1998 (4) TMI 474 - HC - Companies Law

Summary

Issues Involved:
1. Authority to file winding up petitions.
2. Authority to verify petitions.
3. Amendment of petitions.
4. Validity of the Board's resolution.
5. Authority of the Deputy General Manager to sign and affirm petitions.

Issue-wise Detailed Analysis:

1. Authority to File Winding Up Petitions:
The applicant, UTI Bank Ltd., filed two winding up petitions against Diamond Oil Industries (P.) Ltd. and its guarantor, Hynoup Food & Oil Industries Ltd., due to unpaid dues. The respondents contested the authority of the Bank's Board of Directors to initiate such proceedings. The Court examined a resolution passed by the Board on 14-8-1996, which delegated powers to the Chairman for instituting legal proceedings involving amounts up to Rs. 500 lakhs. The Court found that the Chairman had approved the filing of the petitions, satisfying the requirement for Board authorization. The Court concluded that the decision to file the winding up petitions was valid.

2. Authority to Verify Petitions:
The respondents also challenged the authority of R. Ashok Kumar, who initially verified the petitions, and later S.K. Chakrabarti, who sought to amend and verify them. The Court reviewed the power of attorney granted to S.K. Chakrabarti, which included the authority to sign and verify legal documents on behalf of the Bank. Despite his transfer from Hyderabad to Ahmedabad, the Court held that his authority remained valid and that the internal management decisions of the Bank were not improper.

3. Amendment of Petitions:
The Bank sought leave to amend the petitions to correct deficiencies and to allow S.K. Chakrabarti to sign and verify the petitions. The Court allowed the amendments, noting that such procedural irregularities could be cured at any time. The Court referenced a precedent where similar amendments were permitted and deemed effective from the date they were carried out, not the original filing date.

4. Validity of the Board's Resolution:
The Court examined the resolution dated 14-8-1996, which delegated powers to the Chairman for instituting legal proceedings. The Court found that the resolution was valid and that the Chairman had the authority to approve the filing of the winding up petitions. The Court dismissed the respondents' argument that the resolution did not specifically mention winding up petitions, interpreting the delegation of powers broadly to include such actions.

5. Authority of the Deputy General Manager to Sign and Affirm Petitions:
The respondents argued that S.K. Chakrabarti, described as the Deputy General Manager at the Hyderabad Branch, lacked authority to sign and affirm the petitions in Ahmedabad. The Court rejected this argument, noting that the power of attorney granted to Chakrabarti was valid and that his role as the Head of the Ahmedabad Branch did not invalidate his authority. The Court emphasized that the internal management decisions of the Bank, including the delegation of authority, were proper and lawful.

Conclusion:
The Court allowed the amendments to the petitions and granted the Bank's requests, subject to the condition that the amendments would be effective from the date they were carried out. The Court deferred the actual amendment until 20-4-1998, providing the respondents an opportunity to seek a stay. The petitions were scheduled for further hearing on 21-4-1998. The applications were allowed without any order on costs.