2018 (7) TMI 1880 - AT - Insolvency and Bankruptcy

Whether for filing an application under Section 10 of the Insolvency and Bankruptcy Code, 2016 the Board of Director of Corporate Debtor is required to place the matter before the shareholders and creditors in its Extra ordinary General Meeting (EoGM) or Annual General Meeting (AGM)? - Held that - Similar issue fell for consideration before this Appellate Tribunal in Gaja Trustee Company Pvt. Ltd. & Ors. Vs. Haldia Coke and Chemicals Pvt. Ltd. & Ors. 2018 (8) TMI 1270 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI wherein this Appellate Tribunal has held that Board of Directors is required to place the matter before the shareholders and creditors and to take its approval for filing application under Section 10 of the I&B Code. The appellant sought permission to withdraw the appeal to enable the Board of Directors to place the matter before the shareholders in EOGM and AGM, if they intend to file another application under Section 10 of the I&B Code - Liberty is granted - appeal disposed of as withdrawn.

Summary

Issues involved:
1. Whether the Board of Director of a 'Corporate Debtor' is required to place the matter before the shareholders and creditors in its Extraordinary General Meeting (EOGM) or Annual General Meeting (AGM) for filing an application under Section 10 of the Insolvency and Bankruptcy Code, 2016.

Analysis:
The Appellate Tribunal deliberated on the issue of whether the Board of Directors of a 'Corporate Debtor' is mandated to seek approval from shareholders and creditors in an Extraordinary General Meeting (EOGM) or Annual General Meeting (AGM) before filing an application under Section 10 of the Insolvency and Bankruptcy Code, 2016. The Tribunal referred to a previous case, "Gaja Trustee Company Pvt. Ltd. & Ors. Vs. Haldia Coke and Chemicals Pvt. Ltd. & Ors. – Company Appeal (AT) (Insolvency) NO. 137 of 2017," where it was determined that the Board of Directors must indeed present the matter before shareholders and creditors and obtain their approval for initiating proceedings under Section 10 of the I&B Code.

Moreover, the counsel representing the respondent highlighted that relevant laws had been amended to align with this requirement. Consequently, considering the precedent set in the Gaja Trustee case and the subsequent legislative changes, the appellant's counsel requested permission to withdraw the appeal. This withdrawal would allow the Board of Directors to follow the necessary procedures by presenting the matter before shareholders in both EOGM and AGM if they decide to file another application under Section 10 of the I&B Code. The Tribunal granted this request, with a stipulation that no challenge could be raised against the existing order.

Ultimately, the appeal was disposed of as withdrawn, thereby affirming the necessity for the Board of Directors to involve shareholders and creditors in the decision-making process regarding applications under Section 10 of the Insolvency and Bankruptcy Code, as established by the Tribunal's previous judgment and subsequent legislative amendments.