alwar-
301001 (Rajasthan)
4. Daya Kishan Data, at present R/o House No. 7, Shubham
Enclave, Residency Road, Jamna Lal Bajaj Marg, Jaipur
(Rajasthan)
----Appellant
Versus
1. Babu Lal Data, D-47, Hanuman Nagar, Vaishali Nagar, Jaipur -
302021 (Rajasthan) and also at 115A, Bank Colony, Alwar
2. Babu Lal Data HUF, D-47, Hanuman Nagar, Vaishali Nagar,
Jaipur - 302021 (Rajasthan) and also at 115A, Bank Colony,
Alwar
3. Ms. Mohini Devi, D-47, Hanuman Nagar, Vaishali Nagar, Jaipur
- 302021 (Rajasthan) and also at 115A, Bank Colony, Alwar
4. Deepak Kumar Data, D-47, Hanuman Nagar, Vaishali Nagar,
Jaipur - 302021 (Rajasthan)
5. Ajay Kumar Data, D-47, Hanuman Nagar, Vaishali Nagar,
Jaipur - 302021 (Rajasthan)
6. Babu Lal Deepak Kumar, Bhagwati Sadan Swami Dayanand
Marg Alwar -301001 (Rajasthan) and also at 115A, Bank Colony,
Alwar
7. Babu Lal Mohini Devi, Bhagwati Sadan Swami Dayanand Marg
Alwar -301001 (Rajasthan) and also at 115A, Bank Colony, Alwar
8. Babu Lal Ajay Kumar HUF, Bhagwati Sadan Swami Dayanand
Marg Alwar -301001 (Rajasthan) and also at 115A, Bank Colony,
Alwar
9. Ram Babu Jhalani, Ward No. 5, Jhali Mohalla, Khairthal-
301404
10. Mukesh Sethi, 1/57B, Dover Place, Kolkata- 700019 (West
Bengal)
11. Ramesh Sharma, 119, Shanti Kunj, Ward No.33, Moti
Doongri, Alwar -301001 (Rajasthan)
12. Vijay Agro Mills Pvt. Ltd. Bhagwati Sadan Swami Dayanand
Marg Alwar -301001 (Rajasthan)
13. Indo Caps Pvt. Ltd., Itarana Road, Alwar- 301001
14. Bhagwati Agro Products Ltd., Bhagwati Sadan Swami
Dayanand Marg Alwar -301001 (Rajasthan)
15. Shital Build Home Pvt. Ltd., 28, Sudhir Chatterjee Street
(First Floor), Kolkata 700006
16. Vijay International Ltd., Glass Factory, Tonk Road, Jaipur
(Rajasthan)
17. ICICI Bank, Land Markerace Course Circle Alkapuri Baroda,
Gujarat.
18. IDBI Bank, IDBI Tower, WTC Complex, Cuffee Parade,
Mumbai.
(2 of 6) [COA-4/2015]
19. SBBJ; Main Branch, Near Bus Stand, Alwar, (Rajasthan)
----Respondents
For Appellant(s) : Mr. Narendra M. Sharma, Adv. with Mr. Amol Vyas, Adv.
For Respondent(s) : Mr. Anuroop Singhi, Adv. with Mr. Saurabh Jain, Adv.
HON'BLE MR. JUSTICE SANJEEV PRAKASH SHARMA Judgment / Order Reserved on 12/04/2018 Pronounced on 19/04/2018
1. Instant Company Appeal raises an interesting issue as to whether a petition preferred before the Company Law Board jointly by eight petitioners would be held to be not maintainable on account of affidavit having been filed in support of the petitioner by petitioner no.1 alone. The Company Law Board on demurrer filed by the respondents has held the company petition to be defective, which could be cured, holding that a subsequent ratification of earlier authorization violates filing of the petition by petitioner no.1 on behalf of the other petitioners. Aggrieved thereof, the present company appeal has been preferred by the appellants.
2. Learned counsel for the appellants submits that the petition under under Section 397 & 398 of the Companies Act, 1956 (hereinafter referred as the 'Act of 1956') could be preferred only by those who had the right to apply in terms of Section 399 of the Act of 1956. While a joint petition could be filed by the shareholders. He submits that in terms of Section 399(3) any one or more of them can have a right to apply provided they have obtained in writing the consent of the rest of the petitioners (3 of 6) [COA-4/2015] (respondents herein). It is submitted that no such contention was raised in the petition preferred before the Company Law Board and the affidavits of the other petitioners (respondents herein) were not placed on record. It also does not contain any authorization letter or power of attorney on behalf of the other petitioners (respondents herein). Learned counsel further has taken to this Court to the order dated 22/12/2014 passed by the Company Law Board to submit that once the Company Law Board reached to the conclusion that on the date of filing of the petition there was an inherent defect in the petition, the petition was required to be rejected as not maintainable. He submits that in terms of the Company Law Board Regulations, 1991, the procedure for filing a petition has been laid down under Regulation 14 and as there was a defect which is admittedly inherent, the Company Law Board has committed fally in treating the defect to have been cured on the basis of a power of attorney submitted subsequently in the year 2014. Learned counsel has pointed out that the Company Petition was preferred in 2009 and the power of attorney has been executed by the petitioners no.2 to 8 (respondents no.2 to 8 herein) on 22/07/2014. Learned counsel relies on the judgment passed by the High Court of Calcutta in the case of Bengal Luxmi Cotton Mills Ltd. (Company Petition No.111/1964), decided on 22/09/1964. He also taken this Court to the order passed by the Company Law Board, Delhi Bench, New-Delhi in the case of Shri Abid Hussain Khan Vs. M/s. Himalayan Petro Products and Allied Works (P) Ltd and ors. [Company Petition No.69(ND)/2010], decided on 18/12/2012, where the concerned Judge has taken a different view, to contend (4 of 6) [COA-4/2015] that a different view could not have been adopted by the same Judge of the Company Law Board in the present case.
3. Per-contra, learned counsel for the respondents has taken this Court firstly to the affidavit filed in support of the Company Petition before the Company Law Board wherein the respondent no.1 herein has stated that he has been authorized to file the affidavit for and on behalf of the other-respondents. He further submits that the respondent no.1 herein has also stated that he is duly authorized and competent to swear and affirm the affidavit. Learned counsel submits that all the respondents are closely related members of the same family with petitioner no.1 being HUF i.e. son and has also filed petition before the Company Law Board in his own name, in the name of his wife and in the name of HUF that is son and wife. Thus it is submitted that the present appeal is wholly frivolous. Learned counsel has also pointed out that the power of attorney filed on the objection raised by the appellants specifically mentions of previous power of attorney executed by the respondents jointly in favour of respondent no.1 which is misplaced and/or not traceable. He further states that the Company Law Board has rightly treated the defect having been cured in view of the power of attorney dated 22/07/2014 which has subsequently ratified the earlier authorization in favour of the respondent no.1.
4. After hearing learned counsel for both the parties, the judgment was reserved.
5. A look at the Company Law Board Regulations, 1991 shows that Rule 14 provides procedure for filing of petition which requires every petition to be accompanied by an affidavit verifying the same. As per Regulation 15, the Office of the Bench shall (5 of 6) [COA-4/2015] scrutinize the petition found in order, duly register and give a serial number. It if it is found to be defective, the same may be allowed to be ratified. Before the Bench Officer itself or it may be placed before the Bench for its orders and a single Member of the Bench may issue necessary directions for the purpose of ratification. Thus, it is apparent that a defective petition can always be cured.
6. On perusal of the order passed by the Company Law Board, it is apparent that since there was no authorization on record, the Company Law Board has observed that there was an inherent defect in the petition. The Supreme Court in the case of United Bank of India Vs. Naresh Kumar and others: (1996) 6 SCC 660, after considering the provisions of Order 6 Rule 14 CPC alongwith Order 29 Rule 1 CPC, has held as under:-
"A person may be expressly authorised to sign the pleadings on behalf of the company, for example by the Board of Directors passing a resolution to that effect or by a power of attorney being executed in favour of any individual. In absence thereof and in cases where pleadings have been signed by one of its officers a corporation can ratify the said action of its officer in signing the pleadings. Such ratification can be expressed or implied. The court can, on the basis of the evidence on record, and after taking all the circumstances of the case, specially with regard to the conduct of the trial, come to the conclusion that the corporation had ratified the act of signing of the pleading by its officer."
7. Thus, a subsequent ratification by a power of attorney executed on 22/07/2014, whereby the authorization has been ratified, cured the defect.
8. In the case of Maharashtra State Mining Corpn. Vs. Suni, S/o Pundikarao Pathak: 2006(5) SCC 96, relied on by learned counsel for the respondents, it was held as under:-
(6 of 6) [COA-4/2015] "7. The High Court was right when it held that an act by a legally incompetent authority is invalid. But it was entirely wrong in holding that such an invalid act cannot be subsequently 'rectified' by ratification of the competent authority. Ratification by definition means the making valid of an act already done. The principle is derived from the Latin maxim 'Ratihabitio mandato aequiparatur' namely ' a subsequent ratification of an act is equivalent to a prior authority to perform such act'. Therefore ratification assumes an invalid act which is retrospectively validated.
9. The same view has been expressed in several cases in other jurisdictions. Thus in Hartman vs. Hornsby it was said :
"Ratification'" is the approval by act, word, or conduct, of that which was attempted (of accomplishment), but which was improperly or unauthorisedly performed in the first instance".
9. Similar view has been taken by the Division Bench of this Court in the case of High Court of Judicature for Rajasthan Vs. P.P. Singh and another: (2003) 4 SCC 239.
10. Thus, the rectification would relate back to the date when the petition was filed.
11. For the foregoing reasons, it is found that all the respondents had given their consent in writing to file the application as envisaged under Section 389(3) and the power of attorney preferred on 22/07/2014 validates the filing of the petition and the defect stands cured.
12. The present appeal filed by the appellants thus is found to be without merit and the same is accordingly dismissed. The Company Law Board (now NCLT) is directed to proceed further with the Company Petition and decide the same expeditiously.
(SANJEEV PRAKASH SHARMA),J Raghu/