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Judgment
B.S.V. Prakash Kumar, J
Heard and dictated in the Open Court on 17.07.2019
It is a Company Petition filed u/s 241 of the Companies Act 2013 by one out of two Shareholders and Directors of R1 Company holding 50% shares each, against the answering Respondents for declaration of Power of Attorney dated 30.10.2014 executed in favour of R3 as null and void and other consequential reliefs sought in this Company Petition.
The Petitioner counsel has stated that the Petitioner herein and R2 are the Promoters and Shareholders of the Company holding 50% shares each in R1 Company. R3 is the Managing Director of another company namely M/s. Chennai Integrated Construction Company (Private) Limited who has entered into an agreement with the Petitioner and R1 and R2 at threshold. It has been stated that in the year 2011, R1 has entered into a Development-cum-Sale Agreement dated 07.12.2011 with the M/s. Chennai Integrated Construction Private Limited and Manai Builders (hereinafter referred to as "the builders") for the development and sale of the property belonging to R1 Company for construction of multi-storeyed building in the said property. It is also mentioned that on the same day i.e. on the Sale Agreement dated 07.12.2011, R1 Company deposited title deeds of the property to a person called T. Ramesh for getting loan. Thereafter on 30.10.2014, the Power of Attorney dated 07.12.2011 given to R3 and T. Ramesh was illegally cancelled and new General Power of Attorney dated 30.10.2014 was illegally executed in favour of R3 without any Board Resolution and without notifying this fact to the present Petitioner. Thereafter, R3 on 26.06.2015 executed illegal sale deed document No. 2270/2015 and 2271/2015 in favour of R4, who in turn executed a General Power of Attorney dated 26.06.2015 in favour of R5 in respect to the part of the property aforementioned. Subsequently, on 29.06.2015, R3 again executed another illegal sale deed bearing document No. 2302/2015 in favour of R. Prabhu in respect to part of the property. R3 again on 27.07.2015 executed another illegal sale deed bearing document No. 2674/2015 in favour of P.G. Thomas in respect to part of the property. R5, on 06.08.2015 executed an illegal sale deed bearing document Nos. 2787/2015 and 2788/2015 dated 06.08.2015 in favour of one K. Sivakumar in respect to part of the property. Further, admittedly the land in question was originally classified as agricultural land, later it was converted into mixed residential zone and even after re-classification, it continued as an agricultural land in the revenue records.
The Petitioner has further stated that on 12.03.2018 she had sent a legal notice to the present Respondents for cancellation of sale deeds executed in favour of various persons by R3 and the Purchasers thereon. Now, the grievance of this Petitioner is that R2 has been managing the affairs of the company all alone, therefore the Power of Attorney dated 30.10.2014 executed in favour of R3 without any Board Resolution has to be declared as null and void considering such action as prejudicial to the interest of the Petitioner herein.
As against this Company Petition, the R3 filed reply stating that this Petitioner and R2 are none other than wife and husband holding 50% shares each in this company. He says that the Power of Attorney dated 07.02.2011 was initially executed in favour of R3 and another person called T. Ramesh in respect to this property and thereafter both wife (Petitioner) and husband (R2), together holding 100% shares in the status of Directors, passed Resolution dated 04.09.2014 authorizing R2 to execute Power of Attorney in favour of R3, accordingly R2 on behalf of R1 Company executed Power of Attorney in favour of R3 to sell the property mentioned in the schedule in full or partially and to receive the advances or entire sale consideration directly from the intending purchasers in the name of the agent itself and upon receiving sale consideration from the purchasers, the agent is authorised to execute sale deeds, deed of conveyance, documents and writings in their behalf and register the same with the consent of Registrar of Assurances and hand over the vacant possession as mentioned in the schedule of the property to such intending purchasers. In furtherance of the Resolution passed by wife and husband on 04.09.2014, since R2 executed Power of Attorney on behalf of R1 Company in favour of R3 giving complete authority to this agent to convey sale deeds in favour of intending purchasers, this Petitioner, if at all has any grievance, ought to have filed suit for declaration assailing the Power of Attorney and Sale Deeds executed in furtherance of the Power of Attorney, but not this company petition for declaration of those sale transactions as null and void under the garb of Section 241 of the Companies Act 2013.
He has further narrated in his reply that it is not for the first time this kind of proceedings initiated against R3, in the past, R2 on behalf of R1 had filed a Writ Petition before Madurai Bench of Hon'ble Madras High Court citing Joint Registrar as a party to the proceedings to get jurisdiction under Article 226 of the Constitution of India, but whereas Madurai Bench Hon'ble Madras High Court dismissed the writ petition by holding in Para 13 of the order stating "the execution of Power of Attorney in favour of R5 (R3 in this CP) in respect of the lands in the year 2014 is not in dispute mentioning that it is also not disputed that when the Power of Attorney was in force, R5 (R3) sold the property by registered sale deeds in favour of 3rd parties".
As R2 through and through failed to get any relief by filing a Writ Petition in the year 2017, R2 has again approached District Judge, Tiruchirapalli by filing OS No. 258/2018 against R3 and his company and other purchasers assailing this Power of Attorney as well as sale deeds executed by R3 to various persons stating that R3 along with others fabricated cancellation of Power of Attorney dated 07.12.2011 granted in favour of R3 and one T. Ramesh and thereafter fabricated another document dated 30.10.2014 i.e. Power of Attorney executed in favour of R3 by R1 company. This suit has been filed before the District Judge, Tiruchirapalli by citing Para No. 14 of the writ petition order, for having the Madurai Bench Hon'ble Madras High Court stated "if Petitioner has any grievance in respect of the sale consideration, his remedy is to approach competent civil court and since the documents are set aside by the competent civil Court, the Petitioner cannot claim right over the properties already sold".
When R2 failed on all fronts in getting any relief, it has now become the turn of the wife to invoke this proceeding u/s 241 of Companies Act 2013 giving an impression that the petitioner/wife is not aware of passing Resolution dated 04.09.2014 and R2/Husband, basing on the Resolution dated 04.09.2014, executing the Power of Attorney in favour of R3 way back in the year 2014. Besides this, the Respondent counsel appearing on behalf of R3 categorically stated that this wife and husband are till date living together, it is not the case of this Petitioner that they have not been living together, and it is also not the case of this Petitioner that she is not aware of husband executing Power of Attorney in favour of R3 until before filing this case. Even in this Company Petition, R3 counsel says, it has not been said anywhere that R2 forged the minutes dated 04.09.2014 or R3 created the Board Resolution dated 04.09.2014 save and except saying that R2 illegally executed the Power of Attornev dated 31.10.2014 in favour of R3.
R3 counsel has further stated that even if this Bench goes by the reliefs sought, for there being no relief asking for annulment of the Board Resolution dated 14.09.2014 passed by the Wife and the Husband, the Power of Attorney being executed by her husband/R2 basing on the Resolution dated 14.09.2014, no relief could be passed nullifying the power of attorney and the sale deeds thereafter come into existence unless it is decided that the Board Resolution dated 14.09.2014 is null and void. As to the Board Resolution, the petitioner has not sought any relief. R2, actively proceeding against R3 before various fora, has blissfully remained absent to this proceeding initiated by his wife. He says it is nothing but a collusive proceeding to abuse the process of law; therefore he has sought for dismissal of this case with heavy costs.
On hearing submissions of either side, it is evident that the Petitioner and R2 being Shareholders and Directors of R1 Company, on 04.09.2014, they passed board resolution authorizing R2 to execute Power of Attorney in favour of R3 authorising him to alienate the asset of Rl. In pursuance of it, R2 executed power of attorney in favour of R3 authorising him to alienate the property of R1 Company, accordingly R3 executed sale deeds in favour of third parties basing on the power conferred upon him as reflected in Power of Attorney dated 30.10.2014 to alienate the property of R1 company to the intending purchasers. Though this document was executed in the year 2014, until before initiating this proceeding in the year 2018, no proceeding was initiated by this petitioner against her husband for nullification of the Resolution both of them passed and the power of attorney executed by her husband in favour of R3. It is only in the year 2018, this company petition was filed for nullification of Power of Attorney executed in favour of R3 basing on the resolution passed on 04.09.2014.
This wife and husband hell bent upon this R3 to get back this property from R3 by initiating proceedings before various fora. Even in the Writ proceedings initiated by R2 against R3, Madurai Bench of the Hon'ble High Court of Madras has categorically mentioned that execution of Power of Attorney in favour of R3 in respect of the land in the year 2014 is not in dispute. Therefore, the Honourable High Court held that the sale deeds executed through Power of Attorney in force cannot be declared nullified through filing Writ Petition.
It appears till date neither the Petitioner nor R2 contested the order of Madurai Bench of High Court of Madras in respect to the observations made saying that execution of Power of Attorney is not in dispute. Even in the reliefs sought in the CP, no relief has been sought to declare the board resolution dated 04.09.2014 passed by the wife and the husband as null and void. The reliefs are eventually targeted against R3 herein for nullification of Power of Attorney as well as sale deeds executed in favour of various purchasers.
There is no material before this Bench to believe that this Petitioner was not aware of passing a resolution on 04.09.2014 authorizing R3 to sell the property of the company in favour of the intending purchasers. Moreover, the Power of Attorney executed by R2 at the behest of R1 Company is registered one, and Sale Deeds executed by R3 to the intending purchasers are also registered instruments. Since it is very much present on record that these two persons (wife and husband) together passed the resolution for execution of power of attorney in favour of R3 and, in pursuance thereof, her husband having executed Power of Attorney, such actions cannot be called actions falling under the ambit of Section 241 of the Companies Act because to show that consequential acts of executing Power of Attorney and Sale deeds to third Parties are null and void, the petitioner has to prove that the Resolution passed on 04.09.2014 is fabricated behind the back of her and such action is intended to cause prejudice to the petitioner and it is indeed prejudicial to the interest of the petitioner. This petitioner has not tried to prove that aspect except making a passing reference in the oral argument that the Resolution dated 04.09.2014 was created. The petitioner has not even asked relief over it. As long as the Resolution dated 4.9.2014 is not nullified on the ground that act is prejudicial to the interest of the petitioner, the Power of Attorney executed in favour of R3 on 30.10.2014 cannot be called as invalid. Here the question of an outsider (R3) causing prejudice under section 241 would never arise, here the petitioner tried to abuse the process of law to obtain orders against R3 under Section 241 by including her husband (shown as man in the management of R1 Company) as one of the Respondents, and this husband has remained absent.
By looking at the Orders passed by the Madurai Bench of Hon'ble High Court of Madras dated 22.09.2017 in the WP and the Civil Suit (OS No. 258/2018) R2 filed against R3 and other purchasers, I am of the considered view that it is a collusive Petition filed against R3 to invalidate the registered Power of Attorney, R2 executed on behalf of R1 company in favour of R3, therefore this Company Petition shall be dismissed, whereby this company petition is hereby dismissed by imposing costs of Rs. 5 lakhs payable to R3 within 30 days hereof.
Soon after completion of dictation of this order, the counsel appearing on behalf of the Petitioner has further argued stating that this Bench shall examine the veracity of the resolution dated 04.09.2014 by stating that unless the documents are tested by taking evidence, no order should be passed. When the order has been passed by this, the only recourse to the counsel appearing on behalf of the parties is to file appeal but not to make further arguments. It is against the decorum of the Court.
For the sake of clarity, I must mention that this Petitioner has not even asked any relief for nullification of the Resolution dated 4.9.2014 in this company petition, then the question of conducting trial would not arise, moreover this petitioner has not placed any prima facie material to believe that R2 fabricated the Resolution dated 04.09.2014. Therefore, it is hereby held that the petitioner counsel has tried to argue the case beyond the pleadings and the relief sought by the petitioner. Courts are not expected to stretch case beyond the pleadings and reliefs sought in a case. When a point is not legally tenable and when relief is not sought, Court is not obliged to get swayed by the oral arguments of a counsel.
Accordingly, this CP281/2019 is hereby dismissed with costs as mentioned above.