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In this NCLAT decision, the Tribunal clarified that although it had stayed "further steps" to be taken by the IRP in its earlier order dated 07.12.2023, this did not terminate the CIRP or restore management to the suspended Board of Directors. The Tribunal held that once CIRP was initiated and the IRP appointed on 04.12.2023, management of the Corporate Debtor vested with the IRP by operation of Section 17 of IBC. Despite the stay preventing the IRP from taking procedural steps like inviting claims or constituting the Committee of Creditors, the legal fiction created by IBC means the IRP retains control over the Corporate Debtor's assets. The suspended Board cannot resume control, as the stay order did not revert to status quo ante or quash the CIRP initiation.
In this NCLAT decision, the Tribunal clarified that although it had stayed "further steps" to be taken by the IRP in its earlier order dated 07.12.2023, this did not terminate the CIRP or restore management to the suspended Board of Directors. The Tribunal held that once CIRP was initiated and the IRP appointed on 04.12.2023, management of the Corporate Debtor vested with the IRP by operation of Section 17 of IBC. Despite the stay preventing the IRP from taking procedural steps like inviting claims or constituting the Committee of Creditors, the legal fiction created by IBC means the IRP retains control over the Corporate Debtor's assets. The suspended Board cannot resume control, as the stay order did not revert to status quo ante or quash the CIRP initiation.
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