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TMI Blog2024 (2) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... lted the financial debt, paid by the Applicants/Financial Creditors/Allottees towards the purchase of their respective Units. The Appellants in Section 7 Application had mentioned the amount claimed in default as Rs.191,65,13,949/- (Rupees One hundred ninety one crores sixty five lakhs thirteen thousand nine hundred forty nine only). The Default, according to the Appellants, was continuing as soon as, since the year 2016. Further, it was mentioned that the Default was committed by the Respondent/Corporate Debtor as soon as since the years 2016 (being the latest date of Default committed by the Corporate Debtor as per the Agreement). The maximum time, in accordance with the agreement of the Applicant/Allottees for delivering the possession was mentioned as 2016. Also that the Default is continuing even till date, as the construction of Project was not complete and the possession was not handed over. This Tribunal, keeping in mind of the prime fact that in Law, there is no Estoppel against Statute, to raise all Factual and Legal issues / contentions in a Legal Proceedings before the Competent Forum, at this stage, without delving deep into the merits of the matter nor expressin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the C.P. 14. As pointed out by the learned Senior Counsel appearing for the Respondent/Corporate Debtor that except in case of the 3rd Petitioner i.e. Shri Rohit Menon, the signature of the respective Petitioners were not attested by either any Advocate or notary public. Further, as pointed out by the learned Senior Counsel appearing for the Respondent/Corporate Debtor there were a number of Joint purchasers of various units, but only one of them issued the said unattested and un-notarised authorization letters in favour of the Petitioner Nos. 1 and 2. Admittedly, there were number of Applicants who are the Residents in various Countries other than India and the alleged authorization letters issued by them were not in accordance with law, as applicable, in the respective countries where they reside. There was no explanation from the Petitioner Nos. 1 and 2 about the invalid, unattested and un-notarised authorization letters of the Petitioners. It is also not the case of the Petitioners that the authorization letters without even identifying the signature of the deponent by a notary public or as per the rules in force applicable in a particular country where the respective Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mers and had not qualified as Allottees for the purpose of maintaining an application under Section 7 of the I B Code, 2016. 7. The Appellants points out that the Adjudicating Authority/Tribunal through the impugned order dated 24.06.2022 in CP/IB/BB/119/2021 had summarily rejected the petition based on the reasons that the letters of authorization were not attested by an Advocate or by a Notary Public and that therefore, the Petition would be deemed to have been filed only by the Appellant No.1 and 2 and had not met the minimum requirement of 10% or 100% in number. 8. The Learned counsel for the Appellant emphatically takes a plea that the Adjudicating Authority/Tribunal at para 14 of the impugned order had held that the Letters of authorization were not accessible, as they were not attested by an Advocate/by a Notary Public. Moreover, the Adjudicating Authority/Tribunal also held that the Letters of authorization were not drawn up in accordance with the Rules prevailing in various countries in which some of the Appellants resided. 9. According to the Appellants, the Adjudicating Authority/Tribunal does not say which Rule or Regulations requires a Letter of authorization, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fective. In case the adjudicating authority, after the scrutiny of the application, finds that there are certain defects therein and it is not complete as per the provisions of sub-section (2), in that eventuality, the proviso to sub-section (5) mandates that before rejecting the application, the adjudicating authority has to give a notice to the applicant to rectify the defect in his application within seven days of receipt of such notice. 22) Various provisions of the Code would indicate that there are three stages: (i) First stage is the filing of the application. When the application is filed, the Registry of the adjudicating authority is supposed to scrutinise the same to find out as to whether it is complete in all respects or there are certain defects. If it is complete, the same shall be posted for preliminary hearing before the adjudicating authority. If there are defects, the applicant would be notified about those defects so that these are removed. For this purpose, seven days time is given. Once the defects are removed then the application would be posted before the adjudicating authority. (ii) When the application is listed before the adjudicating author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the adjudicating authority, it would be for the adjudicating authority to decide as to whether sufficient cause is shown in not removing the defects beyond the period of seven days. Once the adjudicating authority is satisfied that such a case is shown, only then it would entertain the application on otherwise it will have right to dismiss the application. The aforesaid process indicated by us can find support from the judgment of this Court in Kailash v. Nanhku Ors., (2005) 4 SCC 480, wherein the Court held as under: 46. (iv) The purpose of providing the time schedule for filing the written statement under Order 8 Rule 1 CPC is to expedite and not to scuttle the hearing. The provision spells out a disability on the defendant. It does not impose an embargo on the power of the court to extend the time. Though the language of the proviso to Rule 1 Order 8 CPC is couched in negative form, it does not specify any penal consequences flowing from the non-compliance. The provision being in the domain of the procedural law, it has to be held directory and not mandatory. The power of the court to extend time for filing the written statement beyond the time schedule provided by O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question of the Authority to institute a suit or a claim on behalf of the Company cannot be termed as a technical matter. 20. It is pertinent to mention that the Insolvency and Bankruptcy Code is a self-contained Code. It has made provision for providing an opportunity to rectify the defects of application, and in any position, it can not be denied. 21. In case of Surendra Trading Co. v. Juggilal Kamlapat Jute Mills Co. Ltd., (2017) 16 SCC 143 : 2017 SCC OnLine SC 1208 : (2018) 2 SCC (Civ) 730 at page 149 Hon'ble Supreme Court of India has held that the time provided for rectifying the defection application under Section 9 (5) of the Code is directory in nature and in the given circumstances the tribunal can provide time more than 7 days to rectify the defect. Hon'ble Supreme Court has held that; 5. One of the conditions, with which we are concerned, is that application under sub-section (2) has to be complete in all respects. In other words, the adjudicating Authority has to satisfy that it is not defective. In case the adjudicating Authority, after the scrutiny of the application, finds that there are certain defects therein and it is not complete as per t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roviso to sub-section (5) of Section 7, Section 9 or sub- section (4) of Section 10 as well. After all, the applicant does not gain anything by not removing the objections inasmuch as till the objections are removed, such an application would not be entertained. Therefore, it is in the interest of the applicant to remove the defects as early as possible. 16. The Learned counsel for the Appellants adverts to the decision of Hon ble Supreme Court in Asset Reconstruction Company India Ltd V. Tulip Start Hotels Ltd and others reported in 2022 SCC Online SC 944 wherein at para 64 it is observed as under:- 64. Furthermore, the proviso to Section 7(5)(b) of the IBC requires the Adjudicating Authority to give notice to an applicant, to rectify the defect in its application within seven days of receipt of such notice from the Adjudicating Authority, before rejecting its application under Clause (b) of sub-section (5) of Section 7 of the IBC. When the Adjudicating Authority calls upon the applicant to cure some defects, that defect has to be rectified within seven days. However, in the absence of any prescribed penalty in the IBC for inability to cure the defects in an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffidavit has to be sworn or affirmed before an Advocate or Notary who shall affix his official seal. 21. It is projected on the side of the Respondent that the aspect of verification is to test the genuineness and the authenticity , of the allegations , and the verification aspect is to enable the Tribunal, to find out as to whether, it would be safe to act on the averments made in the Appeal. Moreover, in the instant case, Appeal is shown to have been signed in Bangalore, and the affidavit of the 1st Appellant was shown to have been notarised in Seattle, Washington, USA stating that the Affidavit verifying the Appeal was signed by the Deponent in my presence on 9th July, 2022. In terms of the documents filed, the 1st Appellant has verified an Appeal in Seattle, Washington, USA, which was signed in Bengaluru. 22. According to the Respondent, the Vakalatnama of the 1st Appellant at Page No.2238 of the Appeal, was signed by the 1st Appellant, on 18.07.2022 in Bengaluru. But the 1st Appellant had signed the Affidavit in Seattle, Washington, USA on 09.07.2022 affirming, declaring and verifying the contents of the Appeal, which was dated 18.07.2022. The 1st Appellant had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an authentication by such an Officer will mean that the Officer authenticating has assured himself of the identity of the person who has signed the instrument as well as the factum of execution . 27. According to the Respondent, the ingredients of Section 85 of the Indian Evidence Act, 1872 were not complied with by the Appellants, because of Letters of Authorisation executed by 182 Appellants in favour of Appellant No.1 and 2 were not authenticated by an Attesting Officer or a Functionary , recognised by Law, in other countries. 28. In the instant case on hand, according to Respondents, the Appellants have failed to establish the genuineness and authenticity of the Letter of Authorisation and as such, the Adjudicating Authority/Tribunal had disregarded the Letters of Authorisation and proceeded with the main Company Petition, on the footing, that it was filed only by the Appellant No.1 and 2 herein. Also that, in the absence of such an authorisation the Appellant No.1 and 2 would not have satisfied the minimum requirement of 10% or 100 in number. 29. On behalf of the Respondent, a reference to a Letter of Authorisation (vide Page 263 of Appeal Paper Book) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is the Letter of Authorisation furnished by the 182 Appellants, to and in favour of Appellant No.1 and 2. Furthermore, because of the fact that the Letter of Authority through which the Appellant No.1 and 2 derive the right to file an Application/Petition under Section 7 of the I B Code, 2016, only on satisfaction of the authenticity and genuineness of the Letter of Authority the right to maintain the Application is bestowed on the Appellants. 35. The Learned counsel for the Respondent submits that the primary test is whether the Appellants meet the threshold and can sustain the Application/Petition before a Court of Law. In fact, without fulfilling such requirement, the aspect of Debt and its Default need not be gone into. 36. The Learned counsel for the Respondent raises an argument that the locus standi of the Appellants is yet to be determined and that the Respondent had assailed the very same impugned order dated 24.06.2022 before this Tribunal on the basis that Appellants are speculative investors and as such, cannot claim the status of a Financial Creditor, under Explanation (i) of Section 5(8)(f) of the Code. 37. The Learned counsel for the Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oubt, is rebuttable. But unless rebutted the presumption stands and the document can be admitted in evidence as a' document executed by the person alleged to have executed it without any further proof: vide Haggitt v. Ineff, (1855) 24 L. J. Ch. 120 :(3 W.R. 141) and Performing Right Society Ltd V. Indian Morning Post Restaurant, A.I.R. (26) 1939 Bom. 347: (I. L. R. (1939) Bom. 295). 40. The Learned counsel for the Respondent adverts to the decision of Hon ble Madras High Court in K Gopinath and Ors V S Saviramuthu Sebastian and Ors reported in (2021) 7 MLJ at Page 355 wherein at para 23 to 25 it is observed as under:- 23. Insofar as the Power of Attorney, which was marked as Ex.A.6 is concerned, which was executed by the plaintiff in favour of S.Edward Enoch Thompson on 07.07.2008. Admittedly, it was not adjudicated before the concerned registering authority. In this regard, the learned counsel for the appellant/third defendant relied upon the un-reported judgment of this Court in W.P MD) No.3598 of 2016 (S.Saravanan v. District Collector, Pudukkottai), in which it has been held as follows:- 3. This writ petition is dismissed on the main ground that the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Power holder and it is not valid. Whereas, the Court below failed to frame any issue in this regard, whether the Power of Attorney, which was marked as Ex.A.6 is valid or not. However, as rightly pointed out by the learned counsel for the first appellant/third defendant this issue can be raised before this Court and it can be answered by this Court. The Court below brushed aside the issue that if substantive justice and technicalities are fitted against each other with the technicalities go and substantive justice shall revive. The said settled law is not applicable to the case on hand. Since the Power of Attorney itself was not adjudicated before the authority concerned and as such, the Power holder has no authority to depose on behalf of the plaintiff. Section 18 of the Indian Stamp Act, mandates the adjudication before the registering authority when the Power of Attorney is executed outside India. Therefore, the Power holder cannot maintain the suit, unless the Power of Attorney is adjudicated before the registering authority. 41. The Learned counsel for the Respondent refers to the decision of the Hon ble Delhi High Court in the matter of M/s Birla DLW Ltd V. M/s Prem Eng ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce Act. 9. In Syndicate Bank Vs. M/s. S.A. Trading Corpn. Ors. (supra), a Division Bench of this Court while dealing with the question of proof of Power of Attorney, where presumption under Section 85 of the Evidence Act could not be raised, observed as under : In case the person who has conferred the Power of Attorney has not got it executed, so as to enable him to raise the presumption which may be raised in terms of Section 85 of the Evidence Act, then he is left with no option, but to prove the same in accordance with law. This is done by proving the resolution of the Board of Directors of the company, which gives its officers power to grant Power of Attorney to persons the company considers worthy of it, and also prove the factual execution of the Power of Attorney by the empowered officer or officers. This proof has to be tendered in Court by proving the passing of the resolution by the company in accordance with sections 193 and 194 of the Companies Act, 1956. 10. In the instant case, the Power of Attorney, admittedly, was not executed in the presence of the Notary. The Power of Attorney is stated to be dated 17.7.1981 while the notarial certificate is date ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... med therein is necessary. This document purports to be a Power-of-Attorney, and to have been executed before, and authenticated by a Notary Public. Unless the authentication by the Notary is to be treated as the equivalent of an affidavit of identity it goes for very little. In the present case, the person he authenticates as executing it is William Charles Robert Mylne, the constituent named in the Power, the executor of the will. The power is attested by two witnesses and we think having regard to Section 114 of the Evidence Act, the Court may, in the absence of any thing to excite suspicion, fairly assume that the Notary satisfied himself of the identity of the executant before he certified and attested the Power. If, in addition to this, an affidavit of identity is necessary, another affidavit that the person making the affidavit of identity was in a position to speak of that identity might be required and so on ad infinitum. If the application is the result of a fraudulent conspiracy, we scarcely think the requirement of an affidavit of identity would be likely to prevent the fraud, or afford any real protection. In our judgment, the object of the section was to avoid the nece ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the decision of Hon ble High Court of Andhra Pradesh between M. Parthasarthi Others V The State of AP Represented by Secretary, Education Department, Hyderabad and another reported in 1970 SCC OnLine AP 175 wherein at paras 1, 2, 4,5, 18, 19 and 20 it is observed as under:- 1. Fourteen persons purport to file this writ petition. Though all of them signed the Vakalat form, only one of them signed and verified the writ petition stating that he was doing so for himself and on behalf of other petitioners. A letter entitled authorisation letter purporting to be under Rule 17 of the Civil Rules of Practice and Order 6, Rule 14 of the CPC signed by petitioners 1 to 3 and 5 to 14 was also filled with the writ petition. It says:- We, the undersigned petitioners hereby authorise Sri G. Pattabhirama Sarcna 4th Petitioner in Writ Petition Mo. 1 of 1970 to sign and verify the writ petition on our behalf. 2. The Office took an objection that all the petitioners should either sign and verify the writ petition or they should file an affidavit or a Power of Attorney authorising the 4th petitioner to sign and verify the writ petition. It was objected that a mere letter of au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. There is, therefore, no doubt in my mind to hold that in order to avoid all future difficulties, doubts or complications it is essential for the parties to prove due authorisation' by producing a Power of Attorney or a sworn affidavit of the party who is not personally signing and verifying the petition. Even so, learned counsel submitted that the requirement of filing an affidavit has been satisfied in this case by the fourth petitioner who has filed and verified the petition on behalf of the other petitioners, has himself filed an affidavit stating that the other writ petitioners have authorised him to sign and verify the writ petition. But such an affidavit by a person who is actually signing and verifying the petition does not meet the requirements of the situation. What is required is the affidavit of the party or parties who is or are not signing and verifying. Otherwise, the very purpose for which such an affidavit is required is likely to be defeated. After all, the fourth petitioner, who is swearing to the affidavit has already signed the petition and it would not be difficult for him to swear to another affidavit. If the Court is to be satisfied that the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, or act in or to any Court which is required to be made or done by a party in the Court, can be effectively made by the party in person or by a Recognised Agent. 49. A civil proceeding instituted without the filing of a Power of Attorney is a curable irregularity, as per decision in Ashok Kumar V. Gobinda Chandra, AIR 1984 Cal 337. Indeed, in the decision in Jhamman Lal V. Parma Nand, reported in AIR 1951 All 451 it is observed and held that instead of a Vakalat/post card authorising a lawyer to appear stiched post card bearing the requisite court fee is a valid power. 50. Further, Order III Rule 2 of CPC, 1908, provides for the Recognised Agents of parties by whom such appearances, applications and acts may be made or done (i) persons holding Power of Attorney, authorising them to make and do such appearances, applications and acts on behalf of such parties. (ii) persons carrying on trade or business for an in the names of parties not resident within the local limit of the Court within which limits the appearance, application or act is made or done in matters connected with such trade or business only where no other Agent is expressly authorised to make and do such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /2021 (Before the Adjudicating Authority/NCLT Bengaluru Bench) through their Authorised Representative Mr. Sethuraman Mahadevan and Mr. Bipul Bhattacharya by executing/signing Letters of Authorisation in their favour. 55. It is represented on behalf of the Appellants that since the Company Petition before the Adjudicating Authority/Tribunal is concerned with total number of 184 Unit Holders living worldwide, having in all 184 Units in the said Project, it was difficult to procure affidavits and Vakalanama from each one of the Applicants. 56. The Learned counsel for the Appellants points out that the Adjudicating Authority/Tribunal had not raised any Defect or objection to the manner in which the Petition in CP(IB)No.119/BB/2021 was formulated and filed. The other plea taken on behalf of the Appellants is that the Adjudicating Authority/Tribunal should not have rejected the Petition outright, but should have granted time to the Appellants/Applicants to rectify such Defects, as specified in proviso to Section 7(5)(b) of the I B Code, 2016. 57. The Learned counsel for the Appellants contends that the Adjudicating Authority/Tribunal had failed to appreciate the decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es, who seek to have a shelter for living. 61. Moreover, the Respondent, in their objections had mentioned that in Company Appeal (AT) 83/2020 (Subha Sharma s case) brought down the differences between a Bona fide Allottee and a Speculative Investor and ultimately the Adjudicating Authority/Tribunal was pleased to dismiss the false claim of a speculative investor who had couched himself as a Bona fide Allottee . 62. According to the Respondent/Corporate Debtor, the Appellants/Petitioners had consciously made an investment in terms of a buy back agreement, wherein, their purpose was to invest and earn profit by selling the invested apartment/unit, under certain terms and conditions and as such, they would never fall within the purview of Bonafide Allottees under I B Code, 2016 read with Real Estate (Regulations and Development) Act, 2016 which places only Allottees of a Real Estate projects on the pedestal of a Financial Creditor . 63. It is represented on behalf of the Respondent that out of 169 initial Petitioners, 23 of them had got more than one apartment unit, for the purpose of investment. For example, the Petitioner No.25 namely Mr. Uday Kiran Chaka is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 157, 158, 163, 167 and 168 are all joint owners but the join.co-owner has not been joined as an Applicant before this Hon ble Tribunal and therefore Application has to be disregarded and dismissed. 67. According to the Respondent, out of 169 initial applicants, 167 are not personally prosecuting the present matter and only the Petitioner No.1 and 2 are prosecuting personally. As per principles of Order III, Rule 2 of Civil Procedure Code deals with the mandatory procedure on authorized agents demands a valid Power of Attorney and not a mere self styled Letter of Authorisation . Even the Letters of Authorisation which the Applicant No.3 to 169 purported to have executed, in the name of Applicant No.1 and 2 or flagrantly invalid as they are not Power of Attorney . Also that if the said story typed authorization letter, are to be construed as one satisfying the requirement of a Power of Attorney, they are still not valid because most of the Petitioners are residing in foreign territory and they have appeared to have simply signed the same on Dotted lines and sent it without following the due procedure. 68. According to the Respondent the Petitioners had not paid the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ebts and inferable debt liability either admitted or adjudged. 73. The Learned counsel for the Respondent submits that the Appellants had agreed for an arbitration disputes, and by doing so the Petitioners has admittedly waived all other mechanisms in Law, for recovery of dues and other remedies. Further a statutory right can be waived under a contract if it does not go against the public policy and is in relation to a private arrangement. 74. The Learned counsel for the Respondent points out that a statutory right can be waived off by the parties through contract if it can be shown that such right was conferred only for the private benefit of such parties and does not involve any public interest vide (1974) 2 SCC 472; Murlidhar Aggarwal V State of UP; (2017) 1 SCC 487; All India Powers Engineer Federation and ors V. Sasan Power Limited and others; (1988) 1 SCC 70; Shalimar Tar Products Ltd V. H.C. Sharma; (1971) 1 SCC 619; Lachoo Mal V. Radhey Shyam. 75. This Tribunal has heard the Learned counsels appearing for the Appellants as well as the Respondent and noticed their contentions. 76. As far as the present case is concerned, this Tribunal on going through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is to be adjudicated, in terms of the Indian Stamp Act, 1899, within a period of three months? (v) Whether the Appellant No.1 and 2 had satisfied the minimum threshold of 10% or 100 in number, as per Section 7 of the I B Code, 2016? (vi) Whether the Letters of Authorisation do have the trappings of a Power of Attorney, as per the Powers of Attorney Act, 1882? And (vii) whether the Appellant No.1 and 2 do have a right to maintain the Section 7 Petitioner in CP No.119 (BB)/2021 before the Adjudicating Authority/Tribunal (viii) whether the Respondents/Petitioners/Speculative Investors/Allottees, in view of the stand taken by the Respondent/Corporate Debtor, before the Adjudicating Authority/Tribunal, Bengaluru, as per Section 5(8)(f) of the Code), /available defences in Law and in that event, the Adjudicating Authority/Tribunal is necessarily required to deal with the issues/points on legal plane and, therefore, this Tribunal, based on Fair Play , Good Conscience quite in the fitness of things, remits back the CP No.119/BB/2021 for a de novo enquiry to be conducted, by the Adjudicating Authority/Tribunal and to proceed with the matter by providing opportunity of hearing t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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