Suspended Directors Fined for Corporate Record Violation under Companies Act 2013

The Tribunal found that the Suspended Board of Directors failed to provide corporate records, violating Section 128(5) of the Companies Act, 2013. Directors Mr. Ashish Chaturvedi and Mr. Sanjay Kapoor were held liable for breaching their duties and were each fined Rs. 5 Lakhs, totaling Rs. 10 Lakhs. They were required to deposit the penalty with the Ministry of Corporate Affairs within four weeks. The Tribunal emphasized the importance of upholding statutory obligations and ensuring compliance with record-keeping requirements.

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Issues:
1. Failure of Suspended Board of Directors to provide records and information of the Corporate Debtor.
2. Violation of provisions of Section 128(5) of the Companies Act, 2013 by the Directors.
3. Imposition of penalty under Section 128(6) of the Companies Act, 2013.

Analysis:
1. The Tribunal dealt with the issue of the Suspended Board of Directors failing to provide records and information of the Corporate Debtor. The Resolution Professional sought direction under Section 19(2) for the suspended Directors to provide the necessary records. Despite multiple orders directing compliance, the Directors, Mr. Ashish Chaturvedi and Mr. Sanjay Kapoor, did not maintain the records, breaching their fiduciary duties. The Tribunal found a lack of compliance and held that the Directors violated their obligation to maintain records for a minimum of 8 years as per Section 128(5) of the Companies Act, 2013.

2. The judgment addressed the violation of Section 128(5) of the Companies Act, 2013 by the Directors. It was noted that the Directors, Mr. Ashish Chaturvedi and Mr. Sanjay Kapoor, grossly contravened this provision, which mandates the maintenance of corporate records. The Tribunal highlighted that such violation attracts penalties under Section 128(6) of the Companies Act, 2013. Consequently, the Tribunal concluded that invoking the provisions of Section 128(6) was necessary due to the Directors' failure to fulfill their statutory duties regarding record-keeping.

3. Regarding the imposition of penalties under Section 128(6) of the Companies Act, 2013, the Tribunal decided to levy a penalty of Rs. 5 Lakhs on each of the Directors, Mr. Ashish Chaturvedi and Mr. Sanjay Kapoor. The total penalty amounting to Rs. 10 Lakhs was directed to be deposited into the Government of India's Ministry of Corporate Affairs account within four weeks from the date of the order. Furthermore, the Tribunal mandated that compliance reports be submitted to the Registry by the counsel representing the Directors. This decision was made based on the conduct of the Suspended Board of Directors and the necessity to enforce penalties for their non-compliance with statutory obligations.

In conclusion, the Tribunal's judgment focused on the failure of the Suspended Board of Directors to provide corporate records, the violation of statutory provisions by the Directors, and the subsequent imposition of penalties under the Companies Act, 2013.

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