15.
Manner and effect of takeover of management.-
(1) When the management of business
of a borrower is taken over by a secured creditor,
the secured creditor may, by publishing a notice
in a newspaper published in English language
and in a newspaper published in an Indian language
in circulation in the place where the principal
office of the borrower is situated, appoint
as many persons as it thinks fit-
(a) in a case in which the
borrower is a company as defined in the Companies
Act, 1956 (1 of 1956), to be the directors of
that borrower in accordance with the provisions
of that Act; or
(b) in any other case, to
be the administrator of the business of the
borrower.
(2) On publication of a notice
under sub-section (1),-
(a) in any case where the
borrower is a company as defined in the Companies
Act, 1956 (1 of 1956), all persons holding office
as directors of the company and in any other
case, all persons holding any office having
power of superintendence, direction and control
of the business of the borrower immediately
before the publication of the notice under sub-section
(1), shall be deemed to have vacated their offices
as such;
(b) any contract of management
between the borrower and any director or manager
thereof holding office as such immediately before
publication of the notice under sub-section
(1), shall be deemed to be terminated;
(c) the directors or the administrators
appointed under this section shall take such
steps as may be necessary to take into their
custody or under their control all the property,
effects and actionable claims to which the business
of the borrower is, or appears to be, entitled
and all the property and effects of the business
of the borrower shall be deemed to be in the
custody of the directors or administrators,
as the case may be, as from the date of the
publication of the notice;
(d) the directors appointed
under this section shall, for all purposes,
be the directors of the company of the borrower
and such directors or as the case may be, the
administrators appointed under this section,
shall alone be entitled to exercise all the
powers of the directors or as the case may be,
of the persons exercising powers of superintendence,
direction and control, of the business of the
borrower whether such powers are derived from
the memorandum or articles of association of
the company of the borrower or from any other
source whatsoever.
(3) Where the management of
the business of a borrower, being a company
as defined in the Companies Act, 1956 (1 of
1956), is taken over by the secured creditor,
then, notwithstanding anything contained in
the said Act or in the memorandum or articles
of association of such borrower,-
(a) it shall not be lawful
for the shareholders of such company or any
other person to nominate or appoint any person
to be a director of the company;
(b) no resolution passed at
any meeting of the shareholders of such company
shall be given effect to unless approved by
the secured creditor;
(c) no proceeding for the
winding up of such company or for the appointment
of a receiver in respect thereof shall lie in
any court, except with the consent of the secured
creditor.
(4) Where the management of
the business of a borrower had been taken over
by the secured creditor, the secured creditor
shall, on realisation of his debt in full, restore
the management of the business of the borrower
to him.
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