Managing Director of Nimbo Ltd. (undergoing CIRP) states that since the powers of the Board of directors are suspended, he cannot be forced to perform duties as included in his employment contract with the company. Exami

Section 17(1) of the Insolvency & Bankruptcy Code provides that from the date of appointment of the Interim Resolution Professional the powers of the board of directors or the partners of the corporate debtor, as the case may be, shall stand suspended and be exercised by the interim resolution professional. It is pertinent to note that only powers are suspended; however, the directors can continue to work and provide assistance to the Resolution Professional. In the case of M/s. Subasri Realty Private Limited v. Mr. N. Subramanian & Anr, the NCLAT directed that after the appointment of the Resolution Professional and declaration of moratorium, the Board of Directors stands suspended, but that does not amount to a suspension of Managing Director, or any of the directors or officers or employees of the Corporate Debtor (CD). To ensure that the CD remains a going concern, all the directors/ employees are required to function and to assist the RP who manages the affairs of the CD during the moratorium. If one or other officer or employee had the power to sign a cheque on behalf of the CD prior to the order of moratorium such power does not stand suspended on suspension of Board of Directors nor can it be taken away by the RP. If the person empowered to sign cheque refuses to function on the direction of the RP or misuse the power it is always open to the RP to take away such power, after issuing notice to the person concerned. Therefore, the statement made by Managing Director is not in accordance with the Code.