2021 (1) TMI 570 - Tri - Insolvency and Bankruptcy

Tribunal Orders Cooperation for Insolvency Process, Warns of Contempt

The Tribunal directed the respondents to cooperate with the Resolution Professional by providing necessary information, documents, and assets within a ... Non-cooperation by the directors of the suspended board, and the statutory auditor of the Corporate Debtor - Section 19(2) of I & B Code, 2016 - HELD THAT:- The documents produced on the side of the applicant satisfy that the respondents are not caring about her demands by providing the books of account, the information about the CD current status and the keys of various offices and factories. Physical possession of the Immovable Assets and vehicles, documents as well as other records pertaining to the Corporate Debtor are all retained with the Respondents without any legitimate excuse. The respondents are responsible for delaying the progress of CIRP even if works of all are disrupted due to Covid-19 pandemic. Only because the RP can exclude the unutilised period from the timeline to be completed by her, due to lockdown issued by the respective Government, it doesn't mean that the respondents can cause deliberate delay in handing over the information, documents, assets of the CD and books of account which are essential for continuing the CIRP. The respondents are to be directed to assist or cooperate the RP for completion of the process keeping the timeline as mandated under the Regulations - respondents/directors of the suspended board of the Corporate Debtor and R5 auditor, are directed to provide immediate cooperation and assistance to the RP by providing the information, documents and handing over possession of the assets as detailed in a list of inventory to be prepared by the RP and issued to the respondents - Respondents are directed to provide/handover all the details to be requested by the RP within ten days of the date of receipt of the Inventory/list of documents/assets etc. Petition disposed off. Issues Involved:Alleged non-cooperation by directors and auditor with the Resolution Professional in a Corporate Insolvency Resolution Process (CIRP) under the Insolvency and Bankruptcy Code, 2016.Detailed Analysis:1. Application Alleging Non-Cooperation:The Resolution Professional (RP) filed an application under Section 19(2) of the I&B Code, 2016, citing non-cooperation by the directors of the suspended board and the statutory auditor of the Corporate Debtor. The RP highlighted the urgency due to delays caused by the lockdown. The application was admitted for an urgent hearing.2. Background and Non-Cooperation Details:The Corporate Debtor, M/s. R.P. Info Systems Limited, was undergoing CIRP, and the RP faced challenges in collecting essential information, documents, and assets due to non-cooperation from the directors and the auditor. The RP emphasized the lack of cooperation in providing crucial records and assets necessary for the CIRP process.3. Contentions and Submissions:The RP's counsel outlined the assets and properties owned by the Corporate Debtor across various locations, emphasizing the non-handover of key documents and assets despite repeated demands. The Enforcement Directorate had attached assets, restricting their sale or transfer under the Prevention of Money Laundering Act, 2002.4. Responses from Respondents:The respondents, especially respondent no. 1, denied the allegations of non-cooperation, stating they had provided necessary documents and information. They claimed that RP failed to take necessary steps to obtain assets under ED's control. Respondents argued that RP's actions were merely delaying the process.5. Court's Decision and Directions:After hearing both sides, the Tribunal directed the respondents to cooperate with the RP by providing required information, documents, and assets within a specified timeline. Failure to comply could lead to contempt proceedings. The Tribunal emphasized the importance of cooperation to ensure the timely completion of the CIRP process.6. Conclusion and Disposal of Application:The Tribunal allowed the application, issuing specific directions to the respondents to assist the RP promptly. The order was disposed of without any costs, and the Registry was instructed to serve copies of the order to both parties promptly.This detailed analysis encapsulates the key issues, contentions, responses, and the Tribunal's decision regarding the alleged non-cooperation in a CIRP, providing a comprehensive overview of the judgment.