2018 (4) TMI 1746 - AT - Insolvency and Bankruptcy

Maintainability of appeal - Liquidation proceeding - Insolvency and Bankruptcy Code, 2016 - it was alleged that without following the procedure for resolution process, the impugned order of liquidation has been passed - HELD THAT - From the record, we find that the Directors have not cooperated with the Resolution Professional. The title deeds of the properties belonging to the Corporate Debtor and other records were not supplied to the Resolution Professional . The resolution process started on 23rd August, 2017 and 180 days expired on 19th February, 2018. Taking into consideration the fact already 180 days has completed and the Directors were not co-operating with the Resolution Professional or Committee of Creditors , the Adjudicating Authority had no option but to pass order in accordance with Section 3 of the I B Code, we find no merit in the appeal. Appeal dismissed.

Summary

Issues:
1. Non-completion of resolution process in accordance with the Insolvency and Bankruptcy Code, 2016.
2. Lack of cooperation from Directors with the Resolution Professional.
3. Failure to provide necessary records including title deeds of properties belonging to the Corporate Debtor.

Issue 1: Non-completion of resolution process in accordance with the Insolvency and Bankruptcy Code, 2016

The appellant contended that the resolution process was not completed as per the Insolvency and Bankruptcy Code, 2016. It was argued that the details of creditors were not recorded, and the procedure for calling applications from the Resolution Applicant was not followed. Due to this, the order for liquidation was passed without completing the necessary steps for the resolution process. The appellant suggested that had the proper procedure been followed, the creditors' details could have been noted, and a resolution could have been achieved without resorting to liquidation.

Issue 2: Lack of cooperation from Directors with the Resolution Professional

The record revealed that the Directors did not cooperate with the Resolution Professional. They failed to provide essential documents such as title deeds of properties belonging to the Corporate Debtor. Despite claims of sending mails to the Resolution Professional, it was noted that the Board of Directors was required to cooperate as per the Insolvency and Bankruptcy Code. The lack of cooperation hindered the Resolution Professional and Committee of Creditors from proceeding with the resolution process. As the 180-day period had expired without cooperation from the Directors, the Adjudicating Authority was left with no choice but to pass the order for liquidation as per Section 3 of the I & B Code.

Issue 3: Failure to provide necessary records including title deeds of properties belonging to the Corporate Debtor

The failure to provide crucial records, specifically the title deeds of properties belonging to the Corporate Debtor, was a significant factor in the decision for liquidation. Despite the Resolution Professional's attempts to obtain the required documents, the lack of cooperation from the Directors impeded the progress of the resolution process. This non-compliance with providing essential records further strengthened the Adjudicating Authority's decision to proceed with liquidation as prescribed by the Insolvency and Bankruptcy Code.

In conclusion, the appeal was dismissed as the Adjudicating Authority found no merit in the appellant's arguments. The lack of cooperation from the Directors, failure to follow the prescribed procedures of the Insolvency and Bankruptcy Code, and the non-provision of necessary records were critical factors leading to the decision for liquidation.