BANK OF NOVA SCOTIA Vs. RPG TRANSMISSION LIMITED

JUDGEMENT

(1.) Two questions arise for consideration. Firstly, whether the Power of Attorney executed in favour of the person who has signed the petition conforms with the requirements of law and if found not to be so, what are the proper and appropriate orders that should be passed. Secondly, whether the Company Court should entertain a winding-up petition despite the fact that the petitioning creditor has already instituted proceedings under the Recovery of Debts due to Banks and Financial Institutions. Act, 1993 (hereinafter referred to as 'the RDB Act')(A) Power of Attorney issue.

(2.) In this context, Mr. Rajiv Nayar , learned Senior counsel appearing on behalf of the Respondent, has contended that the document had not been sufficiently stamped. It has, however, been shown that the Power of Attorney in favour of Mr. David A. Tait has been adjudicated for payment of Stamp Duty of Rs.110.00 which has been deposited in the office of the Collector of Stamps, New Delhi. The objection, therefore, has no merit.

(3.) Mr. Nayar has thereafter contended that on a perusal of its sundry clauses, the Power of Attorney does not empower or authorise Mr. Tait to file a suit or application or petition. It is his contention that there ought to have been a clause which specifically empowers the Attorney to institute a winding-up petition, in contradistinction to other acts such as defending such actions. In this regard Mr. Nayar has relied on the decision in Shantilal Kbushaldas and Bros. Pvt. Ltd, v. Smt Chandanbala Sughir............Shah and Another. [1993] 77 Comp. Cas. 253. In that case the Learned Single Judge had rejected the argument that the class of persons who can file a petition under Section 439 cannot be represented by their authorised agents or duly constituted attorneys. In the opinion of the Learned Judged, the reference to 'court" in Rule 1 of Order III of the Code of Civil Procedure includes the Company Court. Having held so, it was held that proceedings under Section 433 of the Companies Act cannot be equated to suits for recovery of money, for the reason that the lis in winding~up proceedings is not between the petitioning party and the company sought to be wound up, and that once the petition is admitted, the creditors, contributors, shareholders etc. may seek redress in the proceedings and can even oppose a winding-up. However, since no specific empowerment to file a winding-up petition had been conferred by the power of attorney relied upon in that case, the Learned Judge dismissed the petition. Mr. Nayar has further referred to Western India Theatres Ltd, v. Ishwarbhai Somabhai Patel . AIR 1959 Bombay 386, which, however, is not of much assistance to the resolution of the objection. The observations are essentially in respect of what can be termed as general and specific powers. The learned Division Bench, speaking through Chief Justice Chagla, after holding that the Power of Attorney was inadequate, viewed it as a mere irregularity, which could be cured at any time. It permitted the Petitioner to sign the petition in. Court, which had hithertofore been signed by his constituted attorney. This very approach has been followed by the Hon'ble Supreme Court in United............Bank of. India v. Naresh Kumar and others, (1996) 6 SCC 660 relied upon by learned counsel for the Petitioner. Mr. Nayar had sought to distinguish the case by drawing attention to the fact that the Plaintiff was a 'Public Corporation', and that the Court was persuaded by ' the pragmatic considerations that public interest should not be permitted to be defeated on a mere technicality. The Hon'ble Court opined that procedural defects which do not go to the root of the matter should not be permitted to overwhelm an otherwise just cause and that as far as possible a substantive right should not be allowed to be defeated on account of a procedural irregularity which is curable. The following extract is relevant: