Corporate insolvency and locus standi: a suspended company director cannot represent the company; the Resolution Professional must act.

A director of a company under corporate insolvency resolution process, with management suspended, cannot independently maintain proceedings on behalf of the company. The Resolution Professional is the competent person to represent the company in such circumstances. Because the applicant acted only as a former director and sought return of an unencashed demand draft issued for the company, the court held that he lacked locus standi and the application was not maintainable.

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Issues: Whether a director of a company, whose management had been suspended in insolvency proceedings, had locus standi to maintain an application seeking return of an unencashed demand draft issued on behalf of the company.

Analysis: The application was filed after the main proceedings had been withdrawn. The company had meanwhile entered the corporate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016, and its management stood suspended. In that situation, the Resolution Professional was the competent person to represent the company. The applicant, claiming only to be a former director, could not independently seek relief on behalf of the company.

Conclusion: The application was not maintainable and the director lacked locus standi to file it.

Ratio Decidendi: Where a company is under corporate insolvency resolution process and its management stands suspended, an individual director has no locus standi to maintain proceedings on behalf of the company unless competent authority to represent the company lies with the Resolution Professional.

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