2013 (11) TMI 1820 - HC - Companies Law

Summary

Issues:
Validity of company petition filed for winding up based on General Power of Attorney (GPA) authorization.

Analysis:
The appellant, a foreign bank operating in India, extended credit facilities to the respondent, who allegedly defaulted on repayment. The appellant filed a company petition under Sections 433, 434, and 439 of the Companies Act, 1956, seeking winding up of the respondent company. An issue arose regarding the validity of the company petition as it was filed through a General Power of Attorney (GPA) without proper authorization. The appellant attempted to rectify the deficiency by submitting a document dated 24-01-2000. The learned single Judge initially refused to accept the document, leading to the appeal.

The appellant argued that only the principal could question the validity of the GPA, and since the appellant did not doubt it, there was no basis for the rejection. The appellant contended that the original power of attorney did authorize the institution of proceedings, and any deficiency was rectified by the subsequent document. The appellant relied on the Supreme Court judgment in M.M.T.C. LIMITED v. MEDCHL CHEMICALS AND PHARMA (P) LIMITED (2002) 1 SCC 234 to support the curability of the defect.

On the other hand, the respondent's counsel argued that due to the serious consequences of a winding-up petition, strict adherence to procedural requirements was necessary. The respondent contended that the original power of attorney was defective and the subsequent document did not align with the appellant's articles of association. The respondent cited the Supreme Court judgment in STATE BANK OF TRAVANCORE v. KINGSTON COMPUTERS INDIA PRIVATE LIMITED (2011) 11 SCC 524 to support their argument.

The High Court held that while the defect in the GPA used to institute proceedings was curable, the proceedings were not invalidated by the defect. The Court distinguished the present case from the judgment cited by the respondent, emphasizing that the appellant had taken steps to rectify the defect pointed out by the respondent. Therefore, the appeal was allowed, setting aside the single Judge's order and treating the company petition as properly instituted. The Court left open the possibility of framing an issue if the respondent persisted with objections. No costs were awarded in the matter.