Gujarat High Court
Bajaj Finance Ltd & vs Jaihind Projects Ltd & 2 on 1 October, 2013
Author: K.M.Thaker
Bench: K.M.Thaker
O/COMP/80/2013 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
COMPANY PETITION NO. 80 of 2013
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BAJAJ FINANCE LTD & 1....Petitioner(s)
Versus
JAIHIND PROJECTS LTD & 2....Respondent(s)
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Appearance:
MR BHARAT T RAO, ADVOCATE for the Petitioner(s) No. 1
DELETED for the Respondent(s) No. 2 - 3
MR AL SHAH, SR. COUNSEL, WITH MR RM MEENA for Respondent No. 1
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CORAM: HONOURABLE MR.JUSTICE K.M.THAKER
Date : 01/10/2013 & 21/10/2013
ORAL ORDER
In present petition, under Sections 433 & 434 r.w. Section 439 of the Companies Act, 1956 [hereinafter referred to as "the Act"], the petitioner has prayed, inter alia, that:-
"46(A) YOUR LORDSHIP MAY BE PLEASED TO order winding up of the respondent No.1 Company under Sections 433 and 434 of the Companies Act, 1956, as the respondent Company is unable to pay its debt to the petitioner, the respondent Company obtained by way of financial assistance, inspite of reschedulements granted by the petitioner Company for repayment of the loss; and"
2. After hearing learned counsel for the petitioner, the Court, under order dated 6.3.2013 called the respondent company to answer the petition.
2.1 At the outset, it may be mentioned that the respondent company has availed loan from the petitioner company and, according to the petitioner, it has failed to repay the loan and despite repeated requests and even after statutory notice, the respondent company did not make the payment of the due and payable amounts/installments towards repayment of loan and now the respondent company is making attempts to thwart the petition by raising diverse objections.
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O/COMP/80/2013 ORDER
3. In reply to the petition, the respondent company has filed reply affidavit. While opposing the petition, the respondent company has raised certain objections as regards the maintainability of the petition on the grounds that:-
[i] the petition is not prepared in accordance with Form No.45 or Form No.46;
[ii] the affidavit in support of the petition is not in accordance with Rule 21 of Companies (Court) Rules, 1959 [hereinafter referred to as "1959 Rules"] and in accordance with Gujarat High Court Rules, 1993 [hereinafter referred to as "1993 Rules"];
[iii] A copy of any resolution by Board of Directors to file winding up petition is not placed on record;
[iv] The authorized signatory, who has signed the petition and made the affidavit, has not demonstrated as to how he has been authorized to make the affidavit and to verify the petition.
4. In reply to the said objections, the petitioner has filed rejoinder and while countering the objections by the respondent company, the petitioner has claimed and contended that:-
"2. I say and submit that the respondent company is taking all frivolous and technical stand which has no merits in the matter because the respondent Company, after having taken the loan from the petitioner and having been given the facility of restructuring the loan twice and after availing the benefits and having taken loan of Rs.6.5 crores is not making the payment since October, 2012 and is trying to give false and frivolous defense only on the basis of technicality which cannot stand in the way of the Hon'ble Court in granting the relief when the petitioner company has advanced loan and therefore defence which is raised by the respondent is sham and bogus and nothing but it is total dishonest defence on the part of the respondent.
4. I say and submit that the Company Petition has been filed in the prescribed format. It is submitted that the respondent has taken this defence with the sole intention to mislead the Hon'ble Court. It is submitted that the present petition is as per the format only and if the Hon'ble Court peruses Form No.1, it is general form and if the Hon'ble Court peruses the petition, it is in Page 2 O/COMP/80/2013 ORDER prescribed format as prescribed under the Company Court Rules. It is submitted that the format has been provided for the procedural aspect. It is not that it is mandatory and that it should be in the particular format only. The only requirement under the Companies Act for presenting Company Petition is that the statutory notice under Sec.433-434 of the Companies Act is required to be issued and time of clear 21 days is to be given and thereafter proceedings can be initiated. It is submitted that the format is general in nature and it does not deal with all these facts. I further submit that in the affidavit also it is clearly stated that whatever is stated in the petition is true and correct. It is submitted that form nos. 45, 46 & 47 are guidelines and accordingly the petition has been filed. There is no breach committed by the petitioner. Therefore the objection raised that the petition is not in proper format is not true and correct. At the cost of repetition, I submit that the respondent has taken loan, has admitted its liability and charge has been created in the records of Registrar of Companies by executing necessary documents. Therefore, this type of objection cannot be considered at this juncture."
4.1 Besides the above mentioned details, the respondent company has also averred and stated that:-
"1. ........ I say and submit that I have been authorized by the Company by Chief Executive Officer of Bajaj Finance Ltd., by authority letter dated 29.4.2013, whereby I have been authorized to undertake certain works on behalf of the company. It is submitted that thereafter the Chief Executive Officer of the Company has on 30.4.2013, once again made power of attorney in favour of the present deponent and whereby authority has been extended with retrospective effect and ratified that the present deponent has been authorized to file Company Petition in the High Court of Gujarat against M/s Jaihind Projects Ltd. and the same has been ratified.
I say and submit that M/s Bajaj Finance Ltd. is a Limited Company and Company being legal entity, is acting through the Constituted Attorney only for which the Company has passed a general resolution in favour of Chief Executive officer further authorizing him to delegate his power in respect of initiation of legal proceedings across the country and that is valid and the company has already ratified the same by passing resolution. Therefore, the contention of the respondent that the deponent does not have authority to file the proceedings in the High Court of Gujarat has no merits. Copy of the Power of Attorney dated 30.4.2012 and the resolution of the Board authorizing Chief Executive Officer are annexed hereto and marked as "Annexure-P1" (Colly.)."
5. At the time of hearing, learned counsel for the respondent company submitted that before the petition is heard on merits, the objections raised by the respondent against maintainability of the petition, may be heard first.
5.1 In view of the said submission, learned counsel for the petitioner as well as the respondent have made submissions at length as regards the preliminary objections qua maintainability of the petition.
6. Mr. Shah, learned counsel appearing for Mr. Meena, Page 3 O/COMP/80/2013 ORDER learned counsel for the respondent, submitted that the petition under Section 433 of the Act has been filed by a company and that therefore, in view of the provisions contained under 1959 Rules, the petition should be prepared in Form No.45 or 46, however, this petition is not prepared either as per Form No.45 or 46 or 47.
6.1 Mr. Shah, learned counsel, further submitted that according to the provisions contained under Rule 21 of 1959 Rules, the petition should be verified by a Director or Secretary or Principal Officer of the company in cases where the petition is filed by a company, however, present petition, according to learned counsel for the respondent, is not in accordance with the provisions contained under Rule 21 of 1959 Rules inasmuch as the petition is verified by one Mr. V.M.Jain, who has described himself as authorized signatory of the petitioner, but he has not explained as to how he has been authorized and what position he holds in the petitioner company. Mr. Shah, learned counsel, also submitted that the petitioner and the deponent of the petition, have not placed any authorization in favour of the person, who has filed the affidavit verifying the petition.
6.2 Mr. Shah, learned counsel, for the respondent company also submitted that any resolution by the Board of Directors is not placed on record and any reference of such resolution is also not made in the petition as well and any clarification as to how the deponent derived authority to make affidavit is not offered/stated in the petition.
7. In reply, Mr. Rao, learned counsel for the petitioner, Page 4 O/COMP/80/2013 ORDER essentially relied on the memo of the petition, the affidavit in verification of the petition, the affidavit in rejoinder, the resolution dated 21.5.2008 and the Power of Attorney [hereinafter referred to as "POA"] dated 30.4.2013 executed by the CEO and submitted that the petition complies all requirements, and the objections are raised with malafide intention of delaying the proceedings and there is no breach or non-compliance, and if any non-compliance is found, then opportunity and time to comply may be granted.
7.1 I have heard at length the learned advocates for the contesting parties and I have also considered the documents available on record.
8. For sake of convenience, the objections at Sr.Nos.(ii) to
(iv) in paragraph No.3 of this order can be considered together since they are interconnected.
8.1 The affidavit verifying the petition reads thus:-
"I, Vikram Munnalal Jain, residing at Flat No.D-12, West End Park, Near Gurudawara, S G Road, Thaltej, Ahmedabad - 380018, on behalf of petitioner Company do hereby solemnly affirm and state on oath that what are stated in paras 1 to 10 are the facts of the case and the same are true and correct to the best of my own knowledge and what are stated in paras 11 to 40 are the legal submissions and the same are true and correct to the best of my information and belief and I believe the same to be true. That para 41 to 44 are the formal paras and para 45 contains the prayer clause.
That the legal submissions raised in the application re raised and derived from the legal advice of my Advocate. That the annexures annexed with the petition are the true copies of the original documents and I further state that I have not suppressed any material facts from this Honourable Court."
8.2 With reference to the said affidavit, the respondent has contended that though the petition is filed by a body corporate, the affidavit in verification of the petition is not made by a director or a secretary or principal officer as required by Rule 21 and that therefore, the affidavit is not Page 5 O/COMP/80/2013 ORDER proper. It is then claimed that the deponent has not established his authorization and has not shown how he is authorized to make the affidavit. In view of the fact that the deponent has claimed that he is "authorized signatory" the said objection is raised and it is also contended that any resolution conferring authorization is not placed on record.
8.3 So as to consider the respondent's objections based on Rule 21 and Form No.3, it would be appropriate to keep in focus said Rule 21 and Form No.3 and the relevant affidavit (i.e. the affidavit verifying the petition. The said affidavit is reproduced hereinabove while the Rule 21 and said Form 3, read thus:-
=> Rule 21:
"Affidavit verifying petition.
21. Every petition shall be verified by an affidavit made by the petitioner or by one of the petitioners, where there are more than one, and in case the petition is presented by a body corporate, by a director, secretary or other principal officer thereof; such affidavit shall be filed alongwith the petition and shall be in Form No.3:"
=> Form No.3:
FORM NO.3
[See rule 21]
[HEADING AS IN FORM No.1]
Company Petition No. ....... of 19....
Affidavit verifying petition
I, A.B., son of .............., aged....... residing at...... do solemnly affirm and say as follows:-
1. I am a director/secretary/......../of........ Ltd., the petitioner in the above matter [* and am duly authorised by the said petitioner to make this affidavit on its behalf.] Note : This paragraph is to be included in cases where the petitioner is the Company.
2. The statements made in paragraphs ...... of the petition herein now shown to me and marked with the letter 'A', are true to my knowledge, and the statements made in paragraphs ..... are based on information, and I believe them to be true.
Solemnly affirmed, etc. *Note: To be included when the affidavit is sworn to by any person other than a director, agent or secretary or other officer of the company."
(emphasis supplied)
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O/COMP/80/2013 ORDER
8.4 The said Rule 21 provides, inter alia, that the affidavit should be made in Form No.3 and that such affidavit should be made by a director or secretary or principal officer. However, the Form No.3 also clarifies and explains that if the affidavit is not made either by the director or the secretary or other principal officer, then it can be made by any other person, however, such person should declare that he is duly authorized by the petitioner.
9. In present case, the affidavit is made by a person other than a director or a secretary and it is true that in the said affidavit, the deponent has not clarified as to whether he (i.e. the deponent Mr. V.M.Jain) is a Director or Secretary of the company or he is principal officer of the petitioner company or holds some other post in the petitioner company and it is also not stated whether he is authorized to prepare and file the petition and to make the affidavit verifying the petition.
9.1 However, subsequently, in his rejoinder, while dealing with the objections raised by the respondent company, the said deponent Mr. V.M.Jain has averred and clarified that, "I am the Regional Sales Manager of M/s Bajaj Finance Ltd. since March, 2010. My area of operation is entire State of Gujarat. I have been authorized by the Company's Chief Executive Officer in whose favour, the company has given Authority by passing resolution under the provisions of The Companies Act, 1956 whereby the Company has authorized its Principal Officer - Chief Executive Officer to delegate his powers to respective branch head and employee of the company in respect of the work to be carried out by the company".
9.2 In light of the said averments and assertions, it has emerged that the deponent is an officer of the petitioner company and holds the post of Regional Sales Manager and he has been authorized to verify and file the petition, by virtue of Power of Attorney dated 30.4.2013 granted by the Chief Page 7 O/COMP/80/2013 ORDER Executive Officer [hereinafter referred to as "CEO" for short] of the company. The deponent has also claimed that the CEO granted the said POA in exercise of the authority conferred on him (i.e. on the CEO) by the company vide resolution dated 21.5.2008. The said resolution dated 21.5.2008 reads thus:-
"CERTIFIED TRUE COPY OF THE RESOLUTION PASSED BY THE BOARD OF DIRECTORS OF THE COMPANY AT ITS MEETING HELD 21 MAY 2008 ISSUE OF POWER OF ATTORNEY TO EMPLOYEE;
"RESOLVED THAT Shri Rajeev Jain - CEO be and is hereby authorized to issue Power of Attorney/Authority Letters on behalf of the Company favouring employees of the Company in connection with legal proceedings for or against the Company, entering into rent/tenancy/lease/leave & licence agreements for office/godown premises, to sign/execute agreements/documents in connection with loans/finance under various schemes given by the company and to appear before the concerned Registering authorities, to present the documents for registration and admit execution thereof and matters connected therewith, registration under Shops & Establishment Act, Profession tax, matters pertaining to telephone/fax/internet connections/other communication facilities as well as to liaise with other government/semi-government authorities for administrative purposes."
9.3 On the strength of said resolution dated 21.5.2008, the CEO Mr. Jain executed - granted power of attorney dated 30.4.2013 in favour of said deponent. The relevant part of the said power of attorney dated 30.4.2013 reads thus:-
"AND WHEREAS the Company, by a Power of Attorney dated 7 December 2012, has granted certain powers to Mr. Vikram Jain, Age - 34 years, son of Mr. Munnalal Jain, residing at D-12, West End Park, Near Gurudwara, S G Road, Thaltej, Ahmedabad - 380018, an employee of the Company at Ahmedabad Branch.
AND WHEREAS the Company is desirous of granting further powers to the said Mr. Vikram Jain, as it Attorney for and in the name of the Company to do and execute all or any of the acts, deeds and things, severally, as mentioned below, NOW THEREFORE KNOW YE ALL THESE PRESENTS THAT I, Rajeev Jain, hereby grant the following further powers to the said Mr Vikram Jain:
To do the acts, deeds and things in connection with legal action for recovery of finance/loans given by the Company to various borrower(s) who have committed default in payment of instalment(s) (hereinafter called the "borrower(s) in default") on the terms and conditions more particularly mentioned in the respective Agreements read with other documents; viz:
1) To institute Civil/Criminal suits/arbitration/ conciliation proceedings against borrower(s) in default and/or their Guarantor(s) and to appoint Advocates and to sign Vakalatnama for and on behalf of the Company in respect of Civil/Criminal suits/arbitration/ conciliation proceedings to be filed against such borrower(s) in default.
2) To appear and represent the Company in the Civil/Criminal suit(s), Claims/Petitions to be filed by the Company against such borrower(s) in default, including Winding Up Petition in the appropriate court, viz. High Court, Civil Judge, Junior/Senior Division and/or Small Cause Court and/or Judicial Magistrate, First Class and/or before the Arbitrator or Page 8 O/COMP/80/2013 ORDER arbitration, or District Consumer Redressal Forum/s or State Consumer Redressal Commission or National Consumer Redressal Commission.
3) To affirm on oath or make an Affidavit , if required, for recovering the above referred loan from the respective borrower(s) in default and to submit the same in the appropriate court.
4) To deposit or submit, application on behalf of the Company in respect of the civil/criminal suit(s) to be filed against such borrower(s) in default and to verify the same in appropriate manner.
5) To sign and verify plaint(s), written statement(s), petition(s) or claims and objections, memorandum of appeal and petition(s) and application of all kinds and to file them in any such Court or Forum/Commission or Office.
6) To file and receive documents from the Court/Forum/Arbitration/Commission and also to withdraw the money from the court subject to the prior intimation to the Company and after having obtained proper authorisation to that effect from the Company.
7) xxx, 8) xxx, 9) xxx."
9.4 In light of the said resolution and Power of Attorney, the said deponent claims that he is duly authorized and competent to make the affidavit and file the petition. Accordingly, he has given reply to the respondent's objection at Sr.No.(iv), Para No.3. The question, thus, would be whether the reply is legally tenable.
10. Before proceeding further, it is relevant to mention that, in the said rejoinder affidavit, the deponent Mr. Jain had made reference of authority letter dated 29.4.2013, however, the said authority letter dated 29.4.2013 was not placed on record with the rejoinder affidavit. Therefore, the learned counsel for the petitioner was asked to explain the fact about the authority letter dated 29.4.2013 (not available on record).
10.1 Besides this, the Court had also noticed another defect viz. the said Power of Attorney dated 30.4.2013 was executed after the date on which the affidavit verifying the petition was made meaning thereby, the requisite authority was conferred in favour of the deponent after the affidavit was made.
11. So as to place on record copy of the letter of authority Page 9 O/COMP/80/2013 ORDER and the explanation in response to the said query, learned counsel for the petitioner had asked for time and subsequently, the deponent filed additional affidavit dated 24.9.2013. In the said additional affidavit dated 24.9.2013, the deponent has averred, inter alia, that:-
"1. I say that I am the Regional Sales Manager of M/s. Bajaj Finance Ltd. since March, 2010. My area of operation is entire State of Gujarat. I have been authorized by the Company's Chief Executive Officer by Power of Attorney dated 7.12.2012 wherein on the basis of the said Authority, I am undertaking all types of works in the State of Gujarat which includes execution of various documents on behalf of the Petitioner Company and also filing Legal proceedings in the court of law. ....
2. I say and submit that Shri Rajiv Jain has been given authority by, Board of Directors of Bajaj Finance Ltd. on 11.9.2008. I say that the name of the Petitioner Company was changed from Bajaj Auto Finance Ltd. to Bajaj Finance Ltd. with effect from September 06, 2010.
3. It is submitted that Shri Rajiv Jain is Chief Executive Officer (CEO) and he has been authorised to issue POA by virtue of power of attorney dated 11.9.2008.
4. It is submitted that the Petitioner Company has also passed resolution on 21.5.2008 authorising Shri Rajiv Jain, Chief Executive Officer to issue Power of Attorney/Authority Letters on behalf of the Company favouring employees of the Company in connection with legal proceedings for or against the Company etc. ...
5. It is submitted that the respondent has raised technical defense because first power of attorney dated 7.12.2012 is not on record of the Hon'ble Court, certain objections have been raised that the authorised signatory does not have authority to file the Company Petition which are incorrect. The first authority has already given all powers to take action on behalf of the Company for the benefit of the Company and in the interest of the Company. The respondent with the sole intention not to pay the amount has raised technical objection.
It is submitted that therefore in view of various judgments of the Hon'ble High Court as well as the Hon'ble the Supreme Court, defect can be ratified in the Company Petition and clarification has been sought for and on 29.4.2013, Shri Rajiv Jain has confirmed the same that the first authority covers all the things and authority given to Shri Vikram Jain is fully true and correct and also made it clear that the Company has authorised the deponent Shri Vikram Jain to file Petition for winding up the respondent Company. ...
It is submitted that based on the said, thereafter, on 30.4.2013 Shri Rajiv Jain, Chief Executive Officer of the Company has given further power of attorney and ratified the action. ..."
11.1 By way of said affidavit, the deponent brought in picture, POA dated 11.9.2008 and POA dated 7.12.2012 and relying on said documents, he claimed that the company has conferred power and authority in favour of the CEO vide said two POA and it is in light of the authority conferred on him vide resolution dated 21.5.2008 and the POA dated 11.9.2008 and Page 10 O/COMP/80/2013 ORDER 7.12.2012 that the CEO issued POA dated 30.4.2013 in his favour.
11.2 Along with the said additional affidavit dated 24.9.2013, the deponent Mr. Jain also placed on record a photocopy of above mentioned POA dated 11.9.2008. The relevant part of the said power of attorney dated 11.9.2008 reads thus:-
"KNOW ALL MEN BY THESE PRESENTS THAT .......
AND WHEREAS Shri Rajeev Jain ....
The Company DOTH HEREBY constitute, nominate and appoint Shri Rajeev Jain, CEO ....to do and execute all or any of the following acts, deeds and things, that is to say:
a) to e) xxx
f) to institute, defend civil / criminal suits, prosecute, conduct, refer to arbitration, withdraw, abandon and compromise, legal or other proceedings, observe and perform the awards, claims and disputes for and on behalf of the Company or its officers or in which the Company be concerned or interested and to appear and represent the Company in any civil / criminal suits before the appropriate courts;
g) to appoint and sign authorities or Vakalatnamas of any lawyer that may be required in connection with the Company's business and to sign all necessary plaints, written statements, appeals, applications, petitions and affidavits and to affirm and declare and sign the same in any court, forum or before any arbitrator or tribunal;
h) to w) xxx
x) to delegate such of his powers as can be delegated, to any executives /
officers / managers / employees of the Company and subject to such limits as he may deem fit.
y) and generally to do all acts, deeds and things as may be necessary for and on behalf of the Company to all intends and purposes as may be deemed fit and proper by the CEO.
AND the Company shall be bound by all the acts, deeds and things lawfully done by the said Attorney under these presents as if it is done by the Company. The Company covenants to ratify and abide by all the acts of the said Attorney purported to be done under authority of these presents. This power of attorney shall remain in force as long as Shri Rajeev Jain is the Manager/CEO of the Company or until it is expressly revoked. This Power of Attorney made on this 11th day of September, 2008 under the Common Seal of Bajaj Auto Finance Limited."
11.3 The deponent Mr. Jain has again placed on record a copy of the power of attorney dated 30.4.2013, however, at this stage, learned counsel for the petitioner specifically relied on the last clause of the said power of attorney dated 30.4.2013 Page 11 O/COMP/80/2013 ORDER which reads thus:-
"I do hereby confirm that the Company shall be bound by all the acts, deeds and things lawfully done by the said Attorney under these presents as if it is done by the Company acting through its Directors. The company authorized MR. Vikram M Jain to file the company petition against M/s. Jai Hind Projects Limited in High Court of Gujarat & the company ratifies the same covenants to ratify and abide by all the acts of the said Attorney purported to be done under authority of these present. This Power of Attorney shall remain in force until it is expressly revoked."
11.4 According to the said clause, the deponent is specifically and expressly authorized to file petition against the respondent company and that therefore, the deponent has claimed that by the said power of attorney dated 30.4.2013, the CEO has authorized him to file company petition against M/s. Jai Hind Projects Limited in the High Court of Gujarat and that by abundant caution and to remove any doubt the company has ratified the acts done under the POA.
11.5 Mr. Shah, learned counsel, had asked for time to file reply affidavit in response to the said additional affidavit made by the petitioner - deponent. In view of the said request, time was granted to the respondent to file further affidavit. Subsequently, the respondent filed affidavit dated 25.9.2013.
11.6 The respondent has, under the said affidavit dated 25.9.2013, reiterated the objections and while dealing with the additional affidavit dated 24.9.2013, contended that the power of attorney dated 7.12.2012 gives very limited powers to the deponent which does not fulfill the requirements or does not make him competent to make affidavit verifying the petition and that the said power of attorney does not authorize the deponent Mr. Jain to take decision as to whether to file or not to file the legal proceedings and/or to sign, file and prosecute winding up petition. The respondent has also contended that, Page 12 O/COMP/80/2013 ORDER since further powers are said to have been granted under power of attorney dated 30.4.2013, it would mean that the powers granted vide power of attorney dated 30.4.2013 were not granted under power of attorney dated 7.12.2012 and that the power of attorney dated 7.12.2012 does not authorize him to verify the petition. The respondent company has also raised objections and doubts with regard to the letter dated 29.4.2013 and by making reference of various details emerging from the said letter dated 29.4.2013. It is alleged that the said letter is not the original letter dated 29.4.2013 of which reference has been made in the affidavit dated 3.5.2013 and it is created subsequently.
12. On reading of the said resolution dated 21.5.2008, it emerges that the company, by passing the resolution, resolved; generally, and granted authority to the CEO to execute power of attorney in favour of company's employees, "in connection with legal proceedings for or against the company." Meaning thereby, the CEO is authorized to authorize another officer/employee of the company - by way of POA - to take legal action by way of legal proceedings for or against the company.
13. The company thereafter issued Power of Attorney dated 11.9.2008 and authorized the CEO to institute and/or defend civil/criminal proceedings, arbitration proceedings and any "legal or other proceedings" and to also delegate such powers to any officer/employee. The relevant part of the said power of attorney dated 11.9.2008 reads thus:-
"KNOW ALL MEN BY THESE PRESENTS THAT .......
AND WHEREAS Shri Rajeev Jain ....
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The Company DOTH HEREBY constitute, nominate and appoint Shri Rajeev Jain, CEO ....to do and execute all or any of the following acts, deeds and things, that is to say:
a) to e) xxx
f) to institute, defend civil / criminal suits, prosecute, conduct, refer to arbitration, withdraw, abandon and compromise, legal or other proceedings, observe and perform the awards, claims and disputes for and on behalf of the Company or its officers or in which the Company be concerned or interested and to appear and represent the Company in any civil / criminal suits before the appropriate courts;
g) to appoint and sign authorities or Vakalatnamas of any lawyer that may be required in connection with the Company's business and to sign all necessary plaints, written statements, appeals, applications, petitions and affidavits and to affirm and declare and sign the same in any court, forum or before any arbitrator or tribunal;
h) to w) xxx
x) to delegate such of his powers as can be delegated, to any executives /
officers / managers / employees of the Company and subject to such limits as he may deem fit.
y) and generally to do all acts, deeds and things as may be necessary for and on behalf of the Company to all intends and purposes as may be deemed fit and proper by the CEO."
13.1 Thus, by virtue of said POA, the CEO is authorized to "institute....legal..... proceedings" and he is also authorized to delegate his powers to any officer.
13.2 Then, on the strength of the power granted to him vide resolution dated 21.5.2008 r.w. POA dated 11.9.2008, the CEO Mr. Jain executed the power of attorney dated 30.4.2013 in favour of present deponent (an officer of the company) whereby the CEO authorized the deponent to institute (such) legal proceedings as may be necessary for recovery of finance/loans given by the company in appropriate Court (as may be required) against "various borrowers" who commit and/or who have committed default in payment of installments.
14. Now, it is pertinent that the authority granted to the CEO Page 14 O/COMP/80/2013 ORDER vide resolution dated 21.5.2008 by Board of Directors includes the authority to issue Power of Attorney or Authority Letter in favour of company's employees "in connection with 'legal proceedings' for or against company". In order to appreciate the controversy, the said resolution dated 21.5.2008 and the Power of Attorney dated 11.9.2008 and the Power of Attorney dated 30.4.2013 are required to be read conjointly.
14.1 Besides the resolution dated 21.5.2008, the CEO, vide power of attorney dated 11.9.2008, as a constituted attorney, is nominated and authorized to carry out several acts, deeds, things, etc. as are mentioned in clause (a) to (y) of the said power of attorney which include the authority to institute, defend, civil / criminal suits, prosecute ..... legal or other proceedings...
and the CEO is also authorized "to delegate such of his powers as can be delegated, to any executives / officers / managers / employees of the Company and subject to such limits as he may deem fit."
The said power of attorney dated 11.9.2008 also declares that the company shall be bound by all acts by the CEO and shall ratify and abide by all acts done by him. Thus, by virtue of said resolution dated 21.5.2008 r.w. POA dated 11.9.2008, the CEO is authorized to confer/delegate, by executing a POA, in favour of employee/officer, power/authority for the purpose of "legal proceedings" to institute legal or other proceedings for and on behalf of the company or to defend the proceedings instituted against the company.
15. When the resolution dated 21.5.2008, the POA dated 11.9.2008 and the POA dated 30.4.2013 are read conjointly, it Page 15 O/COMP/80/2013 ORDER emerges that in exercise of the authority conferred on him vide resolution dated 21.5.2008 and vide POA dated 11.9.2008, the CEO has delegated, in favour of the deponent of this petition, the authority, (1) do all acts, (2) in connection with legal action; and (3) to institute legal proceedings and to appoint advocates;
(4) to affirm on oath or make affidavit;
(5) the power "to sign and verify plaint(s), written
statement(s), petition(s) or claims and
objections, memorandum of appeal and
petition(s) and affidavits and application
of all kinds and to sign them in any such Court
or Forum or Tribunal." and such other related
powers.
(6) for recovery of loans/finance given by the company; (7) against borrowers in default or against guarantors.
16. In light of the nature of respondent's objection, it is imperative to note some vital and relevant expressions in the said Power of Attorney dated 30.4.2013 viz. the expression "legal action" and the words "for recovery of finance/loans" as well as the words "various borrower(s)" and the expression "including winding-up petition".
16.1 While construing the resolution and/or the POA, the Court has to be mindful of the fact that in construing a resolution and/or a POA passed/executed by or on behalf of the company, it is the intention for passing the resolution and/or executing the POA which has to be taken into account and has to be kept in focus and instead of taking pedantic approach, the Court would strive to give effect to the intention behind the resolution and/or the POA. Moreover, a resolution and/or POA Page 16 O/COMP/80/2013 ORDER passed by or on behalf of the company cannot be and should not be construed in a manner a statutory provision would be construed.
16.2 On plain reading of the said resolution and POA, it emerges that the words or expressions "borrower(s)" and "recovery of finance/loans" are not restricted to or confined to any particular loan and/or any particular borrower or any particular case, but the authority to initiate or to defend legal action/proceedings is granted in favour of the deponent generally and for all borrowers who commit default in repayment of loans (i.e. all loans and not one particular loan only).
16.3 The expression "legal proceedings" and/or "legal action"
have wide connotation and would include, in its fold, all types of legal actions / proceedings by (and on behalf of) or against the company (i.e. civil and/or criminal including proceedings under Acts like Companies Act, 1956) which may be, or which are considered, necessary and appropriate for recovery of loans and there is nothing in the Act or in the Rules, much less in the said resolution, to restrict or truncate and curtail the meaning, scope and effect of the said expression "legal proceedings". In the Judicial Officer's Law Lexicon [The Encyclopaedic Law Lexicon with Words, Phrases, Legal Maxims, Latin Terms (Volume-III, Edition-2008/09)] by Hon'ble Mr. Justice C.K.Thakkar (as His Lordship then was) the words "legal proceeding" are also defined to mean, proceeding regulated or prescribed by law in which judicial decision may or must be given. "Legal Proceeding", is any proceeding in Court of justice by which a party pursues a remedy which the law affords him.
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The term embraces any of the formal steps or measures employed in the prosecution or defence of a suit. It refers to the use of a judicial process.
16.4 On this count, it would be appropriate to refer to the observations by Apex Court in para 12 of the decision in case of General Officer Commending v. CBI & Anr. [AIR 2012 SC 1890] where the Apex Court observed that, "12. ........ The phrase 'legal proceeding' connotes a term which means the proceedings in a court of justice to get a remedy which the law permits to the person aggrieved.It includes any formal steps or measures employed therein. It is not synonymous with the 'judicial proceedings'. Every judicial proceeding is a legal proceeding but not vice-versa, for the reason that there may be a 'legal proceeding' which may not be judicial at all, e.g. statutory remedies like assessment under Income-tax Act, Sales Tax Act, arbitration proceedings etc. So, the ambit of expression 'legal proceedings' is much wider than 'judicial proceedings'. The expression 'legal proceeding' is to be construed in its ordinary meaning but it is quite distinguishable from the departmental and administrative proceedings, e.g. proceedings for registration of trade marks etc. ..... Assistant Collector of Central Excise, Guntur v. Ramdev Tobacco Company, AIR 1991 SC 506 : (1991 AIR SCW 306), this Court explained the meaning of the phrase "other legal proceedings" contained in Section 40(2) of the Central Excises and Salt Act, 1944, wherein these words have been used after suit and prosecution. The Court held that these words must be read as ejusdem generis with the preceding words i.e. suit and prosecution, as they constitute a genus. ..... 'Legal proceedings' do not include the administrative proceedings.
In Maharashtra Tubes Ltd. v. State Industrial and Investment Corporation of Maharashtra Ltd. and Anr., (1993) 2 SCC 144 : (1993 AIR SCW 991), this Court dealt with the expressions 'proceedings' and 'legal proceedings' and placed reliance upon the dictionary meaning of expression 'legal proceedings' as found in Black Law Dictionary (Fourth Edition) which read as under:
"Any proceedings in court of justice ... by which property of debtor is seized and diverted from his general creditors .... This term includes all proceedings authorised or sanctioned by law, and brought or instituted in a court of justice or legal tribunal, for the acquiring of a right or the enforcement of a remedy."
The Court came to the conclusion that proceedings before statutory authorities under the provisions of the Act do not amount to legal proceedings.
'Legal proceedings' means proceedings regulated or prescribed by law in which a judicial decision may be given; it means proceedings in a court of justice by which a party pursues a remedy which a law provides, but does not include administrative and departmental proceedings."
(emphasis supplied) At this stage, useful reference may also be made to the observations in para 13 of the decision in case of M/s. Holicow Pictures Pvt. Ltd. v. Prem Chandra Mishra & Ors. [AIR 2008 SC 913] where the Apex Court observed that, "13. In Janata Dal case (supra) this Court considered the scope of public interest litigation. In para 52 of the said judgment, after considering what is public Page 18 O/COMP/80/2013 ORDER interest, has laid down as follows :
"The expression 'litigation' means a legal action including all proceedings therein initiated in a Court of law for the enforcement of right or seeking a remedy. Therefore, lexically the expression "PIL" means the legal action initiated in a Court of law for the enforcement of public interest or general interest in which the public or a class of the community have pecuniary interest or some interest by which their legal rights or liabilities are affected."
16.5 Therefore, there is no reason or justification to narrowly construe and/or to restrict and curtail the plain, natural and ordinary meaning and connotation of the term "legal proceedings" or "legal action". Considering from this perspective, a petition seeking order of admission of winding- up petition and direction for winding-up of a company (i.e. a petition under Sections 433 and 434 r.w. Section 439 of the Act) would stand included in the said expression "legal proceedings" and "legal action" in the said resolution and/or said POA dated 11.9.2008 and 30.4.2013.
16.6 The language of the said Power of Attorney dated 30.4.2013, make it clear that in exercise of the power conferred on him vide resolution dated 25.1.2008 and POA dated 11.9.2008, the CEO has conferred, vide POA dated 30.4.2008, power in favour of the deponent to do all such acts/take all such actions by way of legal action/proceedings as may be necessary for recovery of loans from various borrowers in default.
16.7 The language of the resolution dated 21.5.2008 and POA dated 11.9.2008 make the intention of the company clear i.e. to confer authority in favour of CEO - with further authority to delegate his powers in favour of employee/officer - to issue POA in favour of employee so as to generally authorize them to take legal action by instituting legal proceedings for recovery Page 19 O/COMP/80/2013 ORDER of "loans" from "various borrowers" in default without restricting said resolution and/or authority a particular loan or borrower and that is the reason that the resolution dated 25.1.2008 and/or the POA dated 11.9.2008 and/or POA dated 30.4.2013, (i.e. their scope and effect) are general and are applicable to all types of legal proceedings required to be instituted or defended in connection with loans granted to different customers by the petitioner company and the said resolution and power of attorney are not made borrower specific and/or default specific and they are not restricted to a particular borrower or a particular case of default and that therefore, separate Power of Attorney would not be necessary for each borrower (in default) and/or for each case of default.
17. In light of the above mentioned aspects and from the above discussed documents, namely, Power of Attorney dated 30.4.2013 r.w. the resolution dated 21.5.2008 and the power of attorney dated 11.9.2008, it appears that upon and after execution of and by virtue of the said Power of Attorney dated 30.4.2013, the said deponent is granted and he possesses the authority to do all acts in connection with legal action instituting legal proceedings for recovery of loans from borrowers and to file claims/petitions in appropriate Court and to affirm affidavits and to appoint lawyers.
17.1 The deponent has, thus, explained and established that he is duly authorized to affirm and file the petition and he has also explained and established as to when and how the authority is conferred in his favour. Moreover, the deponent has also placed on record copies of the resolution dated 21.5.2008 and the POA dated 11.9.2008 and the POA dated Page 20 O/COMP/80/2013 ORDER 30.4.2013. Thus, the relevant documents are available on record. Accordingly, the deponent has satisfactorily addressed and replied the respondent's objections mentioned at Sr.Nos.
(iii) and (iv) of paragraph No.3.
17.2 In light of the foregoing discussion, it also becomes clear that merely because the deponent does not hold either of the three positions mentioned in Rule 21, the affidavit made by the deponent and the position cannot be said to be defective. In this context, it would be relevant to take into account observations taken into account by the Division Bench in case of Welding Rods Private Ltd. v. Indo Borax & Chemicals Ltd. [2002 (108) CC 747] wherein it is observed that:-
"24.....it is not necessary that a winding up petition can be signed or verified only by a Director of the petitioning-creditor Company. In State Bank of India vs. The India Electric Works Ltd. (1969) 2 Comp.LJ., the Calcutta High Court has already held that it is sufficient, if the winding up petition is supported by an affidavit filed by a responsible officer (though not a principal officer of the Company) who is fully conversant with the facts. Rule 21 of the Companies (Court) Rules is merely directory."
(emphasis supplied)
18. Besides this, while examining such objection by the respondent, one has to be alive to the ground realities and routine or operational needs of the companies in view of which the companies confer/delegate certain authorities. So far as the facts of this case and the petitioner in present case are concerned, it is relevant to take into account the fact that the Petitioner-Company is a registered non-banking Finance Company and is engaged in the business of consumer finance, infrastructure finance, equipment finance, home loan, loan against the property, personal loan and business loan to the individual / partnership firm / company etc. When such company grants/advances loan facility to borrowers, then it would follow that in the event the debtors commit default in Page 21 O/COMP/80/2013 ORDER observing the schedule for repayment of loan or ignore to make the payment then it would be a routine course of Company's business activity to take steps to recover such amount and in such circumstances the finance company, who is essentially engaged in the business of giving loans, credit facilities, advance facilities, etc. to various customers, would be justified in passing such general resolution conferring necessary and appropriate authority, on their officer/s with further power to delegate such authority, to institute appropriate legal proceedings, for recovery of loans, as and when required on account of default in repayment of loans and other facilities granted by it and it would not be necessary for the company to pass, every time and in every case when debtor delays, or commits default in, the repayment, a separate resolution for institution of legal proceedings.
18.1 Even otherwise, the provisions under the Act or the Rules do not prescribe that when petitioning creditor is a company it should pass separate and independent resolutions with regard to each default/each borrower in default in repayment of loans.
18.2 In this context, it is relevant to mention at this stage that as observed by the Division Bench in the case of Welding Rods Pvt. Ltd. (supra) as such, the Act or Rules or Forms do not require any resolution to be passed for the purpose of initiating winding up proceedings, even where the petitioning-creditor is a company with a board of directors and neither the Act, the Rules nor the Forms prescribe that any particular resolution should be passed by the board of directors for instituting a winding up petition. In case of Welding Rods Pvt. Ltd. (supra), it Page 22 O/COMP/80/2013 ORDER is observed that:-
"The Act, Rules or Forms do not require any resolution to be passed for the purpose of initiating winding up proceedings, even where the petitioning-creditor is a company with a board of directors. Neither the Act, the Rules nor the Forms stipulate that any particular resolution should be passed by the board of directors for instituting a winding up petition."
(emphasis supplied) 18.3 However, for the sake of examining the respondent's objection even if it is assumed that for instituting winding-up petition a resolution is necessary, then also if a company passes a general resolution authorizing any Director or Chief Executive Officer of the Company or Head of the administration to institute legal proceedings in case of need and/or also authorizes the Director or CEO to delegate such power in favour of any officer/employee of the company and in turn such authorized Director/CEO/HOD delegates the power to other officer - employee of the company and such officer makes affidavit verifying the petition and then files the petition, then it would be compliance - or substantial compliance - of the requirements prescribed by Rule 21 of 1959 Rules.
In this context, a useful reference may be made to the observations taken into account and relied on by the Division Bench in the decision in case of Welding Rods Pvt. Ltd. (supra):-
"21 .... A creditor has several remedies against its debtors. The Board of Directors may pass a resolution authorizing its director/officer to resort to all or any of the remedies as may be advisable to the creditor as per legal advice. There is nothing in the provisions of the Companies Act or the Indian Contract Act prohibiting the delegation of the power to take any decision as regards the remedies to be pursued by the constituted attorney or the authorized agent against a defaulting debtor."
(emphasis supplied)
19. On this count, it is also relevant to mention that undoubtedly the Rules are statutory and have to be complied/followed, but all defects or shortfall, if any, in Page 23 O/COMP/80/2013 ORDER compliance of the procedural requirements prescribed by the Rules and Forms, are not to be treated as fatal and the defect or short-fall, if any, would be curable. This, of course, is not to say or suggest that the requirements prescribed under the Rules are to be ignored or that non-compliance should be discounted or overlooked. Rules regarding affidavit and their compliance are important and cannot be discounted or given a go-bye. But, if liberal and pragmatic approach and yardstick are adopted rather than dismissing the petition with pedantic approach and only on ground of non-compliance of requirements prescribed by Rules & Forms, then it would serve the interest of justice.
19.1 It is also pertinent that the Company (Court) Rules, 1959 also confer power, vide Rule 9 thereof, to pass necessary and appropriate order and give such directions as may be necessary for the ends of justice or to prevent abuse of the process.
19.2 Actually, in case of any defect or short fall in compliance, the principle of "Substantial Compliance" should be applied. Substantial compliance of the prescribed requirements can be, in appropriate facts, considered sufficient to maintain the petition for consideration on merits and wherever necessary, opportunity to rectify and cure the defect/s, can be granted.
19.3 So far as present case is concerned, the resolution dated 25.1.2008 and POA dated 11.9.2008 are placed on record and they conjointly spell out company's intention. Under the said two documents, the company has clearly declared the intention that in all cases where borrowers commit default in Page 24 O/COMP/80/2013 ORDER repayment of loans all legal actions by way of legal proceedings as may be required, may be instituted. In view of such resolution and POA separate resolution in each case of default, would not be necessary and by ignoring and overlooking the POA dated 30.4.2013 (r.w. the resolution dated 25.1.2008 and POA dated 11.9.2008), even if it is assumed that separate resolution with reference to the respondent company is not passed, then also absence of separate resolution would not render the petition defective and untenable.
20. In this view of the matter and in light of the fact that the resolution dated 20.1.2008 and POA dated 11.9.2008 and POA dated 30.4.2013 are placed on record, the respondent's objections on the ground that any resolution is not on record and about deponent's authority to make affidavit and file the petition (i.e. the objections at Sr.No.(ii), (iii) and (iv) in paragraph No.3 above) would, ordinarily, stand answered and the said objections would, thereafter, ordinarily not survive.
21. However, in present case, it is relevant to note an anomaly in the petitioner's and deponent's explanation viz. the authorization conferred in favour of the said deponent is conferred on him after he made the affidavit verifying the petition.
21.1 On this count, it is relevant to mention that the power of attorney on which the deponent has placed reliance appears to have been made on 30.4.2013 whereas the affidavit verifying the petition is made on 1.3.2013 thus, the Power of Attorney is executed after the date on which the affidavit (dated 1.3.2013) Page 25 O/COMP/80/2013 ORDER verifying the petition was made.
21.2 It is pertinent that even the stipulation ratifying the action would not help the deponent inasmuch as the said stipulation in the POA dated 30.4.2013 ratifies the actions taken under the said POA meaning thereby it ratifies the action which are taken by the deponent pursuant to execution of the said POA dated 30.4.2013 i.e. after 30.4.2013 whereas the action in question was taken before the POA came to be executed on 30.4.2013.
21.3 When the petitioner's explanation was called for, he filed additional affidavit dated 24.9.2013 and placed earlier referred additional material on record and he has claimed and asserted that he has been duly authorized to make the affidavit and verify the petition and that therefore, the objection by the respondent company that he has not demonstrated as to how he has been authorized to make the affidavit and verify the petition and/or that the resolution is not placed on record, do not survive and he has also claimed that even if the above mentioned aspects are not taken into account, then also, under the power of attorney dated 30.4.2013 the company is bound by the acts, deeds and things done by him viz. the action of instituting company petition against M/s. Jai Hind Projects Limited and the said action is duly ratified and that therefore, the respondent company's objections would not survive.
21.4 When the Resolution dated 21.5.2008, the POA dated 11.9.2008 and the power of attorney dated 30.4.2013 are read conjointly, it emerges that by virtue of and pursuant to the Page 26 O/COMP/80/2013 ORDER resolution dated 30.4.2013, the deponent is duly authorized to take out legal proceedings (which would include a petition under Section 433 and 434 of the Act) for and on behalf of the company and to make the affidavit for verification of the petition and to file the petition.
22. However, the above mentioned anomaly arising from the said facts, particularly from the POA dated 30.4.2013, cannot be overlooked by the Court (though not specifically raised by the respondent) viz. the power of attorney dated 30.4.2013 is of a date subsequent to the date of the affidavit in question. In that view of the matter, the affidavit in question cannot be said or treated as the affidavit made on the strength of, or with the authority derived from, the POA dated 30.4.2013 since at the relevant time, he did not possess requisite authority.
23. However, in present case, the fact remains that since 30.4.2013, the deponent possesses the requisite authority. Besides this, it is also relevant that the said defect is curable and not fatal.
24. It is trite that the procedural rules are handsmaid of justice and are framed for smooth implementation of law and that therefore, substantial compliance of the procedural rules can be treated as sufficient for the purpose of filing and maintaining a petition. If the defect or short-fall is curable, then instead of rejecting the petition under Sections 433 and 434 of the Act on the ground of non-compliance or inadequate compliance of procedural rules, the matter ought to be considered and decided on merits, either by treating substantial compliance as fulfillment of the prescribed Page 27 O/COMP/80/2013 ORDER requirement or by granting opportunity and time to cure the defect, instead of allowing the defendant - debtor to exploit such defect and/or to use Rules of procedure to delay or frustrate the proceedings.
24.1 In this context, it is relevant to take into account, the observations by the Hon'ble Apex Court in paragraph Nos.2 and 3 of the decision rendered in the case between Malhotra Steel Syndicate v. Punjab Chemi-Plants Ltd. [1993 Supp. (3) SCC 565], which read thus:-
"2. We have heard both Counsel. We have looked at the form and verification of the affidavit filed before the High Court in support of the application for winding- up.
3. We are satisfied that the verification, on a proper and liberal construction, does contain an averment to the effect that the statements made in the affidavit are true and correct to the knowledge of the appellant. We do not think that the affidavit can be described as defective in any respect. But that apart we are of the opinion that even if there some slight defect or irregularity in the filing of the affidavit, the appellant should have been given an opportunity to rectify the same."
It would also be useful and profitable to refer to the and take into consideration the observations by the Hon'ble Apex Court in paragraphs 21 to 23 of the decision rendered in the case between Associated Journals Ltd. v. Mysore Paper Mills Ltd. [(2006) 6 SCC 197], which read thus:-
"21. ....The Rules relating to the affidavit and the verification cannot be ordinarily brushed aside, but then what is required to be seen is whether the petition substantially complies with the requirements and, secondly, even when there is some breach or omission, whether it can be fatal to the petition. In the instant case, both the learned Company Judge and also the Division Bench were of the opinion that there is substantial compliance of Rule 21. In Khaitan Overseas & Finance Ltd. vs. Dhandhania Bros.P.Ltd., (2002) 1 Comp LJ 274, a petition was filed by the Chairman-cum-Director of the company. He annexed with the petition a resolution of the Board of Directors permitting him to execute necessary petitions, documents, applications, affidavits and to lodge a suit to recover dues from the debtor company. This was held to include the authority to file a Winding Up Petition also. The affidavit accompanying the petition was signed, sworn and affirmed on oath in the prescribed manner. The court said that the affidavit conformed with the requirements of law."
(emphasis supplied) A useful reference to the observation by Division Bench in the decision in case of Welding Rods Pvt. Ltd. (supra) may Page 28 O/COMP/80/2013 ORDER be made at this stage. It is observed therein that:-
"34. ....The preponderance of judicial authority is that the defect in the form of verification or affidavit is only a technical irregularity and that an opportunity should be given to the concerned party to cure such defect. The inherent powers of the Court saved by Rule 9 of Companies (Court) Rules, can certainly be invoked in such cases....."
(emphasis supplied) It is also observed in the said decision that:-
"39. ...If the effect of permitting an act is to relate back the petition, otherwise initially defective, to its original date of filing, this can be permitted in the ends of justice; and the Court will see if any prejudice is being caused to the other party which may be compensated by cots or otherwise. A balance has to be struck between two warring parties. If amendment of the petition can be allowed, there does not seem to be any reason as to why a defective affidavit verifying the petition cannot be rectified. The Court is not helpless in a case where the affidavit verifying the petition is not in the prescribed form. In the case of verification to the plaint, it is now settled that a defect in verification is only an irregularity in procedure and will not be a ground for rejecting the plaint and that could be cured at any stage of the suit. The Court will not, however, permit the rectification of the defect in a winding-up petition just as a matter of course; but would take into account all the relevant circumstances including the conduct of the parties."
(emphasis supplied)
25. On overall consideration of all facts and legal position, the Court is of the view that the petition does not deserve to be and need not be dismissed at the threshold on ground of the said defect or shortfall. Instead the petitioner should be allowed to cure the defect and in present case, if such opportunity is granted, it would serve the ends of justice and would also not cause any prejudice to the respondent.
26. In light of the facts of the case and more particularly in light of the POA dated 30.4.2013 which inter alia confers the requisite authority on the deponent and also declares the intention and decision of the petitioner (i.e. to file the petition against the respondent and to ratify the deponent's action of having verified and filed the petition) and in light of the fact that though not exactly at the relevant time, however, since 30.4.2013 the deponent possesses the requisite authority, the Court is of the view that if the deponent's action in question, Page 29 O/COMP/80/2013 ORDER i.e. making the affidavit and filing the petition before the authority was conferred, is duly ratified and the resolution ratifying the action is placed on record, then it would serve the requirement and would also amount to requisite or substantial compliance.
27. In aforesaid circumstances, the Court considers it appropriate and in the interest of justice to grant an opportunity to the petitioner to place on record ratification of the action viz. verifying and filing the petition.
27.1 The petitioner shall place on record resolution ratifying the deponent's actions viz. (a) making the affidavit verifying the petition; and (b) filing the petition. Such resolution to be placed on record as expeditiously as possible and preferably within two months.
28. Now, when the objections as regards deponent's authority to make affidavit and to file the petition and the objection about resolution are addressed, it is time to examine the objection against the affidavit. A plain reading of the affidavit (originally/initially made by the deponent for verifying the petition) makes it clear that the affidavit fulfills the requirements prescribed by Rule 21 of 1959 Rules r.w. Form No.3 and in any event, the affidavit would amount to substantial compliance, inasmuch as the deponent has declared and sworn that:-
"......solemnly affirm and state on oath that what are stated in paras 1 to 10 are the facts of the case and the same are true and correct to the best of my own knowledge and what are stated in paras 11 to 40 are the legal submissions and the same are true and correct to the best of my information and belief and I believe the same to be true. That para 41 to 44 are the formal paras and para 45 contains the prayer clause.
.... That the annexures annexed with the petition are the true copies of the original documents and I further state that I have not suppressed any Page 30 O/COMP/80/2013 ORDER material facts from this Honourable Court."
28.1 The deponent has, thus, declared and clarified that para 1 to 10 contain and narrate the facts and para 11 to 40 contain legal submissions and the details - facts stated in the petition are true as per his information and he believes the same to be true and that para 45 mentions the relief prayed for by the petitioner. The deponent has also made declaration about the documents. The declaration by the deponent complies the requirements of an "Affidavit verifying a winding-up petition".
28.2 Now, so far as the objection in light of Form No.45 and Form No.46 is concerned, it is relevant to take into consideration the provision under Rule 95 and the fact that under the Rules separate forms are prescribed inasmuch as Form No.46 is prescribed for the cases where petitions are filed by a creditor of the company whereas Form No.45 is a general form for petitions seeking order of winding up.
28.3 When present petition and the affidavit on one hand and the said Form No.45 and Form No.46 on the other hand are considered in juxtaposition, it emerges that the petitioner company has mentioned the nature of the company's business and it has also mentioned that it is registered as a non-banking finance company. The period of incorporation of the respondent company and objects of the respondent company are also mentioned and the details about the authorized, subscribed and paid up share capital of the respondent company are also mentioned and in para 7 to 13, details on account of which the alleged dues have arisen are also mentioned. In para 14 to 30 other relevant details related to Page 31 O/COMP/80/2013 ORDER the petitioner's claim, other liabilities of the respondent company, respondent's default to make payment, etc. are mentioned. In para 33 to 43, the petitioner has mentioned as to how and why it believes that the respondent company has lost its capacity to make the payment and how the respondent company failed to discharge its debts. The petitioner has also mentioned the formal paragraphs, i.e. para 44 and 46, and in para 46, the petitioner has prayed for the relief against the respondent company, particularly in para 46(A) the petitioner has prayed for order of winding up. The petitioner / deponent has also declared in the verification affidavit that:-
"......solemnly affirm and state on oath that what are stated in paras 1 to 10 are the facts of the case and the same are true and correct to the best of my own knowledge and what are stated in paras 11 to 40 are the legal submissions and the same are true and correct to the best of my information and belief and I believe the same to be true. That para 41 to 44 are the formal paras and para 45 contains the prayer clause.
.... That the annexures annexed with the petition are the true copies of the original documents and I further state that I have not suppressed any material facts from this Honourable Court."
28.4 So far as the relief clause is concerned, as per the prescribed form, the petition is supposed to have the following prayer clause and signatures:-
"The petitioner therefore prays as follows:-
(1) That the ...... Co. (Ltd.), may be wound up by the Court under the provisions of the Companies Act, 1956, and (2) Such other order may be made in the premises as shall be just. Advocate for the petitioner."
28.5 In the memo of the petition, the petitioner has prayed that:-
"46(A) YOUR LORDSHIP MAY BE PLEASED TO order winding up of the respondent No.1 Company under Sections 433 and 434 of the Companies Act, 1956, as the respondent Company is unable to pay its debt to the petitioner, the respondent Company obtained by way of financial assistance, inspite of reschedulements granted by the petitioner Company for repayment of the loss; and"
Thus, the relief clause of the petition is also in consonance with the prescribed relief clause and it is duly signed.
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28.6 When the above aspects are taken into account in light of the Forms prescribed under the Rules of 1959, then it emerges that the Form of the petition, i.e. the Form in which the petition is prepared and filed is in consonance with the prescribed Form and/or it can be treated as in substantial compliance with prescribed Form.
29. In this view of the matter, this Court is of the considered view that present petition does not deserve to be and need not be dismissed and thrown out at the threshold on the ground that the affidavit is not in consonance with Rule 21 and Form 3 and/or on the ground that it is not prepared and submitted in accordance with applicable Rules or prescribed procedure and/or on the ground that the petitioner has not submitted the petition in Form No.45 and Form No.46. Therefore, the said objection is not accepted.
30. For the above mentioned reasons and in light of the foregoing discussions, the Court is of the view that subject to the condition to place on record the resolution ratifying the deponent's action, the petition is not required to be dismissed on the grounds - objections raised by the respondent.
30.1 Consequently, subject to the said condition the petition is held to be maintainable and will be taken up for further hearing and appropriate further order(s), after hearing the contesting parties.
(K.M.THAKER, J.)
kdc/
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suresh/
bharat
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