Bank Officers Can Execute POA By Designation, Not Necessarily By Name: NCLAT

Bank Officers Can Execute POA by Designation, Not Necessarily by Name: NCLAT

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has held that a Power of Attorney (POA) executed by bank officers nominated by their designation, rather than by name, is legally valid for instituting proceedings under the Insolvency and Bankruptcy Code (IBC), 2016.

Factual Background

• The case arose from an appeal filed by Indian Bank challenging the order of the Adjudicating Authority (NCLT).

• The NCLT had dismissed the appellant’s application seeking amendment of Form-1 on the ground of maintainability, holding that the officer who filed the application was not appointed by a validly executed POA.

• The NCLT reasoned that while the General Manager and Deputy General Manager were nominated, they were not specifically named in the POA, and that nomination should have been by name, not designation.

Procedural Background

• Indian Bank appealed before the NCLAT, Principal Bench, New Delhi.

• The matter was heard by Justice N. Seshasayee (Member – Judicial) and Arun Baroka (Member – Technical).

• The key issue before the tribunal was the validity of a POA executed by officers nominated by designation.

Issues

• Whether a POA executed by officers nominated by designation (rather than by name) is legally valid?

• Whether the NCLT erred in dismissing Indian Bank’s application without examining it on merits?

Contentions of the Parties

Appellant (Indian Bank):

• Relied on the Supreme Court ruling in United Bank of India v. Naresh Kumar and Others (1996) 6 SCC 660.

• Submitted that nomination by designation is valid and sufficient, since it provides certainty as to which officer holds authority to execute the POA.

• Argued that if the NCLT’s reasoning were accepted, it would bring banking operations to a standstill.

Respondent:

• Contended that the Board Resolution authorized the Chairman and Managing Director, or in his absence the Executive Director, to nominate officers.

• However, in proceedings dated 24.11.2024, the power to issue POA was delegated to the General Manager (HRM) and the Deputy General Manager (HRM), which according to them was not validly done.

Reasoning and Analysis

• The tribunal noted that the Board Resolution empowered the Chairman and the Executive Director to nominate competent officers to issue POAs.

• Pursuant to this authority, the General Manager and Deputy General Manager (HRM) were nominated.

The tribunal clarified that:

• A POA is a document appointing an agent to act on behalf of another.

• The law imposes no restriction that such authority must be conferred by name; nomination by designation is equally valid.

Accordingly, the tribunal held that the POA in this case was validly executed.

Implications

• This judgment provides clarity on the validity of POAs executed by designation, ensuring smoother functioning of banking institutions.

• It prevents unnecessary procedural hurdles in insolvency proceedings where officers often act based on their official designations.

Outcome

• The NCLAT set aside the NCLT’s order.

• Directed the Adjudicating Authority to hear and dispose of the matter on merits.

• Reaffirmed that a POA executed by officers nominated by designation is legally valid.

Case Details

• Case Name: Indian Bank v. M/s. Aman Hospitality Private Limited

• Case No.: Company Appeal (AT) (Ins) No. 569 of 2025

• Judgment Date: 07.08.2025

• Bench: Justice N. Seshasayee (Member – Judicial) and Arun Baroka (Member – Technical)

• In this case the appellant was represented by Mr. Gautam Awasthi, Mr. Ayush Choudhary, Mr. Devanshu Yadav, Advocates. Meanwhile the respondent was represented by Mr. U.K. Chaudhary, Sr. Advocate with Mr. V. Anush Raajan, Mr. Mansumyer, Mr. Pradyumn Yadav, Advocates.

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