Subsidiary Shielded: Digital Signature Alone Insufficient to Establish Corporate Liability Under Insolvency Code Section 9

NCLAT adjudicated a corporate liability dispute involving a subsidiary and service contract. The Tribunal initially held the subsidiary liable based on an employee's digital signature, despite absence of direct contractual privity. Referencing established legal precedent regarding distinct corporate entities, the appellate tribunal ultimately determined that the subsidiary constitutes a separate legal entity with no inherent obligation to discharge its parent company's financial liabilities. The court recognized that a single employee's digital signature cannot unilaterally establish contractual relationship or transfer debt responsibility between corporate entities. Consequently, the appeal was allowed, affirming the subsidiary's independent legal status and exempting it from the holding company's financial obligations under Section 9 of the Insolvency and Bankruptcy Code. .....

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