Belfin Spa vs Cima Shyam Springs Private Limited

IA No.541 of 2017 in Company Appeal (AT) No. 207 of 2017 [Against the order dated 5th May, 2017 passed by the National Company Law Tribunal, Ahmedabad Bench, Ahmedabad in T.P. No. 31/397- 398/NCLT/AHM 2016 (New), C.P. No. 3/397-398/CLB/MB/2013(Old)]

IN THE MATTER OF:

1. Belfin Spa (A Company incorporated Under the laws of Italy) Via Piave-66, Busnago, Italy.

2. Mr. Sergio Bellazzi, Borgazzi 18 Monza (Mb), Italia.

3. Ms. Rita Bellazi Borgazzi 18 Monza (Mb), Italia. ... Appellants

- Versus -

1. Cima Shyam Springs Private Limited, Cooperative House, 3rd Floor, Old Padra Road, Vadodara, Gujarat - 390015.

2. Mr. Jaimin Girish Patel, Cooperative House, 3rd Floor, Old Padra Road, Vadodara, Gujarat - 390015.

3. Mr. Hemal Patel, Cooperative House, 3rd Floor, Old Padra Road, Vadodara, Gujarat - 390015.

4. Shyam Management Services Pvt. Ltd., Regd. Office at : Madhukunj, 2

GundaFalia, Rajmahal Road, Vadodara, Gujarat - 390001.

5. Shyam Marketing Pvt. Ltd. Regd. Office at : Cooperative House, 3rd Floor, Old Padra Road, Vadodara, Gujarat - 390015.

6. Shyam Industries Ltd., Regd. Office at : 465, GIDC RamangavdiPor, Vadodara - 391243, Gujarat.

7. Pinakin Raman Amin Of Indian Inhabitant, Amin Khadki, MotaGhar, Varnama, Vadodara - 391240 Gujarat. ... Respondents

Present: Shri Armin Wandrewala, Shri Akshay Vani, Shri Manan Jaiswal and Shri Neel Kamal M. Sharma, Advocates for the Appellants.

Dr. U.K. Chaudhary, Senior Advocate with Ms. Avanti Chandele and Ms. Anisha Mahajan, Advocates for the Respondents.

JUDGEMENT

A.I.S. Cheema, J. :

1. This appeal was presented on 20th June, 2017 against part of the order

dated 5th May 2017 passed by the National Company Law Tribunal, Ahmedabad

Bench, Ahmedabad. The application has been filed for condonation of delay of

10 days. The applicants claim that they were under bona fide belief that there

was no delay on the basis that they were under the impression that the time was

computed from the date they obtained order till the date appeal was lodged. The

Company Appeal (AT) No.207 of 2017 3

applicants claim that they were under bona fide mistake and no harm would be

caused in case the short delay is condoned. When this appeal came up earlier

before this Tribunal, the learned counsel for the respondents on 11.10.2017

mentioned that on the appeal, the notary has endorsed in Mumbai that he had

seen power of attorney dated 13th June 2017 and had endorsed the appeal

memo. But that, there is no such Power of Attorney of that date. Learned counsel

for the appellants had submitted that the power of attorney had been signed on

19th June 2017 and the notary may have committed the error of date. The

appellants were given time and affidavit of the notary came to be filed claiming

that 3 power of attorneys were produced before him which were dated 19th June,

2017 and his mentioning of the date as 13th June, 2017 was inadvertent. By

orders dated 15.11.2017, we observed that considering the contents of the

affidavit of the notary, that aspect requires no further consideration by this

Bench.

2. Thereafter, the learned counsel for the Respondents objected to the taking

up of this application for limitation on the basis that the appeal was still not

properly signed and filed as Bharat Modi who signed the appeal memo on 20th

June 2017 did not have the necessary power of attorney in his favour on that

date. Considering the submissions of both the sides, on 15.11.2017, we decided

to hear the aspect:-

"Whether or not the person who filed the appeal had the necessary power

on the date when the appeal was filed and whether the act of power of attorney

can be ratified subsequently by the principal."

Company Appeal (AT) No.207 of 2017 4

3. We have heard the counsel for both sides regarding this point raised by

the learned Counsel for the Respondents. Learned counsel for the respondent

referred to the 3 power of attorneys filed with the appeal in Volume III (Pages 448

- 465). According to the learned counsel, there is no power of attorney which was

executed on 19.06.2017. The documents at page 453 and 459 as executed in

Italy on 19.06.2017 are only a certificate of the public notary verifying signature

of the person who signed power of attorney. According to the learned counsel for

Respondents, the document requires apostille from the concerned authority

which is dated 22nd June, 2017 as can be seen from the stamp behind page 459.

Thus according to the learned counsel on 20.06.2017, when the appeal was filed,

Bharat Modi did not have the valid power of attorney executed in his favour. It

is argued that apart from this, the power of attorney as filed shows that Bharat

Modi accepted the power of attorney on 28th June, 2017 which date and

endorsement is authenticated by the notary at Mumbai. The argument is that

there was no valid authority in favour of Mr. Bharat Modi on 20.06.2017 and

thus the appeal as filed is defective and deserves to be rejected.

4. The learned counsel for Respondents relied on the case of "Bhagwandas

Goverdhandas Kedia vs. Girdharilal Parshottamdas and Co. and others" (AIR

1966 SC 543). That was a matter where the plaintiff made offer from Ahmedabad

by long distance telephone call to defendants at Khamgaon to purchase goods.

Subsequently, the question of jurisdiction of the Court at Ahmedabad came up.

Learned counsel for the respondents referred to para 4 of this judgement where

Hon'ble Supreme Court dealt with the question as to making of an "offer" and

"acceptance" of the same with reference to a "contract". The learned counsel for

Company Appeal (AT) No.207 of 2017 5

the respondents on the basis of the provisions of the Contract Act submits that

till Bharat Modi accepted the power of attorney on 28th June, 2017, it cannot be

said that he was the power of attorney.

5. Against this, the learned counsel for the applicants-appellants submitted

that she has filed translations of the certificate of the notary at Italy. The pages

have been added in the paper book volume III between page 459 - 460. The same,

learned counsel submitted that the certificates have been flagged by her as 'X',

'Y' and 'Z' to show that the three power of attorneys which she has filed were

signed by the appellants 2 and 3 for themselves and the Company Appellant

No.1 on 19th June, 2017. The learned counsel submits that after the 3 power of

attorneys were signed by the appellants and certificate of the public notary was

obtained, these power of attorneys were electronically sent to Bharat Modi and

he acted upon them to save limitation to file the appeal. In the meanwhile, the

appellants obtained apostille below the power of attorney and the certificate of

public notary and the original documents were sent by post to Bharat Modi who

could sign them on 28th June, 2017. According to the learned counsel, as the

appellants signed the power of attorneys on 19th June, 2017 and electronically

the same were conveyed to Bharat Modi, they had conferred the powers to file

appeal and Mr. Bharat Modi acted on these documents and when he formally

signed the same on 28th June, 2017 his actions got regularized. According to the

learned counsel when the appellants are not objecting to the power of attorney

they executed and the acts of their power of attorney, the respondents have no

locus to question the same.

Company Appeal (AT) No.207 of 2017 6

6. Learned counsel for the appellants - applicants relied on the case of

"Chairman, Life Insurance Corpn. and others vs. Rajiv Kumar Bhasker"

reported in (2005) 6 SCC 188 and referred to para 22 to submit that an agency

can be created by necessary implication. Learned counsel for the applicants then

relied on the case of "Jugraj Singh vs. Jaswant Singh and Another" 1970 (2)

SCC 386. That was a matter where one Vernon Seth Chotia executed power of

attorney in California, USA authorizing Sardar Kartar Singh Chawla an advocate

at Supreme Court to sell the property and to execute sale deed and present for

registration. That power of attorney was witnessed by one Daniel E. Cooper. On

the strength of that document, Sardar Kartar Singh Chawla executed the sale

deed. On 30th May, 1963 in favour of the respondents in the appeal and

presented the same for registration and the document was registered. The

judgement of the Hon'ble Supreme Court shows that while the suit was pending,

because of the challenge to the power of attorney on the ground that it had not

been properly authenticated under the law, a fresh power of attorney was

executed by Vernon Seth Chotia on 23rd March, 1964 in favour of Sardar Kartar

Singh Chawla. Before the Hon'ble Supreme Court, both the power of attorneys

were considered. The Hon'ble Supreme Court (in para 8) found that the first

power of attorney was ineffective. However, with regard to the second power of

attorney in para - 9 and 10 the observations of the Hon'ble Supreme Court were

as follows:

"9. The only question is whether the second power of attorney was effective to render valid the transaction of sale and the registration of the document both earlier than the power of attorney. In our judgment, it would be so. Mr. Hardev Singh does not read into this matter the fact of

Company Appeal (AT) No.207 of 2017 7

ratification by Vernon Seth Chotia of his earlier power of attorney. The second power of attorney states in express terms that the first power of attorney was defective and was being ratified. Vernon Seth Chotia also stated in the second power of attorney that the act of Mr. Chawla would be his act which included not only the making of the document but also the presentation of that document. Now the law is quite clear that ratification relates back to the original act provided there is a disclosed principal and this has been stated nowhere better than by Lord Mac Naughton in Keighley, Maxsted and Co. v. Durant(1) quoting Tindal, C. J. in Wilson v. Tumman(2):

"That an act done, for another, by a person though without any precedent authority whatever, becomes then act of the principal, if subsequently ratified by him, is the known and well- established rule of law. In that case the principal is bound by the act, whether it be for his detriment or his advantage, and whether it be founded on a tort or on a contract, to the same effect as by, and with all the consequences which follow from, the same act done by this previous authority. And so by a wholesome and convenient fiction, a person ratifying the act of another, who, without authority, has made a contract openly and avowedly on his behalf, is deemed to be, though in fact he was not, party to the contract."

10. Relation back of an act of ratification was expressly accepted in this case. Other cases have been summarised in the Manual of the Law and Practice of Powers of Attorney issued by the Council of the Chartered Institute of Secretaries. This follows from the maxim of law "Omnis ratihabitio retrotrahitur et mandate priori acquiparatur"-- that is to say, ratification is thrown back to the date of the act done, and the agent is put in the same position as if he had authority to do the act at the time the act was done by him."

Company Appeal (AT) No.207 of 2017 8

7. Relying on the above judgement, the learned counsel for the appellant has

submitted that act of ratification relates back to the date of action. The learned

counsel submitted that in the present matter, as far as the appellants were

concerned, when they signed the power of attorneys on 19.06.2017, they had

conferred the powers on Bharat Modi and even if the apostille was done on 22nd

June, 2017 and formally Bharat Modi accepted the power of attorney on 28th

June, 2017, there is an act of regularization as well as ratification. The learned

counsel relied on the judgement of "United Bank of India vs. Naresh Kumar

and others" reported in AIR 1997 SC 3 where Hon'ble Supreme Court had held

that where the courts find any suits instituted or defended on behalf of public

corporation like bank, public interest should not be permitted to be defeated on

mere technicality that person signing plaint was not competent. Learned counsel

submitted that although this judgement relates to banks and public interest, the

present matter should not be allowed to be defeated on technicalities, looking to

the fact that the appellant is a foreign company; the appellants 2 and 3 are

foreign citizens and the matter relates to company and economy of the country.

8. Having heard counsel for both sides and having perused the documents

we find the respondents standing on technicalities and we find that there is

substance in the submissions which are being made by the learned counsel for

the applicants - appellants. When the certificate was endorsed by the public

notary on 19th June, 2017 certifying that he has personally seen the appellants

2 and 3 signing the power of attorneys, the appellants had executed the power

of attorney on that date in favour of Bharat Modi. No doubt the documents got

technically complete on 28th June, 2017 but for this mere technicality, we find

Company Appeal (AT) No.207 of 2017 9

it would be unjust to non-suit the appellants. When the appeal was filed on 20th

June, 2017 and the appellants proceeded to get the certificate of notary

authenticating their signatures dated 19.06.2017, to be apostilled on

22.06.2017, they were in fact ratifying the act of Mr. Bharat Modi, and when

Bharat Modi endorsed acceptance on 28.06.2017 he regularised the Act of filing

appeal in advance. All this was avoidable. It would have been better to take steps

in time to avoid all this confusion. The appellants Nos.2 and 3 for themselves

and the company are not objecting to the act of Bharat Modi. Thus in the interest

of justice and looking into the facts of present matter we discard the contentions

raised by the learned counsel for the respondents.

9. The short delay in filing of the appeal is condoned.

[Justice A.I.S. Cheema] Member (Judicial)

[Balvinder Singh] Member (Technical)

New Delhi

5th December, 2017

/rs/nn

Company Appeal (AT) No.207 of 2017