2017 (7) TMI 1229 - HC - Companies Law

Winding up petition - petition not been filed by a competent person - Held that - All it says is that, the deponent was the pairokar in the aforesaid case and well acquainted with the facts deposed to below . It is only in the application dated September 24, 1998 that for the first time it was being stated that the petitioners had duly authorised Satyendra Veer to file the petition. This appears to be an afterthought and only with a view to get rid of the difficulty in complying with the provisions of rule 21 of the Rules. Besides, the court does not see any sufficient reason to grant leave to the pairokar to file this petition especially in view of the averments made in the counter affidavit and the contention of the respondent that the instant petition has been engineered by Satyendra Veer Singh who was the ex-director of the respondent-company and also had serious litigation with the present board of directors. Consequently, I see no reason to accept the prayer made and to grant leave to accept the affidavit already filed. The supporting affidavit is not in accordance with rule 21 of the Companies (Court) Rules. On the issue of giving opportunity to the petitioner to cure the defect, it is noticed that company secretary Devraj Gupta in the affidavit filed in support of the petition has stated that company petition has been drafted on his instructions. Hence, the defect cannot be cured by filing the affidavit of some other competent person. Hence, the company petition is dismissed having not been filed by a competent person.

Summary

Issues Involved:
1. Competency and authorization of the company secretary to file the petition.
2. Compliance with Rule 21 of the Companies (Court) Rules, 1959.
3. Opportunity to cure defects in the affidavit supporting the petition.

Issue-wise Detailed Analysis:

1. Competency and Authorization of the Company Secretary to File the Petition:
The primary issue in this case revolves around whether the company secretary, Devraj Gupta, was competent and properly authorized to file the winding-up petition on behalf of the petitioner-company. The respondent argued that the company secretary was not competent and lacked proper authorization. The petitioner countered this by citing Section 2(2)(b) and (c) of the Company Secretaries Act, 1980, asserting that the company secretary was competent to file the petition.

Upon examination, it was found that the affidavit supporting the petition left the space blank concerning the person by whom the power of attorney was executed. The power of attorney filed as annexure P1 revealed that S.C. Bansal, a director, not the managing director, executed it. The memorandum of articles of association (annexure P3) indicated that only the board of directors or the managing director could institute legal proceedings. The court concluded that the company secretary, without proper authorization from the company, could not file the company petition. Therefore, the petition was not filed by a competent and duly authorized person.

2. Compliance with Rule 21 of the Companies (Court) Rules, 1959:
The court examined whether the petition complied with Rule 21 of the Companies (Court) Rules, 1959, which mandates that every petition must be verified by an affidavit made by the petitioner or a principal officer of the body corporate. The affidavit in this case was not by a principal officer but by the company secretary, who was not duly authorized. The court referred to the Allahabad High Court's judgment in Tayal Potteries v. Macroplast P. Ltd., which emphasized the mandatory nature of Rule 21 and the necessity for proper authorization to file the affidavit.

The court noted that the affidavit filed by the company secretary did not state that he was duly authorized by the petitioner to file the affidavit. This non-compliance with Rule 21 rendered the petition defective and not maintainable. The court highlighted that the affidavit's verification is crucial to test the genuineness and authenticity of the allegations.

3. Opportunity to Cure Defects in the Affidavit Supporting the Petition:
The petitioner sought an opportunity to cure the defect by filing an affidavit from a competent person. However, the court observed that the company secretary, in his affidavit, stated that the petition was drafted on his instructions. This indicated that the defect could not be cured by filing an affidavit from another competent person. The court referred to several judgments, including those from the Calcutta High Court and the Punjab and Haryana High Court, which held that defects in verification could not be remedied if the original affidavit was not by a duly authorized person.

The court concluded that the petition could not be rectified by filing another affidavit, as it would result in confusion and complications. The defect was not merely technical but substantive, affecting the maintainability of the petition. Consequently, the court dismissed the company petition for not being filed by a competent person and for non-compliance with Rule 21 of the Companies (Court) Rules, 1959.

Conclusion:
The court dismissed the winding-up petition on the grounds that it was not filed by a competent and duly authorized person and for non-compliance with Rule 21 of the Companies (Court) Rules, 1959. The defects in the affidavit supporting the petition were substantive and could not be cured by filing another affidavit.