Union of India represented by Secretary to Government, Ministry of Defence, Central Secretariat, New Delhi v. Claramma Thomas W/o P.C. Thomas; Shiny Davis; Mini Thomas; Jaya Kalloorkkaran; Paul Thomas; Aban Constructions (P) Ltd.; Kriloskar Constructions and Engineers Limited

## **`IN THE HIGH COURT OF KERALA AT ERNAKULAM`** ## **`PRESENT`** ## **`THE HONOURABLE MR. JUSTICE P.SOMARAJAN`** ``` TUESDAY, THE 5[TH] DAY OF MARCH 2024 / 15TH PHALGUNA, 1945 ``` ``` CRP NO. 407 OF 2017 ``` ``` AGAINST THE ORDER/JUDGMENT DATED 30.03.2017 IN OP(ARB) NO.4 OF 1994 OF PRINCIPAL SUB COURT ``` ## **`REVISION PETITIONERS/RESPONDENTS 1 TO 3/JUDGMENT DEBTORS:`** - **`1 UNION OF INDIA REPRESENTED BY SECRETARY TO GOVERNMENT, MINISTRY OF DEFENCE, CENTRAL SECRETARIAT, NEW DELHI.`** - **`2 THE CHIEF ENGINEER (P)R&D PICKET, SECUNDERABAD, ANDHRA PRADESH, PIN-500 651.`** - **`3 THE GARRISON ENGINEER (P) (I) R & D NAVAL BASE, COCHIN - 682 004, PRESENTLY ASSISTANT GARRISON ENGINEER.`** ``` BY ADVS. SRI AR.L SUNDARESHAN, ASGI SRI.S.KRISHNAMOORTHY, CGC ``` ## **`RESPONDENTS/PETITIONER/DECREE HOLDER/RESPONDENTS 4 & 5:`** - **`1 CLARAMMA THOMAS W/O P.C. THOMAS, AGED 79 YEARS,`** ``` RESIDING AT PUTHUSSERY HOUSE, MAMANGALAM, COCHIN- 682 025, EDAPALLY SOUTH VILLAGE, KANAYANNUR TALUK, ERNAKULAM DISTRICT. ``` - **`2 SHINY DAVIS`** ``` D/O. LATE P.C. THOMAS, AGED 57 YEARS, RESIDING AT PUTHUSSERY HOUSE, MAMANGALAM, COCHIN- 682 025, EDAPALLY SOUTH VILLAGE, KANAYANNUR TALUK, ERNAKULAM DISTRICT. ``` - **`3 MINI THOMAS`** ``` D/O. LATE P.C. THOMAS, AGED 54 YEARS, RESIDING AT PUTHUSSERY HOUSE, MAMANGALAM, COCHIN- 682 025, EDAPALLY SOUTH VILLAGE, ``` ``` CRP NO. 407 OF 2017 ``` ``` 2 ``` ## **`KANAYANNUR TALUK, ERNAKULAM DISTRICT.`** - **`4 JAYA KALLOORKKARAN`** ``` D/O. LATE P.C. THOMAS, AGED 53 YEARS, RESIDING AT PUTHUSSERY HOUSE, MAMANGALAM, COCHIN- 682 025, EDAPALLY SOUTH VILLAGE, KANAYANNUR TALUK, ERNAKULAM DISTRICT. ``` - **`5 PAUL THOMAS`** ``` S/O. LATE P.C. THOMAS, AGED 51 YEARS, RESIDING AT PUTHUSSERY HOUSE, MAMANGALAM, COCHIN- 682 025, EDAPALLY SOUTH VILLAGE, KANAYANNUR TALUK, ERNAKULAM DISTRICT. ``` - **`6 ABAN CONSTRUCTIONS (P) LTD.`** ``` HAVING ITS REGISTERED OFFICE AT JANPRIYA CREST, 113 PANTHEON ROAD, EGMORE, CHENNAI-600008, REP. BY ITS MANAGING DIRECTOR REJI ABRAHAM. ``` - **`7 MS. KRILOSKAR CONSTRUCTIONS`** ``` AND ENGINEERS LIMITED, HAVING ITS REGISTERED OFFICE AT UDYOGBHAVAN, TILAK ROAD, PUNE - 411 002, MAHARASTHRA, REP. BY ITS MANAGING DIRECTOR. ``` ``` BY ADVS. SRI.K.BABU THOMAS - R1 TO R5 SMT.MARYKUTTY BABU SRI.K.L.VARGHESE (SR.)-R6 SRI.NINAN JOHN SMT.SANTHA VARGHESE SRI.RAHUL VARGHESE BASIL MATHEW -R7 ``` ``` THIS CIVIL REVISION PETITION HAVING COME UP FOR ADMISSION ON 05.03.2024, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: ``` ``` CRP NO. 407 OF 2017 ``` ``` 3 ``` ## **`ORDER`** ``` This civil revision is against the order ``` ``` passed in execution of an award by the Sub Court ``` ``` in E.P.No.489/2009. Union of India is the respondent in an arbitration proceeding initiated. It initially culminated in an award at the first instance. It was taken up before this Court in MFA.No.452/1997. This court in ``` ``` turn set aside the award passed by the arbitrator. Later on it was taken up before the Apex Court in Civil Appeal Nos. 311/2003 and ``` ``` 312/2003. The Apex Court in turn set aside the ``` ``` verdict given by this Court by restoring the ``` ``` award of the arbitrator, for recovery of an ``` ``` amount of Rs.50,22,612/- with 18% interest. ``` ``` 2. The award, hence, put in execution ``` ``` before the Sub Court, Ernakulam. The Sub Court in turn passed the impugned order allowing ``` ``` CRP NO. 407 OF 2017 ``` ``` 4 ``` ``` EA.No.1167/2016 directing the judgment debtor to issue a cheque for Rs.2,37,94,739/- with the interest accrued thereon with cost of E.P by its order dated 30/3/2017. It is against that order in the E.P., the judgment debtor, the Union of India, came up in revision mainly on three grounds. Firstly on the ground that, the decree was sought to be executed by a total stranger and not by the decree-holder company. Secondly, on the ground that the power of attorney three in numbers relied on by the petitioner who sought to execute the decree cannot be construed as an assignment of decree or proper power of attorney to execute the decree. Thirdly, on the ground that the power of attorney relied on as that of the decree holder company cannot be construed as a valid power of attorney, and lastly, on the ground that none of the powers of attorney amounts to an irrevocable power of attorney. Necessarily, they will not get the ``` ``` CRP NO. 407 OF 2017 ``` ``` 5 ``` ``` sanctity of a decree holder or the person claiming under the decree holder. The first power of attorney Exhibit R5(a) is a general power of attorney (copy produced), by which certain matters, including the construction of the work, were given to the power of attorney holder. The abovesaid power of attorney was executed by Asian Techs Limited, a company duly incorporated under the Indian Companies Act, 1956, executed by the Director Sri.M.C.George in favour of one Sri.P.C.Thomas, son of Chackappan. The second power of attorney executed is Ext.R5(C). It is also a general power of attorney executed by the company appointing the very same P.C.Thomas, Son of Chakkappan, to do certain things, i.e., pertaining to the work taken up by the company, executedocumentsandotherthings, hypothecation, etc., in connection with the above work, and to initiate any arbitration proceedings arising out of the execution of the ``` ``` CRP NO. 407 OF 2017 ``` ``` 6 ``` ``` work. ``` ``` 3. Before going into the third power of ``` ``` attorney, it is necessary to have an ``` ``` understanding with respect to the earlier two general powers of attorney. The main argument from the part of the person who initiated the execution is that by virtue of the abovesaid powers of attorney, authority was given to do certain construction work and all other works connected, even a permission was also granted to initiate arbitration proceedings. None of the power of attorney is an irrevocable power of attorney, but only a general power of attorney given in the name of P.C.Thomas. Admittedly, by ``` ``` virtue of the power assigned and given under these two powers of attorney, no arbitration proceedings were initiated by the power holder P.C. Thomas. On the other hand, arbitration proceedings were initiated by the company by name Asian Techs Ltd., though represented ``` ``` CRP NO. 407 OF 2017 ``` ``` 7 ``` ``` through the very same person, P.C. Thomas. That ``` ``` does not mean that it is an arbitration proceeding initiated by P.C Thomas in his individual capacity. Hence, the claim that he is ``` ``` a party in his individual capacity to the said proceedings can not hold good. In fact, P.C.Thomas is not a party to the arbitration ``` ``` proceedings in his personal capacity. Hence, he ``` ``` cannot claim that he is a party to the ``` ``` arbitration proceedings in his individual capacity and can not claim that the award, ``` ``` deemed decree was passed in his favour, but it ``` ``` is in favour of the company, represented through ``` ``` him, being the power of attorney holder. The ``` ``` award which would acquire the character of a ``` ``` deemed decree for the purpose of execution, hence cannot be termed as an award passed either ``` ``` in favour of the P.C.Thomas or against him. He is not a party to the proceedings. ``` ``` 4. On coming into the third power of ``` ``` CRP NO. 407 OF 2017 ``` ``` 8 ``` ``` attorney exhibited as R5(d), the submission made by the execution petitioner is to the effect that, it is an irrevocable power of attorney executed by the decree holder company, Asian Techs Ltd, represented through its director, wherein the entitlement of 97% of the work done ``` ``` is specifically recognised and assigned with the condition that the company is entitled to 3%. ``` ``` out of that 3%, 1% on account of the tax and all that and the rest of the amount by way of commission. So the necessary question to be addressed is whether this Ext.R5(d) power of ``` ``` attorney would constitute an irrevocable power of attorney or whether it would constitute an assignment of the decree (an award passed by the arbitrator) and whether it would stand valid in ``` ``` the eye of law. ``` ``` 5. Extensive arguments were placed by the ``` ``` learned senior counsel Adv.Sri. A.R.L. Sundareshan, Assistant Solicitor General of ``` ``` 9 ``` ``` CRP NO. 407 OF 2017 ``` ``` India, Sri.S.Krishnamoorthy, CGC, appearing for the Union of India, and Senior Counsel Sri.K.L Varghes for respondent No.6 and ``` ``` Adv. Sri.K.Babu Thomas for respondent No.1 to 5 and Adv. Sri. Basil Mathew appearing for the 7[th] respondent in the revision. ``` ``` 6. Ext.R5(d) power of attorney and the various clauses included would itself show its nature, especially the clauses No.(i) to (iv) ``` ``` which are extracted below for reference: ``` ``` “i) the said attorney is empowered to act in his individual capacity to prosecute, or defend, whatever legal proceedings,whichwouldbecome necessary for the realization of unpaid amounts and to receive all amounts, which would become payable by filing applications or petitions in his own name and on affixing his own signature appearing in person or causing appearance of any other person before anycourtsinIndiaasthe circumstances warrant. ii) to file the applications, petitions, ``` ``` CRP NO. 407 OF 2017 ``` ``` 10 ``` ``` statements etc., as are required for execution or realization of the unpaid amounts, as and when they become due or payable in the name of the company, in his individual capacity and name on the strength of this irrevocable Power of Attorney, without reference to the company, or transferees, or assignees. ``` ``` iii) to appoint advocates, sign vakalaths,applications,cheques, acknowledge receipt of payment and to issue valid acquittance for receipt of amount | from court, or authority, which would become payable on account of the said work carried out by him subject to reservation of right of the company to receive only 3% (three percent) and 1% (one percent) towards Income Tax, from the net payment received. ``` ``` iv)the company shall have no claim of whatsoever nature in excess of 3% and 1% specified above out of the amounts received or realized by the said attorney, through legal proceedings, or otherwise.” ``` ``` 11 ``` ``` CRP NO. 407 OF 2017 ``` ``` 7.Clause (ii) was pressed into service in ``` ``` support of his argument that authority was given to file application, petition, statement etc. for execution and realization of unpaid amount in his individual capacity without reference to the company or transferees or assignees on the strength of irrevocable power of attorney. But the power holder was not in the picture at any point of time when the matter was fought upto the Apex Court and culminated in a binding decree, in which, the power holder is not a party either in his individual capacity or in his personal status. Even if it is assumed that ``` ``` power of attorney was given to execute the decree, the decree can be executed only by the parties to the decree or any person litigating thereunder. The person so entitled to execute the decree must be the decree holder or person claiming under the decree holder or assignee of the decree. Admittedly, there is no assignment ``` ``` CRP NO. 407 OF 2017 ``` ``` 12 ``` ``` of decree and there is no operation of intestate or testate succession. The power holder cannot be termed as a person claiming under the decree holder, but would be a person authorised to execute the decree. Necessarily, the execution must be by the decree holder represented through the power holder, if it is filed through the power holder and not in the individual or personal name of power holder without referring to the decree holder. Further clause (ii) shall not be read in isolation, but should read along with other clauses – clauses (i) to (iv), wherein there is an understanding to share the profits between the power holder and the decree ``` ``` holder company and it is an internal matter. The decree can be executed only by the decree holder or the person authorised in that behalf or represented through and it must be by the decree holder himself or through authorised agent or representative (power of attorney). In ``` ``` CRP NO. 407 OF 2017 ``` ``` 13 ``` ``` other words, the power of attorney holder cannot in his name maintain an execution without the juncture of decree holder. The claim that the power holder is a sub-contractor cannot be sustained as he was not in the picture at any point of litigation and was not made as a party. ``` ``` The arbitration proceedings were initiated by Asian Techs Limited, the company, in which the power holder or the sub-contractor was not made as a party in their personal capacity or otherwise. In fact, no award or decree was passed in their favour. The award passed stood confirmed by the Apex Court is in favour of Asian Techs Limited, the company. So the company alone ``` ``` is empowered or authorised representative for and on behalf of the company will get right to execute the decree and none else. The execution filed by a total stranger, though he may be an authorised power of attorney cannot maintain an execution in his personal name. He is not a ``` ``` CRP NO. 407 OF 2017 ``` ``` 14 ``` ``` party to the decree, but can maintain execution in the name of company, the decree holder and certainly he can represent the company being a power holder. But he cannot initiate separate execution in his name. ``` `8. Yet another reason is also available to` `non suit the execution petitioner on the reason that it is a power of attorney executed without disclosing the person who` ex `ecuted the same. It is well settled that a registered company is an` ``` inanimate body that cannot do anything with the assistance of a living person. Someone should be there to represent the company. Here, the power of attorney is executed by the director without disclosing the identity of the person who holds ``` ``` the office of the Director, presumably on the reason that it has been given to the very same person. This would show what is behind it. ``` `9. The power of attorney will not stand in` ``` the eye of law on yet another reason that even ``` ``` CRP NO. 407 OF 2017 ``` ``` 15 ``` ``` admittedly, the original company was amalgamated ``` ``` with another registered company, who is the 7[th] respondent in the CRP, who was added as a necessary party at the time of filing of revision. The amalgamation was effected by a decree of the High Court of Madras, and it was approved by this court. The order was pronounced ``` ``` on 23/06/2005 with effect from the date of application, i.e on 1/04/2004. Necessarily, the company will stand amalgamated with the new one, ``` ``` with effect from 01/04/2004. Thereafter there ``` ``` cannot be any separate existence or entity as a ``` ``` person for any purpose. All the assets and ``` ``` liabilities and everything attached with the ``` ``` earlier company will stand merged and ``` ``` amalgamated with the newly established company ``` ``` after amalgamation. So, there cannot be any separate existence for the original company, the ``` ``` decree holder, the Asia Techs Ltd., after 01/04/2004 and it will stand amalgamated with ``` ``` CRP NO. 407 OF 2017 ``` ``` 16 ``` ``` the 7[th]respondent the newly established company. Thereafter the newly established company alone can hold and discharge every liability, asset, and everything pertaining to the company and its due business, etc. The power of attorney Ext.R5(d) was executed subsequent to 01/04/2004 after the amalgamation of the decree holder company with the newly established company respondent No.7. Though an argument was advanced by the senior counsel, Sri.K.L.Varghese that the day on which the order was pronounced, i.e 26.03.2005 should be reckoned as the effective date of implementation of amalgamation, it goes against the settled principle that every adjudication rendered in any proceedings will go back to the date of initiation of proceedings, except on an amendment which would stand barred by limitation by that time. Necessarily, I could not find any merit in the abovesaid submission. The cut off date is 01.04.2004. On that day, the ``` ``` CRP NO. 407 OF 2017 ``` ``` 17 ``` ``` decree holder company came to an end by the substitution of a new company, respondent No.7 by amalgamation. Necessarily, the power of ``` ``` attorney executed as that of the earlier company ``` ``` after amalgamation, i.e. in the year 2005, R5(d) ``` ``` more specifically, 07.02.2005, will not have any legal effect. ``` ``` 10. Even going by the abovesaid powers of attorney, it is clear that what is agreed into is to apportion the profit that can be claimed for the work done or the amount which would fall due at the rate of 97% x 3%. Necessarily, they can go for recovery of the said amount, provided that the newly amalgamated company should be made as party or they can assign the same by way of a document in favour of any person at their whims and fancies. In the present case, there is no such assignment of decree amount or right and the power of attorney Ext. R5(d) cannot be acted upon even otherwise on the reasons as stated ``` ``` CRP NO. 407 OF 2017 ``` ``` 18 ``` ``` above. All these questions were not taken up properly by the Execution Court. I reserve my comment with respect to the operative portion of ``` ``` the order by the Execution Court, especially the ``` ``` second portion. It has got some sort of ``` ``` inconsistency and confusion. Hence, the order allowing the E.A cannot be sustained. It was also submitted by the learned counsel Adv. Sri.K Babu Thomas relying on the decision rendered by the Apex CourtVaishno Devi Constructions Repersetned Through Sole Proprietor (Dead) Through Legal Representatives and Another v. Union of India and Others, (2022) ``` ``` 2 SCC 290,especially relying on paragraphs 26 and 27 that it is well within the jurisdiction of this Court to accept an assignment in ``` ``` anticipation of a decree that may be passed. But as discussed earlier when there is no assignment or effective irrevocable power of attorney to recover the abovesaid amount, nothing can be ``` ``` CRP NO. 407 OF 2017 ``` **==> picture [15 x 9] intentionally omitted <==** ``` done in favour of the execution petitioner. ``` ``` Hence, the impugned order will stand set aside. ``` ``` E.A. will stand dismissed. ``` ``` The Civil Revision Petition will stand ``` ``` allowed accordingly. ``` ``` Sd/- ``` ## **`P.SOMARAJAN`** ``` JUDGE ``` ``` SPV ```