2020 (4) TMI 151 - Tri - Insolvency and Bankruptcy

Liability of Director of the company - it appears that R1 is the mother of R2. These two are making allegations against each other by R2 saying that she came into the company only in the year 2016 therefore she cannot be held responsible and R1 saying that she being aged about 80 years she has not been dealing with the management of the company though continuing as director of the company - HELD THAT - It is evident that since R2 subsequently resigned as director and Rl has continued as director until before this petition is admitted the books of the Corporate Debtor must be lying either with Rl or R2. Instead of providing documents Rl and R2 are not expected to make allegations against each other ignoring their duty to handover the books of the Company to the Applicant on the Application filed on 30.09.2019. Till date these two Respondents have not provided information in full that has been sought by the RP - On the other hand the RP says that though already 268 days of CIRP period is over he is unable to proceed with CIRP because information that is required to proceed further has not come so far. RP further says that ten hearings have been provided to these Respondents but so far information required for discharging his functions has not come forth from these Respondents. It is evident that these Respondents have neither produced the books of the company nor at least furnished the information enabling the RP to locate books of the Corporate Debtor - unless appropriate directions are given in this matter RP will not be in a position to proceed further in discharging his functions - The police authorities concerned are directed to assist the RP in getting information that is required for him to proceed with in discharging his functions as RP of this Corporate Debtor - application disposed off.

Summary

Issues:
1. Relief sought by the Resolution Professional under section 19(1) of the Insolvency & Bankruptcy Code, 2016.
2. Cooperation and support required from the Respondents.
3. Dispute regarding the availability of documents and information related to the Corporate Debtor.
4. Allegations between the Respondents regarding responsibility for the company's management.
5. Failure of the Respondents to provide necessary information to the Resolution Professional.
6. RP's inability to proceed with Corporate Insolvency Resolution Process (CIRP) due to lack of required information.
7. Lack of production of company books by the Respondents.
8. Need for police assistance under section 429 of the Companies Act, 2013.

Analysis:

1. The Resolution Professional (RP) filed an MA seeking various reliefs under section 19(1) of the Insolvency & Bankruptcy Code, 2016, including cooperation, support, and access to necessary documents and information from the Respondents to fulfill statutory obligations related to the Corporate Debtor.

2. The Respondents, particularly R2 and R3, raised issues regarding the availability of documents prior to R2's appointment as director and the responsibility for managing the construction project. R3 stated that the documents in their possession have been provided, while R2 emphasized her appointment in 2016, deflecting responsibility for pre-2016 documents.

3. Despite the RP's repeated requests and ten hearings, the Respondents, namely R1 and R2, failed to provide the required information and documents related to the Corporate Debtor, causing hindrance to the CIRP process.

4. The Tribunal noted that R1 and R2, who are related, were involved in a dispute and making allegations against each other instead of fulfilling their duty to hand over the company books. R2 resigned as director, while R1 continued, indicating that the necessary documents should be with either of them.

5. Due to the Respondents' non-compliance and lack of cooperation, the RP faced challenges in proceeding with the CIRP, as essential information crucial for discharging duties was not provided, even after 268 days of the CIRP period.

6. Considering the circumstances and the critical need for information, the Tribunal directed the police authorities to assist the RP under section 429 of the Companies Act, 2013, to obtain the necessary information required to move forward with the resolution process.

7. Consequently, the MA filed by the RP was disposed of, highlighting the importance of cooperation, timely provision of information, and adherence to statutory obligations to facilitate a smooth insolvency resolution process.