2020 (3) TMI 1344 - Tri - Insolvency and Bankruptcy

Seeking exclusion of period of 275 days from CIRP period - penalty on IRP on the charge of dereliction of duty on his part - HELD THAT - The communication it is seen was made only on 27.11.2019 and all the facts points out to an all around dereliction of duty and are absolute negligence on the part of the Operational Creditor and as well as the IRP. The Operational Creditor in its own interest and acting on behalf of the other creditors, the CIRP being a proceeding in rem had to communicate the same to the IRP/Applicant for proceeding with the CIRP which has not been done in this case. Penalty on IRP - HELD THAT - In the case of M/s. Takkshill Enterprises vs M/s. IAP Company Pvt. Ltd, 2018 (7) TMI 1632 - NATIONAL COMPANY LAW TRIBUNAL, NEW DELHI the Appellate Tribunal had chosen to waive the fine imposed by this Tribunal and stated that if any dereliction of the duties on the part of the IRP only IBBI can initiate action on the IRP and in the circumstance it is deemed appropriate in this matter to transmit the records to the IBBI by the Registry and the IBBI to initiate suitable action as may be deemed appropriate. Application disposed off.

Summary

Issues:
Application seeking reliefs under Section 12 of the Code, exclusion of a period of 275 days, appointment of IRP without consent, communication of Order to IRP, negligence of Operational Creditor and IRP, appointment based on IBBI circular, transmission of records to IBBI.

Analysis:
The Application sought relief under Section 12 of the Code, requesting exclusion of a 275-day period from 14th March 2019 to 13th December 2019. The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was initiated on 14.03.2019 based on a Petition by the Operational Creditor. The Applicant did not consent to be appointed as the IRP, and only learned of the appointment on 27.11.2019, leading to delays in the process.

The IRP/Applicant highlighted that the communication of the Order by the Tribunal was not promptly conveyed, and the appointment was not based on the IRP's consent but on the IBBI circular. The Tribunal noted the dereliction of duty and negligence by the Operational Creditor and the IRP in failing to communicate crucial information promptly, affecting the progress of the CIRP.

The Tribunal questioned the Operational Creditor's delay in communicating the Order to the IRP and the appointment made without explicit consent. Referring to a previous case, the Tribunal emphasized the importance of IRPs fulfilling their duties earnestly. While acknowledging the IBBI's authority to take action against IRPs for dereliction of duties, the Tribunal decided to transmit the records to the IBBI for appropriate action in this matter.

Consequently, the Application was disposed of with directions to transmit the records to the IBBI for further action, highlighting the need for timely communication, consent-based appointments, and diligent performance of duties by all parties involved in the insolvency resolution process.