TMI Blog2017 (5) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... sed the attorney, appointed there-under, to initiate a corporate insolvency resolution proceeding under section 7 of the Code. I have no doubt, whatsoever, in my mind that when the financial creditor executed the power of attorney in question on 20.10.2014, he could not have visualized even remotely that the donee would be required, one day, to initiate a corporate insolvency resolution proceeding under the Code of 2016 which, as stated above, was not even in existence in 2014. Thus no hesitation in holding that Shri Srinjoy Bhattacharjee did not have requisite authority to initiate the proceeding under section 7 Code, 2016 against the corporate debtor. A perusal of the orders rendered by the learned Members of the NCLT, Kolkata Bench makes it clear. Therefore, this Bench has no occasion or the authority to embark upon the question which is sought to be presented before this court by the learned counsel for the corporate debtor.In view of the foregoing discussions, have found reason to concur with the finding arrived at by the learned Member (J) while differing respectfully from the conclusion, reached by the learned Member (T), NCLT, Kolkata Bench.Resultantly, the referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, financial creditor, through its attorney, has filed an application under Section 7 of the Code of 2016 read with Rule 4 of the Rules, 2016 seeking initiation of resolution process as contemplated in the Code of 2016 which was registered as CP No. 37/2017. 6. On the same day, a copy of the application was sent for delivery to the Corporate Debtor as required under Rule 4 of the Rules, 2016. On hearing both the parties, the learned Members, NCLT, Kolkata Bench rendered orders expressing divergent views on the qualification of attorney holder to initiate proceeding under Section 7 of the Code of 2016. 7. I have perused the orders aforesaid and found that without any notice having been served on it, the corporate debtor entered appearance and objected the application on the ground that the Attorney who had filed the application under Section 7 did not have the requisite power to initiate a resolution process under Section 7 of the Code of 2016. In that connection, it has been stated that the power of attorney in question did not at all authorise the attorney holder Sri Srinjoy Bhattacharjee to initiate aforesaid proceeding. 8. In support of such contention, it ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its range is widened and all steps taken in winding up proceedings are in public interest. Sometimes the relief for winding up is denied when it is against public interest. The settled principle is that the power of attorney must be strictly construed, the rationale behind the principle being that the powers given are not abused by agent or the actions are restricted within an only to the extent the power is indicated or given . 12. Refuting such contentions, learned counsel for the financial creditor argued that the power of attorney in question had very specifically empowered Sri Srinjoy Bhattacharjeet to do varieties of acts which clearly included the power to initiate a resolution process under Section 7 of the Code of 2016 as well. The fact that under the power in question, the attorney holder was authorised to institute suit/ winding up proceeding/ other proceeding even before a whole lot of authorities including High Court/CLB / NCLT makes such a conclusion inescapably inevitable. 13. According to the learned counsel for the financial creditor, the decisions, relied on by the counsel for the corporate debtor, have no application to the proceeding in hand since ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not abused by the agent and its actions are restricted within and only to the extent the power is indicated or given. In the above circumstances, in my view, specific authorisation to initiate Corporate Insolvency Resolution Process is needed. It also appears from the application that the applicant has not filed any affidavit in support of the application. Therefore, the applicant has also to submit affidavit in support of the application. Notice be issued to the applicant petitioner to ratify the defect in the application within seven days of receipt of such notice. List on dated 15/2/17 for FO. Order by : Member) (T) I beg to differ from the Ld. Judicial Member in this respect proceedings made under Section 7 of the Insolvency Bankruptcy Code, 2016 does not necessarily lead to liquidation of the Corporate Debtor. Under sub-section (1) of Section 20, the Interim Resolution Professional shall make every endeavour to protect and preserve the value of the property of the corporate debtor and manage the operations of the corporate debtor as a going concern. It may lead to liquidation or winding up, in case no viable Insolvency Resolution Plan could be evolved in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, I find, reiterated the arguments which had they advanced before the learned members of the NCLT, Kolkata Bench. Mr R. Banerjee, learned Sr. Counsel for the financial creditor, has vehemently contended that the power of attorney, under which one Shri Srinjoy Bhattacharjee was constituted as attorney of ICICI Bank had given him unqualified and absolute power to do various acts which obviously included the power to initiate corporate insolvency resolution proceeding under section 7 of the Code of 2016 as well. A very careful reading of the power of attorney in question makes it abundantly clear. 19. In that connection, it has been stated that the power of attorney is required to be read as a whole in order to understand true intent, meaning and purport of such power of attorney. In support of his contention, the learned counsel for financial creditor has relied on the decision of Hon'ble Privy Council in the case of Bank of Bengal v. R. Chetty 1915 PC 527. 20. In the aforesaid case, it was held that where an act purporting to be done under the power of attorney is challenged as being in excess of the authority to confer the power of attorney, it is necessary to show that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such, the corporate debtor has no right, whatsoever, to point out any defect in the petition, so filed by financial creditor before the NCLT under Section 7 of the Code aforesaid. 24. As stated above, such contentions were strenuously disputed by Mrs Manju Bhutoria, the learned counsel appearing for the corporate debtor stating that the argument advanced from the side of petitioner is structured entirely on surmises and conjectures, and not, on law and logic. In that connection, it has been pointed out that the Code of 2016 was brought into existence in 2016 whereas the power of attorney, aforesaid was executed on 20.10.2014. 25. Learned counsel for the corporate debtor further submits that Code of 2016 contemplated a regime for recovery of debt etc which is fundamentally different from all the regimes which had been holding the field before coming into operation of the Insolvency and Bankruptcy Code of 2016. Therefore, on the date of execution of the power of attorney in favour of Shri Srinjoy Bhattacharjee, the donor could not have contemplated, even distantly, about authorizing the donee to initiate action under the Code of 2016. In support of such contention, the counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lications, miscellaneous application, intervener application, notice of motion, action, appeals and proceedings of any kind whatsoever in any court of Law and/or Tribunal and/or Recovery Officer, including but not limited to High Court/National Company Law Tribunal/Company Law Board, whether of original, appellate, testamentary or revisional jurisdiction, established by lawful authority or before the Income-tax, Gift-tax, Wealth-tax, Recovery, Refund, Appellate, Assistant Commissioner or Income-tax Tribunal and to do all acts and appearances or applications to any such Court/Tribunal or Courts and forums aforesaid in any suits, action, appeals or proceedings and all information of complaints that it shall or may be had, brought or commenced and to defend, answer or oppose the same or suffer judgment or decrees to be had, given, taken or pronounced in any such suits, action, appeals, proceedings, bills, information or complaints as the said Attorney shall be advised or my think proper and to execute decrees/Recovery Certificates or any other certificate/order for recovery of dues and also to bid at auction sales or to authorize all agents or sub-agents to bid at auction sales and pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose for which the authority is given, and are construed as enlarging the special powers when necessary and only when necessary for that purpose. 4. The deed must be construed so as to include all medium powers necessary for its effective execution . 30. Now, the question is whether the power of attorney in question had ever bestowed upon the attorney holder the necessary authority to initiate a proceeding U/s 7 of the Code. In order to reply such a query, one needs to take into consideration several facts and circumstances which occurred soon before and after the execution of power of attorney in question since all those facts and circumstances have huge bearing on the outcome of the present proceeding. 31. In this connection, one may note here that when the power of attorney was executed on 20.10.2014, the Companies Act, 2013 has already been in operation. One may also note here that the Companies Act, 2013 has brought numerous changes to the Act of 1956.Thus, the abolition of CLB and substitution of it by NCLT is one of such important changes brought about by the Act, 2013. 32. It is also worth noting that under the Companies Act, 1956, the matters perta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... procedures, prescribed for winding up of the companies under the Companies Act, 1956, yet, in many other respects, procedures, prescribed there-for, under the Code of 2016, are radically different from the procedures, prescribed under the old Act. 38. Situations being such, in my considered opinion, the procedures for adjudication of insolvency and liquidation for corporate person etc, or the procedures for adjudication of corporate insolvency/bankruptcy of individual/partnership firm under the Code of 2016 can never be equated with the proceeding for winding up/ insolvency/liquidation of the companies under the Act of 1956. In other words, the procedures vis-a-vis winding up/insolvency/liquidation of the companies etc. under the Act of 1956 and the procedures for insolvency/liquidation etc under the Code of 2016 are not one and same. 39. One may note here that under the power of attorney in question, the author thereof had bestowed various power on the attorney appointed thereunder which included the power to initiate winding proceeding as well. But then, in view of our foregoing discussion, its needs to be concluded conclusively that the power, so given to the attorney unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ney, being found without any substance, is required to be rejected. 45. In view of our foregoing discussion, I have no doubt, whatsoever, in my mind that when the financial creditor executed the power of attorney in question on 20.10.2014, he could not have visualized even remotely that the donee would be required, one day, to initiate a corporate insolvency resolution proceeding under the Code of 2016 which, as stated above, was not even in existence in 2014. 46. It may be stated here that the broad facts and circumstances in the case in hand are very similar to the facts and circumstances in P.M. Desappa Nayanim Varu's case (supra). Therefore, one may also peruse profitably the decision, rendered by Hon'ble Madras High Court in the case of P.M. Desappa Nayanim Varu (supra). 47. In P.M. Desappa Nayanim Varu's case (supra), the plaintiff had executed a power of attorney in favour of person empowering him to institute a suit before the Court of Munsiff, Tirupathi. Accordingly, a suit was filed before the court aforesaid. However, the Court of Munsiff had found that the suit was beyond pecuniary jurisdiction of the court and, therefore, it was returned to the pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o confer a new power on him. When the plaintiffs expressly authorised Narayanaswami Naidu to conduct a suit in a particular Court. I cannot hold that they intended to empower Narayanaswami Naidu to conduct that suit in any other Court. I am therefore constrained to hold, on a fair construction of the express words used in the power of attorney, that Narayanaswami Naidu has no power, under the power of attorney, to institute and conduct the suit in the Subordinate Judge's Court of Chittoor. In my view the conclusion arrived at by the Subordinate Judge is correct. 50. In my view, the law, laid down in P.M. Desappa Nayanim Varu's case (supra), is clearly applicable to our case since the fundamental facts of both the cases are very similar. Being so, I have no hesitation in holding that Shri Srinjoy Bhattacharjee did not have requisite authority to initiate the proceeding under section 7 Code, 2016 against the corporate debtor. 51. It may be noted here that the counsel appearing for corporate debtor contends that the proceeding in hand cannot be initiated without giving the Corporate Debtor a fair chance of hearing. Such opportunity, contends counsel for the Corporate D ..... X X X X Extracts X X X X X X X X Extracts X X X X
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