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2021 (10) TMI 84 - Tri - Insolvency and BankruptcySeeking issuance of directions to the suspended Board of Directors (Respondents) to co-operate the RP in smooth functioning of CIRP of the Corporate Debtor - Section 19(2) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - Section 19 (1) of the Code cast a duty upon to the ex-management and other personnel of the CD to furnish information and all assistance to the RP in managing the affairs of the CD. In the absence of cooperation, powers have been conferred on Adjudicating Authority to direct such personnel or other person to comply with the instructions of the resolution professional and to cooperate with him in collection of information and management of the Corporate Debtor. The provisions of Section 19 suggests that directions must be issued to the defaulting personnel of the ex-management to comply with the directions of the RP and to cooperate with him. The provisions of Section 19 are mandatory in nature so as to facilitate the RP to complete the CIRP expeditiously and manage the affairs of the CD as a going concern. Therefore, there is no escape from the conclusion that non-applicant respondents are under legal and moral obligation to co-operate with RP for smooth functioning of the CIRP. Petition disposed off.
Issues Involved:
1. Application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016 for directions to the suspended Board of Directors to cooperate with the Resolution Professional (RP). 2. Compliance with previous orders regarding provision of documents and information by the respondents. 3. Affidavit submissions by the respondents regarding cooperation and provision of information. 4. Tribunal's decision on the necessity of cooperation under Section 19(1) of the Insolvency and Bankruptcy Code, 2016. Issue-wise Detailed Analysis: 1. Application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016: The application was filed by the Resolution Professional (RP) under Section 19(2) of the Insolvency and Bankruptcy Code, 2016, requesting directions for the suspended Board of Directors (respondents) to cooperate with the RP in the smooth functioning of the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor (CD). 2. Compliance with Previous Orders: The Tribunal had previously directed the RP to file an affidavit detailing the documents provided by the respondents (order dated 16.02.2021). The RP complied by submitting a supplementary affidavit on 23.02.2021, listing the documents provided and highlighting the information still pending from the respondents. Further, the respondents were directed on 19.03.2021 to provide details of pending cases before the High Court and related documents, and to file an affidavit of compliance. 3. Affidavit Submissions by the Respondents: In response, the respondents filed an affidavit on 23.03.2021, stating: - No knowledge of pending cases before the High Court, but efforts were being made to trace any such cases. - Full cooperation with the RP, denying any willful disobedience. - Provision of various documents and information, including inventory lists, debtor lists, details of godowns/shops, cheque books, post office details, and books of accounts. They also addressed issues like sale of goods at lower prices and forensic auditor queries. - The respondents highlighted their efforts to retrieve documents from a landlord who had disposed of them due to a rent dispute, and ongoing legal action against the landlord. 4. Tribunal's Decision on Cooperation under Section 19(1) of the Insolvency and Bankruptcy Code, 2016: The Tribunal emphasized that under Section 19(1) of the Code, the ex-management and other personnel of the CD are obligated to furnish information and assist the RP in managing the affairs of the CD. The Tribunal noted that the respondents had undertaken to cooperate with the RP and provide necessary information and documents. Consequently, the application (LA No. 2089 of 2020) was disposed of, with liberty granted to the RP to file an appropriate application if the respondents failed to extend the required cooperation in the future. Separate Judgment on IA-2685/2021: The Tribunal granted the applicant's counsel one week to file a rejoinder and scheduled the matter for further hearing on 08.10.2021.
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