Case: P. Punnaiah and Ors Vs. Jeypore Sugar Co. Ltd. and Ors

by the member personally. 12. Mr. Vinoo Bhagat, learned Counsel for the appellant invited our attention to a decision of the Division Bench of the Bombay High Court in Killick Nixon Limited and Ors. v. Bank of India and Ors, (1985) 57 Com Cases 831. In this case it is held that the General Power of Attorney-holder empowered to grant consent under Section 399(3). The General Power of Attorney concerned therein is substantially in the same terms as the one concerned herein. We agree with the said decision. 13. Mr. Sibal brought to our notice a few decisions to which we may advert now. A learned single Judge of Allahabad High Court held in Makhan Lal Jain and Anr. v. The Amrit Banaspati Co. Ltd. and Ors., AIR1953All326 that the consent in writing contemplated by Section 153(C)(3) of Companies Act, 1913 requires that the writing itself should indicate that the members have affixed their signatures, having applied their mind to the question before them and have consented for the action being taken. (Section 153(c)(3) of the Companies Act, 1913, considered in the said decision broadly corresponds to Section 399(3). Looking at the sheets of papers allegedly constituting the consent of the consenting members, the learned Judge held that having regard to their contents, they cannot be treated as consent letters. Learned Judge held that the writing itself should indicate that the person has applied his mind to the question before him and has given his consent and that where a petitioner obtained another shareholders signature on a blank piece of paper and sought to supplement it by an affidavit or an oral sworn statement of the member himself or his agent cannot be said to have complied with the requirements of the section. Nowhere does the decision say that such consent must be given by the member personally and that it cannot be given through his agent. 14. Mr. Sibal relied upon the decision of this Court in Charanjit Lal Chowdhury v. The Union of India and Ors., [1950]1SCR869 and in particular the statement in para 78 at page 62. 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 property, what is the effect of the Ordinance and the Act on such property. It is nobodys case that the Ordinance or the Act has authorised any acquisition by the State of this property of the shareholder or that there has in fact been any such acquisition. The only question then is whether this property of the shareholder meaning thereby only the rights mentioned above, has been taken possession of by the State. It will be noticed that by the Ordinance or the Act these particular rights of the shareholder have not been entirely taken away, for he can still exercise these rights subject, of course, to the sanction of the Government. Assuming however, that the letters placed on these rights are tantamount to the taking away of the rights altogether, there is nothing to indicate that the Ordinance or the Act has, after taking away the rights from the shareholder, vested them in the State or in any other person named by it so as to enable the State or any other person to exercise those rights of the shareholder. 15. The observations to the effect that the right to present an application of winding up and the right to vote for the election of Directors are the personal rights of shareholders must be understood in the context of the question considered therein. The observations cannot be torn from their context to hold that the said right cannot be exercised through an agent. That was not the issue before the Court. Mr. Sibal also brought to our notice the decision of this Court in R. Subba Rao v. Commissioner of income-tax, Madras, [1956]30ITR163(SC) . The matter arose under Section 26(A) of the Indian Income Tax Act, 1922 read with Rules 2 and 6 of the Rule framed in that behalf. The Rules provided that an application for renewal of registration of the firm shall be signed personally by all the partners. It is because of the said requirement that it was held that partners must sign such an application personally. In the absence of any such expression in Section 399(3), the said decision is of no help to the respondents herein. 16. Mr. Sibal lastly contended that the petition was filed as far back as in 1978 and that over the years, certain Directors have ceased to be directors by death or otherwise and that some new directors have come into Office. An affidavit was handed over across the bar stating that some of the directors have expired. The affidavit, 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.

Decision (1 = appeal accepted, 0 = rejected): 1

Explanation:
1[ds]7. A reading of the several clause of the G.P.A. discloses ex-fade that the powers given thereunder are wide enough to take in the power to grant the consent under Section 399(3). Under the said deed, Smt. Rajeshwari empowered her father to manage and otherwise administer her movable and immovable properties including shares and stock as may be held by her and to take all proceedings before all the authorities and Courts concerning the said properties and shares. The deed also empowered him to sign all necessary papers relevant in that behalf and to file them in courts and generally to do all things as may be necessary to safeguard her interest. It is obvious that in pursuance of the said deed, it would have been perfectly legitimate for the first appellant to institute suits, petitions and other proceedings with respect to the shares or other movable and immovable properties held by Smt. Rajeshwari. Indeed it would well have been within the power of the G.P.A. holder to have himself figured as an applicant, acting in the name of Smt. Rajeshwari, in the said application filed under Sections 397/398. If so, there appears no reason why the consent could not have been given by the Power of Attorney holder which is only a step towards protecting the interest of Rajeshwari. It in effect means joining the tiling of the application under Section 397/398. May be that there are some functions/duties which cannot be performed through a Power of Attorney Agent (e.g., quasi-judicial/judicial functions) but there appears to be no good reason why the consent contemplated by Section 399(3) cannot be given by such Power of Attorney-holder, when indeed he could himself have filed such an application in the name of and on behalf of Smt. Rajeshwari. In this connection we may notice yet another fact. With a view to counter-act the objection taken by the respondents, the appellants filed an affidavit 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 G.P.A. in that behalf and to take all such steps as he deemed proper to protect her interest.8. 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 G.P.A.-holder is not competent to grant the consent.9. We are unable to agree with the said reasoning. Section 399 or Sub-section (3) thereof does not either expressly or by necessary implication indicate that the consent to be accorded thereunder should be given by the member personally. As we have emphasised hereinabove, the first appellant could have filed, or joined as an applicant in an application under Sections 397/398 in the name of and for and on behalf of Smt. Rajeshwari as her G.P.A. holder. No question of consent would have and could have arisen in such a case. If so, it is un-understandable as to why and how he could not have given consent on behalf of Smt. Rajeshwari, the member, under Section 399(3). No rule or decision could be brought to our notice saying that the consent under Section 399(3) cannot be given by a G.P.A.-holder (who is empowered by the principal to manage and administer the shares and stocks held by the principal and to take all necessary steps and proceedings in all Courts, Offices and Tribunals in that behalf). In this connection, it is relevant to notice that shares may also be held by a company or other corporate body. Question may arise what does one mean by a personal decision by a company or other juristic person. Be that as it may, we see no warrant for holding that Section 399(3) is an exception to the normal rule of agency. The normal rule is that whatever a person can do himself, he can do it through his agent, except certain functions which may be personal in nature or otherwise do not admit of such delegation. The consent contemplated by Section 399(3) falls under the general rule and not under the exception.11. What the Rule says is that the letters of consent signed by the consenting members shall be annexed to the petition alongwith their names and addresses and other prescribed particulars. The Rule does not in any manner indicate that the consent should be given by the member personally.the Division Bench of the Bombay High Court in Killick Nixon Limited and Ors. v. Bank of India and Ors, (1985) 57 Com Cases 831.In this case it is held that the General Power of Attorney-holder empowered to grant consent under Section 399(3). The General Power of Attorney concerned therein is substantially in the same terms as the one concerned herein. We agree with the said decision.15. The observations to the effect that the right to present an application of winding up and the right to vote for the election of Directors are the personal rights of shareholders must be understood in the context of the question considered therein. The observations cannot be torn from their context to hold that the said right cannot be exercised through an agent. That was not the issue before the Court.Mr. Sibal also brought to our notice the decision of this Court in R. Subba Rao v. Commissioner of income-tax, Madras, [1956]30ITR163(SC) .The matter arose under Section 26(A) of the Indian Income Tax Act, 1922 read with Rules 2 and 6 of the Rule framed in that behalf. The Rules provided that an application for renewal of registration of the firmshall be signed personally by all the partners. It is because of the said requirement that it was held that partners must sign such an application personally. In the absence of any such expression in Section 399(3), the said decision is of no help to the respondents herein.The affidavit, 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.