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CS Professional · Corporate Restructuring, Valuation and Insolvency · Application for Corporate Insolvency Resolution Process

Rudra Logistics Ltd (operational creditor) files a Section 9 application against Vindhya Cement Ltd. The application omits the affidavit required under Section 9(3)(b), and Rudra proposes a resolution professional against whom no disciplinary proceeding is pending. Which course must the Adjudicating Authority follow?

The Adjudicating Authority must first give Rudra notice to rectify the defect within seven days of receiving that notice, and may reject for incompleteness only if it remains uncured. Immediate rejection or admission of an incomplete application is wrong, and Section 10 is not available to an operational creditor.

  1. AReject the application at once as incomplete
  2. BAdmit the application, since the debt is undisputed
  3. CGive notice to Rudra to rectify the defect within seven days of receipt of the notice, before rejecting under the incompleteness groundCorrect
  4. DConvert it into an application under Section 10 by the corporate applicant

Explanation

Section 9(5)(ii)(a) allows rejection for incompleteness, but the proviso requires the Adjudicating Authority first to give notice to rectify the defect within seven days of receipt. Immediate rejection skips this safeguard, and admission requires a complete application. Section 10 is available only to a corporate applicant.

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