Tribunal orders directors to submit accounting records promptly to aid audit process, failure may result in police intervention

The Tribunal granted the Resolution Professional's application under Section 19(2) of the Insolvency and Bankruptcy Code, directing the suspended directors of the Corporate Debtor to provide accounting data records from 01.04.2014 to 31.03.2017 within fifteen days. Non-cooperation by the Respondents led to suspicions of concealing illegal acts, with the Tribunal emphasizing the obligation of the suspended management to assist in the audit process. Failure to comply would allow the Resolution Professional to seek police assistance, highlighting the importance of complete accounting data for an effective audit.

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Issues:
1. Application filed seeking directions for accounting data records of the Corporate Debtor.
2. Non-cooperation by Respondents No.1 and 2 in providing accounting data.
3. Dispute over the availability of accounting data and its recovery.
4. Contention regarding the necessity of the origin of transactions for a detailed audit.
5. Obligation of suspended management to cooperate with the Resolution Professional.

Analysis:
1. The Tribunal dealt with an application filed by the Resolution Professional under Section 19(2) of the Insolvency and Bankruptcy Code, 2016, seeking directions for the accounting data records of the Corporate Debtor from 01.04.2014 to 31.03.2017. The Resolution Professional had conducted an audit of transactions and required the data for the same.

2. The Resolution Professional alleged non-cooperation by Respondents No.1 and 2, who were the promoter directors of the Corporate Debtor. Despite repeated requests, the Respondents did not provide the accounting data, leading to suspicions of concealing illegal acts. The Tribunal noted the Resolution Professional's efforts to obtain the data and the lack of cooperation from the Respondents.

3. Respondents No.1 and 2 claimed that the accounting data was corrupted in one of the computers, making it unavailable. The Tribunal emphasized that even if the data was corrupted, physical copies should exist with the suspended management of the Corporate Debtor for audit purposes. The suspended management was obligated to assist the Resolution Professional as per Section 19(1) of the Code.

4. The Resolution Professional argued that the origin of transactions before 01.04.2017 was necessary for a detailed audit, especially for ongoing transactions. The Tribunal considered this argument and highlighted the importance of having access to complete accounting data for an effective audit process.

5. In the final decision, the Tribunal directed the suspended directors of the Corporate Debtor to provide the accounting data records in soft and physical form from 01.04.2014 to 31.03.2017 to the Resolution Professional within fifteen days. Failure to comply would allow the Resolution Professional to seek assistance from the local police. The Tribunal emphasized the suspended management's obligation to cooperate with the Resolution Professional and allowed the application while disposing of the matter.

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