Insolvency application cannot be rejected merely because of technical defects, says NCLAT
Dismissal of application as being non-maintainable for technical defects such as omission in appending of signatures on the application in the prescribed format is not warranted, maintained the National Company Law Appellant Tribunal (NCLAT).
Passing the order in the Silvassa Cement Products Pvt. Ltd (appellant) Vs Noor India Buildcon Pvt. Ltd case, the NCLAT noted that the Adjudicating Authority (Ahmedabad bench of NCLT), which was required to pass the order of admission or rejection of the application being satisfied about the completion of the application and proof of debt and default as mandated under Section 9(5) had failed to provide opportunity of rectifying the defect as noticed and allowing the applicant ( Silvassaa Cement) to bring it in conformity with the requirements of law.
The appellant tribunal, therefore, set aside the order of NCLT dismissing the insolvency petition brought by Silvassa Cement against Noor India Buildcon because of technical defects, and remitted the matter back to the Adjudicating Authority to allow the appellant opportunity of rectifying the defect, if any, in the application and thereafter pass order of admission or rejection in regard to initiation of corporate insolvency resolution process (CIRP) on merit.
The Ahmedabad Bench of NCLT had rejected the insolvency application under Section 9 of the IBC on the ground that the application was neither signed by authorised person named above nor it is notarized. The NCLT, thus, rejected the application by terming the ‘petition bad in the eye of law and it is not maintainable in view of the above case laws.’
