2017 (11) TMI 841 - AT - Insolvency and Bankruptcy

Corporate insolvency procedure - Power of Attorney Holder as given power of attorney prior to enactment of I&B Code , entitlement to file an application under Section 7 or 9 or 10 of the I&B Code - admission of application under Section 7 - appointment of Interim Resolution Professional - Held that - In the present case, the appellant has enclosed the so-called Power of Attorney of the Punjab National Bank like ICICI Bank. As noticed in the case of Palogix Infrastructure Private Limited 2017 (10) TMI 913 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI in the present case also we find that by an instrument dated 5th November, 2015 the committee of Board of Directors empowered an officer of the Bank and delegated him power to move before a Court on behalf of the Bank, with power to do everything requisite for the purpose mentioned therein, including borrowing money from the Reserve Bank of India and financial institutions of big authorities in India and also to appear and take action on behalf of the Bank in any Court of original jurisdiction, court of appeal, revision, civil, criminal, revenue courts, tribunals and office/offices and to engage counsel on behalf of the Bank for such courts, tribunal and offices. In view of the aforesaid Board s Resolution by letter dated 28th March, 2017 the Chief Manager, Branch Head, MCB Hisar was authorised to file petition before the Adjudicating Authority under Section 7 of the I & B Code and named the IRP for appointment. From the application filed under Section 7 in Form 1 filed by the respondent Financial Creditor we find that the authorised officer of the Bank has signed the document. In the aforesaid circumstances, as the case in hand is covered by the decision of this Appellate Tribunal in Palogix Infrastructure Private Limited (Supra) and as the Senior Manager of the Bank has filed the application under Section 7, we find no ground to interfere with the impugned order.

Summary

Issues:
1. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by a power of attorney holder on behalf of the Financial Creditor.
2. Requirement of authorization by the Financial Creditor for initiating insolvency proceedings.
3. Distinction between an authorized person and a power of attorney holder in filing applications under the I&B Code.

Analysis:
1. The appellant challenged the maintainability of the application under Section 7 of the I&B Code, contending that it was filed by a power of attorney holder and not an authorized person of the Financial Creditor. The appellant argued that the authorization letter issued by the Financial Creditor was insufficient to initiate proceedings under Section 7. The respondent, on the other hand, asserted that the application was valid as it was filed by an authorized officer of the Financial Creditor.

2. The Appellate Tribunal referred to a previous case where it was held that under the I&B Code, a Financial Creditor must file the application for Corporate Insolvency Resolution Process through an authorized representative. The Tribunal emphasized that only an authorized person, not a power of attorney holder, can make such an application. It was noted that the Code itself is comprehensive and specific, overriding general provisions like the Power of Attorney Act, 1882.

3. In the specific case under consideration, the Appellate Tribunal found that the Financial Creditor had authorized its officer through Board Resolutions to handle legal proceedings. Even though the term "Power of Attorney" was used, the Tribunal clarified that if a Financial Creditor authorizes its officer to act on its behalf in legal matters, the officer can be considered an authorized representative for the purpose of filing applications under the I&B Code. The Tribunal stressed that the officer's designation and authorization by the Financial Creditor are crucial, and any defects can be rectified within a specified timeframe.

4. The Tribunal further highlighted that if an officer is authorized to sanction loans and initiate insolvency proceedings, the Corporate Debtor cannot dispute the officer's authority based on separate authorization letters. The emphasis was on the substance of the authorization rather than the terminology used. In the present case, the Appellate Tribunal found that the officer of the Bank had been properly authorized to file the application under Section 7, and therefore, upheld the order admitting the application and declaring a moratorium.

5. Ultimately, the appeal was dismissed, affirming the admission of the application under Section 7. The Tribunal found no grounds to interfere with the impugned order, given the compliance with the requirements of authorization and the specific delegation of powers by the Financial Creditor to its officer for initiating insolvency proceedings.