Suspended directors must sign financial statements for 2019-2020 per Companies Act.

The Tribunal held that the suspended directors of the Corporate Debtor are obligated to sign the financial statements for the Financial Year 2019-2020 as mandated by the Companies Act, 2013. The Resolution Professional (RP) was deemed not competent to sign the statements in place of directors. The Tribunal emphasized the importance of compliance with procedural requirements under the Insolvency and Bankruptcy Code and Companies Act, 2013, and dismissed the appeal, directing the suspended directors to sign the financial statements within two weeks to ensure timely completion of the Corporate Insolvency Resolution Process.

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Issues Involved:
1. Whether the suspended directors are obligated to sign the financial statements for the Financial Year 2019-2020.
2. Whether the Resolution Professional (RP) is competent to sign the financial statements in place of the suspended directors.
3. Whether the procedural requirements for filing financial statements under the Insolvency and Bankruptcy Code (IBC) and Companies Act, 2013, were met.
4. Whether the adjudicating authority erred in directing the suspended directors to sign the financial statements without allowing them to file a reply.

Issue-wise Detailed Analysis:

1. Obligation of Suspended Directors to Sign Financial Statements:
The Tribunal held that the suspended directors of the Corporate Debtor (CD) are required to sign the financial statements. It was emphasized that the suspension of their powers does not absolve them from their duties. The Tribunal cited Sections 129 and 134 of the Companies Act, 2013, which mandate that financial statements must be signed by directors. The Tribunal found no merit in the appellants' argument that the RP should sign the financial statements, especially since the appellants had signed the financial statements for the first three quarters of the financial year 2019-2020.

2. Competency of RP to Sign Financial Statements:
The appellants argued that the RP should sign the financial statements as per the General Circular No. 08/2020 dated 06.03.2020. However, the Tribunal clarified that the circular pertains only to the procedure for filing forms and does not override the statutory requirement under the Companies Act, 2013, which mandates directors to sign the financial statements. The Tribunal concluded that the RP's role is to manage the company during the Corporate Insolvency Resolution Process (CIRP) but does not extend to signing financial statements in place of directors.

3. Procedural Requirements Under IBC and Companies Act, 2013:
The Tribunal noted that the RP and the statutory auditor had prepared the financial statements and provided all necessary information to the appellants. Despite repeated requests via emails dated 22.01.2021, 15.02.2021, 19.02.2021, 20.02.2021, and 26.02.2021, the appellants failed to sign the financial statements. The Tribunal emphasized that under Section 19(2) of the IBC, the personnel of the CD, including its promoters and directors, are required to assist the RP. The Tribunal found that the appellants' refusal to sign the financial statements was unjustified and aimed at delaying the process.

4. Adjudicating Authority's Direction Without Allowing Reply:
The appellants contended that the adjudicating authority disposed of the application without giving them an opportunity to file a reply. The Tribunal found that the adjudicating authority acted within its powers to ensure timely completion of the CIRP. The Tribunal held that the appellants were given ample opportunity to cooperate and that their objections had been addressed by the RP and the statutory auditor. The Tribunal upheld the adjudicating authority's order directing the appellants to sign the financial statements within two weeks.

Conclusion:
The Tribunal dismissed the appeal, affirming that the suspended directors must sign the financial statements for the financial year 2019-2020. The Tribunal found no illegality in the adjudicating authority's order and emphasized the importance of cooperation from the appellants to avoid further delays in the CIRP. The Tribunal directed the registry to upload the judgment and send a copy to the adjudicating authority.

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