TaxTMI 
TaxTMI 
2021 (4) TMI 813
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 contended that there is no specific provision neither in the Code nor under the Rules and Regulations made thereunder, which mandates authorisation post-enactment of the Insolvency & Bankruptcy Code 2016. Instead of deciding the Section 9 Application on merit, the Learned Adjudicating Authority rejected the application as not maintainable for want of proper Authorisation, which happens to be of 2013 when the I&B Code was not in existence. 4. The Appellant contends that the Adjudicating Authority should have granted the liberty to rectify the defects if any. However, the Learned Adjudicating Authority failed to provide an opportunity of being heard to the Appellant either on account of principles of natural justice or account of non-compliance of the proviso to Section 9(5) (ii)(a) of the Code. Respondent's Contention 5. The Respondent/Corporate Debtor contends that the Application filed by the Operational Creditor under Section....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 case of Ramesh Murji Patel v Aramex India Pvt Ltd. Company Appeal (AT) (Ins)No 1447 of 2019 wherein it is held that; '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". 11. The Learned Counsel for the Appellant also placed reliance on the judgement of this Tribunal in case of Palogics Infrastructure Private Limited v ICICI Bank, Company Appeal (AT) (Ins) No 30 of 2017 wherein it is held that; "36. In so far as, the present case is concerned, the 'Financial Creditor'-Bank has pleaded that by Board's Resolutions dated 30th May, 2002 and 30th October, 2009, the Bank authorised its officers to do needful in the legal proceedings by and against the Bank. If general Authorisation is made by any 'Financial Creditor' or 'Operational Creditor' or 'Corporate Applicant' in favour....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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 the statutory provision of the Code. Section 9 of the Insolvency and Bankruptcy Code 2016 is reads as under; "9. Application for initiation of corporate insolvency resolution process by Operational Creditor.- (1) After the expiry of the period of ten days from the date of delivery of the notice or invoice demanding payment under sub-section (1) of Section 8, if the operational creditor does not receive payment from the corporate debtor or notice of the dispute under sub-section (2) of Section 8, the operational creditor may file an application before the Adjudicating Authority for initiating a corporate insolvency resolution process. (2) The application under sub-section (1) shall be filed in such form and manner and accompanied with such fee as may be prescribed. ******************** (5) The Adjudicating Authority shall, within fourteen days of the receipt of the applicat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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, rendering legal action devoid of Authority. 19. The Learned Counsel for the Respondent further placed reliance on the direction of Hon'ble Delhi High Court in the case of Nibro Ltd v National Insurance Company, AIR 1991 Delhi 25 wherein it is held that the question of the Authority to institute a suit or a claim on behalf of the Company cannot be termed as a technical matter. 20. It is pertinent to mention that the Insolvency and Bankruptcy Code is a self-contained Code. It has made provision for providing an opportunity to rectify the defects of application, and in any position, it can not be denied. 21. In case of Surendra Trading Co. v. Juggilal Kamlapat Jute Mills Co. Ltd., (2017) 16 SCC 143 : 2017 SCC OnLine SC 1208 : (2018) 2 SCC (Civ) 730 at page 149 Hon'ble Supreme Court of India has held that the time provided for rectifying the defection app....
X X X X Extracts X X X X
X X X X Extracts X X X X
....t 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 judgments cited by NCLAT and the principle contained therein applied while deciding that period of fourteen days within which the adjudicating Authority has to pass the Order is not mandatory but directory in nature would equally apply while interpreting the proviso to sub-section (5) of Section 7, Section 9 or sub-section (4) of Section 10 as well. After all, the applicant does not gain anything by not removing the objections inasmuch as till the objections are removed, such an application would not be entertained. Therefore, it is in the interest of the applicant to remove the defects as early as possible. 25. Thus, we hold that the aforesaid provision of removing the defects within seven days is directory and not mandatory in nature. However, we would like to enter a caveat. 28. In fine, these appeals are allowed and that part ....