2022 (2) TMI 796 - AT - Insolvency and Bankruptcy

Maintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Operational Creditors - service of demand notice - HELD THAT - The fact that Section 8 notice was issued by the Corporate Debtor find mention in the Section 9 application and adopted for initiating Section 9 proceeding. Observation of the Adjudicating Authority that notice under Section 8 was singed and issued by an unidentified person, cannot be approved. If the Adjudicating Authority had any doubt about details of person signing the notice, an opportunity ought to have been given to the Appellant to explain before the Adjudicating Authority and remove defects, if any, including details of authorization of person issuing notice. There is no dispute that the application under Section 9 was filed by the person who was duly authorized by the Board Resolution dated 15.11.2019 - Finding of Adjudicating Authority that there is different signatory in the demand notice and Section 9 application and name of person who signed notice is not clearly mentioned cannot be ground for rejecting application under Section 9. The Adjudicating Authority ought not have rejected application on aforesaid ground. Now the materials have been brought on record to the effect that person who has given the Section 8 notice was Director of the Appellant, it is satisfying that notice was issued by a competent person - the order of the Adjudicating Authority is set aside - the application before the Adjudicating Authority which may be considered and decided by the Adjudicating Authority after hearing the parties is revived. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Rejection of Section 9 application by the Adjudicating Authority based on technical grounds regarding the signature on the demand notice.
2. Dispute over the details of the person who signed the Section 8 notice and the subsequent rejection of the application under Section 9.
3. Argument regarding the authorization of the person issuing the notice under Section 8 and the Section 9 application.
4. Consideration of the Power of Attorney submitted during the appeal process.
5. Evaluation of the Adjudicating Authority's decision and the need for providing an opportunity to clarify any doubts before rejecting the application.

Analysis:
1. The judgment involves the appeal against the rejection of a Section 9 application by the Adjudicating Authority, citing technical grounds related to the signature on the demand notice issued under Section 8 of the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority found discrepancies in the signature on the notice and the application, raising concerns over the authorization of the person who issued the notice.

2. The Appellant argued that the notice under Section 8 was issued by a duly authorized Director of the Company, and the Adjudicating Authority should have allowed an opportunity to clarify any doubts regarding the signatory. The Respondent contended that the details of the person signing the notice were missing, justifying the rejection of the application.

3. The Court noted that the Section 9 application was filed by a person authorized by a Board Resolution dated 15.11.2019, emphasizing that the application was not submitted by an unauthorized individual. The Adjudicating Authority's concern over the different signatories on the notice and the application was deemed insufficient to reject the Section 9 application.

4. During the proceedings, the Appellant presented a Power of Attorney, which was not submitted before the Adjudicating Authority. The Respondent objected to its consideration, highlighting the absence of this document during the initial application process.

5. Ultimately, the Court overturned the Adjudicating Authority's decision, reinstating the application for further consideration. It emphasized the importance of providing an opportunity to clarify any discrepancies before rejecting an application based on technical grounds. The Court refrained from commenting on the case's merits, directing the Adjudicating Authority to review the application after hearing both parties.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, the Court's evaluation, and the final decision to set aside the Adjudicating Authority's order and revive the application for proper consideration.