Tribunal grants RP custody of assets in IBC case; former directors must produce records

The Tribunal ruled in favor of the Resolution Professional (RP) in a case involving immediate custody and control of assets under the Insolvency and Bankruptcy Code, 2016. Despite possession by another company and previous proceedings, the asset was deemed to belong to the Corporate Debtor, entitling the RP to custody. Additionally, the Tribunal directed former directors to produce company records during the Corporate Insolvency Resolution Process, citing their ongoing involvement in financial matters. Failure to comply would result in assistance from the District Collector.

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Issues Involved:
1. Immediate custody and control of assets under the Insolvency and Bankruptcy Code, 2016.
2. Production of company records by erstwhile directors during Corporate Insolvency Resolution Process (CIRP).

Analysis:
1. The judgment addressed the issue of immediate custody and control of assets under the Insolvency and Bankruptcy Code, 2016. The case involved an Asset Reconstruction Company (R6) that had taken possession of a Corporate Debtor's asset under SARFAESI proceedings. Another company (R5) had entered into agreements related to the same asset. The Resolution Professional (RP) filed a Miscellaneous Application (MA) seeking custody of the asset, which was still considered the property of the Corporate Debtor. The Tribunal held that despite the possession by R5 and previous proceedings under SARFAESI, the asset remained the property of the Corporate Debtor. Therefore, the RP was entitled to immediate custody and control of the asset from R5. The judgment directed R5 to deliver possession and custodial control of the asset to the RP within 10 days, allowing the application.

2. The judgment also dealt with the issue of production of company records by erstwhile directors during the Corporate Insolvency Resolution Process (CIRP). The erstwhile directors (R1 to R4) claimed they no longer had the company records as the asset had been taken over by R6 and then by R5. They argued that they had donated their shares to a Trust and had no documents to provide. The RP contended that the directors were still involved in financial matters like filing tax returns and maintaining bank accounts, indicating their knowledge of the company's affairs. As the directors failed to provide the required documents, the Tribunal directed R1 to R4 to provide the records to the RP within 10 days. In case of non-compliance, the District Collector of Madurai was requested to assist the RP in obtaining the necessary documents and fulfilling his duties during the CIRP period.

In conclusion, the judgment resolved the issues of immediate custody and control of assets under the Insolvency and Bankruptcy Code, 2016, and the production of company records by erstwhile directors during the Corporate Insolvency Resolution Process. The Tribunal upheld the RP's right to take custody of the asset from R5 and directed the erstwhile directors to provide the company records within a specified timeframe, with the option of seeking assistance from the District Collector in case of non-compliance.

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