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2021 (1) TMI 1220 - Tri - Insolvency and BankruptcyMaintainability of application - initiation of CIRP - Corporate Debtor failed to make repayment of its dues - Financial Creditors - existence of debt and dispute or not - respondent has taken a defence that the Director who has entered into an agreement with the applicant had obtained the amount without the approval of the Board of Director and without having special resolution passed by the board of Director - HELD THAT:- Mere plain reading of the provision shows that under this provision any person may inspect the documents, which are kept in the office of Registrar regarding the incorporation of the company, which includes the Article of Association and Memorandum of Association. 'The documents which a person is entitled to get from the office of Registrar u/s 399 of the Companies Act and if he fails to see and verify it prior to entering with a contract with the company then the company is not liable for that act, if it is done by the Director, because it comes under the doctrine of constructive ' notice. But the question is "does the doctrine of constructive notice allow the outsiders to have notice of internal affairs of the company", the answer is no, because doctrine of constructive notice is subject to exception i.e Indoor Management and that is the reason petitioner has taken this plea. In view of Section 179(3) (d) the Board of Director of Company shall exercise its powers subject to the provision contained in the Act or in the memorandum or articles and one of the power which is referred in Section 179 (3)(d) of the Companies Act, 2013 is also to borrow the money, of course, in view of Section 180(1)(c) that is subject to special resolution passed by the Board of Directors and in view of Section 180(5) of the Companies Act, 2013 no debt incurred by the company in excess of the limit imposed by Clause C of Sub Section 1 shall be valid or effectual unless the lender proves that he advanced the loan in good faith without knowledge that the limit imposed by that clause had been exceeded but herein the case in hand, we notice that it is not the case of respondent that the debt incurred by the company is in excess of the limit imposed by Section 180(1) (c) of the Companies Act 2013 rather the claim of the respondent is that the Director who signed the loan agreement had not been authorized by the special resolution passed by the Board of Directors as required under Section 180 of the Companies Act, 2013, therefore, Section 180(5) of the Companies Act is not applicable. The receiving of the amount has been not denied by the respondent and it is also admitted by the respondent that amount has not been paid because the director who entered into an agreement was not authorized by the special resolution as required under Section 180(1) of the Companies Act to borrow the loan and in view of Section 7(5) of the IBC the moment the Adjudicating Authority came to the conclusion that default has occurred and the application under sub-section (2) is complete, and there is no disciplinary proceedings pending against the proposed resolution professional then the Adjudicating Authority has no option but to admit the application filed under Section 7 of the IBC. The applicant has succeeded to establish that there is a financial debt and Corporate Debtor is in default in making the payment of that financial debt, the application is complete - Application admitted - moratorium declared.
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