2019 (7) TMI 1639 - Tri - Companies Law

Declaration of Power of Attorney executed in favour of R3 as null and void - HELD THAT - It is evident that the Petitioner and R2 being Shareholders and Directors of RI Company, on 04.09.2014, they passed board resolution authorizing R2 to execute Power of Attorney in favour of R3 authorising him to alienate the asset of RL In pursuance of it, R2 executed power of attorney in favour of R3 authorising him to alienate the property of RI Company, accordingly R3 executed sale deeds in favour of third parties basing on the power conferred upon him as reflected in Power of Attorney dated 30.10.2014 to alienate the property of RI company to the intending purchasers - Though this document was executed in the year 2014, until before initiating this proceeding in the year 2018, no proceeding was initiated by this petitioner against her husband for nullification of the Resolution both of them passed and the power of attorney executed by her husband in favour of R3. It is only in the year 2018, this company petition was filed for nullification of Power of Attorney executed in favour of R3 basing on the resolution passed on 04.09.2014. The Honourable High Court held that the sale deeds executed through Power of Attorney in force cannot be declared nullified through filing Writ Petition - It appears till date neither the Petitioner nor R2 contested the order of Madurai Bench of High Court of Madras in respect to the observations made saying that execution of Power of Attorney is not in dispute. This Petitioner has not even asked any relief for nullification of the Resolution dated 4.9.2014 in this company petition, then the question of conducting trial would not arise, moreover this petitioner has not placed any prima facie material to believe that R2 fabricated the Resolution dated 04.09.2014. Therefore, it is hereby held that the petitioner counsel has tried to argue the case beyond the pleadings and the relief sought bv the petitioner. Courts are not expected to stretch case beyond the pleadings and reliefs sought in a case. When a point is not legally tenable and when relief is not sought, Court is not obliged to get swayed by the oral arguments of a counsel. Petition dismissed.

Summary

Issues Involved:
1. Validity of the Power of Attorney dated 30.10.2014 executed in favor of R3.
2. Legitimacy of the board resolution dated 04.09.2014.
3. Legality of the sale deeds executed by R3 based on the Power of Attorney.
4. Allegation of collusion between the Petitioner and R2 against R3.
5. Jurisdiction and appropriateness of filing the petition under Section 241 of the Companies Act, 2013.

Detailed Analysis:

1. Validity of the Power of Attorney dated 30.10.2014 executed in favor of R3:
The petitioner contended that the Power of Attorney dated 30.10.2014, executed by R2 in favor of R3 without a board resolution, was illegal and sought its nullification. However, it was established that the Power of Attorney was executed following a board resolution dated 04.09.2014, which authorized R2 to execute the said Power of Attorney. The tribunal noted that the petitioner did not challenge the board resolution itself, which formed the basis of the Power of Attorney. Hence, without nullifying the board resolution, the Power of Attorney could not be invalidated.

2. Legitimacy of the board resolution dated 04.09.2014:
The petitioner failed to seek any relief for the nullification of the board resolution dated 04.09.2014, which authorized R2 to execute the Power of Attorney in favor of R3. The tribunal emphasized that without challenging the board resolution, the subsequent actions, including the execution of the Power of Attorney, could not be declared invalid. The tribunal also noted that there was no material evidence to suggest that the resolution was fabricated or passed without the petitioner's knowledge.

3. Legality of the sale deeds executed by R3 based on the Power of Attorney:
The sale deeds executed by R3 in favor of third parties were based on the Power of Attorney, which was executed following the board resolution. The tribunal observed that these sale deeds were registered instruments, and there was no evidence to suggest that they were executed illegally. The petitioner’s attempt to nullify these sale deeds without challenging the foundational board resolution was deemed legally untenable.

4. Allegation of collusion between the Petitioner and R2 against R3:
The tribunal noted that the petitioner and R2, who are husband and wife, appeared to be colluding to invalidate the Power of Attorney and the sale deeds executed by R3. The tribunal highlighted that R2 had previously filed a writ petition and a civil suit against R3, both of which were dismissed. The tribunal inferred that the current petition by the petitioner was a continuation of these failed attempts, indicating a collusive effort to misuse legal processes against R3.

5. Jurisdiction and appropriateness of filing the petition under Section 241 of the Companies Act, 2013:
The tribunal held that the petition under Section 241 of the Companies Act, 2013, was inappropriate for seeking the reliefs related to the nullification of the Power of Attorney and the sale deeds. Section 241 pertains to acts prejudicial to the interests of the company or its members, and the tribunal found no evidence that the actions in question fell under this provision. The tribunal concluded that the petitioner was attempting to abuse the process of law by invoking Section 241 to achieve objectives that should have been pursued through other legal avenues.

Conclusion:
The tribunal dismissed the company petition, emphasizing that the petitioner failed to challenge the board resolution dated 04.09.2014, which was the basis for the Power of Attorney and the subsequent sale deeds. The tribunal also noted the collusive nature of the proceedings initiated by the petitioner and R2 against R3. Consequently, the petition was dismissed with costs of ?5 lakhs payable to R3 within 30 days. The tribunal reiterated that courts should not stretch cases beyond the pleadings and reliefs sought, and the petitioner's arguments without proper legal basis were not entertained.