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2020 (11) TMI 296 - AT - Companies LawMaintainability of petition - Oppression and Mismanagement - criteria under Section 244 of the Companies Act, 2013 fulfilled or not - Whether the Joint Petition by three members (Appellants) is maintainable? - HELD THAT - Admittedly the total number of members of the Respondent No. 1 company are nine. Hence, even Appellant No. 1 being a member i.e. more than one-tenth of the total number of members can maintain the petition under Section 241 of the Act. However, there is no such averment in the petition. Therefore, in the absence of pleading, the petition is not maintainable on this ground. Whether written consent is required to be filed alongwith the Petition? - HELD THAT - The requirements contained in Regulation 18 of Company Law Board Regulation, 1991 can hardly be said to be mandatory in the sense that non-compliance would ipso facto result in the dismissal of the petition. Thus, we can say that sub-section 2 of Section 244 of the Act only speaks of obtaining of written consent of members. Though Rule 81 of NCLT rules, 2016 provides that the letter of consent signed by the members shall be annexed to the petition, however, non-compliance would not ipso facto result in the dismissal of the petition. We can say that such defect can be cured subsequently by filing of the written consent of members. It is not out of context to refer that Rule, 58 of the National Company Law Tribunal, Rules, 2016 provides that failure to comply with any requirements of these Rules shall not invalidate any proceedings, merely by reason of such failure, unless the Tribunal is of the view that such failure has resulted in miscarriage of justice. Thus, the written consent obtained under Section 244(2) of the Act is not annexed with the Petition as per the Rule 81 of NCLT Rules, 2016. Such non-compliance of this rule shall not invalidate the proceedings. Whether consent should be given by a member personally or power of attorney holder of such member can give consent? - HELD THAT - Hon ble Supreme Court in the case of BHAGWATI DEVELOPERS (P.) LTD. VERSUS PEERLESS GENERAL FINANCE INVESTMENT CO. LTD. 2013 (4) TMI 252 - SUPREME COURT has settled law that is not required that consent should be given by a member personally. Such consent can be given by the Power of Attorney Holder of such member and the consent must be decided on the basis of a broad consensus approach, in relation to the avoidance and subsistence of the case. The same must not be decided on the basis of the form of such consent, rather on the substance of the same. Whether General Power of Attorney of Appellant No. 2 3 in favour of Appellant No. 1 is doubtful? - HELD THAT - N on-filing of written consent ipso facto would not result in dismissal of the petition. The GPA executed and notarized on 04.04.2019 and the petition under Section 241 and 242 of the Act filed on 30.04.2019. There is no finding rendered by the Tribunal that the GPA is back dated or a forged document and the Appellant Nos. 2 and 3 are not denying the execution of this document - the GPA cannot be rejected as being a forged one because it was not filed along with the main Company Petition or there was no reference in the petition or reasons for execution have not been assigned. Admittedly, the Respondent No. 1 is a family Company, in which there are total 9 Members. The Appellant No. 1 is the husband of Appellant No. 2 and father of Appellant No. 3. It is pertinent to note that all the Appellants have signed the Vakalatnama accompanied with the petition - it is evident from the Balance Sheet of the Respondent No. 1 Company for the Financial Years 2016- 2017 and 2017-2018 that the Appellants are holding shares 8.93%, 8.10% and 8.52% total 25.55%. Thus, the Appellants hold one-tenth of the total paid up share capital. Therefore, they fulfil the requirement for maintaining the Petition as stipulated under Section 244 (1) of the Act. The Joint Petition of the Appellants is fulfilled the requirement under Section 244(1) of the Act. Thus, the Petition is maintainable and impugned order passed by the Learned Tribunal is not sustainable in law - Appeal allowed.
Issues Involved:
1. Maintainability of the Company Petition under Section 244 of the Companies Act, 2013. 2. Requirement of written consent for filing a Joint Petition. 3. Validity of General Power of Attorney (GPA) for providing consent. 4. Non-compliance with procedural rules and its impact on the maintainability of the petition. Issue-wise Detailed Analysis: 1. Maintainability of the Company Petition under Section 244 of the Companies Act, 2013: The Appellants filed a petition under Sections 241 and 242 of the Companies Act, 2013, alleging oppression and mismanagement by Respondents. The National Company Law Tribunal (NCLT) dismissed the petition, stating it did not meet the threshold criteria under Section 244. The Appellants argued that they collectively held more than 1/10th of the total number of members, thus meeting the threshold. The Tribunal found that the Appellants' claim of holding 42.76% of shares was based on disputed shares, and they only held 25.55% of the shares. The Appellate Tribunal concluded that the Appellants met the requirement of holding 1/10th of the total paid-up share capital, thus fulfilling the criteria under Section 244(1) of the Act. 2. Requirement of written consent for filing a Joint Petition: The Respondents contended that the Appellant No. 1 had not obtained written consent from Appellant Nos. 2 and 3 before filing the petition, as mandated by Section 244(2) of the Act. The Appellants argued that the GPA executed by Appellant Nos. 2 and 3 in favor of Appellant No. 1 authorized him to file the petition. The Tribunal held that non-filing of the written consent along with the petition would not ipso facto result in its dismissal. The Appellate Tribunal referred to the Supreme Court's judgment in J.P. Srivastava Vs. Gwalior Company Sugar Ltd., which held that the requirement of filing consent letters is not mandatory and non-compliance can be cured subsequently. 3. Validity of General Power of Attorney (GPA) for providing consent: The Tribunal doubted the validity of the GPA, suggesting it might have been executed after filing the petition. The Appellants argued that the GPA was executed before filing the petition and was notarized on 04.04.2019. The Appellate Tribunal found no evidence of the GPA being backdated or forged, and the Appellant Nos. 2 and 3 did not deny its execution. The Tribunal concluded that the GPA was valid, and Appellant No. 1 was competent to file the petition on behalf of Appellant Nos. 2 and 3. 4. Non-compliance with procedural rules and its impact on the maintainability of the petition: The Respondents argued that non-compliance with Rule 81 of the NCLT Rules, 2016, which requires the consent letters to be annexed with the petition, rendered the petition non-maintainable. The Appellate Tribunal referred to Rule 58 of the NCLT Rules, which states that failure to comply with procedural requirements shall not invalidate proceedings unless it results in a miscarriage of justice. The Tribunal held that non-compliance with Rule 81 did not invalidate the petition, and such defects could be cured subsequently. Conclusion: The Appellate Tribunal allowed the appeal, set aside the NCLT's order, and remanded the matter back to the Tribunal for disposal on merits. The Tribunal directed the parties to appear before the NCLT for further proceedings and disposed of the application for interim reliefs, directing the Appellants to pursue the reliefs before the Tribunal. The appeal was allowed with no order as to costs.
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