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2018 (8) TMI 1270 - AT - Insolvency and BankruptcyCorporate Insolvency Resolution Process - 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 - violation of the provisions of the’ Articles of Association’ of the Company and other provisions of law. Held that:- 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. 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 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. 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.
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