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2023 (2) TMI 1033 - AT - Insolvency and BankruptcyRight of the Resolution Professional - Non-cooperation by the Directors of Corporate Debtor - NCLT rejected the application of RP with cost of Rs. 25000/-- non-application of mind by the Adjudicating Authority - HELD THAT - When we look into the order itself, it is clear that in 25.04.2022 order, liberty was reserved to RP to file an Application, if there is no continued cooperation from the suspended Board of Directors, for seeking prosecution under Section 236 of the Code. The prosecution under Section 236 is a different aspect from running a CIRP as per timeline prescribed in the IBC. The mere fact that in an earlier Application filed by RP, liberty was granted only to file prosecution, does not preclude the Adjudicating Authority to consider a subsequent Application filed by the RP due to continued non-cooperation by suspended Directors. The Application had substantial grounds as evidenced from the orders of the Adjudicating Authority itself that it had issued various directions including a direction of personal appearance of Respondent No.1, which was issued after the Adjudicating Authority was fully satisfied, hence, there is no occasion to dismiss Section 19, sub-section (2) Application as frivolous and infructuous. Coming to the submission of learned Counsel for Respondent that Resolution Plan had already been approved by the Adjudicating Authority, which is pending consideration before the Adjudicating Authority, it is for the Adjudicating Authority to consider as to what directions can be issued. Appeal allowed.
Issues:
- Dismissal of IA(I.B.C.)/678(KB)2022 as infructuous - Imposition of cost on the Resolution Professional Analysis: 1. The Appeal was filed by the Resolution Professional (RP) against the order of the National Company Law Tribunal, Kolkata Bench, dismissing IA(I.B.C.)/678(KB)2022 under Section 19(2) of the Insolvency and Bankruptcy Code, 2016 (IBC) as infructuous and imposing a cost of Rs.25,000 on the RP. 2. The RP filed IA(I.B.C.)/678(KB)2022 seeking direction for the Respondent to disclose documents after non-cooperation. The Adjudicating Authority issued notices and directions to the Respondent, emphasizing cooperation. Despite repeated directions and non-cooperation by the Respondent, the IA was dismissed as frivolous on 02.12.2022, causing the RP to appeal. 3. The RP argued that the order was based on an earlier order dated 25.04.2022, which granted liberty to file a fresh application if cooperation ceased. The Adjudicating Authority's multiple directions and summoning of the Respondent showed the seriousness of the matter, making the dismissal unjustified and indicating a lack of application of mind. 4. On the other hand, Respondent No.1 contended that the IA was a delay tactic as the Resolution Plan was already approved by the Committee of Creditors. They claimed no non-cooperation as the Respondent had resigned earlier, and the IA was an attempt to hinder the resolution process. 5. The Adjudicating Authority had issued various directions and summoned the Respondent due to non-cooperation, showing the seriousness of the issue. However, the sudden dismissal of the IA without valid reasons and imposition of costs raised concerns about the fairness and reasoning behind the decision. 6. The Adjudicating Authority's decision to dismiss the IA as infructuous lacked justification and failed to consider the continued non-cooperation by the Respondent, as evidenced by previous orders. The imposition of costs on the RP was not supported by any valid reasons, rendering the decision unsustainable. 7. The Appeal Tribunal set aside the order dated 02.12.2022, reviving IA(I.B.C.)/678(KB)2022 for fresh consideration by the Adjudicating Authority in accordance with the law, highlighting the need for a fair and reasoned decision-making process without arbitrary impositions or dismissals.
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