Curable authorisation defects and exclusive DRT recovery jurisdiction limit parallel winding-up proceedings for bank debt claims.

A winding-up petition signed through an imperfect authority was not to fail on a mere technicality, because defects in authorisation can be cured by rectification or ratification where substantive rights are unaffected. In contrast, where a bank had already invoked the special recovery mechanism before the Debt Recovery Tribunal under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, the Company Court should not entertain a parallel winding-up petition as a recovery device. The special statute was treated as the more efficacious forum, and parallel proceedings were avoided to prevent inconsistent and duplicate litigation.

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Issues: (i) Whether an inadequacy in the authority of the signatory to a winding-up petition required dismissal of the petition or could be cured by rectification or ratification. (ii) Whether a winding-up petition by a bank was maintainable when recovery proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 had already been instituted before the Debt Recovery Tribunal.

Issue (i): Whether an inadequacy in the authority of the signatory to a winding-up petition required dismissal of the petition or could be cured by rectification or ratification.

Analysis: The Power of Attorney objection on stamping was rejected because stamp duty had been adjudicated and deposited. On the question of authority, the governing principle was that procedural defects which do not go to the root of the matter should not defeat substantive rights. A corporation may authorise a person to sign pleadings, and where the authority is found wanting, the defect can be cured by ratification or other appropriate rectification. The Court preferred this approach over dismissal on a mere technical objection.

Conclusion: The objection to the Power of Attorney was rejected and the defect was treated as curable.

Issue (ii): Whether a winding-up petition by a bank was maintainable when recovery proceedings under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993 had already been instituted before the Debt Recovery Tribunal.

Analysis: The Court held that once the bank had already chosen the statutory recovery forum under the Recovery of Debts Due to Banks and Financial Institutions Act, 1993, it was not proper to pursue the summary winding-up remedy simultaneously. The RDB Act confers exclusive jurisdiction on the Tribunal for adjudication of debt recovery claims and overrides inconsistent provisions of other laws. A winding-up petition was treated as part of an adjudicatory recovery process, and permitting parallel proceedings would amount to needless multiple litigation. The Court distinguished authorities where no exclusive statutory remedy of this kind was involved and concluded that the RDB Act remedy was the more efficacious one.

Conclusion: The winding-up petition was not maintainable in the circumstances and was dismissed.

Final Conclusion: The petition could not proceed in the Company Court because the signatory defect was curable but the bank had already elected to pursue the special statutory recovery mechanism before the Debt Recovery Tribunal, making the winding-up remedy inappropriate.

Ratio Decidendi: Where a special statute vests exclusive jurisdiction in a recovery tribunal for adjudication of a bank's debt claim, the Company Court should not entertain a parallel winding-up petition as a recovery device, and technical defects in authorisation to sign the petition are curable by rectification or ratification.

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