2021 (2) TMI 605 - Tri - Insolvency and Bankruptcy

Suspended Directors Ordered to Assist Resolution Professional for Corporate Insolvency Resolution Process

The Tribunal directed the suspended Directors to cooperate and assist the Resolution Professional by providing necessary information, documents, and ... CIRP proceedings - Seeking directions under Section19(3) of the IBC, 2016 to all the personnel of the Corporate Debtor to assist and cooperate with the Applicant and comply with the instructions of the applicant and provide the applicant all information, document etc,. required by the applicant - HELD THAT:- When the application was listed before the Bench, several notices were issued to the Corporate Debtors which had been returned unserved. Thereafter, a paper publication has also been made in the local dailies. In spite of all these exercises, the Respondent/Corporate Debtor did not appear before this Tribunal and the Bench relying on Sections 5(20) and (21) and Section (3)(1)(b) (c) of the IBC 2016, admitted the application and ordered Corporate Insolvency Resolution Process (CIRP). Non-cooperation of the respondent/Corporate Debtor is evident from their behaviour. Now after admission, all the steps taken by the Resolution Professional for getting cooperation from the side of the suspended Directors have been failed. Hence, he has appraoched this Tribunal seeking aforesaid reliefs, under Section 19(2) of the IBC, 2016. As per Section 19(2) of the IBC, 2016, it is made clear that this Tribunal can direct such personnel or other person to comply with the instructions of the Resolution Professional and to cooperate with him for collection of information and management of the Corporate Debtor. This Tribunal directs the Respondents 1&2 who are suspended Directors of the Corporate Debtor to assist and cooperate with the Applicant to provide all information, documents required by him and hand over all records, books and paper, books of accounts etc. for management of the Corporate Debtor and complete the CIRP without further delay. This direction should be carried out by the Respondents immediately, at any rate within two weeks from the date of receipt of this order - Application disposed off. Issues:Interlocutory Application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016 against suspended Directors seeking directions for cooperation, assistance, and compliance with the Resolution Professional.Analysis:1. The Interlocutory Application was filed by the Resolution Professional under Section 19(2) of the Insolvency and Bankruptcy Code, 2016 against the suspended Directors of the Corporate Debtor. The Application sought directions under Section 19(3) of the IBC for all personnel of the Corporate Debtor to assist, cooperate, and provide necessary information, documents, and records for the management of the Corporate Debtor as required by the Code.2. The Resolution Professional was appointed as the Interim Resolution Professional after an application under Section 9 of IBC was admitted by the Tribunal. The Resolution Professional undertook various steps, including making a Public Announcement, informing the Suspended Directors, and appointing an auditor to complete the audit and submit financial statements of the Corporate Debtor.3. Despite efforts by the Resolution Professional to collect necessary documents and records from the suspended Directors, their non-cooperation was evident. The Resolution Professional approached the Tribunal seeking necessary directions under Section 19(2) of the IBC due to the failure of the suspended Directors to comply with the instructions and cooperate in the Corporate Insolvency Resolution Process (CIRP).4. During the hearing, the Applicant argued that urgent cooperation and assistance from the Corporate Debtor were required to proceed with the CIRP. The Tribunal noted the non-appearance of the Corporate Debtor despite notices issued, leading to the admission of the application for CIRP. The Tribunal emphasized the importance of cooperation from all parties involved in the resolution process.5. The Tribunal, after considering the provisions of Section 19 of the IBC, directed the suspended Directors to assist and cooperate with the Resolution Professional by providing all necessary information, documents, and records for the management of the Corporate Debtor. The Tribunal ordered the suspended Directors to comply with the directions within two weeks from the date of the order to facilitate the completion of the CIRP without further delay.6. Regarding the request for police protection, the Tribunal noted that the Resolution Professional had not approached the authorities for such protection. The Tribunal directed the Resolution Professional to take necessary steps to seek police protection if required, before approaching the Tribunal for directions in that regard.7. The Tribunal disposed of the Interlocutory Application with the directions for the suspended Directors to cooperate and assist the Resolution Professional promptly. The judgment emphasized the importance of compliance and cooperation in insolvency proceedings for the effective resolution of corporate debts.