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2019 (9) TMI 587 - AT - Insolvency and BankruptcyContempt petition - removal of the Resolution Professional / Liquidator - It was alleged that despite directions by the Adjudicating Authority from time to time, the Ex-Directors of the Corporate Debtors were willfully dis-obeying to co-operate - HELD THAT - In the present case, as we find that the Appellant has not co-operated with the Resolution Professional / Liquidator and is still not co-operating and the Adjudicating Authority has already initiated the contempt proceedings under Section 425 of the Companies Act and intends to order for penal action under Section 70 and 72 of the I B Code, we allow the Appellant to raise all the issues before the Adjudicating Authority - If any issue the Appellant intends to raise, he and other Directors should appear in person and may file reply and the Adjudicating Authority thereafter will decide whether the Appellant and the other Directors are liable for punishment in terms of Section 425 of the Companies Act or their case is to be referred to the Special Court for action under Section 70 r/w Section 72 of the I B Code. Appeal dismissed.
Issues:
Application for removal of Resolution Professional/Liquidator under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (I&B Code) r/w Rule 11 of the NCLT. Analysis: The Appellant, a Director of M/s Mega Soft Infrastructure Pvt. Ltd., filed an application seeking the removal of the Resolution Professional/Liquidator, Mr. Abhishek Anand, under Section 60(5) of the I&B Code. The Adjudicating Authority, the National Company Law Tribunal, New Delhi Bench, rejected this application on 2nd May 2019. The grounds for seeking removal included allegations of non-cooperation by the Appellant/Directors with the Resolution Professional/Liquidator. It was claimed that the Ex-Directors of the Corporate Debtors willfully disobeyed cooperation directives and withheld crucial property title deeds, which were later revealed. The Resolution Professional invoked powers under Section 425 of the Companies Act, 2013, along with Sections 70 and 72 of the I&B Code, citing non-compliance by the Directors. The Adjudicating Authority initiated contempt proceedings against the Appellant and other Directors due to their lack of cooperation, leading to non-bailable warrants being issued. Subsequently, two applications were filed by the Ex-Directors, including the Appellant, which were dismissed. One application sought to recall the non-bailable warrants, while the other questioned the Adjudicating Authority's functioning. The Adjudicating Authority dismissed both applications, highlighting the Directors' conduct and reluctance to assist in the proceedings. The Court emphasized that the Ex-Directors had no standing to file applications on behalf of others. During the proceedings, it was revealed that a forensic audit had been conducted, and the report was shared with the Ex-Directors, including the Appellant. The Appellant's legal counsel argued that the Directors had cooperated with the Resolution Professional, who was uncooperative in return. However, the Court refrained from making any determination regarding the removal of the Resolution Professional/Liquidator or the handover of documents. The Court noted the ongoing non-cooperation by the Appellant with the Resolution Professional/Liquidator and the initiation of contempt proceedings. Consequently, the Appellant was allowed to raise all issues before the Adjudicating Authority, which would decide on potential penal actions under the Companies Act and the I&B Code. The Appeal was dismissed with these observations, and no costs were awarded.
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