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TMI Blog2018 (8) TMI 1936X X X X Extracts X X X X X X X X Extracts X X X X ..... itor, Olympia Credits & Mercantile Pvt. Ltd., for initiating Corporate Insolvency Resolution Process (In short, CIRP) against the respondent/corporate debtor, Prithvi Finvest Co. Pvt. Ltd. Vide order dated 15/01/2018 the application was admitted and one Mr. Rajesh Kumar Kejriwal, Interim Resolution Professional (In short, IRP) has been appointed for initiating CIRP process. Mr. Rajesh Kumar Kejriwal has been confirmed as Resolution Professional (In short, RP) and while he continues the CIRP process allegations leveled against him that he delayed the entire CIRP process in order to permit Mr. Rajiv Kumar Agarwalla, Mr. Sajjan Kumar Bajaj and Mr. Bijay Kumar Garodia, who are the Directors of the suspended Board of Directors of the corporate debtor, to move out the entire funds of the corporate debtor to 4th respondent (Bijay Kumar Garodia) and his family members and his associate members of the corporate debtor. It is also contended that the Resolution Professional in violation of the CIRP Regulations and the Code continued the CIRP and thereby the newly inducted financial creditor removed the Resolution Professional and appointed another Resolution Professional Mr. Jitendra Lohia. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the List of Creditors annexed to the C.A. (IB) No. 605/KB/2018. 7. Since the allegations leveled against the erstwhile Resolution Professional as well as Directors of the corporate debtor is serious in nature and larger fund of the corporate debtor has been diverted during the period of Moratorium the prayer for passing an interim order arises for consideration before the disposal of both the above referred CAs. 8. Heard the Ld. Resolution Professional Mr. Jitendra Lohia, his Counsel and the Ld. Counsel appearing for the financial creditors in CA (IB) No. 605/KB/2018 and the Ld. Pr. CA appearing for the Directors of the corporate debtor and some of the respondents in CA(IB) No. 605/KB/2018. Ld. Counsel appearing for the Income Tax Department also was heard. Perused the records. 9. Upon hearing the arguments and considering the contentions of the applicants and the directors of the corporate debtor the short point that arise for determination is whether the Directors of the suspended board of directors of the corporate debtor had transferred the funds of the corporate debtor in violation of section 14 of the Code or in disobedience of the direction issued by the IRP. 10. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The erstwhile RP himself has filed CA (IB) No. 430/KB/2018 inter alia contending that he has issued public announcement in accordance with the Regulation 6 and that the corporate debtor did not co-operate with him nor disclose particulars despite repeated letters addressed to the corporate debtor on 25/01/2018, 05/02/2018 and 16/02/2018 and that the corporate debtor was directed not to do any transactions except which is essential for the day-to-day operation of the company without his prior permission and the corporate debtor has been alerted about the declaration of Moratorium and informed the corporate debtor inter alia prohibiting to do the transactions mentioned in the letter dated 25/01/2018. The operative portion of the letter dated January 25,2018 send by the RP reads as follows:- "You are further advised in the meantime not to do any transaction except which is essential for the day-to-day operation of the company without my prior permission. As moratorium have been declared u/s. 14 of Insolvency & Bankruptcy Code, 2016, you are inter alia prohibited to do the below-mentioned transactions:- 1. Dispose off or transfer any of your assets or legal right or beneficial in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on Professional has not taken over all the assets of the company/corporate debtor immediately after his appointment. He did not take over the management and the affairs of the corporate debtor immediately after his appointment. On the other hand permitted the corporate debtor to continue its operation as referred to in his letter dated 25/01/2018. That letter too send only after ten days of his appointment. Why not he took over the management and the affairs of the corporate debtor instead of sending letters permitting the management to run it under the guise of day-to-day operation immediately after his appoint, no explanation forthcoming. 16. Regulation 6(1) of the CIRP Regulations direct the IRP to make public announcement immediately on his appointment not later than 3 days from the date of his appointment and that too be published in one English newspaper and one regional Vernacular newspaper with wide circulation at the location of the Registered Office of the corporate debtor. But here in the instant case the newspapers referred to above is not seen widely circulated newspapers. The name of the both newspapers is rarely brought to my notice. Generally public announcement is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficers of the corporate debtor cannot do the operation of the company by self and its officers, mangers and Managing Director shall report and assist the IRP and they can do the affairs at the instruction of the IRP. How to manage the affairs of a corporate debtor is clearly laid down in the Code. Therefore plea of ignorance from the side of directors or IRP is not at all an excuse. The corporate debtor is bound not to do the management and the affairs of the company without permission of the RP. So the question is whether the IRP can permit the directors to continue the operation of the corporate debtor? 20. The letter referred to above date 25.01.2018 is interpreted by the Ld. CA that the directors being permitted to continue the operation transfer of fund is with permission and therefore their action is legal and not in violation of the provisions of the Code. It appears to me that no provisions of the Code or Regulation authorise the IRP to give permission to the directors of suspended board of directors to transfer fund of the corporate debtor to its existing creditors. Section 17 of the code otherwise clear that an IRP has no power to authorise the directors of suspended boa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oval of CoC. 22. It is significant to not here that the corporate debtor immediately after admission of the application filed by the Olympia Credits and Mercantile Ltd. has settled its claim and filed an appeal Sanjeev Azaad v. Punjab National Bank [CA (AT) (Insolvency) No. 65 of 2018, dated 23-1-2019 before the Hon'ble NCLAT for setting aside the order of admission. The Hon'ble NCLAT dismissed the appeal. It is argued by the Ld. Counsel for the financial creditors that above said applicant deliberately propose the name of the RP and after getting payment due to it in collusion with RP and directors of the corporate debtor assisted the corporate debtor to divert the fund. Whether there is any collusion or whether the delay in took over the management of the affairs of the corporate debtor by the RP is deliberate, are questions to be left open for determination as it requires larger hearing and evidence. 23. On going through the 7th Progress Report filed by the RP dated 07/08/2018 it is understood that 35 financial creditors were identified by the CoC in the meeting held on 20/07/2018 and individual notice has been send to the financial creditors and thereby the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X
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