1994 (4) TMI 233 - SC - Companies Law

Appeal allowed, consent valid under Companies Act. Emphasis on expeditious proceedings.

P. Punnaiah Versus Jeypore Sugar Co. Ltd.

P. Punnaiah Versus Jeypore Sugar Co. Ltd. - 1994 AIR 2258, [1994] 81 COMP. CAS. 1 (SC), [1994] 1 SCL 180 (SC), 1994 AIR 2258, 1994 (4) SCC 341, 1994 (3) ... Issues Involved1. Validity of consent given by a general power of attorney holder under Section 399(3) of the Companies Act, 1956.2. Interpretation of Section 399(3) and its application to the case.3. Relevance of Rule 88 of the Companies (Court) Rules, 1959.4. Precedent and case law analysis.5. Procedural aspects and implications of the judgment.Detailed Analysis1. Validity of Consent Given by a General Power of Attorney Holder Under Section 399(3) of the Companies Act, 1956The primary issue in this case was whether the consent given by the first appellant, as a general power of attorney holder for Smt. Rajeshwari, is valid under Section 399(3) of the Companies Act, 1956. The appellants, shareholders of Jeypore Sugar Co. Ltd., filed an application under Sections 397 and 398, including the consent of Smt. Rajeshwari given by her father through a general power of attorney.2. Interpretation of Section 399(3) and Its Application to the CaseSection 399(3) allows members entitled to make an application under Section 397 or 398 to do so with the written consent of the rest. The court examined whether this consent must be given personally by the member or if it can be delegated to a general power of attorney holder. The court held that the general power of attorney executed by Smt. Rajeshwari granted her father broad powers, including managing her shares and taking legal proceedings on her behalf. Therefore, the consent given by the general power of attorney holder was deemed valid.3. Relevance of Rule 88 of the Companies (Court) Rules, 1959Rule 88 requires that the letter of consent signed by the members authorizing the petition must be annexed to the petition. The rule does not specify that the consent must be given personally by the member. The court interpreted this to mean that the consent can be given through an agent, provided it is properly documented.4. Precedent and Case Law AnalysisThe court referenced several cases, including the Bombay High Court decision in Killick Nixon Ltd. v. Bank of India, which supported the validity of consent given by a general power of attorney holder. The court disagreed with the respondents' reliance on decisions like Mahhan Lal Jain v. Amrit Banaspati Co. Ltd. and Chiranjilal Chaudhari v. Union of India, which were contextually different and did not explicitly prohibit consent through an agent.5. Procedural Aspects and Implications of the JudgmentThe court noted that the application had been pending for about fifteen years due to the preliminary objection regarding the consent's validity. The court emphasized the need for expeditious proceedings and set aside the orders of the company judge and the Division Bench, allowing the application to proceed. The court clarified that the consent given by the first appellant on behalf of Smt. Rajeshwari was valid under Section 399(3), thus dismissing the preliminary objection.ConclusionThe appeal was allowed, and the orders of the company judge and the Division Bench were set aside. The court held that the consent given by the first appellant as a general power of attorney holder for Smt. Rajeshwari was valid under Section 399(3) of the Companies Act, 1956. The application under Sections 397 and 398 was to proceed in accordance with the law, and no order as to costs was made.