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Issues: Whether the suspended managing director had locus to move an application under section 60(5) of the Insolvency and Bankruptcy Code, 2016 challenging steps taken in SARFAESI sale proceedings during the corporate insolvency resolution process, and whether rejection of the application solely on the ground of locus was sustainable.
Analysis: The application had been rejected without examining the merits, only on the premise that a member of the suspended board could not maintain it because the corporate debtor's affairs were under the control of the interim resolution professional. The order was tested against the principle that once the corporate insolvency resolution process commences, the moratorium under section 14 operates with overriding effect and bars continuation of actions to foreclose, recover, or enforce security interest, including proceedings under the SARFAESI framework. In that context, the authority relied on the view that a suspended director could still seek relief under section 60(5) before the adjudicating authority to protect the corporate debtor's interest.
Conclusion: The suspended managing director was entitled to maintain the application, and rejection solely for want of locus was unsustainable.
Final Conclusion: The impugned order was set aside and the application was restored to be considered on merits in accordance with law.
Ratio Decidendi: A suspended director may invoke section 60(5) to challenge measures affecting the corporate debtor during CIRP, and an application cannot be rejected only on the ground that it was filed by a member of the suspended board when the challenge concerns protection of the corporate debtor's assets during moratorium.
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