Case: A.C. Karthikeyan Vs Sunil Shastri and Ors.. Company Law Board

JudgesKanthi Narahari, Judicial Member
IssueCompany Law
Citation[2010] 154 CompCas 491 (CLB)
Judgement DateNovember 30, 2009
CourtCompany Law Board


Kanthi Narahari, Judicial Member, (Chennai Bench)

1. The present application is filed by the applicant/second respondent by invoking the provisions of Sections 399 and 403 of the Companies Act, 1956, read with Regulation 44 of the Company Law Board Regulations, 1991. Shri P.H. Arvindh Pandian, learned Counsel for the applicant/second respondent submitted that the company petition filed by respondents Nos. 1 to 16 herein is not maintainable either in law or on facts. He submitted that by virtue of the provisions of Section 399 of the Companies Act, 1956, the right to apply under Section 397/398 arises only if (i) not less than 100 members of the company apply, or (ii) not less than one-tenth of the total number of members apply, or (iii) any member or members holding not less than one-tenth of the issued share capital of the company applied. He submitted that in the instant case the respondents herein falsely claim to own about 85 per cent, of the issued and paid-up capital of the company. Respondents Nos. 2 to 16 herein are purportedly represented in the instant petition by their own power agent, i.e., the first respondent herein.

2. The powers of attorney executed by respondents Nos. 2 to 16 in favour of the first respondent would reveal that there has been no power given to the first respondent to initiate/institute legal proceedings concerning the movable or immovable properties of respondents Nos. 2 to 16. Further, the power of attorney does not confer any power with regard to commence/institute any legal action with regard to respondents Nos. 2 to 16 concerning their shares or their shareholding in the seventeenth respondent herein. All the powers of attorney are of a standard format and all have been purportedly executed on the same day before the same notary in USA. The first respondent herein holds only 9,14,414 shares in the seventeenth respondent-company and his shareholding does not constitute one-tenth of the issued share capital of the seventeenth respondent-company. The first respondent by himself does not constitute one-tenth of the total number of members of the company since the total number of members of the company is admittedly more than 10 members. In view of the facts and reasons the applicant prays this Bench to allow the applicant to raise the issue of maintainability of C.P. No. 35 of 2009 as a preliminary issue and dismiss the said petition. In support of his contention learned Counsel relied upon the following decisions: (1) ILR 2005 Karn 884 in the matter of (T.L. Nagendra Babu v. Manohar Rao Pawar) paragraph 23 it is held: "in the light of these judgments what is clear to this court is that to have a presumption under Section 85 of the Indian Evidence Act, 1872, the document in question namely, the power of attorney has to be to the satisfaction of the court in the matter of maintainability". (2) AIR 2006 SC 269 in the matter of (Uday Shankar Triyar v. Ram Kalewar Prasad Singh), paragraph 21 (page 275): "We may at this juncture digress and express concern in regard to the manner in which defective Vakalatnamas are routinely filed in courts. Vakalatnama, a species of power of attorney, is an important document, which enables and authorises the pleader appearing for a litigant to do several acts as an agent, which are binding on the litigant who is the principal. It is a document which creates the special relationship between the lawyer and the client. It regulates and governs the extent of delegation of authority to the pleaders and the terms and conditions governing such delegation. It should, therefore, be properly filled/ attested/accepted with care and caution. Obtaining the signature of the litigant on blank Vakalatnamas and filing them subsequently should be avoided. (3) [1994] 81 Comp Cas 1 (SC) in the matter of (P. Punniah v. Jeypore Sugar Co. Ltd.) it is held (page 3): "To comply with the requirement of one-tenth shareholding, the first appellant gave consent in writing for and on behalf of Smt. Rajeshwari as her general power of attorney holder. If the shareholding of Rajeshwari is taken into account and she is deemed to have consented to the filing of the said application, the requirements of Section 399 are admittedly satisfied. The precise question in this appeal is whether the consent given by her general power of attorney holder for and on her behalf - and not by her personally - is a valid consent within the meaning of Sub-section (3) of Section 399". (4) [1985] 57 Comp Cas 831 (Bom) that in the matter of (Killick Nixon Ltd. v. Bank of India), it is held (page 858): "In view of these settled principles, the power of attorney given by the Bank of India as the holder of 16,706 shares must be construed as it stands. Under Clause 1 of this power of attorney, the holder can exercise all rights and privileges that the holder of 16,706 shares could have exercised. This would include the right to file a petition under Sections 397 and 398."

3. Shri R. Senthil Kumar, learned Counsel for respondents Nos. 1 to 16 filed his counter and submitted that these respondents deny the contents of the application and submit that the same is nothing but a gross abuse of the process of court. The application has been filed only for the purpose of delaying the hearing of the interim reliefs sought by the petitioners in the company petition. The application is not maintainable and is liable to be dismissed. Learned Counsel submitted that the power of attorney have been executed in favour of the first respondent in view of the fact that respondents Nos. 2 to 16 are all resident in the USA and are unable to be personally present to...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT