2020 (9) TMI 1264 - Tri - Insolvency and Bankruptcy

Seeking to pass an order of injunction restraining the Respondent from leaving the jurisdiction of this Tribunal without its leave - seeking direction to Respondent to extend necessary cooperation in discharge of his functions under the provisions of Code - Sections 19 33 of the I B Code, R/w Rule 11 13 of NCLT Rules. Extension of co-operation - HELD THAT - Though more than one year was over, the Applicant could not make substantial progress in liquidation process in order to follow time lines as prescribed under the Provisions the Code. So far as extending co-operation by the Respondent is concerned, it is settled position of law that all the concerned people, which includes Directors/MD, in respect of the affairs of the Corporate Debtor, and Managing Directors are required to extend co-operation to IRP/RP/Liquidator. The Applicant himself states in the Application that the Respondent was extending cooperation to him except for the last 20 (twenty) days, which is nothing but un-tenable contention/allegation made for the reasons best known to him. It (sic) goes without saying that the Respondent is under legal obligation to extend his co-operation. Seeking restraint on Respondent from leaving the Country - HELD THAT - The presence of Respondent is not required before the Adjudicating Authority, but may be required before Arbitral Authorities. And Arbitral Authorities, by law have judicial powers to ensure witness in the case pending before them. It is relevant to point out here that proceedings pending here are only liquidation proceedings, wherein presence of Respondent is not required. It is for the Applicant to initiate Criminal proceedings against the Respondent, if circumstances so warrant and thus seek appropriate relief which include to prohibit the Respondent to leave the Country. Application dismissed.

Summary

Issues Involved:
1. Direction for the Respondent to extend cooperation to the Liquidator.
2. Restraining the Respondent from leaving the country.

Detailed Analysis:

1. Direction for the Respondent to Extend Cooperation to the Liquidator:
The Liquidator of M/s. Deepak Cables (India) Limited filed applications seeking directions for the Respondent, the former Managing Director of the Corporate Debtor, to extend necessary cooperation in discharging his functions under the Insolvency and Bankruptcy Code (I & B Code). The Liquidator was appointed following the initiation of liquidation proceedings on 04.07.2019. Despite initial cooperation, the Respondent allegedly ceased cooperation in the last 20 days, which the Liquidator claimed hindered the liquidation process, including the handling of 23 pending arbitration proceedings.

The Tribunal noted that the Liquidator, appointed on 04.07.2019, was mandated to expedite the liquidation process but had only realized Rs. 53.70 crores against claims exceeding Rs. 1,623 crores from Financial Creditors and Rs. 1,149 crores from Operational Creditors. The Tribunal emphasized that under the I & B Code, Directors and Managing Directors are legally obligated to cooperate with the Insolvency Resolution Professional (IRP), Resolution Professional (RP), or Liquidator. However, it found the Liquidator's contention of non-cooperation for the past 20 days to be untenable and noted that the Respondent had been cooperative previously.

2. Restraining the Respondent from Leaving the Country:
The Liquidator also sought an injunction to restrain the Respondent from leaving the country, fearing it would prejudice the interests of the creditors and stakeholders. The Tribunal examined whether the Respondent's presence was necessary for the liquidation process and arbitration proceedings. It was highlighted that the presence of the Respondent was not required before the Adjudicating Authority but might be needed before Arbitral Tribunals, which have judicial powers to ensure witness attendance.

The Tribunal pointed out that the Liquidator could initiate criminal proceedings if necessary and seek appropriate relief, including prohibiting the Respondent from leaving the country. It was noted that the Respondent was not facing any criminal or CBI case, and the applications were filed based on the apprehension that the Respondent might leave the country on 21.08.2020, which the Respondent denied.

Relevance of Cited Judgments:
The Tribunal reviewed the judgments cited by the Applicant but found them inapplicable to the present case. In the cited cases, the directors were restrained from leaving the country due to pending criminal proceedings, which was not the situation in the current case. The Tribunal concluded that the relief sought by the Liquidator was substantial and fell under criminal jurisdiction, not under the inherent powers of the Adjudicating Authority.

Conclusion:
The Tribunal concluded that the applications were based on a misconception of facts and law and lacked merit. Consequently, both I.A. Nos. 288 & 289 of 2020 in C.P. (IB) No. 154/BB/2017 were rejected with no order as to costs.