2019 (10) TMI 1493 - Tri - Insolvency and Bankruptcy

Seeking directions to members suspended Board of Directors of the Corporate Debtor and their associates to submit/handover all the requisite books, financial data, information, returns and assets to the Resolution Professional immediately - seeking directions to provide necessary assistance/cooperation in smooth conduct of Corporate Insolvency Resolution Process - HELD THAT - The respondent Nos. 1 to 5 are misconducting themselves in the course of Corporate Insolvency Resolution Process by not extending their cooperation and assistance to the Resolution Professional and are withholding and not disclosing the information supposed to be furnished by them and not furnishing the books and documents belonging to the corporate debtor, which were supposed to be maintained by them at the relevant point of time. The Resolution Professional directed to issue a fresh notice immediately to respondent Nos. 1 to 5 specifically indicating what information/books/assets are still to be furnished by the respondents and the same shall be furnished by the respondents to the Resolution Professional within three weeks from the date of receipt of the said notice - application disposed off.

Summary

Issues: Non-cooperation of suspended Board of Directors in Corporate Insolvency Resolution Process, Failure to provide necessary information and documents, Violation of directions issued by NCLAT, Contempt of Courts Act, Compliance with orders

In the judgment delivered by the National Company Law Tribunal, Chandigarh Bench, the Resolution Professional of Mahabir Techno Ltd. filed an application against respondent Nos. 1 to 5, seeking cooperation and assistance in the Corporate Insolvency Resolution Process. The Tribunal noted that the respondents were not extending their cooperation, withholding information, and failing to provide the necessary books and documents belonging to the corporate debtor, which they were supposed to maintain. This behavior was deemed as misconduct during the insolvency process.

The Tribunal referred to a judgment by the Hon'ble NCLAT in Ajay Kumar vs. Shree Sai Industries Pvt. Ltd., which highlighted the importance of promoters cooperating and handing over necessary documents and information to the Resolution Professional. The judgment emphasized that if necessary, criminal action could be taken against non-cooperating promoters. Additionally, directions were issued during the admission of the Corporate Petition, instructing the Corporate Debtor, its Directors, and personnel to extend full cooperation to the Resolution Professional in managing the affairs of the company.

The respondents were found to be in violation of these directions, potentially leading to proceedings under the Contempt of Courts Act. However, to provide a final opportunity, the Tribunal directed the Resolution Professional to issue a fresh notice to the respondents, specifying the outstanding information, books, and assets to be furnished within three weeks. Failure to comply within the specified time would result in appropriate orders being passed. The Resolution Professional was instructed to file a compliance affidavit before the next hearing, detailing the information provided by the respondents. The case was listed for further proceedings on 15.11.2019, with a copy of the order to be communicated to all parties involved.