TaxTMI 
TaxTMI 
2024 (2) TMI 871
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.... was filed originally by 169 Flat Buyers. Thereafter, vide order dated 24.05.2022 in I.A. No. 128/2022, 15 other Homebuyers of the same real estate project got impleaded in the C.P. as Petitioners and thereby the total number of Petitioners in the C.P. are now 184. The 1st Petitioner i.e. Shri Sethuraman Mahadevan and the 2nd Petitioner i.e. Shri Bipul Bhattarcharya filed the C.P. directly along with their supporting individual affidavits and signed the vakalatnama. The Petitioner Nos. 3 to 184 have only given authorization letters in favour of the Petitioner Nos. 1 and 2 authorising them to sign on their behalf and to file 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. Admitte....
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....in different places in the country, as well as across the world, for ease and convenience in filing the Application, the Appellant Nos 1 and 2 were duly authorized by the rest of the Appellants (vide Letters of authorization to file the Application). 6. According to the Appellants, the Respondent contended among other things that the Petition was not filed in accordance with the NCLT Rules, as per the letters of authorization were not attested either by an 'Advocate' or a 'Notary Public' and that the Respondent took a 'plea' that most of the Petitioners were so called speculative investment customers 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 counse....
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....ts, will be put to severe harm, loss and prejudice and if their Appeal is to be rejected by this Appellant Tribunal. APPELLANTS' DECISIONS 14. The Learned counsel for the Appellants relies on the decision in Surendera Trading Company V. Juggilal Kamlapat Mills Company Limited & Others (2017) 16 SCC 143 wherein at paras 5, 22, 24, 25 and 26 it is observed as under:- 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 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 Registr....
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....ns to remain pending and, therefore, would not remove the defects. In order to take care of such cases, a balanced approach is needed. Thus, while interpreting the provisions to be directory in nature, at the same time, it can be laid down that if the objections are not removed within seven days, the applicant while refilling the application after removing the objections, file an application in writing showing sufficient case as to why the applicant could not remove the objections within seven days. When such an application comes up for admission/order before 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....
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....s already taken the view that if Authorisation is prior to the enactment of the Code, then it can not be treated as a defect in the Application and 'authorisation letter, even if, issued prior to the enactment of I&B Code can be looked into for the purpose of entertaining an Application under Section 7 or 9 of the Code. 19. The Learned Counsel for the Respondent further placed reliance on the direction of Hon'ble Delhi High Court in the case of Nibro Ltd V National Insurance Company, AIR 1991 Delhi 25 wherein it is held that the 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 ....
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....or this purpose, fourteen days' time is granted to the adjudicating Authority. If the application is rejected, the matter is given a quietus at that level itself. However, if it is admitted, we enter the third stage. 24. Further, we are of the view that the judgments cited by NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating Authority has to pass the Order is not mandatory but directory in nature would equally apply while interpreting the proviso 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 requ....
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....strength of invalid, 'unauthenticated' and un-notarised 'Letters of Authorisation' and as such, the instant Appeal deserves to be dismissed in 'limine' as not maintainable. 20. The Learned Counsel for the Respondent adverts to the NCLAT Rules, 2016 pertaining to the General Procedure, for filing Appeals before the Appellate Tribunal and as per Rule 68, the Affidavit shall conform to the requirements of Order XIX, Rule 3 of the Code of Civil Procedure, 1908 (5 of 1908). Further, as per Rule 69, an Affidavit 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....
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....entral Government), was so executed and authenticated." 26. The Learned counsel for the Respondent points out that the presumption as to the execution and authentication of the 'Letter of Authorisation' would be wrong in favour of the Appellant No.1 and 2 only if it is shown to the satisfaction of the Adjudicating Authority/Tribunal that the same was executed before and authenticated by an 'Attesting Officer' or a 'Functionary', recognised by Law in other countries. Further, 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 a....
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....t be equated to a mere defect in the Application under Section 9 of the I&B Code, 2016. 34. According to the Respondent, the ingredients of Section 7(1) of the I&B Code, 2016 has to be satisfied before proceeding to Section 7(2) of the Code when there is a specific statutory requirement of a minimum threshold of 10% or 100 in number, it is important that such requirement is to be satisfied firstly and the 'tool' used by the Appellants to satisfy the requirement 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....
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....g more. It means that the person authenticating has assured himself of the identity of the person who has signed the instrument as well as the fact of execution. It is for this reason that a power of attorney bearing the authentication of a notary public or an authority mentioned in Section 85 is taken as sufficient evidence of the execution of the instrument by the person who appears to be the executant on the face of it. The presumption, no doubt, 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....
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....ing failed to get adjudicated by a competent Sub-Registrar, is not entitled to represent the respondent, as power of attorney are not valid." 25. Accordingly, the Power of Attorney executed outside India has to be adjudicated in India as per the provisions of Section 18 of the Indian Stamp Act. The Power of Attorney having been failed to get adjudicated by a competent authority is not entitled to represent the plaintiff as 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. Sectio....
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....h the General POA was executed. Similarly, in the case of the National & Grindlays Bank Ltd., the authentication shows that the seal of the Bank was impressed on the POA in the presence of the Notary and the same was the genuine seal of the Bank. Thus, it was the authentication that proved both the execution as well as the due authentication of POA and, therefore, satisfied the test laid down in Sec. 85 of the Evidence 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 A....
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....ent purporting to be a Power-of-Attorney and to have been executed before, and authenticated by a Notary Public ****was so executed and authenticated. "It is a mandatory section, the Court shall presume that every document, etc. The question is whether, in the face of that section, an affidavit of identification as to the person purporting to make the Power-of-Attorney being the person named 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 affidav....
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....nt relief in respect of specific performance of the contract. I have no semblance of doubt that such reasoning is not only wrong but also uncalled for. Therefore, I have no hesitation in my mind that the second appeal has been proceeded before this Court on the right substantial questions of law and shall be allowed on that score." 44. The Learned counsel for the Respondent adverts 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 ....
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.... Court is very anxious to have not only the petitioners that come to the Court but also the facts alleged by them are verified. Such verification is easily done by an affidavit. A mere letter of authorisation, though purported to be signed by other petitioners, is neither a sworn statement of those persons nor is it signed in the presence of a recognised authority. 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....
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....ction 1A and 2 of the Powers of Attorney Act, 1882. 48. At this juncture, this 'Tribunal' pertinently points out that the 'execution of Power of Attorney', will not denude the principle of his power, to act independently and the principle is not required, to take the consent of 'Attorney'. In terms of Or III R1 of CPC, an appearance, application, 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 ....
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....Agreement for sale and construction agreement executed between the parties. 54. It is pointed out on behalf of the Appellants that in view of the Default committed by the Respondent in not delivering the possession of the Flats/Units, they being 184 Unit Holders had collectively filed a Section 7 Petition in CP(IB) NO.119/BB/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 ....
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....judicating Authority/Tribunal', the Respondent/M/s Ozone Urbana Infra Developers Pvt Ltd, had filed a Preliminary Statement of Objection to the CP (IB)No.119/BB/2021 filed by the Petitioners/Financial Creditors stating that the Petitioners/Appellants are all speculative investments customers and are not Allottees, 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 Allottee....
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....inciples 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 amounts as depicted under the Tabular representation at Part IV Page 1 of the Application and in fact they had only paid 10% of the sum, while the rest is funded by Bank/Financial Institutions associated with the Respondent. Several of the Petitioners had already taken the refund of 10% investment alongwith profit and interest improvements thereof. 69. It is the version of the Respondent that pre-....
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.... 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 the 'impugned order' dated 24.06.2022 in CP (IB) No.119/BB/2021 passed by the 'Adjudicating Authority' (National Company Law Tribunal, Bengaluru Bench, Bengaluru) is of the considered view that at Paragraph No.12 of the 'impugned order' although 'five issues' were framed for consideration by the 'Adjudicating Authority', therein no specific issue / point being framed or raised for consideration viz., whether ....