Section 15(3)(c) of the SARFAESI Act provides a special

Solution

Section 15(3), which applies where the borrower is a company, provides three important consequences upon management takeover: (a) no shareholder can nominate or appoint any director; (b) no resolution passed at any shareholders' meeting is effective unless approved by the secured creditor; and (c) under sub-clause (c), no proceeding for the winding up of the borrower company or for the appointment of a receiver shall lie in any court except with the consent of the secured creditor. This provision ensures that the secured creditor's enforcement action is not derailed by rival insolvency proceedings initiated by other parties. It gives the secured creditor a veto over winding up proceedings during the management takeover period.