NCLAT (27.01.2022) in Dheeraj Wadhawan Vs. The Administrator Dewan Housing Finance Corporation Ltd. [Company Appeal (AT) (Insolvency) No. 785 of 2020 & 647 of 2021] noted the difference between the ‘supersession of Directors’ under the RBI Act and the ‘suspension of Directors’ under the Code, held that;
A removed Director from the Board of Directors cannot interfere in the Company’s affairs per contra a suspended Director always remains on the Board.
it is clear that Director Simpliciter can participate in the CoC of the Corporate Debtor. However, the person who is not in the office and deemed to have vacated the office under the RBI Act cannot claim parity with the suspended Director under the Code.
Excerpts of the order;
# 4.6 Heard the arguments of the Learned Counsel for the parties and perused the records. The points that arise for our consideration in these Appeals are as under;
1. Is there a difference between the ‘supersession of Directors’ under the RBI Act and the ‘suspension of Directors’ under the Code?
2. Whether a ‘Superseded director’, who had vacated office on supersession of Board under RBI Act, is entitled to the notice of CoC meeting and has the right to participate in the meeting of the CoC?
# 5. Analysis
# 5.1 Kapil Wadhwan and Dheeraj Wadhwan (the Appellants in CA (AT) (Ins) No’s 647/2021 and 785/2021) are the promoters, major shareholders, erstwhile directors and guarantors of the Dewan Housing Finance Corporation Limited (“DHFL”).
# 5.2 The Appellants have alleged that the CIRP of DHFL had been conducted in blatantly illegal and violated the most elementary principles of natural justice. As a result, both the Appellant’s, despite being Promoters/Share Holders/Directors/Guarantor, is shut out of the meetings of the COC and prevented in any manner from participating in the CIRP. This is entire without precedent in so far as the CIRP of the DHFL is the first occasion in the entire history of the Code that erstwhile Directors have been prevented from participating in the meetings of the COC.
# 5.3 It is contended that denial of any semblance of natural justice to the Appellant had been carried to the point where the Appellant’s despite being major stakeholders and their interest being vitally affected, were denied even a copy of the Resolution Plan even after the COC approved the same. The Appellants were thus denied any opportunity to object to the plan before the Adjudicating Authority/NCLT.
# 5.4 Added further, despite being denied Information, from what little could be gleaned from the public domain, it was clear that the offer is being made for DHFL at a serious undervalue. With what little Information he had in possession, Kapil Wadhwan made a settlement proposal which was not even placed before the CoC for consideration. This plan offers ₹ 53,000 crores more than the Resolution Plan of Piramal and would have paid all the creditors, including thousands of public depositors, in full. These members of the public have not even had an adequate opportunity to consider the settlement proposal. The CoC and NCLT have approved the Resolution Plan of Piramal, a travesty that constitutes a severe failure of justice.
# 5.5 Further, they expected that the Administrator should give due notice of the meetings of the COC, with the documents and agenda for the meetings. However, despite several communications, the Administrator refused the Appellant’s request constraining Dheeraj Wadhwan, the Appellants in CA (AT) (Ins) No. 785 of 2020, to file MA No. 518 2020. The same was rejected by the impugned judgement dated 28 April 2020, which proceeds inter alia on the erroneous basis that ‘suspension’ is temporary by nature and that the erstwhile directors have been superseded (which is more permanent) cannot be permitted to participate in the CIRP.
# 5.6 For the present Appeal, it is relevant to take note of Section 45-IE of the RBI Act, which is as follows: . . . . ,
# 5.7 On a bare reading of Section 45-IE of the Act, it is clear that upon exercise of the said power by the RBI7 , the Board of Directors vacates their office. In other words, the vacating of office of the said Board of Directors has finality attached to it. The Appellant’s contention that Section 45-IE of the RBI Act does not bar the said directors who have vacated their offices from becoming directors of the Company when the Board is reconstituted cannot and does not alter the precise position that the supersession of the directors and their vacation of office is final and that their appointment, if at all, at a subsequent stage (and if fulfilling criteria of being fit and proper) is a fresh/new appointment and not a continuation of the original offices as Directors of the Company.
# 5.8 On 28 November 2019, the RBI exercised its power under Section 45- IE (2) of the RBI Act and superseded the Board of Directors of DHFL. This was done as the business of DHFL has been conducted in a manner that was detrimental to the interest of the depositors DHFL’s creditors, which led to a severe deterioration in DHFL’s financial position. Given the above, the then Board of Directors of DHFL vacated their respective offices on 20 November 2019. In other words, w.e.f. 20 November 2019, there was no Board of Directors in DHFL, and their power stood vested in the Administrator under the RBI Act.
# 5.9 On 22 November 2019, the RBI, in the exercise of the power conferred under Section 45-IE (5)(a) of the RBI Act, constituted an Advisory Committee to assist the Administrator. After that, on 29 November 2019, the RBI filed the above Company Petition for initiation of CIRP of DHFL under the FSP Rules . Accordingly, the interim moratorium period as defined under Section 14 of the IBC, 2016 commences from the date of filing of the Company Petition before the Adjudicating Authority/NCLT under Rule 5(b)(i) of FSP Rules.
# 5.10 On 02 December 2019, Respondent was appointed as Administrator under FSP Rules. It is pertinent to note that as of this date, the Board of Directors of DHFL had already vacated their respective offices, and Respondent/Administrator of DHFL was discharging duties under Section 45- IA(4)(b) of the RBI Act.
# 5.11 Since the erstwhile members of the Board of Directors of DHFL had already vacated their offices, the powers of the Board of Directors had stood vested in the Administrator on 03 December 2019 under Section 45-IE of the RBI Act. In such a scenario, there is no question of any powers of the Board being suspended as per Section 17(i)(b) of the Code upon the admission of the above Company Petition. Consequently, there is no question of considering the Appellant as being a ‘suspended’ Director for the Code.
# 5.12 It is important to mention that Section 24(3)(b) of the Code provides that the Resolution Professional should give notice/details of the meeting of the Committee of Creditors to ‘suspended’ Directors of the Corporate Debtor. The said provision reads as follows:
“24. Meeting of committee of creditors.—(1) The members of the committee of creditors may meet in person or by such electronic means as may be specified.
(2) All meetings of the committee of creditors shall be conducted by the Resolution professional.
(3) The Resolution professional shall give notice of each meeting of the committee of creditors to—
(a) members of committee of creditors, including the authorised representatives referred to in sub-sections (6) and (6-A) of Section 21 and sub-section (5);
(b) members of the suspended Board of Directors or the partners of the corporate persons, as the case may be;
(c) operational creditors or their representatives if the amount of their aggregate dues is not less than ten per cent of the debt.”
# 5.13 On a bare reading of Section 24(3)(b) of the Code, it is clear that the notice of each meeting of the Committee of Creditors is required to be given to the ‘suspended’ Board of Directors. The word ‘suspended’ used in Section 24(3)(b) of the Code is clearly and directly relatable to the words ‘suspended’ in Section 17(1)(b) of the Code. In other words, it is those directors whose powers stand ‘suspended’ under Section 17(1)(b) of the Code by appointment of the Interim Resolution Professional that is entitled to receive notice of the meetings of the Committee of Creditors under Section 24(3)(b) of the Code. In the present case, it is an admitted position that with effect from 20 November 2019, upon the RBI exercising powers under Section 45-IE of the RBI Act, the Board of Directors of DHFL stood superseded and had vacated office. Accordingly, at the time of appointment of the Administrator under the FSP Rules by the NCLT on 03 December 2019, there was no question of the powers of the Board of Directors of DHFL. Since they had already vacated their offices on 20 November 2019, there is no question of the said Directors of DHFL permitting them to participate in the CoC meetings in this scenario. They had already vacated their offices on supersession of the erstwhile Board. Therefore, they have not qualified as ‘suspended’ Directors for Section 24(3)(b) of the Code.
# 5.14 The Appellant has attempted to equate supersession of the Board of Directors under Section 45-IE of the RBI Act with the suspension of the Board of Directors under Section 17(1)(b) of the Code on the basis that both have the same ‘legal effects’ and that there is ‘no legal prohibition’ for the same Directors to be appointed on the reconstituted Board of Directors under Section 45-IE(7) of the Code. This is a misconceived proposition since ‘suspension’, and ‘supersession’ are distinct concepts in law. Moreover, when a Company Petition is admitted under Sections 7, 9 or 10 of the Code, the resultant ‘suspension’ of Directors under Section 17(1)(b) of the Code does not necessarily mean that it is on account of severe governance issues, unlike in a case where the RBI exercises powers under Section 45-IE of the RBI Act.
# 5.15 On a bare reading of Section 45-IE of the RBI Act, the supersession of the Board of Directors under the said provision has finality attached to it. Accordingly, if the RBI exercised the said powers and the Directors have vacated office, as in the present case. There is no question of the powers of the Board of Directors who have already vacated office and consider them ‘suspended’ under Section 17(1)(b) of the Code. The Appellant’s contention that the suspension of powers of the Board of Directors (under Section 17(1)(b) of the Code) may also have the ‘legal effect’ of the said Directors vacating office is irrelevant and a mere red herring. As to the Appellant’s contention that there is ‘no legal prohibition’ for the same Directors to be appointed on the reconstituted Board of Directors under Section 45-IE(7) of the Code, the said contention is misconceived, irrelevant and overlooks the fact that the vacation of office under Section 45-IE has finality, attached to it. Accordingly, any appointment of such a person as a Director on the ‘reconstituted’ Board of Directors under Section 45-IE(7) of the RBI Act the period of supersession is over, is a new appointment (which will undoubtedly be required to satisfy all legal requirements, including of being a ‘fit and proper person’ at that stage) and is not a continuation of the original appointment as Director, but a fresh/new appointment.
# 5.16 However, such a further appointment may be possible when the Board of Directors is reconstituted. Therefore, it cannot take away from the supersession under Section 45-IE(2) of the RBI Act, when ordered by the RBI, has attained finality. Therefore, those directors who were already removed and dismissed are deemed to have vacated office under the RBI Act w.e.f the date of supersession of the Board.
# 5.17 The Appellant has relied on the decision of the Hon’ble Supreme Court in Vijay Kumar Jain vs Standard Chartered Bank (2019 SCC Online SC 13) to contend that the word ‘erstwhile’ or ‘former’ directors used in the said judgment would mean that Directors who have vacated office under Section 45-IE of the RBI Act are also included in the ambit of Section 24(3)(b) of the Code. However, this contention is misconceived and based on a patent misreading of the judgment in Vijay Kumar Jain (supra).
# 5.18 At the outset, it is pertinent to note that in Vijay Kumar Jain (supra), the Hon’ble Supreme Court was concerned with the extent to which Directors who had been suspended on the appointment of the Interim Resolution Professional, in that case, were entitled to participate in the meetings of the CoC. In other words, the said Directors’ right to attend the CoC meetings was not under dispute but merely the width of their rights and whether the same included copies of the documents discussed at the CoC meetings.
# 5.20 The obligations of Directors as guarantors for DHFL cannot (and does not) mean that such persons are necessarily entitled to attend or participate in CoC meetings. The Appellant’s contention overlooks that Resolution Plan binds every person a guarantor for DHFL under Section 31 of the Code is not ipso facto entitled to attend and participate in CoC meetings. The Appellant’s contention overlooks that the Appellant had vacated office under Section 45- IE of the RBI Act on 20 November 2019. There was no question of their powers as Directors being suspended under Section 17(1)(b) of the Code on 03 December 2019, when the above Company Petition was admitted. Therefore, there is no question of the said persons being entitled to notice of CoC meetings under Section 24(3)(b) of the Code.
# 5.21 We are not convinced with the above argument advanced by the Learned Senior Counsel about the applicability of the doctrine of election in this case. Appellant contends that RBI as the Applicant elected to proceed under the Code, the Administrator cannot take recourse to the RBI Act to deprive the Appellant of an opportunity to participate in CoC meetings and obtain copies of relevant documents.
# 5.22 Relevant CIRP Rules is given for ready reference:
“Insolvency and Bankruptcy (Insolvency and Liquidation Proceedings of Financial Service Providers and Application to Adjudicating Authority) Rules, 2019.
4. General modifications.— For the purposes of these rules, in all the provisions relating to insolvency and liquidation proceedings under the Code,—
(i) for the expression “corporate debtor” wherever they occur, shall mean “financial service provider”; and
(ii) for the expressions “insolvency professional”, “interim resolution professional”, “resolution professional” or “liquidator”, wherever they occur, shall mean “administrator”.
5. Corporate Insolvency Resolution Process of financial service providers.— The provisions of the Code relating to the Corporate Insolvency Resolution Process of the corporate debtor shall, mutatis mutandis apply, to the insolvency resolution process of a financial service provider subject to the following modifications, namely:—
(a) Initiation of Corporate Insolvency Resolution Process.—
(i) no corporate insolvency resolution process shall be initiated against a financial service provider which has committed a default under section 4, except upon an application made by the appropriate regulator in accordance with rule 6;
(ii) the application under sub-clause (i) shall be dealt with in the same manner as an application by a financial creditor under section 7, subject to clause (iii); and
(iii) on the admission of the application, the Adjudicating Authority shall appoint the individual proposed by the appropriate regulator in the application filed under sub-clause (i) of clause (a) of rule 5, as the Administrator.”
# 5.23 Rule 4 of FSP Rules provides for general modifications of the Code concerning insolvency of a Financial Service Provider. Rule 5 provides that the entire Code applies mutatis mutandis to a Corporate Debtor subject to modifications provided under Rule 5. Admittedly, no such modifications are provided under the Code to exclude superseded Directors prohibiting them from participating in the CoC meetings. However, we can take note of the Hon’ble Supreme Court finding in the case of Vijay Kumar Jain (supra).
# 5.24 In the case mentioned above, Hon’ble Supreme Court has held that; the proviso to Section 21(2) of the I&B Code clarifies that a Director who is also a Financial Creditor who is a related party of the Corporate Debtor shall not have any right of representation, participation or voting in a meeting of a Committee of Creditors. Further, Directors simpliciter are not the subject matter of the proviso to Section 21(2) of the Code. But only Directors who are related parties of the Corporate Debtor. Therefore, only such persons do not have any right of representation, participation, or voting in the Committee of Creditors meeting.
# 5.25 Superseded Directors are those Directors who have been removed or deemed to have demitted office and who are not holding the position of Director on the CIRP commencement date, cannot be considered a Director Simpliciter to benefit from participating in the meeting of CoC. Section 45-IE (4)(a) of the RBI Act provides that upon making an order of supersession of the Board of Directors of a non-banking financial company, Director shall from the supersession of the Board of Directors vacate their offices. Section 45-IE of the RBI Act empowers the RBI for the supersession of the Board of Directors of a non-banking financial company. After vacation or removal from the office of the Director, the said person cannot claim their entitlement to participate in the CoC of the Corporate Debtor. A removed Director from the Board of Directors cannot interfere in the Company’s affairs per contra a suspended Director always remains on the Board. Given the law laid down by Hon’ble Supreme Court Vijay Kumar Jain’ case, it is clear that Director Simpliciter can participate in the CoC of the Corporate Debtor. However, the person who is not in the office and deemed to have vacated the office under the RBI Act cannot claim parity with the suspended Director under the Code.
# 5.28 The Appellant had contended that they were also aggrieved by the Order refusing to supply the copy of the approved Resolution Plan. In reply, Respondent vouched that confidentiality is critical for a successful restructuring of the Corporate Debtor. Accordingly, several provisions have been incorporated in the Code and the Allied regulations to safeguard the confidentiality concerns relating to insolvency resolution, liquidation, or bankruptcy. For instance, Section 29 (2) of the Code requires a confidentiality undertaking from the Resolution Applicant’s before they are provided access to relevant Information about the Corporate Debtor. Similarly, Regulation 21 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations 2016 also requires insolvency professional to ensure the confidentiality of Information relating to the Insolvency Resolution, Liquidation, or Bankruptcy Process is maintained.
# 5.29 Further, the Resolution Plans to obtain critical Information relating to the CIRP, the resolution applicant and the Corporate Debtor, which are commercially sensitive and may be subject to obligations owed to 3rd parties such as trade secrets, research and development Information and customer information. It is also a known fact that Resolution Plans involve extensive grounds of preparation, review and deliberations by the Resolution Applicant and later by the insolvency professionals and COC; and giving it to the appellants on demand for a copy of the same will be akin to trivialising these efforts and disturbing the sanctity of the entire CIRP.
# 5.30 The Resolution Plan deliberately deals with confidentiality provisions requiring all parties involved in the resolution process to keep the Information provided therein confidential. Further, the Appellant submitting that the Resolution Plan may become public after its approval by the learned tribunal does not justify overriding the confidentiality provisions. Allowing such parties to receive a copy of the Resolution Plan would not only jeopardise the revival and Resolution in the form of successful implementation of the Resolution Plan for the corporate debtor but also set a dangerous precedent where any party would seek a copy of the Resolution Plan that the COC has already approved.
# 5.31 It is important to mention that CIRP Regulation 36(4) imposes a duty on the RP to share the Information Memorandum with the members of CoC after an undertaking of confidentiality of Information. However, the Appellants are not a member of CoC, and they have been removed from the erstwhile Board of DHFL and have vacated the office before initiation of CIRP of the Corporate Debtor. Therefore, they are not entitled to participate in the CoC meetings or share the documents.
# 5.32 Regulation 36 is quoted below for ready reference;
“Regulation 36
36. Information memorandum.— [(1) Subject to sub-regulation (4), the Resolution professional shall submit the information memorandum in electronic form to each member of the committee within two weeks of his appointment, but not later than fifty-fourth day from the insolvency commencement date, whichever is earlier.]
(2) The information memorandum shall contain the following details of the corporate debtor—
XXXX
(l) other Information, which the Resolution professional deems relevant to the committee.
(3) A member of the committee may request the Resolution professional for further Information of the nature described in this Regulation and the Resolution professional shall provide such Information to all members within reasonable time if such Information has a bearing on the resolution plan.
(4) The Resolution professional shall share the information memorandum after receiving an undertaking from a member of the committee [* * *] to the effect that such member or resolution applicant shall maintain confidentiality of the Information and shall not use such Information to cause an undue gain or undue loss to itself or any other person and comply with the requirements under sub-section (2) of Section 29.”
# 5.33 The Appellants adverted to the observations of the Hon’ble Supreme Court in Paragraphs 14, 16, 17, 19.5, 20-23 & 25 in the case of Vijay Kumar Jain v. Standard Chartered Bank, (2019) 20 SCC 455 quoted below for ready reference;
16. This statutory scheme, therefore, makes it clear that though the erstwhile Board of Directors are not members of the Committee of Creditors, yet, they have a right to participate in each and every meeting held by the Committee of Creditors, and also have a right to discuss along with members of the Committee of Creditors all resolution plans that are presented at such meetings under Section 25(2)(i). It cannot be gainsaid that operational creditors, who may participate in such meetings but have no right to vote, are vitally interested in such resolution plans, and must be furnished copies of such plans beforehand if they are to participate effectively in the meeting of the Committee of Creditors. This is for the reason that under Section 30(2)(b), repayment of their debts is an important part of the resolution plan qua them on which they must comment. So the first important thing to notice is that even though persons such as operational creditors have no right to vote but are only participants in meetings of the Committee of Creditors, yet, they would certainly have a right to be given a copy of the resolution plans before such meetings are held so that they may effectively comment on the same to safeguard their interest.
17. However, it was argued before us that the Notes on Clauses to Section 24 make it clear that the erstwhile members of the Board of Directors are participants in these meetings only so that the Committee of Creditors and the Resolution professional may seek Information from them. The Notes on Clauses, heavily relied upon by the learned counsel for the respondents, read as follows:
“Clause 24 prescribes the modalities for the meeting of the Committee of Creditors. The meetings are conducted by the Resolution professional and may be attended by the members of the Board of Directors or partners of the corporate debtor. This gives an opportunity for the Committee of Creditors and the Resolution professional to seek Information that they may require to assess the financial position of the corporate debtor and prepare a resolution plan.” (emphasis supplied)
19.5. Further, under Regulation 37(1)(f), a resolution plan may provide for reduction in the amount payable to the creditors, which again vitally impacts the rights of a guarantor. Last but not the least, a resolution plan which has been approved or rejected by an order of the adjudicating authority, has to be sent to “participants” which would include members of the erstwhile Board of Directors — vide Regulation 39(5) of the CIRP Regulations. Obviously, such copy can only be sent to participants because they are vitally interested in the outcome of such resolution plan, and may, as persons aggrieved, file an appeal from the adjudicating authority’s Order to the Appellate Tribunal under Section 61 of the Code. Quite apart from this, Section 60(5)(c) is also very wide, and a member of the erstwhile Board of Directors also has an independent right to approach the adjudicating authority, which must then hear such person before it is satisfied that such resolution plan can pass muster under Section 31 of the Code.
20. It is also important to note that every participant is entitled to a notice of every meeting of the Committee of Creditors. Such notice of meeting must contain an agenda of the meeting, together with the copies of all documents relevant for matters to be discussed and the issues to be voted upon at the meeting vide Regulation 21(3)(iii). Obviously, resolution plans are “matters to be discussed” at such meetings, and the erstwhile Board of Directors are “participants” who will discuss these issues. The expression “documents” is a wide expression which would certainly include resolution plans.
21. Under Regulation 24(2)(e), the Resolution professional has to take a roll call of every participant attending through videoconferencing or other audio and visual means, and must state for the record that such person has received the agenda and all relevant material for the meeting which would include the resolution plan to be discussed at such meeting. Regulation 35 makes it clear that the Resolution professional shall provide fair value and liquidation value to every member of the committee only after receipt of resolution plans in accordance with the Code [see Regulation 35(2)]. Also, under Regulation 38(1-A), a resolution plan shall include a statement as to how it has dealt with the interest of all stakeholders, and under sub-regulation (3)(a), a resolution plan shall demonstrate that it addresses the cause of default. This Regulation also, therefore, recognises the vital interest of the erstwhile Board of Directors in a resolution plan together with the cause of default. It is here that the erstwhile Directors can represent to the Committee of Creditors that the cause of default is not due to the erstwhile management, but due to other factors which may be beyond their control, which have led to non-payment of the debt. Therefore, a combined reading of the Code as well as the Regulations leads to the conclusion that members of the erstwhile Board of Directors, being vitally interested in resolution plans that may be discussed at meetings of the Committee of Creditors, must be given a copy of such plans as part of “documents” that have to be furnished along with the notice of such meetings.
22. As a result of the aforesaid discussion, the arguments of the respondents that “committee” and “participant” are used differently, which would lead to the result that resolution plans need not be furnished to the erstwhile members of the Board of Directors, must be rejected. Equally, the Regulations, far from going beyond the Code, flesh out the true intention of the Code that is achieved by reading the plain language of the sections that have already been adverted to. So far as confidential Information is concerned, it is clear that the Resolution professional can take an undertaking from members of the erstwhile Board of Directors, as has been taken in the facts of the present case, to maintain confidentiality. The source of this power is Regulation 7(2)(h) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, read with Para 21 of the First Schedule thereto. This can be in the form of a non-disclosure agreement in which the Resolution professional can be indemnified in case information is not kept strictly confidential.
23. The argument on behalf of the Committee of Creditors based on the proviso to Section 21(2) is also misconceived. The proviso to Section 21(2) clarifies that a Director who is also a financial creditor who is a related party of the corporate debtor, shall No. have any right of representation, participation, or voting in a meeting of the Committee of Creditors. Directors, simpliciter, are not the subject-matter of the proviso to Section 21(2), but only Directors who are related parties of the corporate debtor. It is only such persons who do not have any right of representation, participation, or voting in a meeting of the Committee of Creditors. Therefore, the contention that a Director simpliciter would have the right to get documents as against a Director who is a financial creditor is not an argument that is based on the proviso to Section 21(2), correctly read, as it refers only to a financial creditor who is a related party of the corporate debtor. For this reason, this argument also must be rejected.
25. We may indicate that the time that has been utilised in these proceedings must be excluded from the period of the resolution process of the corporate debtor as has been held in ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta [ArcelorMittal (India) (P) Ltd. v. Satish Kumar Gupta, (2019) 2 SCC 1] (decided on 4-10-2018) (at para 83). In each of these cases, the appellants will be given copies of all resolution plans submitted to the CoC within a period of two weeks from the date of this judgment. The resolution applicant in each of these cases will then convene a meeting of the CoC within two weeks thereafter, which will include the appellants as participants. The CoC will then deliberate on the resolution plans afresh and either reject them or approve of them with the requisite majority, after which, the further procedure detailed in the Code and the Regulations will be followed. For all these reasons, we are of the view that the petition and Appeal must be allowed and the NCLAT judgment [Vijay Kumar Jain v. Standard Chartered Bank Ltd., 2018 SCC OnLine NCLAT 855] set aside.” (emphasis supplied)
# 5.34 The above-mentioned case law is not applicable in the present case as Superseded Directors are those Directors who have been removed or deemed to have demitted office and who were not holding the position of Director on the CIRP commencement date, cannot be considered a Director Simpliciter to benefit from participating in the meeting of CoC. Section 45-IE (4)(a) of the RBI Act provides that upon making an order of supersession of the Board of Directors of a non-banking financial company, Director shall, from the supersession of the Board of Directors, vacate their offices. After vacation or removal from the office of the Director, the said person cannot claim their entitlement to participate in the CoC of the Corporate Debtor. A removed Director from the Board of Directors cannot interfere in the Company’s affairs per contra a suspended Director always remains on the erstwhile Board of the Company and assist the IRP/RP as per requirement.
# 5.35 Therefore, the Appellant, erstwhile Directors, who have vacated the offices are also not entitled to share any document. However, the copy of the Resolution Plan after approval from the Adjudicating Authority can not be treated as a confidential document. Therefore, after final approval of the Resolution Plan, its certified copy may be issued as per Rules.
# 5.36 We have concluded unanimously that the impugned Order needs no interference in the circumstances stated above. Accordingly, both the Appeals are disposed off—no order as to costs.
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