2020 (12) TMI 802 - Tri - Companies Law

Seeking direction to the suspended directors of Corporate Debtor to provide and make available to the Liquidator the complete set of books of accounts of the CD for the past 4 years - Seeking direction to make available to the Liquidator the complete set of books of accounts of the subsidiary Company - HELD THAT - No serious effort has been taken by the suspended directors of CD to provide the entire documents to the Liquidator. The attempt to put blame on the designated employee and the auditor of the Company with regard to the Books of Accounts of the Company is an excuse of the Suspended Director of the Corporate Debtor not to give the documents sought by the Liquidator. On going through the application, it is seen that adequate co-operation has not been extended by the Corporate Debtor to the Liquidator in completing the liquidator process. The absence of books of accounts of the Corporate Debtor as well as their Subsidiary Company M/s. Sabkaa Payments Ltd will ultimately result into hampering of the process of liquidation. The suspended directors of the CD are bound to extend all assistance to the Liquidator in his efforts to collect the whole documents including the books of accounts of the CD as well as the subsidiary Company of CD. Application disposed off.

Summary

Issues:
1. Direction sought by the Liquidator for the provision of complete set of books of accounts by suspended directors of Corporate Debtor and its subsidiary.
2. Discrepancies found by the Liquidator in the records of the Corporate Debtor.
3. Appointment of Forensic Auditor and registered valuers by the Liquidator.
4. Reasons provided by the suspended director for not providing the books of accounts.
5. Allegations and counter by the suspended director regarding the maintenance and availability of books of accounts.
6. Lack of cooperation by the Corporate Debtor with the Liquidator.
7. Tribunal's observations and decision regarding the provision of books of accounts by the suspended directors.

Analysis:
1. The Liquidator filed an application seeking direction for the suspended directors of the Corporate Debtor to provide the complete set of books of accounts for the past 4 years and for the subsidiary company. The Tribunal noted the importance of these documents for the liquidation process and the lack of cooperation from the suspended directors.

2. The Liquidator identified several discrepancies in the Corporate Debtor's records, including ambiguity in transactions with the subsidiary, non-appointment of internal auditor, non-maintenance of statutory registers, financial performance issues, voluminous transactions, and fraudulent activities, necessitating the appointment of a Forensic Auditor and registered valuers.

3. The suspended director provided reasons for not providing the books of accounts, citing issues with server hard disk corruption, data loss due to cybercrime, and allegations against a former employee. The Corporate Debtor claimed to have handed over all available information to the Liquidator, emphasizing financial difficulties affecting operations.

4. The Tribunal observed that the suspended directors did not make serious efforts to provide the required documents to the Liquidator. It dismissed the excuses made by the suspended director regarding the availability of books of accounts and emphasized the necessity of full cooperation in the liquidation process.

5. Ultimately, the Tribunal directed the suspended directors of the Corporate Debtor and the subsidiary to provide the complete set of books of accounts within two weeks, highlighting the critical role of these documents in facilitating the liquidation process and ensuring transparency. The order emphasized the obligation of the suspended directors to assist the Liquidator effectively.

This detailed analysis covers the issues raised in the judgment, the arguments presented by the parties involved, the Tribunal's observations, and the final decision rendered in the case.