Tribunal penalizes ex-directors and auditor for non-cooperation in insolvency case. Contempt notices issued.

The Tribunal imposed penalties of Rs. 10,00,000 each on ex-directors and a statutory auditor for non-cooperation in handing over control of the corporate debtor, violating the Insolvency and Bankruptcy Code. Contempt notices were issued, and bank accounts were frozen to enforce compliance. Police assistance was directed to facilitate the Resolution Professional in taking possession of assets. The order emphasized the necessity of cooperation in insolvency proceedings and highlighted the severe repercussions for non-compliance.

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Issues Involved:
1. Non-cooperation by ex-directors and statutory auditor in handing over possession and control of the corporate debtor.
2. Deliberate obstruction in the resolution process by the ex-directors.
3. Penalties and legal consequences for non-compliance with court orders.
4. Involvement of police assistance to enforce court orders.
5. Freezing of bank accounts of ex-directors and statutory auditor.

Detailed Analysis:

1. Non-cooperation by ex-directors and statutory auditor in handing over possession and control of the corporate debtor:
The Resolution Professional (RP) reported multiple instances of non-cooperation by the ex-directors, specifically Mr. Gaurav Dave, Mrs. Ami Dave, and Mr. Vishal Dave, as well as the statutory auditor, Mr. Sandeep Shah. Despite repeated attempts, the RP was unable to take possession of the corporate debtor’s registered office, corporate office, and factory land due to deliberate obstruction and lack of cooperation from the ex-directors. The RP's visits to these premises were met with various forms of resistance, including locked gates, removed company boards, and misleading information about the premises and assets.

2. Deliberate obstruction in the resolution process by the ex-directors:
The RP’s status report highlighted that the ex-directors continuously obstructed the resolution process. For instance, during visits to the registered office and corporate office, the ex-directors provided misleading information about the premises and refused to hand over keys or identify specific locations. The ex-directors also failed to provide statutory records and other necessary documents, claiming they were either produced before appellate authorities or not available. This obstruction was documented through video recordings and Panchanamas.

3. Penalties and legal consequences for non-compliance with court orders:
The Tribunal noted that the actions of the ex-directors and statutory auditor were in violation of Section 70 of the Insolvency and Bankruptcy Code (IBC), 2016. This section outlines punishments for misconduct during the corporate insolvency resolution process, including failure to disclose property details, deliver property and documents, and prevent production of relevant books or papers. Consequently, the Tribunal imposed a penalty of Rs. 10,00,000 each on Mr. Gaurav Dave, Mrs. Ami Dave, and Mr. Vishal Dave, to be paid before the next hearing date. The Tribunal also issued contempt notices due to their repeated non-compliance with court orders.

4. Involvement of police assistance to enforce court orders:
Given the persistent non-cooperation, the Tribunal directed the Police Commissioner of Ahmedabad to provide police assistance to the RP. This included deputing a police officer of Deputy Superintendent rank to help the RP take control and possession of the corporate debtor’s assets and premises. The Tribunal had previously issued similar directions for police assistance, which were reiterated in this order to ensure compliance.

5. Freezing of bank accounts of ex-directors and statutory auditor:
To enforce compliance, the Tribunal ordered the freezing of bank accounts belonging to Mr. Gaurav Dave, Mrs. Ami Dave, and Mr. Vishal Dave. This included both individual and joint accounts in any bank in India. The Indian Banks Association and Reserve Bank of India were directed to issue necessary instructions to all banks and confirm compliance within a week. This measure was taken to ensure that the ex-directors and statutory auditor could not evade financial accountability.

Conclusion:
The Tribunal's order emphasized the importance of cooperation in the corporate insolvency resolution process and the severe consequences of non-compliance. The ex-directors and statutory auditor were penalized and faced legal actions, including contempt proceedings and freezing of bank accounts, to enforce compliance and facilitate the RP’s efforts in taking control and custody of the corporate debtor’s assets. The involvement of police assistance underscored the Tribunal's commitment to ensuring that its orders were executed effectively.

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