Tribunal Upholds Interim Resolution Professional's Authority; Emphasizes Continued Role Post-Appointment

The Tribunal upheld the Interim Resolution Professional's (IRP) authority and actions, dismissing the application to annul the IRP's appointment. It emphasized the IRP's continued role post the expiry of the initial term until replaced by a Resolution Professional, ensuring the seamless progression of the insolvency process. The Tribunal directed cooperation with the IRP, provided police protection, and addressed non-cooperation issues from financial creditors, highlighting the significance of adherence to statutory deadlines and procedural requirements under the Insolvency and Bankruptcy Code.

---

---

Issues Involved:
1. Non-cooperation of the personnel of the Corporate Debtor.
2. Validity of the Interim Resolution Professional’s (IRP) actions post the expiry of his term.
3. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC), 2016.
4. Allegations of illegal actions by the IRP.
5. Publication of advertisements in widely circulated newspapers.
6. Appointment of a valuer previously dis-empanelled by a bank.
7. Directions for police protection and assistance.

Detailed Analysis:

1. Non-cooperation of the personnel of the Corporate Debtor:
The IRP faced significant non-cooperation from the personnel of the Corporate Debtor. Despite multiple visits and requests, the personnel, including the Director (R-2) and a Consultant Chartered Accountant, failed to provide necessary documents, access to books of accounts, or control over the premises. The premises were found devoid of any plant and machinery, spare parts, or records, indicating a deliberate attempt to obstruct the IRP’s duties. The Tribunal noted the non-cooperative attitude of the key managerial personnel, which hindered the IRP's performance of his time-bound duties.

2. Validity of the IRP’s actions post the expiry of his term:
The primary issue was whether the IRP could continue functioning after the expiry of his 30-day term. The Tribunal held that the IRP does not become functus officio (having no further official authority) merely because his initial term expired. The Tribunal emphasized that the insolvency process must continue seamlessly to meet the statutory deadlines, and the IRP would continue to function until replaced by a Resolution Professional (RP) as per the Code. The Tribunal referenced the Hon'ble Company Law Appellate Board’s decision in JK Jute Mills Company Limited Vs. M/s Surendra Trading Company, which clarified that the IRP’s duties are not mandatory but directory, ensuring the continuity of the resolution process.

3. Compliance with procedural requirements under the IBC:
The IRP complied with the procedural requirements by filing the report certifying the constitution of the Committee of Creditors (CoC) within the stipulated 30 days and scheduling the first CoC meeting. However, the meeting was delayed due to non-cooperation from Canara Bank, the lead financial creditor. The Tribunal found that the IRP acted in accordance with the regulations despite the challenges and non-cooperation from the financial creditors.

4. Allegations of illegal actions by the IRP:
The respondents alleged that the IRP acted beyond his jurisdiction by attempting to lock the premises and requesting information for the past four financial years. The Tribunal dismissed these allegations, stating that the IRP was within his rights to secure the assets and request necessary information. The Tribunal noted that the Corporate Debtor failed to provide even the financial statements for the last two years, which were essential for the resolution process.

5. Publication of advertisements in widely circulated newspapers:
The respondents contended that the IRP did not publish the required advertisements in newspapers with wide circulation in the locality of the Corporate Debtor. The Tribunal rejected this argument, stating that the IRP made reasonable efforts by publishing in 'Business Standard' and 'Rozana Spokesman,' which have significant circulation. The Tribunal emphasized that the intervener had no locus standi to challenge the publication's adequacy given his non-cooperative behavior.

6. Appointment of a valuer previously dis-empanelled by a bank:
The intervener argued against the appointment of a valuer dis-empanelled by the State Bank of India. The Tribunal found this contention without merit, noting that the valuer was empanelled with other banks and financial institutions. The Tribunal stated that dissatisfaction with the valuer's report could be addressed by the CoC, but it was not a ground to impede the IRP's functioning.

7. Directions for police protection and assistance:
The Tribunal issued directions for police protection to the IRP to ensure he could perform his duties without interference. The Tribunal also issued notices to the Chief Managers of Canara Bank and Bank of Maharashtra, the Regional Manager of Canara Bank, and the statutory auditors to explain their non-cooperation and failure to comply with the Tribunal's directions.

Conclusion:
The Tribunal dismissed the application to annul the IRP's appointment and upheld the IRP's actions and authority. The Tribunal directed the necessary parties to cooperate with the IRP and provided for police protection to facilitate the resolution process. The Tribunal also emphasized the importance of seamless continuation of the insolvency process and the IRP's role until a Resolution Professional is appointed.

---