Export-Import Bank of India Vs Astonfield Solar (Gujarat) Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 754 of 2018 - Synopsis
Team SoOLEGAL 7 Dec 2020

In this particular case, Export-Import Bank of India Vs Astonfield Solar (Gujarat) Pvt. Ltd. [Company Appeal (AT) (Insolvency) No. 754 of 2018, an appeal has been filed by Export-Import Bank of India, the appellant in this case against an order of NCLT in which application under Section 10, preferably by M/s. Astonfield Solar (Gujarat) Limited Private and Anr.) the respondent in this particular case has been accepted, a moratorium order has also been passed and an Insolvency Professional has also been appointed. Learned lawyer, speaking on behalf of the appellant, claimed that the shareholders have no right to vote in favour of the decision of the Board of Directors to begin a corporate insolvency settlement process under Section 10 of Insolvency and Bankruptcy Code 2016 to the Corporate Debtor. 'Deed of Pledge of Securities' dated 28th March 2013 was relied upon in support of the assertion. Mr. Gurpreet Singh, Interim Resolution Expert, argued that in the processing of the financial matrix, the appellants were causing a hindrance on the basis that they favoured appeals. According to clause 5.2 of the laws relating to voting rights, the Deed of Pledge of Securities dated on 28th March 2013 was entered into by the Corporate Debtor and the Financial Creditor. According to the appellant, under clause 5.2.2, wherein the case of failure, the pledger allowed the Security Agent to attend the general meeting of the members or the meeting of each class of members or the meeting of creditors or debtors and to exercise the right to vote. According to the 'Deed of Pledge,' the Court was of the opinion that in the event of default, the voting rights of the shareholders ceased to exist, but it would not deprive the shareholder of continuing to be a shareholder and its securities would not be transferred to the Financial Creditor. In terms of Deed of Pledge dated 28th March 2013, they may lose the right to vote but they continue to be a shareholder. According to the Court, even if the shareholder is assumed to have ceased to exercise his right to vote in respect of the companies referred to above, his right under clause (c) of subsection (3) of Section 7 shall not be superseded by that provision.
The Court held that the shareholder has the right to determine whether to accept or reject a decision on the insolvency proceedings of a company pursuant to Section 10 of the I&B Code. Such right shall not be limited by Deed of Pledge dated 28 March 2013.


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