After acceptance of the application for initiating Corporate Insolvency Resolution Process (CIRP) by National Company Law Tribunal (NCLT), the powers of the Board of Directors of the Company (Corporate Debtor) is suspend

The present case is similar to the case of Steel Konnect (India) Private Limited v/s. Hero Fincorp Ltd. , In the case of Steel Konnect (India) Private Limited v/s. Hero Fincorp Ltd. , Initially Courts were of view that once an insolvency application is admitted, the Code does not permit erstwhile company directors to maintain an appeal on behalf of the corporate debtor and only the interim resolution professional (IRP") can maintain an appeal on behalf of the company. Further, it was observed the power of the IRP as provided under the Code does not include the power to initiate proceedings on behalf of the Corporate Debtor. The aforesaid issue was raised in Steel Konnect (India) Pvt Ltd. v. M/s Hero Fincorp Ltd. where it was held that upon admission of application under the Insolvency and Bankruptcy Code, 2016 and commencement of corporate insolvency resolution process, for preferring an appeal before NCLAT; the corporate debtor can appear through its Board of Directors or its officer or its authorized representative. If corporate debtor is represented before Adjudicating Authority during appeal through its Board of Directors, no objection can be raised in this regard as initiation of corporate insolvency resolution process only suspends functioning of Board of Directors in that corporate debtor not the Board of Directors as a whole. Also, the directors continue to be in their position and are still present in the records maintained by the Registrar of Companies. They are just put in temporary suspension for 180/270 days till continuation of the insolvency resolution process. Therefore, suspended Board of Directors being aggrieved party can make an appeal against the order of NCLT.