Judgment

B.P. JEEVAN REDDY, J.:- An application under Section 397/398 of the Companies Act, 1956 can be filed inter alia by "any member or members holding not less than one-tenth of the issued share capital of the Company" -vide clause (a) of sub-section (1) of Section 399. Sub-section (3) of Sec. 399 says that among the members of the Company entitled to make an application by virtue of sub-section (1) "any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them."

2. The three appellants in this appeal are the shareholders of the first respondent-company, Jeypore Sugar Company Limited. The respondents are its Directors. The first appellants daughter Smt. V. Rajeshwari also holds certain shares in the first respondent company. She is married and has been residing in U.S.A. since 1973. Before leaving for the U.S.A., she executed a General Power of Attorney (G.P.A.) in favour of her father, the first appellant herein, on 29th November, 1973.

3. On October 25, 1978, the three appellants herein filed an application under Section 397/398 in the High Court of Orissa. To comply with the requirement of one-tenth shareholding, the first appellant gave consent in writing for and on behalf of Smt. Rajeshwari as her G.P.A. holder. If the shareholding of Rajeshwari is taken into account and she is deemed to have consented to the filing of the said application, the requirements of S. 399 are admittedly satisfied. The precise question in this appeal is whether the consent given by her G.P.A. holder for and on her behalf - and not by her personally - is a valid consent within the meaning of subsection (3) of S. 399.

4. As soon as the application under Sections 397/ 398 was filed by the appellants, some of the respondents raised a preliminary objection to the maintainability of the application on the ground that it does not comply with the requirement of Section 399 inasmuch as the consent given by the first appellant on behalf of and as the attorney of Smt. Rajeshwari, and not by herself personally, cannot be treated as consent within the meaning of Section 399(3). Both, the Company Judge; and on appeal the Division Bench of the Orissa High Court, upheld the said objection and dismissed the application on the said preliminary ground alone.

5. For a proper appreciation of the question arising herein, it would be appropriate to read Section 399 of the Companies Act here :

"Section 399. Right to apply under Sections 397 and 398.- (1) The following members of a company shall have the right to apply under Sec. 397 or 398 :-

(a) in the case of a company having a share capital, not less than one hundred members of the company or not less than one-tenth of the total number of its members, whichever is less or any member or members holding not less than one-tenth of the issued share capital of the company, provided that the applicant or applicants have paid all calls and other sums due on their shares;

(b) in the case of a company not having a share capital, not less than one-fifth of the total number of its members.

(2) For the purposes of sub-sec. (1), where any share or shares are held by two or more persons jointly, they shall be counted only as one member.

(3) Where any members of a company are entitled to make an application in virtue of sub-section (1), any one or more of them having obtained the consent in writing of the rest, may make the application on behalf and for the benefit of all of them."

(Sub-sections (4) and (5) are omitted as unnecessary.)

6. The relevant clauses of the General Power of Attorney executed by Smt. Rajeshwari in favour of the first appellant may also be noted:

"4. To sell, convert, collect, get in, or manage or collect or otherwise administer any property movable or immovable which may be vested in me alone or join with others.

10. To take, prosecute, or defend, all legal proceedings touching any of my matters in which I am or may hereafter intere