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TMI Blog1994 (4) TMI 233X X X X Extracts X X X X X X X X Extracts X X X X ..... G.S. Srinivasa Rao for the Respondent. JUDGMENT B.P. Jeevan Reddy, J. An application under sections 397 and 398 of the Companies Act, 1956, can be filed, inter alia , by "any member or members holding not less than one-tenth of the issued share capital of the company", vide clause ( a ) of sub-section (1) of section 399. Sub-section (3) of section 399 says that among the members of the company entitled to make an application by virtue of sub-section (1), "any one or more of them having obtained the consent in writing of the rest, may make the application on behalf, and for the benefit, of all of them". The three appellants in this appeal are the shareholders of the first respondent-company, Jeypore Sugar Co. Ltd. The respondents are its directors. The first appellant's daughter, Smt. V. Rajeshwari, also holds certain shares in the first respondent-company. She is married and has been residing in the USA since 1973. Before leaving for the USA, she executed a general power of attorney (GPA) in favour of her father, the first appellant herein, on November 29, 1973. On October 25, 1978, the three appellants herein filed an application under sections 397 and 398 i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplication on behalf and for the benefit of all of them." (Sub-sections (4) and (5) are omitted as unnecessary). The relevant clauses of the general power of attorney executed by Smt. Rajeshwari in favour of the first appellant may also be noted: "4. To sell, convert, collect, get in, or manage or collect or otherwise administer any property movable or immovable which may be vested in me alone or jointly with others ... 10. To take, prosecute, or defend, all legal proceedings touching any of my matters in which I am or may hereafter be interested or concerned and also if thought fit to compromise, refer to arbitration, withdraw or confess judgment or in any such proceedings . . . 12. To vote at the meetings of the company or companies and otherwise to act as my proxy or representative in respect of any shares or stock or debentures which may hereafter be acquired by me and for that purpose to sign and execute proxies or other instruments in my name and on my behalf. 13. To appear and act in all the courts, in the registration office and in any offices of the Government, District, Board, Municipality or any local authority, on my behalf. 14. To sign all the papers to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Smt. Rajeshwari wherein she affirmed that on her recent visit to India she was apprised by her father of the affairs of the first respondent-company and of the proposal to file an application against the first respondent-company and its management alleging oppression and mismanagement. She affirmed that she had authorised her father to act on her behalf as her general power of attorney in that behalf and to take all such steps as he deemed proper to protect her interest. The company judge and the Division Bench have, however, taken the view that the consent to be granted by a member of the company under section 399(3) must be a conscious decision of the member himself/herself. They opined that the member must personally apply his mind to the advisability of granting consent and then grant it. In this view of the matter, they held, the general power of attorney holder is not competent to grant the consent. Mr. Sibal, learned counsel appearing for the respondents, supported the said reasoning. He submitted that the right or power to grant consent under section 399(3) is a personal right which cannot be delegated to or exercised by an agent. The very filing of an application und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tled to apply under section 399(1), by any one or more of them, the letter of consent signed by the rest of the members so entitled authorising the petitioner or petitioners to present the petition on their behalf, shall be annexed to the petition, and the names and addresses of all the members on whose behalf the petition is presented shall be set out in a schedule to the petition, and where the company has a share capital, the petition shall state whether the petitioners have paid all calls and other sums due on their respective shares. Where the petition is presented by any member or members authorised by the Central Government under section 399(4), the order of the Central Government authorising such member or members to present the petition shall be similarly annexed to the petition. A petition under section 397 shall be in Form No. 43, and a petition under section 398 shall be in Form No. 44. (2) A petition under section 397 or 398 shall not be withdrawn without leave of the court, and where the petition has been presented by a member or members authorised by the Central Government under subsection (4) of section 399, notice of the application for leave to withdraw shall be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... age 72 of 21 Comp Cas): In the said paragraph, this court considered the question whether the shares held by a person can be said to be "property" within the meaning of articles 31(2) and 19(1)( f ) and whether acquisition of the company by the Government amounts to acquisition of the shares of the shareholders. The petitioner contended that it does. Repelling the said contention, S.R. Das J. observed: "These rights, as already stated, are, no doubt, privileges incidental to the ownership of the share which itself is property, but it cannot, in my opinion, be said that these rights, by themselves, and apart from the share are, 'property' within the meaning of those articles, for those articles only regard that as 'property' which can by itself be acquired, disposed of or taken possession of. The right to vote for the election of directors, the right to pass resolutions and the right to present a petition for winding up are personal rights flowing from the ownership of the share and cannot, by themselves and apart from the share, be acquired or disposed of or taken possession of as contemplated by those articles. The second question is, assuming that these rights are by themselves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... davit, however, does not say that any new directors have come into office or that in their absence the present appeal is not maintainable. We need not, therefore, express any opinion on this contention. For the above reasons, the appeal is allowed and the orders of the learned company judge and the Division Bench impugned herein are set aside. The consent given by the first appellant for and on behalf of Smt. V. Rajeshwari, as her general power of attorney holder is a valid consent within the meaning of section 399(3) and, therefore, the preliminary objection to the maintainability of the application filed under sections 397 and 398 is unsustainable in law. The application may be proceeded with in accordance with law expeditiously, in view of the fact that about fifteen years have been spent on a preliminary objection alone. No order as to costs. Hansaria, J. I am in respectful agreement with my learned brother in the conclusion arrived at by him. Though it may be that on the legal question under consideration the contention of Shri Sibal is correct for the reasons advanced by him, yet as Smt. Rajeshwari made her position clear, in the affidavit filed in the High Court, to wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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