Defects In Board Resolution Authorising CIRP Plea Don't Invalidate Otherwise Valid Proceedings: NCLT Jaipur

The National Company Law Tribunal (NCLT) at Jaipur has held that alleged defects in the certified copy of a Board Resolution, including objections that it did not disclose the date of the Board meeting or carried mechanically reproduced signatures, do not invalidate an insolvency application where the Operational Creditor has, in substance, authorized the initiation of proceedings.

A coram of Judicial Member Reeta Kohli and Technical Member Kavita Bhatnagar was considering an interlocutory application filed by Sai Educare Private Limited, the corporate debtor, seeking rejection of the Section 9 petition filed by Vensysco Technologies Limited.

“The objection is that there are alleged deficiencies in the certified copy of the Board Resolution. Such deficiencies do not by themselves lead to the conclusion that the Operational Creditor had not been authorized to initiate the Section 9 proceedings. As a matter of fact, the proceedings have been continued throughout in the name of the Operational Creditor itself. In such circumstances mere objections regarding the format or contents of the certified copy of the resolution cannot automatically be elevated to the status of a jurisdictional defect.” it held

The corporate Debtor sought rejection of the petition contending that the Operational Creditor had initiated the proceedings without a valid Board Resolution.

The Corporate Debtor contended that the insolvency petition and the statutory demand notice issued under Section 8 of the Insolvency and Bankruptcy Code were not backed by a valid Board Resolution.

It argued that the certified copy of the Board Resolution was undated, did not disclose the date of the Board meeting and contained only a mechanically reproduced signature. It contended that, in the absence of a valid Board Resolution, the demand notice and the subsequent insolvency proceedings were void and unsustainable.

The Tribunal found that the Board Resolution expressly authorised initiation of legal proceedings against the Corporate Debtor, including issuance of the demand notice, filing of the Section 9 petition and execution of pleadings. Rejecting the Corporate Debtor's contention, it held that the Resolution specifically recorded that it had been passed at the Board meeting held on 18 June 2025, identified the meeting, venue and subject matter, and was duly certified by the company's directors.

“Merely, because the Applicant disputes the authenticity of the signatures or questions the form of certification no material has been produced to establish that the Resolution was fabricated, unauthorized or not in fact passed by the Board of Directors. Bald allegations unsupported by any cogent material, cannot displace a document produced on record in the ordinary course of corporate proceedings.” it held

It observed that there is a clear distinction between the complete absence of authority and alleged irregularity in the manner of proving such authority.

“A proceeding instituted by a complete stranger having no authority what so ever stands on an entirely different footing from a proceeding where authority is being questioned only because of alleged deficiencies in the form or contents of the documents evidencing such authority. In the present case the Applicant has not produced any material showing that the person who issued the statutory demand notice or instituted Company Petition was a stranger to the affairs of Operational Creditor or acted contrary to its wishes.” it noted

It held that alleged deficiencies in the certified copy of the Board Resolution did not establish that the Operational Creditor lacked authority to initiate the Section 9 proceedings.

“The maintainability of the insolvency proceedings cannot be determined solely by examining every procedural detail relating to the documentary proof of authorization has been recorded in a particular manner. What is important is whether the proceedings have in substance been instituted on behalf of Operational Creditor through a person competent to represent it.” it added

Relying on the Supreme Court's decision in United Bank of India v. Naresh Kumar, the tribunal observed that courts should examine the substance of corporate authorization rather than reject proceedings on technical defects.

“Applying the said principle to the preset case, this Tribunal finds that the specific Board Resolution produced by the Operational Creditor sufficiently authorizes the institution and prosecution of the present proceedings.” it concluded

Accordingly, the Tribunal dismissed the application.

For Applicant: Advocates Jeetam Kumar Saini, Bilal Ahmed and Dolly Sharma

For Respondent: Advocates Sonal Anand and Shrikant Samanatara