JUDGMENT :

SUDHANSU JYOTI MUKHOPADHAYA, J.

The Appellants- Shareholders of Haldia Coke and Chemicals Private Limited (‘Corporate Debtor’) have preferred the appeal against an order dated 11th July, 2017, passed by the Adjudicating Authority (National Company Law Tribunal), Division Bench, Chennai, whereby and where under the application preferred by the ‘Corporate Applicant’ (‘Corporate Debtor’) under Section 10 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “I&B Code”) has been admitted, the order of ‘Moratorium has been passed and the ‘Insolvency Resolution Professional’ has been appointed with certain directions.

2. The questions arise for consideration in this appeal are:

i. 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 ? and;

ii. Whether the decision of the ‘Board of Directors’ to file application under Section 10 of the ‘I&B Code’ for initiation of ‘Corporate Insolvency Resolution Process’ against the Company without approval of the EoGM is against the provisions of the’ Articles of Association’ of the Company and other provisions of law?

3. According to the Appellants, the application preferred by the person authorized by the ‘Board of Directors’ filed application under Section 10 of the ‘I&B Code’ is not maintainable for want of approval of the Shareholders’.

4. Learned Senior Counsel appearing on behalf of the Appellants submitted that the decision to file an application under Section 10 of the ‘I&B Code’ is vested with the ‘shareholders’ and the decision of the ‘Board of Directors’ is against the provisions of the Articles of Association and the Companies Act and regulations framed there under.

5. According to learned Senior Counsel for the Appellants, Section 5 (5) demarcates the difference between the application which is made by the ‘Corporate Debtor’ i.e. the company itself and those made by “person having control and supervisions of the financial affairs of the ‘Corporate Debtor’ or “the persons who is in charge of managing the operations of the ‘Corporate Debtor’”. Any application under Section 10 made on behalf of the ‘Corporate Debtor’ on the basis of the resolution of the Board of Directors, would be nothing but usurping the powers/ entitlement of the shareholders. According to him, Section 5(5) itself contemplates that a shareholders and other persons can be a ‘Corporate Applicant’. Moreover, Section 5(5) (b) refers to the constitutional document of the company thereby indicates the ‘Articles of Association’ of the Company which is relevant.

6. It was further submitted that the shareholders are the persons with financial stake whose rights will be seriously impaired. In the present case, the Appellants’ stake of equity share in the Company is 32% of the entire paid up capital. It is also material that the ‘Financial Creditors’ have also opposed the application filed by the Board of Directors under Section 10.

7. Referring to the objective of the Articles of Association of the Company, it was submitted that the said Articles of Association provided certain matters as ‘affirmative vote matters’ is inter alia to put restrictions on the powers of the ‘Board of Directors’ in case of the specified matters. The effect being that without specific consent as mandated in the Articles of Association, the Board of Directors will not have any power in relation to the said matters. According to him, the Articles of Association are to be construed accordingly and the restrictions imposed therein are to be abided by the Board of Directors and any purported exercise of the powers by the Board of Directors, which is contrary to the restrictions as per the Articles of Association and/or not permitted there under, is clearly ultra vires and void.

8. It was further su