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of <h1>NCLAT allows liquidator to inspect subsidiary company records but bars asset takeover</h1> <h3>Bhavik Bhimjyani Versus Uday Vinodchandra Shah, RP of Neelkanth Township & Construction Pvt. Ltd. & Ors.</h3> Bhavik Bhimjyani Versus Uday Vinodchandra Shah, RP of Neelkanth Township & Construction Pvt. Ltd. & Ors. - TMI Issues involved:1. Appellant challenging order of Adjudicating Authority regarding furnishing of documents related to financial transactions.2. Dispute over documents required by Resolution Professional for advances made to various entities.3. Issue regarding providing documents related to wholly owned subsidiaries of the Corporate Debtor.4. Disagreement over the jurisdiction of Resolution Professional/Liquidator to take over assets of subsidiary companies.Detailed Analysis:1. The Appellant, a shareholder/ex-director, appealed against an order by the Adjudicating Authority concerning the disclosure of financial documents. The Authority observed discrepancies in transactions and directed the Appellant to provide specific documents within a stipulated time frame. The Appellant contested this directive, stating that certain documents were not in their possession but might be with other directors. The Resolution Professional confirmed receiving some documents from the bank related to the transactions in question.2. A detailed dispute arose over the documents required by the Resolution Professional regarding advances made to different entities. The Resolution Professional highlighted the necessity of specific documents, such as bank statements and agreements, to ascertain the nature and status of the advances. The Appellant claimed to have already provided available documents and expressed willingness to cooperate in obtaining the remaining records from the recipients of the advances.3. The issue extended to the provision of documents concerning wholly owned subsidiaries of the Corporate Debtor. The Resolution Professional emphasized the importance of accessing records of these subsidiaries to safeguard the assets of the Corporate Debtor. The Appellant agreed to provide the necessary documents but raised concerns about the Resolution Professional taking control of the subsidiaries without proper legal direction.4. A crucial disagreement emerged regarding the jurisdiction of the Resolution Professional, now acting as the Liquidator, to seize assets of subsidiary companies. The Tribunal directed the Appellant to allow inspection of subsidiary records to identify any relevant documents. However, it clarified that the Resolution Professional/Liquidator could only take authenticated photocopies of documents from the subsidiaries and not seize original records. The Tribunal modified the impugned order against the Appellant and disposed of the appeal with specific observations and directions to address the issues raised during the proceedings.
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