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Issues: (i) whether the corporate debtor had committed default in payment of operational debt so as to warrant admission of the insolvency petition, and whether the memorandum of understanding could displace the creditors' claim; (ii) whether the petition was maintainable when filed through an authorised signatory and subsequently ratified by board resolution.
Issue (i): Whether the corporate debtor had committed default in payment of operational debt so as to warrant admission of the insolvency petition, and whether the memorandum of understanding could displace the creditors' claim.
Analysis: The petition was found complete under Section 9(5)(ii) of the Insolvency and Bankruptcy Code, 2016. The record showed supply of goods, issuance of invoices, non-payment, and reflection of the liabilities in the corporate debtor's own books and statutory returns. The memorandum of understanding could not bind the operational creditors because there was no assent, privity of contract, or valid novation in their favour under Section 62 of the Indian Contract Act, 1872. A subsequent arrangement between other parties did not extinguish the corporate debtor's liability to the operational creditors.
Conclusion: The default was established and the insolvency petition was rightly admitted in favour of the petitioners.
Issue (ii): Whether the petition was maintainable when filed through an authorised signatory and subsequently ratified by board resolution.
Analysis: The filing through the authorised signatory was treated as valid because the act was ratified by the board resolution. Retrospective validation by ratification was accepted as permissible, and the petition was therefore not vulnerable on the ground of lack of proper authorisation.
Conclusion: The petition was maintainable and validly presented.
Final Conclusion: The insolvency applications were admitted, moratorium was directed, and the matter was referred for nomination of an interim resolution professional.
Ratio Decidendi: In insolvency proceedings, proved operational debt and default cannot be defeated by an unconsented third-party memorandum of understanding, and filing defects are curable by valid ratification by the creditor's board.
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