Power of Attorney Holder cannot initiate Insolvency proceedings without specific authorization

Palogix Infrastructure Private Limited Versus ICICI Bank Limited

Palogix Infrastructure Private Limited Versus ICICI Bank Limited - Tmi Issues Involved:
1. Maintainability of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (I&B Code) filed through a Power of Attorney Holder.
2. Specific authorization requirement for initiating Corporate Insolvency Resolution Process (CIRP).
3. Validity of the removal of defects within the prescribed period.

Issue-wise Analysis:

1. Maintainability of the application under Section 7 of the I&B Code filed through a Power of Attorney Holder:

The core issue was whether a Power of Attorney Holder, authorized before the enactment of the I&B Code, could file an application under Section 7. The Adjudicating Authority had a divided opinion, leading to a larger Bench's decision. The majority judgment held that specific authorization for initiating CIRP is necessary. The Tribunal emphasized that the I&B Code and Adjudicating Authority Rules recognize that a Financial Creditor, being a juristic person, can only act through an "Authorized Representative." The Tribunal concluded that a Power of Attorney Holder is not competent to file such an application, as the Code mandates specific authorization.

2. Specific authorization requirement for initiating CIRP:

The Tribunal explored the necessity of specific authorization for initiating CIRP. It referred to various rules and provisions, including Section 7 of the I&B Code, Adjudicating Authority Rules, and NCLT Rules, 2016. The Tribunal noted that the I&B Code is a complete code in itself, and the provisions of the Power of Attorney Act, 1882, cannot override the specific requirements of the I&B Code. The Tribunal held that only an "authorized person," distinct from a "Power of Attorney Holder," could make an application under Section 7, and such authorization must be explicitly stated by the Board of Directors.

3. Validity of the removal of defects within the prescribed period:

The Tribunal addressed the objection regarding the removal of defects within the seven-day period. The Corporate Debtor argued that the defects were not removed within the stipulated time. However, the Tribunal clarified that the seven days should be counted from the date of receipt of the notice from the Adjudicating Authority, excluding holidays. The Tribunal found no specific pleadings from the Corporate Debtor regarding the date of receipt of the notice and accepted the Financial Creditor's stand that the defects were removed within the permissible period, considering the holidays.

Conclusion:

The Tribunal dismissed all appeals and affirmed the order of admission of the application under Section 7. It held that while a Power of Attorney Holder is not empowered to file an application under the I&B Code, an authorized person with specific authorization from the Board of Directors can do so. The Tribunal emphasized the importance of adhering to the specific provisions of the I&B Code and the necessity of proper authorization for initiating CIRP.