Tribunal orders Ex-Directors to cooperate with Insolvency Resolution under Section 19

The Tribunal allowed the application under Section 19 of the Insolvency and Bankruptcy Code, directing Ex-Directors to cooperate with the resolution professional. Non-compliance could lead to action by the Adjudicating Authority-NCLT. The Ex-Directors were found to be evasive, misinterpreting the Code. The Tribunal emphasized the duty to provide information and imposed costs for lack of cooperation. The resolution professional was tasked with obtaining necessary records to ensure the process's success.

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Issues:
Application under Section 19 (2) of the Insolvency and Bankruptcy Code, 2016 for directions to Ex-Directors/Management to cooperate with the resolution professional and provide necessary information.

Analysis:
1. The corporate insolvency resolution process was initiated, and specific directions were issued to Ex-management-Directors to provide crucial information regarding the plantation of poplar trees, uprooting of crops, and lease agreements. However, the required information was not provided, leading to allegations of financial misconduct by the corporate debtor.

2. In subsequent meetings of the Committee of Creditors (COC), further directions were issued to the corporate debtor to provide detailed information about its working, assets, and liabilities. The corporate debtor failed to hand over account books and questioned the credibility of the resolution professional.

3. The application faced opposition with allegations of bias against the resolution professional and non-compliance with the Code of Conduct. The defense argued that necessary information had already been provided to the financial creditor at the time of loan sanction.

4. The non-applicant respondents claimed that certain information had been shared with the resolution professional and cited difficulties in complying with requests due to the suspension of the Board of Directors. They also referred to specific Code provisions related to the collection of information by the resolution professional.

5. The Tribunal analyzed Section 19 of the Code, emphasizing the obligation of ex-personnel to cooperate with the resolution professional. The Tribunal highlighted that non-compliance could lead to directions from the Adjudicating Authority-NCLT.

6. The Ex-Directors were found to be engaging in irrelevant dialogue and attempting to avoid providing information by misinterpreting Section 18 (1) of the Code. The Tribunal clarified that the resolution professional's duty includes collecting information beyond two years and that withholding information was against the spirit of the Code.

7. The Tribunal allowed the application, directing the resolution professional to take possession of necessary records from a specified address. Non-compliance would result in further action, and costs were imposed on the Ex-Directors for their lack of cooperation.

8. The resolution professional was instructed to ensure cooperation and obtain the required records, emphasizing the importance of complying with legal obligations for the successful completion of the corporate insolvency resolution process.

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