2022 (3) TMI 994 - Tri - Insolvency and Bankruptcy

Direction to provide all required information to RP and to assist the RP in completing and signing the financials - providing the accurate details of debtors against whom the Corporate Debtor advanced money and supplied goods as required by RP - furnishing all required information relating to ECGC claim - furnishing all required information for filing DGFT claim - assisting the RP in the identification of machineries and reconcile the same with the invoices - assisting RP in complying with all statutory requirements - direction to provide all other assistance and cooperation required by the RP during the CIRP Process - HELD THAT - It appears from the record that vide order dated 27.07.2021 this Tribunal directed the parties to sit together and sort out the issues so as to enable the Resolution Professional to discharge her duties. The Resolution Professional was directed to file a report before this Tribunal stating what transpired in the meeting. As per the direction, the meeting was convened on 04.08.2021. In the meeting counsel for both the Respondents and Applicant have suggested the Suspended Directors visit to the factory and sit with the Resolution Professional, to provide the necessary assistance to the Resolution Professional. However, one of the suspended Directors informed that as his father is not well and he was attending the meeting from Hospital at Calicut, Kerala traveling from there to the factory premises cost him additional expenses. The defence of the Respondents is that, they have already handed over the documents to the Interim Resolution Professional and that since their part of the job is already completed, no further assistance to the Resolution Professional is required. Upon the direction of this Tribunal, a meeting was conducted in which the counsel for both the parties suggested the ex-management to visit the premises of the Corporate Debtor to provide further assistance. However, the Respondents were unwilling to go to the premises to provide any assistance; instead, they have sent an e-mail providing certain documents. If the Respondents/Suspended Directors were unable to go to the premises they should have arranged some other persons to make means to make necessary arrangements for carrying out the functions of the Resolution Professional. There was default on the part of the suspended Directors in compliance with the provisions of Section 19 of the IBC Code. To implement the intention of the Code up to this extent, it is obvious that the Suspended Directors and Managerial persons should extend full cooperation to the Resolution Professional and to furnish all information about their accounts and financial facilities availed from various financial creditors - No assistance was provided by them to identify the debtors of the Corporate Debtor, instead, they have submitted a letter to financial creditors to write off the dues. No action was taken to recover those dues and no claim was made before ECGC prior to giving such instructions. All these pieces of information are mainly in the knowledge and possession of the Directors, and therefore they are held responsible for non-submission of the information as well as non-cooperation as prescribed under Section 19 of the I B Code. The respondents are directed to assist the Resolution Professional and provide the required details to carry out her duties for completion of the Corporate Insolvency Resolution Process within two weeks from the date of receipt of this Order - application allowed.

Summary

Issues Involved:
1. Non-cooperation by the Respondents in providing necessary information and assistance to the Resolution Professional (RP) during the Corporate Insolvency Resolution Process (CIRP).
2. Specific details required by the RP for completing financials, identifying debtors, and filing claims with ECGC and DGFT.
3. Identification and reconciliation of machinery and compliance with statutory requirements.

Issue-wise Detailed Analysis:

1. Non-cooperation by the Respondents:
The Resolution Professional (RP) filed an application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016, seeking directions for the Respondents to provide necessary assistance and information. The RP stated that despite repeated requests, the Respondents failed to provide crucial documents and information essential for the CIRP. The Respondents argued that they had already handed over all documents to the Interim Resolution Professional (IRP) and that no further assistance was required. However, the Tribunal noted that the Respondents were unwilling to visit the premises to provide further assistance and had only sent some documents via email. The Tribunal emphasized the need for full cooperation from the ex-directors and managerial persons to facilitate the RP in managing the affairs of the Corporate Debtor.

2. Specific details required by the RP:
The RP sought various specific details from the Respondents, including:
- Financial information for the period from 01.04.2019 to 31.03.2020.
- Accurate details of debtors against whom the Corporate Debtor advanced money and supplied goods.
- Information relating to ECGC and DGFT claims.
- Assistance in identifying and reconciling machinery with invoices.
- Compliance with statutory requirements.

The Respondents contended that the financial statements for 2018-19 had already been submitted and that there were no significant operations during 2019-20 and 2020-21. They also claimed that details of debtors had been provided and that the ECGC and DGFT claims had already been filed. However, the Tribunal found that the information provided was incomplete and that the Respondents had not fully complied with their obligations under Section 19 of the IBC Code.

3. Identification and reconciliation of machinery and compliance with statutory requirements:
The RP faced difficulties in updating details of machinery with the SEZ authorities due to a lack of information from the Respondents. The Tribunal noted that the Respondents had not provided adequate assistance in identifying the machinery or reconciling it with invoices. Additionally, the RP required assistance in complying with statutory requirements, which the Respondents failed to provide.

Conclusion:
The Tribunal concluded that there was a default on the part of the suspended Directors in complying with the provisions of Section 19 of the IBC Code. The Tribunal directed the Respondents to assist the RP and provide the necessary details within two weeks from the date of receipt of the Order, including:
- All required information to assist the RP in completing and signing the financials for the period from 01.04.2019 to 31.03.2020.
- Accurate details of debtors against whom the Corporate Debtor advanced money and supplied goods.
- All required information relating to ECGC and DGFT claims.
- Assistance in identifying and reconciling machinery with invoices.
- Assistance in complying with all statutory requirements.

The Tribunal's order emphasized the importance of cooperation from the ex-directors and managerial persons to ensure the successful completion of the CIRP.