Gaja Trustee Company Private Limited & ... vs Haldia Coke And Chemicals Private ...

Gaja Trustee Company Private Limited & Ors. ...Appellants

Vs.

Haldia Coke and Chemicals Private Limited ...Respondent

Present: For Appellant: - Mr. Sudipto Sarkar, Senior Advocate assisted by Mr. Abhijeet Sinha, Mr. Jatin Pore, Mr. Shashank Agarwal, Mr. Gurnishan Bir Singh Mann and Mr. Saikat, Advocates.

For Respondents: - Mr. Arun Kathpalia, Senior Advocate assisted by Ms. Pooja M. Saigal, Ms. Khyati Sharma and Mr. Samaksh Goyal, Advocates.

JUDGMENT

SUDHANSU JYOTI MUKHOPADHAYA, J.

The Appellants- Shareholders of Haldia Coke and Chemicals

Private Limited ('Corporate Debtor') have preferred the appeal against an

order dated 11th July, 2017, passed by the Adjudicating Authority

(National Company Law Tribunal), Division Bench, Chennai, whereby

and whereunder the application preferred by the 'Corporate Applicant'

('Corporate Debtor') under Section 10 of the Insolvency and Bankruptcy

Code, 2016 (hereinafter referred to as "I&B Code") has been admitted,

Company Appeal (AT) (Insolvency) No. 137 of 2017 2

the order of 'Moratorium has been passed and the 'Insolvency

Resolution Professional' has been appointed with certain directions.

2. The questions arise for consideration in this appeal are:

i. Whether it is mandatory for the 'Board of Directors' to

place the proposal before the shareholders in the 'Extra

Ordinary General Meeting' (EoGM) before moving an

application under Section 10 of the 'I&B Code' for initiation

of 'Corporate Insolvency Resolution Process' against the

Company itself ? and;

ii. Whether the decision of the 'Board of Directors' to file

application under Section 10 of the 'I&B Code' for initiation

of 'Corporate Insolvency Resolution Process' against the

Company without approval of the EoGM is against the

provisions of the' Articles of Association' of the Company

and other provisions of law?

3. According to the Appellants, the application preferred by the

person authorized by the 'Board of Directors' filed application under

Section 10 of the 'I&B Code' is not maintainable for want of approval of

the Shareholders'.

4. Learned Senior Counsel appearing on behalf of the Appellants

submitted that the decision to file an application under Section 10 of

the 'I&B Code' is vested with the 'shareholders' and the decision of the

Company Appeal (AT) (Insolvency) No. 137 of 2017 3

'Board of Directors' is against the provisions of the Articles of

Association and the Companies Act and regulations framed thereunder.

5. According to learned Senior Counsel for the Appellants, Section 5

(5) demarcates the difference between the application which is made by

the 'Corporate Debtor' i.e. the company itself and those made by

"person having control and supervisions of the financial affairs of the

'Corporate Debtor' or "the persons who is in charge of managing the

operations of the 'Corporate Debtor'". Any application under Section 10

made on behalf of the 'Corporate Debtor' on the basis of the resolution

of the Board of Directors, would be nothing but usurping the powers/

entitlement of the shareholders. According to him, Section 5(5) itself

contemplates that a shareholders and other persons can be a 'Corporate

Applicant'. Moreover, Section 5(5) (b) refers to the constitutional

document of the company thereby indicates the 'Articles of Association'

of the Company which is relevant.

6. It was further submitted that the shareholders are the persons

with financial stake whose rights will be seriously impaired. In the

present case, the Appellants' stake of equity share in the Company is

32% of the entire paid up capital. It is also material that the 'Financial

Creditors' have also opposed the application filed by the Board of

Directors under Section 10.

7. Referring to the objective of the Articles of Association of the

Company, it was submitted that the said Articles of Association

Company Appeal (AT) (Insolvency) No. 137 of 2017 4

provided certain matters as 'affirmative vote matters' is inter alia to put

restrictions on the powers of the 'Board of Directors' in case of the

specified matters. The effect being that without specific consent as

mandated in the Articles of Association, the Board of Directors will not

have any power in relation to the said matters. According to him, the

Articles of Association are to be construed accordingly and the

restrictions imposed therein are to be abided by the Board of Directors

and any purported exercise of the powers by the Board of Directors,

which is contrary to the restrictions as per the Articles of Association

and/or not permitted thereunder, is clearly ultra vires and void.

8. It was further submitted that the purported decision of the 'Board

of Directors' to file the application under Section 10 of the 'I&B Code' is

contrary to the Articles of Association of the Respondent and is invalid

and non-est.

9. Referring to Article 1.1.3 (d, e, h, i, n, q, r, t) of the Articles of

Association, it was contended that the purported decision to file the

application is squarely covered by affirmative vote matters for which, as

per Article 9.1, prior written consent of the Appellants was mandatory.

The Articles of Association of the Company were amended to reflect the

provisions of the share subscription and shareholders' agreement dated

31st May, 2010 inter alia, executed amongst the Appellants and the

Respondents, pursuant to which, the Appellants had invested sum of

Rs. 1,25,00,00,000/- in the Respondents and the holding of the

Company Appeal (AT) (Insolvency) No. 137 of 2017 5

Appellants constitute 32% of the entire paid up share capital of the

Company.

10. Learned Senior Counsel appearing on behalf of the Respondents

submitted that the appeal has been preferred by minority equity

shareholder along with preferential shareholders. According to him, the

'Corporate Debtor' having committed defaults in terms of Section 3(12),

the application under Section 10 by the 'Corporate Applicant' is

maintainable. The entire purpose of exercise of filing the application

under Section 10 is to ensure resolution of insolvency and to avoid

liquidation; which mandate and object of the 'I&B Code'. It is obligating

of the 'Resolution Professional' to preserve and protect the assets of the

'Corporate Debtor', and to ensure that the Company continuous as

"going concern".

11. Learned Senior Counsel for the Respondents further submitted

that the preamble of the enactment and the intent and object of the

'I&B Code' is maximization of value of assets of a 'Corporate Debtor' by

first attempting a resolution, failing which liquidation of the Company.

The Board of Directors of a Company are the best judge of the financial

health of the company and are alone capable of taking an informed

decision to maximize value of assets of the company. Such matters

cannot be subjected to shareholders' approval in order to trigger the

resolution process, since the entire purpose of expeditious attempt

towards resolution may stand defeated.

Company Appeal (AT) (Insolvency) No. 137 of 2017 6

12. It was further submitted that the 'Corporate Insolvency

Resolution Process' is a statutory process and completely governed and

guided by rigors of Section 10 of the 'I&B Code'. If the Adjudicating

Authority, on examination of application under Section 10, finds that

there has been a default in payment of debt and that the application is

in conformity with the provisions of Section 10 of the 'I&B Code' and

other applicable rules and forms and that the 'Corporate Applicant' is

not otherwise ineligible under Section 11 of the 'I&B Code', it must

admit the application so as to initiate 'Corporate Insolvency Resolution

Process'.

13. Reliance placed on the decision of this Appellate Tribunal in

"Unigreen Global Private Limited V/s. Punjab National Bank─

Company Appeal (AT) (Insolvency) No. 81 of 2017".

14. According to him, for filing an application under Sections 7 or 9

or 10, there is no requirement of shareholders' approval. The 'Corporate

Debtor' itself, acting through its Board of Directors, is competent to do

so, which in the present case has taken resolution on 13th May, 2017 to

move application under Section 10 of the 'I&B Code'.

15. Learned Senior Counsel for the Respondents submitted that the

appended instructions to Form 6 (at Annexure VII) prescribes the

document such as-- Articles of Association or shareholders' agreement

is required only for the 'Corporate Applicant' to submit. The application

Company Appeal (AT) (Insolvency) No. 137 of 2017 7

having been preferred by the 'Corporate Debtor' itself, through Sh. M.

Natarajan, CEO, who has been duly authorized by the Board of

Directors resolution dated 13th May, 2017, the application under

Section 10 is maintainable.

16. According to him, a Company acts through its 'Board of Directors'

and in terms of Section 179 of the Companies Act, 2013, the Board of

Directors of a Company is entitled to exercise all such powers, and to do

all acts and things, as the Company is authorized to exercise to do.

17. Reliance was placed on the clarification issued by the Ministry of

Corporate Affairs dated 25th October, 2017, with regard to the

requirement of approval of shareholders for a 'Resolution Plan' qua the

'Insolvent Corporate Debtor'.

18. Further, according to Respondent, clause 1.1.3 and in particular

sub-clause (r) of the definitions clause in the Articles of Association of

the company and clause 9.1 of the Articles of Association, is entirely

misplaced and is devoid of any merit, as what the Article seeks to do is

to provide a reserved matter in the event the company opts for/resolves

upon to initiate a voluntary winding up process, a concept which is

entirely different and distinct from an 'Insolvency Resolution Process'.

19. According to him, a voluntary winding up must only lie if the

shareholders approve the same and the same is also evident from the

provisions of Section 59 of the 'I&B Code'. the two parts are treated

Company Appeal (AT) (Insolvency) No. 137 of 2017 8

differently since part dealing with a voluntary winding up specifically

provides for a shareholders' resolution, no such imposition exists for a

'Corporate Insolvency Resolution Process'.

20. It was further submitted that the 'Corporate Insolvency

Resolution Process' is encapsulated in Chapter II whereas liquidation

process is provided for in Chapter III of the 'I&B Code'. Further, the

provisions of Voluntary Liquidation of Insolvency Code is provided

under Chapter V of the 'I&B Code'. Pertinently, specific

Rules/Regulations have been notified in the 'I&B Code' governing each

such process. The Insolvency and Bankruptcy Board of India

(Insolvency Resolution Process for Corporate Persons) Regulations,

2016 and Application to Adjudicating Authority Rules, 2016 would

govern the 'Corporate Insolvency Resolution Process'. The Insolvency

and Bankruptcy Board of India (Liquidation Process) Regulations 2016

would govern the liquidation process under Chapter III and the

Insolvency and Bankruptcy Board of India (Voluntary Liquidation

Process) regulations, 2017 would govern the voluntary liquidation

process under Chapter V of the 'I&B Code'.

21. In regard to Article 9.1, it was submitted that the said Article is to

be read with the definition clause of Articles of Association is to be

interpreted to include Insolvency, the Article would be void/un-

enforceable in view of Section 238 of the 'I&B Code'. A similar provision

is also incorporated in Section 6, Companies Act, 2013 which stipulates

Company Appeal (AT) (Insolvency) No. 137 of 2017 9

that the provisions of Act shall have effect notwithstanding anything

contrary contained in the memorandum or Articles of a Company and

that any provision contained in the memorandum, articles, agreement

or resolution shall, to the extent to which it is repugnant to the

provisions of this Act become or be void, as the case may be. The

alleged reserve matter pertaining to liquidation, dissolution and winding

up, will therefore, have no applicability for an action taken by the Board

of Directors in the interest of the Company, its shareholders as well as

creditors of the company by seeking to invoke 'Corporate Insolvency

Resolution Process'.

22. It was submitted that the right to invoke a statutory remedy

cannot be curtailed in the manner contemplated or asserted by the

Appellant. Reliance was placed on "Surendra Kumar Dhawan and

Anr. V/s. R. Vir and Ors.─ (1977) Vol 47 Company Cases 276" and

"O.P Gupta V/s. Shiv General Finance (P) Limited & Ors.─ (1977)

Vol. 47 Company Cases 279".

23. According to the Respondents, application under Section 10 of

the 'I&B Code' being complete in all respects, was supported by a valid

resolution of the Board of Directors of the Company, it was rightly

admitted.

24. We have heard learned counsel for the parties and perused the

record and relevant provisions.

Company Appeal (AT) (Insolvency) No. 137 of 2017 10

25. Article 1.1.3 of Articles of Association defines "Affirmative Vote

Matters", relevant of which reads as follows:

"1.1.3 "Affirmative Vote Matters" means the

following matters listed below whether proposed to

be decided upon at the Board and/or at the

Shareholders' meeting or in any other manner:

(a) Any strategic alliance/ joint venture proposal

to be entered into by the Company or any

incorporation of a subsidiary;

(b) To acquire through subscription, purchase or

otherwise, securities, debentures or bonds in

or of any other body corporate;

(c) Any amendment to the provisions of the

Memorandum or Articles or other

constitutional documents of the Company;

xxx xxx xxx

(l) Creating any Encumbrance on the Assets of the

Company over and above an aggregate amount

exceeding Rs. 25,00,000/- (Rupees Twenty Five

Lacs only);

(m) Creation of any lien on the Shares held by the

Promoters, or any assets of the Company valued in

excess of 5% of the net worth of the Company;

Company Appeal (AT) (Insolvency) No. 137 of 2017 11

(n) Sale or disposal of the Company's assets which

during the financial year of the Company have a

fair market value of more than Rs. 50,00,000/-;

(o) Capital expenditure exceeding Rs.

5,00,00,000/- (Rupees Five Crores only) in any

financial year other than as approved in the

business plan;

(p) Approval of the annual financial statements,

distribution of profits and coverage of losses of the

Company;

(q) Amalgamation or re-organization or

consolidation of the Company;

(r) A liquidation, dissolution or winding-up of the

Company or any of its subsidiaries;

(s) Filing of all offering materials to be utilized in

connection with any public offering of shares of the

company;

(t) Any alteration of any rights attached to any

share capital of the Company."

26. From clause (r) of Article 1.1.3 of the Articles of Association it is

clear that liquidation, dissolution or winding-up of the Company or any

of its subsidiaries to be placed for affirmative vote at the Shareholders

meeting upon decision of the 'Board of Directors'.

Company Appeal (AT) (Insolvency) No. 137 of 2017 12

27. Article 9.1 which also relate to "Affirmative Vote Matters", which

reads as follows:

"9. Affirmative Vote Matters

9.1 No action or decision shall be taken and/or no

resolution shall be adopted at a Board meeting or a

Shareholder meeting any committee thereof, or any

of the employees, officers or managers or the Target

Companies, in respect of any Affirmative Vote Matter

save and except with the prior written consent of the

Investors.

For this purpose, any connected contracts or

transactions shall be combined to determine the

applicability of the limits specified in the Affirmative

Vote Matters."

28. From the aforesaid provisions, it is clear that no action or

decision can be taken and/or no resolution can be adopted at a Board

meeting or a Shareholders meeting any committee thereof, or any of the

employees, officers or managers or the Target Companies, in respect of

any 'Affirmative Vote Matter' save and except with the prior written

consent of the Investors.

Company Appeal (AT) (Insolvency) No. 137 of 2017 13

29. Article 9.2 mandate that the 'affirmative vote matters' specified in

Article 9.1 shall be taken by the Company only at a 'general meeting', as

quoted below:

"9.2 In the event the provisions of Article 9.1

hereof are rendered unenforceable under law, all

decision in relation to any of the Affirmative Vote

Matters specified in Article 9.1 shall be taken by

the Company only at a general meeting."

30. From the aforesaid provision, it is clear that for the purpose of

liquidation, dissolution or winding-up of the Company or any of its

subsidiaries, 'affirmative vote matters' is required to be taken by the

Company only at a general meeting.

31. Learned Senior Counsel for the Respondents referred to Section

179 of the Companies Act, 2013 to suggest that the Company acts

through its Board of Directors. However, as per 1st and 2nd proviso of

Section 179, the Board of Directors of the Company is entitled to

exercise all such powers is subject to the provisions contained in the

memorandum or articles of the Company. Under sub-section (3) of

Section 179, the Board of Directors have been provided with limited

power to act on behalf of the Company and have not been empowered to

file an application for 'Corporate Insolvency Resolution Process' under

Section 10 which may result into liquidation of Company itself in

Company Appeal (AT) (Insolvency) No. 137 of 2017 14

absence of proper 'Resolution Plan'. This is apparent from the relevant

provision of Section 179 as quoted below:

"179. Powers of Board. ─ (1) The Board of

Directors of a company shall be entitled to

exercise all such powers, and to do all such acts

and things, as the company is authorised to

exercise and do:

Provided that in exercising such power or doing

such act or thing, the Board shall be subject to the

provisions contained in that behalf in this Act, or

in the memorandum or articles, or in any

regulations not inconsistent therewith and duly

made thereunder, including regulations made by

the company in general meeting:

Provided further that the Board shall not

exercise any power or do any act or thing which is

directed or required, whether under this Act or by

the memorandum or articles of the company or

otherwise, to be exercised or done by the

company in general meeting.

Company Appeal (AT) (Insolvency) No. 137 of 2017 15

(2) No regulation made by the company in general

meeting shall invalidate any prior act of the Board

which would have been valid if that regulation

had not been made.

(3) The Board of Directors of a company shall

exercise the following powers on behalf of the

company by means of resolutions passed at

meetings of the Board, namely: --

(a) to make calls on shareholders in respect

of money unpaid on their shares;

(b) to authorise buy-back of securities under

section 68;

(c) to issue securities, including debentures,

whether in or outside India;

(d) to borrow monies;

(e) to invest the funds of the company;

(f) to grant loans or give guarantee or provide

security in respect of loans;

(g) to approve financial statement and the

Board's report;

(h) to diversify the business of the company;

(i) to approve amalgamation, merger or

reconstruction;

Company Appeal (AT) (Insolvency) No. 137 of 2017 16

(j) to take over a company or acquire a

controlling or substantial stake in another

company;

(k) any other matter which may be

prescribed:

Provided that the Board may, by a resolution

passed at a meeting, delegate to any committee of

directors, the managing director, the manager or

any other principal officer of the company or in the

case of a branch office of the company, the

principal officer of the branch office, the powers

specified in clauses (d) to (f) on such conditions as

it may specify:

Provided further that the acceptance by a

banking company in the ordinary course of its

business of deposits of money from the public

repayable on demand or otherwise and

withdrawable by cheque, draft, order or

otherwise, or the placing of monies on deposit by

a banking company with another banking

company on such conditions as the Board may

prescribe, shall not be deemed to be a borrowing

of monies or, as the case may be, a making of

Company Appeal (AT) (Insolvency) No. 137 of 2017 17

loans by a banking company within the meaning

of this section.

Explanation I.--Nothing in clause (d) shall

apply to borrowings by a banking company from

other banking companies or from the Reserve

Bank of India, the State Bank of India or any

other banks established by or under any Act.

Explanation II. --In respect of dealings between

a company and its bankers, the exercise by the

company of the power specified in clause (d) shall

mean the arrangement made by the company

with its bankers for the borrowing of money by

way of overdraft or cash credit or otherwise and

not the actual day-to-day operation on overdraft,

cash credit or other accounts by means of which

the arrangement so made is actually availed of.

(4) Nothing in this section shall be deemed to

affect the right of the company in general meeting

to impose restrictions and conditions on the

exercise by the Board of any of the powers

specified in this section."

Company Appeal (AT) (Insolvency) No. 137 of 2017 18

32. On initiation of 'Corporate Insolvency Resolution Process', the

Board of Directors are suspended, it cannot exercise its power during

the period of 'Moratorium'. If sub-section (4) of Section 179 is seen, it

will be evident that the said Section 179 shall not be deemed to affect

the right of the Company in general meeting to impose restrictions and

conditions on the exercise by the Board of any of the powers specified in

the said Section. Therefore, the Company has right in the general

meeting to impose restrictions and conditions which will prevail over the

powers of the Board as specified in sub-section (3) of Section 179.

33. In "John Tinson & Co. Pvt. Ltd. & Ors. V/s. Surjeet Malhan

(Mrs) and Anr.−(1997) 9 SCC 651" , the Hon'ble Supreme Court held

that "it is now a well-settled legal position that Articles of Association of

a private company is a contract between the parties."

34. In "Naresh Chandra Sanyal V/s. Calcutta Stock Exchange

Association Ltd.−1971 (1) SCC 50", the Hon'ble Supreme Court

observed that subject to the provisions of the Companies Act, the

Company and the members are bound by the provisions contained in

the Articles of Association, as quoted below:

"14. Subject to the provisions of the Companies

Act the Company and the members are bound by

the provisions contained in the Articles of

Association. The Articles regulate the internal

management of the Company and define the

Company Appeal (AT) (Insolvency) No. 137 of 2017 19

powers of its officers. They also establish a

contract between the Company and the members

and between the members inter se. the contract

governs the ordinary rights and obligations

incidental to membership in the Company. In the

absence of any provisions contained in the Indian

Companies Act which prohibit a Company from

forfeiting a share for failure on the part of the

member to carry out an undertaking or an

engagement the Articles of a Company which

provide that in certain events membership rights of

the shareholder including his right to the share will

be forfeited are binding. The Articles of Association

of the Exchange expressly provide that in the event

of the member failing to carry out the engagement

and in the conditions specified therein his share

shall stand forfeited. Articles 22, 24, 26, 27 and 29

of the Exchange relating to forfeiture of shares in

certain events are therefore valid."

35. The Hon'ble Supreme Court in "Life Insurance Corporation of

India V/s. Escorts Ltd. and Others. ─ (1986) 1 SCC 264" held:

"A Company is, in some respects, an institution like

as State functioning under its 'basis Constitution'

Company Appeal (AT) (Insolvency) No. 137 of 2017 20

consisting of the Companies Act and the

memorandum of Association. Carrying the analogy

of constitutional law a little further, Gower describes

"the members in general meeting" and the

directorate as the two primary organs of a company

and compares them with the legislative and the

executive organs of a Parliamentary democracy

where legislative sovereignty rests with Parliament,

while administration is left to the Executive

Government, subject to a measure of control by

Parliament through its power to force a change of

Government. Like the Government, the Directors will

be answerable to the 'Parliament' constituted by the

general meeting. But in practice (again like the

Government), they will exercise as much control over

the Parliament as that exercises over them. Although

it would be constitutionally possible for the company

in general meeting to exercise all the powers of the

company, it clearly would not be practicable (except

in the case of one or two - man - companies) for day-

to-day administration to be undertaken by such a

cumbersome piece of machinery. So the modern

practice is to confer on the Directors the right to

exercise all the company's powers except such as

Company Appeal (AT) (Insolvency) No. 137 of 2017 21

general law expressly provides must be exercised in

general meeting. Gower's Principles of Modern

Company Law. Of course, powers which are strictly

legislative are not affected by the conferment of

powers on the Directors as section 31 of the

Companies Act provides that an alteration of an

article would require a special resolution of the

company in general meeting. But a perusal of the

provisions of the Companies Act itself makes it clear

that in many ways the position of the directorate vis-

a-vis the company is more powerful than that of the

Government vis-a-vis the Parliament. The strict

theory of Parliamentary sovereignty would not apply

by analogy to a company since under

the Companies Act, there are many powers

exercisable by the Directors with which the members

in general meeting cannot interfere. The most they

can do is to dismiss the Directorate and appoint

others in their place, or alter the articles so as to

restrict the powers of the Directors for the future.

Gower himself recognises that the analogy of the

legislature and the executive in relation to the

members in general meeting and the Directors of a

Company is an over-simplification and states "to

Company Appeal (AT) (Insolvency) No. 137 of 2017 22

some extent a more exact analogy would be the

division of powers between the Federal and the

State Legislature under a Federal Constitution." As

already noticed, the only effective way the members

in general meeting can exercise their control over the

Directorate in a democratic manner is to alter the

articles so as to restrict the powers of the Directors

for the future or to dismiss the Directorate and

appoint others in their place. The holders of the

majority of the stock of a corporation have the power

to appoint, by election, Directors of their choice and

the power to regulate them by a resolution for their

removal. And, an injunction cannot be granted to

restrain the holding of a general meeting to remove a

director and appoint another."

36. In view of the aforesaid decision of the Hon'ble Supreme Court

and other Hon'ble Courts, we hold that the Article 1.1.3; 9.1 and 9.2 are

binding on all the 'shareholders' as also on the 'Board of Directors' as

also on 'the Company'. We have already held that the 'Board of

Directors' of a Company is not empowered to file an application under

Section 10 for its own liquidation or dissolution or 'Corporate Insolvency

Resolution Process'. For the said reason, the application under Section

10 filed by the Board of Directors was not maintainable. The argument

Company Appeal (AT) (Insolvency) No. 137 of 2017 23

that Section 59 of the 'I&B Code' is the only provision for liquidation,

cannot be accepted as initiation of 'Corporate Insolvency Resolution

Process' by the Company ('Corporate Debtor') against itself under

Section 10 may result into its own liquidation. If the 'Resolution

Process' starts and ultimately fails because of non-approval of the

'Resolution Plan', at that stage provisions of 'Articles of Association'

cannot be given effect nor the approval of the shareholders can be

taken.

37. An application under Section 7 of the 'I&B Code' or Section 9

cannot be equated with application under Section 10. On filing an

application under Section 7 or Section 9, the Board of Directors may

take steps for 'Corporate Insolvency Resolution Process' against other

'Corporate Debtor' but not against its own Company.

38. In the present case, as we find that no decision has been taken by

the Shareholders in their 'Extra Ordinary General Meeting', we hold the

application under Section 10 filed by the person authorized by the

Board of Directors, was not maintainable.

39. For the reasons aforesaid, we set aside the impugned order dated

11th July, 2017 passed by the Adjudicating Authority in

CP/509/(IB)/CB/2017 and allow the appeal.

Company Appeal (AT) (Insolvency) No. 137 of 2017 24

40. In effect, order (s), passed by the Adjudicating Authority

appointing any 'Interim Resolution Professional', declaring

moratorium, freezing of account, and all other order (s) passed by the

Adjudicating Authority pursuant to impugned order and action, if any,

taken by the 'Interim Resolution Professional', including the

advertisement, if any, published in the newspaper calling for

applications all such orders and actions are declared illegal and are set

aside. The application preferred under Section 10 of the I&B Code,

2016 is dismissed. Learned Adjudicating Authority will now close the

proceeding. The 'Corporate Debtor' (company) is released from all the

rigour of law and is allowed to function independently through its

Board of Directors from immediate effect.

41. The Adjudicating Authority will fix the fee of the 'Resolution

Professional', and the 'Corporate Debtor' will pay the fees of the

'Resolution Professional', for the period he has functioned. The appeal

is allowed with aforesaid observation. However, in the facts and

circumstances of the case, there shall be no order as to cost.

(Justice S.J. Mukhopadhaya) Chairperson

(Justice Bansi Lal Bhat) Member(Judicial)

NEW DELHI 19th July, 2018 AR

Company Appeal (AT) (Insolvency) No. 137 of 2017