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2022 (2) TMI 1174 - Tri - Insolvency and BankruptcySeeking to declare that the Power of Attorney executed by Syndicate Bank shall not be enforced against the customers/borrowers of Canara Bank under the amalgamation scheme - Power of Attorney is invalid and void ab-initio, or not - seeking to declare that the authorised signatory Mr. Vamsidhar Naidu is not having valid Power of Attorney or authorization from Canara Bank to initiate present legal proceedings - HELD THAT - It is clear from scheme of merger at Clause-8 that the Power of Attorney given to the Transferor Bank prior to the commencement of the scheme shall be of full force and effect against or in favour of the Transferee Bank and they may be enforced and acted upon as fully and effectively as if in the place of the Transferor Bank, the Transferee Bank is a party and as if it has been issued in favour of the Transferee Bank. Hence, by virtue of the above there need not be any further discussion to hold that the Power of Attorney given to the employee to the Syndicate Bank prior to the merger, who later has become the employee of the Canara Bank by virtue of the merger, would suffice and would be a proper authorisation for him to file this Application. Hence this application is dismissed.
Issues:
Application to declare the invalidity of Power of Attorney executed by Syndicate Bank against Canara Bank customers/borrowers under amalgamation scheme and the authorization of Mr. Vamsidhar Naidu to initiate legal proceedings. Analysis: The Application sought a declaration that the Power of Attorney executed by Syndicate Bank should not be enforced against Canara Bank customers/borrowers under the amalgamation scheme, alleging it to be invalid and void ab-initio. Additionally, it aimed to declare that Mr. Vamsidhar Naidu, the authorized signatory, lacked valid authorization from Canara Bank to initiate legal proceedings. The Central Government, in consultation with the RBI, issued a Gazette Notification for the amalgamation of Syndicate Bank into Canara Bank. The scheme designated Syndicate Bank as the Transferor Bank and Canara Bank as the Transferee Bank, transferring rights and powers accordingly. The Application argued that Canara Bank should not utilize the Power of Attorney from Syndicate Bank, claiming that Mr. Vamsidhar Naidu suppressed material facts and abused the legal process, questioning the validity of the Company Petition. Despite the Respondent not filing a counter, arguments were presented. During the hearing, the Applicant's counsel contended that the Power of Attorney given to the signatory was pre-merger and required fresh authorization post-merger from Canara Bank. In contrast, the Respondent's counsel referred to a notification related to the merger scheme, asserting that the Power of Attorney granted to the Syndicate Bank employee remained valid post-merger for Canara Bank. The specific clause highlighted stated that contracts, powers of attorney, and other instruments in favor of the Transferor Bank (Syndicate Bank) would remain effective for the Transferee Bank (Canara Bank) post-merger without the need for additional consent. Consequently, the Tribunal concluded that the Power of Attorney granted to the Syndicate Bank employee, now part of Canara Bank post-merger, was sufficient authorization to file the Application. Therefore, the Application was dismissed, and I.A. No. 141/2021 in CP (IB) No. 52/7/AMR/2020 was also dismissed.
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