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TMI Blog2021 (4) TMI 813X X X X Extracts X X X X X X X X Extracts X X X X ..... - decided in favor of appellant. - Company Appeal (AT) (Insolvency) No. 172 of 2020 - - - Dated:- 19-4-2021 - [Justice Anant Bijay Singh] Member (Judicial) And [V. P. Singh] Member (Technical) For the Appellant : Mr Rachit Kohli, Advocate For the Respondent : Mr Malak Bhatt, Mr Rajat Bector Mr Shivankar, Advocates. JUDGMENT [ Per; V. P. Singh, Member (T) ] This appeal emanates from the Order dated 13 December 2019 passed by the Adjudicating Authority in Company Petition (IB) No. 252/NCLT/AHM/2019, whereby the Application filed by Appellant under Section 9 of the I B Code 2016 was rejected on the ground of maintainability for want of proper Authorisation, which is of the year 2013 when I B Code 2016 was not in existence. The parties are represented by their original status in the Company Petition for the sake of convenience. Appellants Contention; 2. The Applicant/Appellant filed an Application under Section 9 of the I B Code 2016 (in short 'code'), which was dismissed on the ground that the Authorisation annexed with the application was of the year 2013, i.e. before the Insolvency Bankruptcy Code, 2016 came into force. 3. It is con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the Insolvency and Bankruptcy Code 2016. 8. The Adjudicating Authority has rejected the Application only on maintainability ground without deciding the Application on merit. The question that arises for our consideration is as follows; 1. Whether Authorisation for filing a petition under Section 9 of the Code before the commencement of the Code can be treated as a valid authorisation? 2. Whether Adjudicating Authority instead of dismissal of the Petition should have given the opportunity to rectify the defects as per proviso to Section 9 (5) (ii)(a) of the Code? Issue No's 1 and 2; 9. The Adjudicating Authority has dismissed the Petition because the Authorisation to file the Petition is of 2013, whereas the Insolvency and Bankruptcy Code came into existence in 2016. The Appellant contends that the Adjudicating Authority should have granted the liberty to the Appellant to rectify the defects if any. It is also contended that neither the Code nor any Rules and Regulations made thereunder mandates the authorisation post the enactment of the I B Code. 10. The Learned Counsel for the Appellant has placed reliance on the decision of this Tribunal in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to remove the defect. 13. Further, in case of Rajendra Narottamdas Sheth v Smt Heenaben Rajendra Kumar Sheth Company Appeal (AT) (insolvency) No 621 of 2020 this Appellate Tribunal has held that; we do not find any substance in the argument that as such general power of attorney was executed before coming into force of insolvency and bankruptcy code hence, the said chief manager did not have Authority. In our view, it is general power of attorney and not confined to any particular Act or Acts. We do not find any defect on this account with the application under section 7 of IBC. (Emphasis supplied, verbatim copy) 14. In the case of Ramesh Murji Patel(supra) and Rajendra Narottamdas Sheth (supra), this Appellate Tribunal has already taken the view that if Authorisation is prior to the enactment of the Code, then it can not be treated as a defect in the Application and 'authorisation letter, even if, issued prior to the enactment of I B Code can be looked into for the purpose of entertaining an Application under Section 7 or 9 of the Code. 15. In order to ascertain the mandatory conditions of Section 9(5)(ii)(a) of the Code, it is necessary to go through th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f receipt of such notice from the Adjudicating Authority. 16. Thus it is clear that if Applications filed under Section 9 of the Code is found incomplete, then Adjudicating Authority in compliance of proviso to Section 9 (5) (ii)(a) of the Code is obliged to issue notice on the applicant and provide an opportunity to rectify that the defects within seven days, failing which petition can be rejected. 17. In the instant case, the Adjudicating Authority noticed that the Authorisation was much before the commencement of the I B Code, and only on this basis, the Application under Section 9 of the Code was rejected without allowing the applicant to rectify the mistakes, is against the statutory provision of the Code. 18. The Learned Counsel for the Respondent argues that the Appellant was not at all entitled opportunity to rectify the defect in compliance with Section 9(5)(ii)(a) of the Code because Authorisation forms the foundation of entire proceedings under the I B Code. Since the authorisation issue goes to the root of the matter, the same cannot be treated as a curable defect . An incomplete or improper authorisation vitiates the entire proceedings at inception, renderin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s thereby debarring the applicant from filing fresh application or it is to be treated as an administrative order since the rejection was because of the reason that defects were not removed and application was not examined on merits. In the former case it would be travesty of justice that even if the case of the applicant on merits is very strong, the applicant is shown the door without adjudication of his application on merits. If the latter alternative is accepted, then rejection of the application in the first instance is not going to serve any purpose as the applicant would be permitted to file fresh application, complete in all aspects, which would have to be entertained. Thus, in either case, no purpose is served by treating the aforesaid provision as mandatory. 23.2. When the application is listed before the adjudicating Authority, it has to take a decision to either admit or reject the application. For this purpose, fourteen days' time is granted to the adjudicating Authority. If the application is rejected, the matter is given a quietus at that level itself. However, if it is admitted, we enter the third stage. 24. Further, we are of the view that the judgm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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