Doctrine of derivative action cannot be applied in Petition under Section 7 of the IBC – M Sai Eswara Swamy Vs. Siti Vision Digital Media Pvt. Ltd. – NCLAT New Delhi
NCLAT affirmed the findings of Ld. AA that there is no Board Resolution authorizing the petitioner to file the Petition and held there is a specific notification by the Central Government under sub-section (1) of Section 7 of the IBC that on behalf of the Financial Creditor a guardian, an executor or administrator of an estate of a financial creditor, a trustee and a person duly authorized by the board of directors of a company may file Application for initiation of CIRP against the Corporate Debtor. In such situation, doctrine of derivative action cannot be applied in Petition under Section 7 of the IBC. Therefore, the Petition is not maintainable.