In the case of M/s. Innoventive Industries Ltd. Vs. Versus Icici Bank & Anr. Hon’ble Supreme Court has passed a comprehensive judgement which settles some nagging issues in the Insolvency and Bankruptcy Code. There are certain flaws observed at para 11 the following,
“11. Having heard learned counsel for both the parties, we find substance in the plea taken by Shri Salve that the present appeal at the behest of the erstwhile directors of the appellant is not maintainable. Dr. Singhvi stated that this is a technical point and he could move an application to amend the cause title stating that the erstwhile directors do not represent the company, but are filing the appeal as persons aggrieved by the impugned order as their management right of the company has been taken away and as they are otherwise affected as shareholders of the company. According to us, once an insolvency professional is appointed to manage the company, the erstwhile directors who are no longer in management, obviously cannot maintain an appeal on behalf of the company. In the present case, the company is the sole appellant. This being the case, the present appeal is obviously not maintainable. However, we are not inclined to dismiss the appeal on this score alone. Having heard both the learned counsel at some length, and because this is the very first application that has been moved under the Code, we thought it necessary to deliver a detailed judgment so that all Courts and Tribunals may take notice of a paradigm shift in the law. Entrenched managements are no longer allowed to continue in management if they can’t pay their debts.”
With due respect to the Judgment of Hon’ble Court, I beg to state that the observation made therein seems to be made without taking into account its adverse consequences. My points of differences are as follows:-
1. Whether the IBC is a confiscatory legislation?
2. Whether suspension of powers means & includes right to carry on the business of the company, represent the company before courts & tribunals other than powers to make investment, borrow & grant loan as mentioned in erstwhile section 292 of 1956 Act?
3. Whether even powers mentioned under section 292 to make calls on shareholders on unpaid money on shares issued, as the same would defeat the very purpose to pay the creditors?
4. Who would represent the Company before the courts & tribunals?
5. If shareholders are allowed to represent the Company then what procedures are to be followed under Companies Act?
6. Can shareholders appoint one of themselves in an EGM?
7. Who would carry on the business of the company?
8. Who would realise debtors outstanding of corporate debtor?
9. Whether powers are suspended even in case of default arising out of temporary mismatch in realising debtors & payment of creditors?
10. Whether the initiation of resolution process is essentially a revival process of the company and as such only powers under 292 should be read as suspended?
11. Whether the last line of para 11 which says ‘entrenched managements are no longer allowed to continue in management if they can’t pay their debts’ & is an over reading of the scope of IBC?
12. Whether such an erroneous interpretation will also not allow delinquent management to get away with its wrong doings?
My lords is requested to review their decision as else this IBC would wind up the entire Indian economic system which is left after demonetization!
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