2022 (1) TMI 15 - Tri - Insolvency and Bankruptcy

Proceedings against the Suspended Directors - Failure to handover books of accounts and documents to the RP - Seeking permission to withdraw the application with a liberty to file a separate application under Section 43 66 of IBC - HELD THAT - The present application is filed under Section 19(2) by the Resolution Professional, admittedly, the respondent nos. 1 and 2 are the Suspended Directors of the Corporate Debtors and who had been managing the affairs of the Company before the CIRP was initiated. The respondent no. 1 cannot be escaped from its liability, by shifting the responsibility solely on the respondent no. 2. Since, both the respondents were the directors of the Company prior to the initiation of the CIRP, therefore, they are supposed to hand over the documents and furnish the information as required by the RP. Since both of them have failed to furnish the information as required under the law, therefore the RP is directed to institute a criminal case against both the Suspended Board of Directors under Section 70 of the IBC along with the other relevant Sections of the law - Application disposed off.

Summary

Issues:
1. Application seeking withdrawal with liberty to file a fresh application under Section 43 & 66 of IBC.
2. Application for relief directing suspended directors to handover books of accounts, assets, and provide clarification.

Issue 1 - Application seeking withdrawal with liberty to file a fresh application under Section 43 & 66 of IBC:
The Tribunal granted permission for withdrawal of the application with liberty to file a fresh application under Section 43 & 66 of IBC, considering the submissions made by the counsel for the applicant. The present application, IA/5253/2020, was dismissed as withdrawn with the liberty to file a new application in accordance with the provisions of the law.

Issue 2 - Application for relief directing suspended directors to handover books of accounts, assets, and provide clarification:
The applicant sought various reliefs, including directing the suspended directors and management to handover books of accounts, fixed assets, provide clarification on financial transactions, and extend cooperation to the Resolution Professional. The respondent no. 1 cited medical reasons for non-cooperation due to being in a high-risk category for contracting COVID-19 and stated that the required information was under the control of respondent no. 2. The respondent no. 1 argued that the responsibility solely lies with respondent no. 2 for furnishing information and handing over documents. However, the Tribunal held that both respondents, being directors before CIRP initiation, are liable to provide the necessary information. As both failed to do so, the RP was directed to initiate a criminal case against both suspended directors under Section 70 of IBC and other relevant sections of the law. The application was disposed of with this direction.

This detailed analysis of the judgment covers the issues involved comprehensively, highlighting the key arguments and decisions made by the Tribunal regarding the withdrawal of the application and the relief sought against the suspended directors.