Debenture trustee authority and limitation govern Section 7 insolvency filing; pre-2020 default cannot invoke Section 10A.

A Section 7 insolvency application initiated through a debenture trustee structure must comply with the governing debenture trust deed and any prescribed majority-based decision process; where that contractual authority is not shown, the initiation is unauthorised. The filing must also be supported by a subsisting power of attorney or other valid corporate authority; an affidavit signed without continuing mandate is defective. Limitation runs from the admitted default date under Article 137, and a pre-pandemic default filed after the extended period remains time-barred. Section 10A does not protect defaults arising before 25.03.2020, so it cannot revive a pre-existing claim.

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Issues: (i) whether non-compliance with the debenture trust deed and the absence of the required majority-based decision invalidated the initiation of the insolvency process; (ii) whether the person who filed the Section 7 application had valid authority under the power of attorney; (iii) whether the Section 7 application was barred by limitation on the admitted date of default; (iv) whether Section 10A of the Insolvency and Bankruptcy Code, 2016 protected the filing.

Issue (i): whether non-compliance with the debenture trust deed and the absence of the required majority-based decision invalidated the initiation of the insolvency process.

Analysis: The debenture trust deed was treated as binding between the parties and as governing the debenture trustee's authority to act. The deed contemplated a structured decision-making process, including majority resolution, before the trustee could take action on the events of default and related remedies. The initiation of insolvency proceedings had to conform to that contractual framework. Since the proceedings were not shown to have been commenced in the manner mandated by the deed, the invocation of Section 7 was held to be procedurally and substantively unauthorised.

Conclusion: The challenge on this ground succeeded and the initiation of the insolvency process was held unsustainable.

Issue (ii): whether the person who filed the Section 7 application had valid authority under the power of attorney.

Analysis: The authority of the signatory to the Section 7 application was tested against the board resolution and the power of attorney. The later corporate authorisation was found to have superseded the earlier arrangement, and the original attorney did not possess a continuing or express mandate to institute insolvency proceedings on the relevant date. Since the affidavit supporting the application was executed by a person lacking subsisting authority, the filing itself was treated as defective at its source.

Conclusion: The filing was held to be unauthorised and the objection was accepted.

Issue (iii): whether the Section 7 application was barred by limitation on the admitted date of default.

Analysis: The admitted date of default was treated as 30.09.2019. Applying Article 137 of the Limitation Act, 1963, the three-year period would expire on 30.09.2022. The Court declined to treat the COVID-related suspension as extending the limitation indefinitely, especially when the default pre-dated the pandemic and the application was filed long after the extended period had ended. The filing on 07.09.2023 was therefore beyond limitation.

Conclusion: The application was held to be barred by limitation.

Issue (iv): whether Section 10A of the Insolvency and Bankruptcy Code, 2016 protected the filing.

Analysis: Section 10A was held to apply only to defaults arising on or after 25.03.2020. The default in question having occurred on 30.09.2019, the statutory suspension did not apply. The provision could not be used to extend limitation for a pre-existing default.

Conclusion: Section 10A was held inapplicable.

Final Conclusion: The insolvency initiation was set aside because it was not instituted in conformity with the governing debenture documentation, was filed through a signatory lacking valid subsisting authority, and was also beyond limitation.

Ratio Decidendi: Where a Section 7 proceeding is initiated through a debenture trustee structure, the application must be supported by valid contractual authority and a subsisting power of attorney, and the period of limitation is computed from the admitted pre-25.03.2020 default without aid from Section 10A of the Insolvency and Bankruptcy Code, 2016.

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