The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Ashok Bhushan, Chairperson, Dr. Alok Srivastava and Barun Mitra, Technical Members was recently hearing an Appeal and held that an Application under Section 7 even if it is on the basis of Power of Attorney is fully maintainable.
The present Appeal filed by the Suspended Director of the Corporate Debtor challenging the order dated 31.08.2022 passed by the National Company Law Tribunal, New Delhi, Bench-VI, admitting Section 7 Application filed by the Financial Creditor filed Application under Section 7 alleging default of Rs. 59,34,96,998.55/- inclusive of interest. The Adjudicating Authority after hearing the parties found the debt and default and has admitted the Application. Challenging the order admitting Section 7 Application, the Appeal has been filed by the Suspended Director of the Corporate Debtor.
Appellant’s Submission:
Learned Counsel appearing for the Appellant challenging the impugned order has raised only one submission i.e. Application under Section 7 filed by the Financial Creditor was not filed by an authorised person. It was submitted that the Section 7 Application was supported by a Power of Attorney dated 24.01.2005. It was submitted that there was no Resolution by the Board of Directors authorising the person who has filed the Section 7 Application, hence, the Application was not maintainable and ought to have been rejected by the Adjudicating Authority. It was submitted that although the submission with regard to the incompetency of Section 7 Application was raised the Adjudicating Authority has not considered the submission in the right perspective rather has held that the Power of Attorney executed by Syndicate Bank was valid authority for filing the present Application by Canara Bank.
Respondent’s Submission:
Learned Counsel appearing for the Bank refuting the submissions of the Learned Counsel for the Appellant contends that there was no defect in the Application filed under Section 7. The Application was filed by the Chief Manager, of Canara Bank who was duly authorised to file the Section 7 Application. It was submitted that the Power of Attorney which was filed along with the Section 7 Application itself clearly mentions the Resolution of the Board of Directors in pursuance of which Power of Attorney was issued.
NCLAT's Analysis:
The copy of the Power of Attorney referred to in Column 5 was attached along with the Application. The submission which has been pressed by the Counsel for the Appellant was that the authorisation of Power of Attorney was not authorisation which was recognised by law. Submission of the Learned Counsel for the Appellant was that the authorisation has to be by the Board of Directors of the Company. Learned Counsel for the Appellant has also referred to the Notification dated 27.02.2019 issued by the Ministry of Corporate Affairs.
To support his submission, learned Counsel for the Appellant placed reliance on the judgment of the Appellate Tribunal in Palogix Infrastructure Private Limited v ICICI Bank Limited, REED 2017 NCLAT Del 09504. In the above case also, the question was as to whether the Section 7 Application filed by the Power of Attorney Holder was a valid Application. In the above case, the Appellate Tribunal has noted that Financial Creditor- Bank by Board Resolution has authorised his office to do the needful in the legal proceeding and mere mention of the word Power of Attorney by delegating such power shall not take away the authority of such officer. The Appellate Tribunal accepted that the person who had filed the Section 7 Application was entitled to file an order of the Adjudicating Authority admitting the Section 7 Application was not interfered with.
Another judgment of the Appellate Tribunal which has been relied on by the Counsel for the Appellant is Ramesh Chander Gupta v. Punjab National Bank, REED 2017 NCLAT Del 10508, which in essence has relied on Palogix Infrastructure Private Limited, REED 2017 NCLAT Del 09504. The Appellate Tribunal found the Senior Manager of the Bank entitled to file the Application.
The Hon’ble Supreme Court rejected the objection of the Appellant and while noticing the judgment of this Tribunal in Palogix Infrastructure Private Limited, REED 2017 NCLAT Del 09504, has approved the observations made in paragraph 41. The above judgment of the Hon’ble Supreme Court clearly holds that an Application under Section 7 even if it is on the basis of Power of Attorney which is referable to the Resolution of the Board is fully maintainable.
In the present case, the Appellate Authority has looked into the Power of Attorney which has been brought on record and in paragraph 20 of the Power of Attorney, there was a clear mention that Power of Attorney was executed by the Director of the Bank on the basis of Resolution dated 24.01.2005 passed by the Board of Directors in the meeting held at Bangalore. The above part which was in paragraph 20 of the Power of Attorney dispels all doubt regarding the maintainability of the Application.
The Appellate Authority, thus, did not find any merit in any of the submissions of the Counsel for the Appellant. The Appeal was dismissed.