TaxTMI 
TaxTMI 
2024 (2) TMI 871
X X X X Extracts X X X X
X X X X Extracts X X X X
....bserved the following:- "13. The instant C.P. 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 authorizat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....epresented on behalf of the Appellants that since they are residing/working for gain 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e Respondent, if the instant Appeal is allowed as prayed for by the Appellants. However, the Appellants, 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y also be cases where such applications are frivolous in nature which would be filed for some oblique motives and the applicants may want those applications 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate Ltd. V. Altius Travels Pvt Ltd 2021 SCC Online NCLAT 351. "14. In the case of Ramesh Murji Patel (supra) and Rajendra Narottamdas Sheth (supra), this Appellate Tribunal has 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 14....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ther case, no purpose is served by treating the aforesaid provision as mandatory. 23.2. When the application is listed before the adjudicating Authority, it has to take a decision to either admit or reject the application. For 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'b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al, by any 'process of reasoning', can not validate and invalid 'Letter of Authorisation'. As such, it is contended on behalf of the 1st Respondent that the instant Appeal on behalf of 182 Appellants claiming to be their 'Authorised Representative' on the 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,....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to powers-of-attorney- The Court shall presume "that every document purporting to be a power-of-attorney, and to have been executed before, and authenticated by, a Notary Public, or any Court, Judge, Magistrate, 1 (Indian) Consul or Vice-Consul, or representative 2 *** of the 3 (Central 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 a....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... and 2 are not valid and that the Appellant No.1 and 2 are not entitled to represent other 182 Appellants. 33. The Learned counsel for the Respondent advances an argument that the authenticity and genuineness of the 'Letter of Authority' questioning the right to maintain the Application cannot 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e a power of attorney, and to have been executed before and authenticated by, a notary public, or any Court, Judge, Magistrate, British Counsel or Vice-Counsel or representative of Her Majesty or of the Central Government, was so executed and authenticated. The authentication is not merely attestation, but something 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....c.tn.gov.in/judis/ Public and they need not be registered. The learned Judge has committed an irregularity in allowing both the applications. The learned Judge failed to see that any power of attorney executed outside India it is to be adjudicated in India as per the provisions of Section 18 of the Indian Stamp Act. The power of attorney having 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tatement of facts by the Notary Public regarding the manner of execution or the persons executing the document. If reference is made to the judgments cited before us, the contrast is striking. In the case of the City Bank, the authentication made by the Notary Public in New York covers nearly two printed pages of the Report and quotes extensively the circumstances in which 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 presum....
X X X X Extracts X X X X
X X X X Extracts X X X X
....vailable in the instant case." 42. The Learned counsel for the Respondent cites the decision of Hon'ble High Court of Calcutta in Re.Mylne V Unknown reported in (1906) ILR 33 Cal 625 wherein at para 3 it is observed as under:- "3. The question turns, as we have said, upon the true construction of Section 85 of the Evidence Act. The section runs as follows: " "The Court shall presume that every document 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ady and willing to perform the part performance of the contract as per Section 16 of the Specific Relief Act. So far the 1st point is concerned, the Court of first instance in effect held that there is a difference between pleading and proof as regards readiness arid willingness in terms of Section 16 of the Specific Relief Act. The first Appellate Court, unfortunately held that this can not be the solitary ground for refusing to grant 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....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d by an authority authorised by law to so attest. The possibility of getting false authorisations is thus excluded or, in any case minimised by making a sworn statement in the presence of a duly constituted authority. It is pertinent to note that clause (b) of Rule 3 of the Writ Petition Rules requires that:- "The facts relied on by the petitioner shall be verified by an affidavit which shall be filed along with the petition." 5. It is thus manifest that the 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 sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....l Bench decision of the Hon'ble High Court of Andhra Pradesh in Satyanarayana V. Venkatasubbayya (AIR 1957 AP 172 (FB)). The 'words' 'Except where otherwise expressly provided' were construed to be one, as including the provisions of the Civil Procedure Code and Or XXXIII R 3 and Or XLIV R 1 and held to constitute exceptions, to this Rule, falling within the 'words' 'Except where otherwise provided' 47. A recognised Agent, includes a person who holds the 'Power of Attorney' and this is because of Section 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. Ind....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n 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. 53. According to the Appellants, they are home buyers/Allottees of Respondents' under construction project 'Ozone Urbana' and had approached the Adjudicating Authority/Tribunal against the 'Default of Financial Debt' of not delivering the possession of the Flats/Units, as committed by the Respondent, in view of the agreed terms and conditions of the 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....insolvency and bankruptcy regime in India. As such, it is a carefully considered and well thought out piece of legislation which sought to shed away the practices of the past. The legislature has also been working hard to ensure that the efficacy of this legislation remains robust by constantly amending it based on its experience. Consequently, the need for judicial intervention or innovation from the NCLT and NCLAT should be kept at its bare minimum and should not disturb the foundational principles of the IBC." 60. Before the 'Adjudicating 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 o....
X X X X Extracts X X X X
X X X X Extracts X X X X
...., 54, 55, 57, 60, 61, 62, 63, 64, 65, 66, 68, 72, 75, 77, 78, 79, 80, 83, 93, 95, 96, 102, 106, 107, 109, 110, 113, 114, 115, 117, 118, 124, 125, 126, 127, 129, 130, 135, 137, 138, 140, 141, 142, 143, 144, 145, 146, 147, 150, 152, 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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns. A conjoint reading of Section 3(6), 3(10), 3(11), 3(12), 5(20) and 5(21 of the Code, 2016 makes it clear that to sustain an Application, seeking liquidation proceedings before this Tribunal, the existence of clear financial debts 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. Radhe....