NCLAT Dismisses Order Under Section 9 of IBC

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The Tribunal had examined as to whether the Adjudicating Authority gave an opportunity to the Appellant to rectify his errors in the Order passed on 13th December 2019.

Facts

The Appellant had filed a petition under Section 9 of the I & B Code 2016 on December 13th 2019 but it was dismissed on grounds of maintainability. The Adjudicating Authority on December 13th 2019 stated this petition would be dismissed as the authorization annexed with the application was of the year 2013.

The Order on December 13th 2019 did not please the Appellant, so he filed an appeal against it. The two main issues in this appeal were whether authorization of a petition filed under Section 9 of the I & B Code before the commencement of the Code is a valid authorization and whether the Adjudicating should have given the opportunity to rectify the defects of the application instead of dismissing it.

Arguments Advanced

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The Respondent Side stated that there is no rule or regulation in the I & B Code which mandates authorization post-enactment of the Insolvency and Bankruptcy Code 2016.

The Appellant side stated that the Adjudicating Authority should have given the liberty to rectify the defects if any. The Adjudicating Authority failed in providing an opportunity to the Appellant to rectify errors. The Order was not in compliance with the provisions of Section 9(5)(ii)(a). It was also not in compliance with the principles of natural justice.

The Respondent side stated that the Authorization Company Appeal (AT) (Insolvency) No. 172 of 2020 2 of 12 stated that the I & B Code can only be used for those applications post-enactment of the code. The Respondent side further added that the Appellant should not be granted seven days under Section 9 (5)(ii)(a) to rectify the defects of the application which concerns the issue of authorization. The Respondent further added to the previous statement by stating that authorization refers to the root matter of application due to which it cannot be rectified within seven days.

Court Observation

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The Court has taken the case of Ramesh Murji Patel v Aramex India Pvt Ltd to understand that an authorisation letter which may be filed before the commencement of the Code can still be looked into by the Adjudicating Authority under Section 7 & Section 9 of the Code. The Tribunal also used the case Surendra Trading Co. v. Juggilal Kamlapat Jute Mills Co. Ltd. In which the Court had provided more than seven days to rectify the errors of the application.

Decision

The Tribunal stated that the Adjudicating Authority has failed to provide the Appellant with the opportunity to rectify the errors. Hence, the impugned Order is dismissed. The Appeal had succeeded. The Adjudicating Authority was directed to decide the application at the earliest.

Click here to read the judgement.


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