2021 (4) TMI 813 - AT - Insolvency and Bankruptcy

Maintainability of application - petition filed under Section 9 of the Code before the commencement of the Code - treated as a valid authorisation or not - opportunity to rectify the defects as per proviso to Section 9 (5) (ii)(a) of the Code to be provided or not - HELD THAT - In the instant case, it is found that the Adjudicating Authority has dismissed the Petition for want of proper Authorisation. However, the Adjudicating Authority has not considered providing an opportunity to the Applicant to rectify the defects. In contrast, proviso to Section 9(5)(ii)(a) of the Code makes it mandatory to provide an opportunity to the applicant for rectifying the defects of the application. In these circumstances, it can be held that the Adjudicating Authority has erred in dismissing the Application for want of Authorisation, without even providing an opportunity to rectify the defects in compliance with Section 9(5)(ii)(a) of the Code. The Adjudicating Authority is directed to decide the application afresh at the earliest - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Validity of Authorisation for filing a petition under Section 9 of the Insolvency and Bankruptcy Code (I&B Code) before its commencement.
2. Obligation of the Adjudicating Authority to provide an opportunity to rectify defects in the application as per the proviso to Section 9(5)(ii)(a) of the I&B Code.

Issue-wise Detailed Analysis:

1. Validity of Authorisation for filing a petition under Section 9 of the I&B Code before its commencement:

The Appellant filed an application under Section 9 of the I&B Code, which was dismissed on the ground that the authorisation annexed with the application was from 2013, predating the enactment of the I&B Code in 2016. The Respondent argued that the authorisation must be post-enactment of the Code to be valid. The Appellant contended that neither the Code nor its Rules and Regulations mandate post-enactment authorisation. The Tribunal referenced previous decisions, including *Ramesh Murji Patel v Aramex India Pvt Ltd.* and *Palogics Infrastructure Private Limited v ICICI Bank*, which held that authorisation letters issued before the enactment of the I&B Code could be valid for filing applications under Sections 7 or 9 of the Code. Therefore, the Tribunal concluded that authorisation predating the I&B Code should not be treated as a defect invalidating the application.

2. Obligation of the Adjudicating Authority to provide an opportunity to rectify defects in the application as per the proviso to Section 9(5)(ii)(a) of the I&B Code:

The Adjudicating Authority dismissed the application solely on the ground of authorisation without deciding on the merits and without providing an opportunity to rectify the defect. The Appellant argued that the Authority should have allowed rectification of defects, adhering to the principles of natural justice and the proviso to Section 9(5)(ii)(a) of the Code. The Tribunal emphasized that the Code is self-contained and mandates providing an opportunity to rectify defects. The Tribunal cited the *Surendra Trading Co. v. Juggilal Kamlapat Jute Mills Co. Ltd.* case, where the Supreme Court held that the time to rectify defects is directory, not mandatory, and additional time can be granted. The Tribunal found that the Adjudicating Authority erred in dismissing the application without allowing rectification, contradicting the statutory provisions of the Code.

Conclusion:

The Tribunal concluded that the Adjudicating Authority was incorrect in dismissing the application for want of proper authorisation without providing an opportunity to rectify the defects. The appeal was allowed, the impugned order was set aside, and the Adjudicating Authority was directed to decide the application afresh, considering the directions provided. No order as to costs was made.

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