Ex-management fined for failing to provide data to Liquidator, fined Rs. 5 lakhs for misconduct

The Tribunal found that the ex-management failed to comply with the order to provide tally data to the Liquidator, citing the theft of a macbook containing the data. However, inconsistencies in their claims led the Tribunal to impose a fine of Rs. 5 lakhs on the ex-management for misconduct. The ex-directors' contradictory statements regarding the theft were deemed false, emphasizing the importance of accurate information in insolvency proceedings. The Tribunal stressed the obligation of ex-management to cooperate with the Liquidator and directed the Resolution Professional to respond to previous orders within two weeks.

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Issues: Non-compliance with order to provide tally data, theft of macbook containing tally data, contradictory statements by ex-directors, obligation of ex-management to cooperate with liquidator, imposition of fine for misconduct, pending response from Resolution Professional.

1. Non-compliance with order to provide tally data:
The Tribunal noted that the ex-management, now represented by Respondent Nos. 1 & 2, failed to comply with the order directing them to provide tally data regarding the Corporate Debtor's workings to the Liquidator. Despite claiming to have handed over balance-sheets for multiple years, they failed to produce the required tally data, citing the theft of a macbook containing the data in January 2019.

2. Theft of macbook containing tally data:
The Respondent Nos. 1 & 2 claimed that the macbook containing the tally data of the Corporate Debtor was stolen in January 2019. However, the Tribunal found this claim contradictory as the balance-sheet for the year ending 2018-19 was signed by the Ex-Director in May 2019, implying access to the tally data for that year.

3. Contradictory statements by ex-directors:
The Tribunal deemed the statements made by the ex-directors regarding the theft of the tally data as false and misleading. The Tribunal highlighted the inconsistency in the ex-directors' claims, emphasizing the importance of accurate and reliable information in insolvency proceedings.

4. Obligation of ex-management to cooperate with liquidator:
Referring to Section 34(3) of the Insolvency and Bankruptcy Code and Regulation 9 of the IBBI (Liquidation Process) Regulations 2016, the Tribunal emphasized the obligation of ex-management to cooperate with the Liquidator. It stressed the importance of providing necessary information for the conduct of liquidation proceedings.

5. Imposition of fine for misconduct:
In light of the ex-management's failure to cooperate and the misleading statements made, the Tribunal imposed a fine of Rs. 5 lakhs on Respondent Nos. 1 & 2. The Respondents were directed to make the payment to the Central Government within two weeks and file a compliance affidavit along with proof of payment within one week.

6. Pending response from Resolution Professional:
The Tribunal noted that the Resolution Professional had not yet responded to the directions given in a previous order. The Counsel was directed to file the response within two weeks, with a copy provided in advance to the other party for information, and the matter was scheduled for a further hearing on a specified date.

This comprehensive analysis of the judgment highlights the key issues addressed by the Tribunal and the actions taken regarding non-compliance, misleading statements, cooperation obligations, imposition of fines, and pending responses from involved parties.

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