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Oasis Agro Infra Ltd. v/s Mandeep Singla & Others

    Company Application No. 67 of 2018 & Company Petition (Ib) No. 60/Chd/Pb/2017

    Decided On, 04 May 2018

    At, National Company Law Tribunal Chandigarh

    By, THE HONOURABLE MR. JUSTICE M.M. KUMAR
    By, PRESIDENT & THE HONOURABLE MR. PRADEEP R. SETHI
    By, TECHNICAL MEMBER

    For the Appearing Parties: Pulkit Goyal, Manish Jain, Divya Sharma, Advocates.



Judgment Text

1. CA No.67/2018:

This is an application filed under Section 19 (2) of the Insolvency and Bankruptcy Code, 2016 (for brevity the 'Code') for issuance of appropriate directions to Ex-Directors/Management for extending full cooperation and to provide necessary information to the resolution professional. The corporate insolvency resolution process was triggered in this case on 22.09.2017 (Annexure A-1). In the first meeting of the Committee of Creditors (COC) held on 22.12.2017 (Annexure A-3), specific directions were issued to the Ex-management-Directors namely Mr.Mandeep Singla, Mr.Keshav Kumar Bansal and Mr.Raj Kumar. According to the directions, exact particulars of the land, the period when the crop was uprooted premature, the subsequent termination of the lease agreement by the corporate debtor and details of plantation of crops etc. were sought. However, no exact information as required was provided. The aforesaid information is extremely necessary as the corporate debtor has secured the financial facilities from the creditors on the pretext of plantation of the poplar trees. The allegation against the corporate debtor is that the crops were uprooted without seeking prior approval from the Bank; and no particulars of such uprootment and other particulars regarding the land which was taken on lease, have been provided. The resolution professional had put a specific agenda in that regard before the COC.

2. In the meeting of COC held on 03.02.2018 (Annexure A-4), the representative of the corporate debtor was present and again directions were issued by the COC to provide numerous information with regard to the working of the corporate debtor, its assets and liabilities etc. to properly assess its financial position. The corporate debtor did not hand over the account books of the company to the resolution professional has given a vague reply questioning of credibility of the resolution professional.

3. The application has been opposed by filing an evasive and vague reply alleging bias of the resolution professional against the nonapplicant respondents. It is alleged that he has made up his mind that there was no possibility of resolution. There are further allegations against the resolution professional for not preparing Information Memorandum within 14 days of the first meeting of the COC as required by Section 25 (2) (g) of the Code. Allegations have also been made by referring to the Code of Conduct.

4. On merits, the defence put up is that the whole record has been provided to the PNB-financial creditor at the time of sanctioning of loan and disbursement of the term loan. The resolution professional, therefore, is free to ask for the same from the PNB. It is suggested that the land is already held by the Bank.

5. With regard to harvesting and pre-mature uprooting of the crop, the relevant information is stated to have been supplied to the financial creditor and a reference has been made to communications which the resolution professional is alleged to be withholding with mala fide intention. It is stated that letters dated 17.09.2015, 03.10.2015 and 06.11.2015 (Annexure R-2 to R-4 of diary No.1408, dated 03.05.2018) have already been handed over to the resolution professional. Similar averments have been made with regard to many other such things.

6. The non-applicant-respondent further state that Ex-Directors were asked to submit the details on the letter head of the Corporate Debtor duly signed by the suspended Board of Directors which is not possible for them to do. It is also stated that the requisite record can be seen at House No.22422, Bhagu Road, Bhatinda and it has been made known to the resolution professional in the letter dated 07.02.2018. Reliance has also been placed on the provisions of Section 18 (a) (i) & (ii) of the Code to argue that resolution professional is to collect the information relating to the assets, finances and operations of the corporate debtor for determining its financial position including information relating to business operations of the previous two years and financial and operational payments of the previous two years. Upon that basis, it is sought to be argued that the resolution professional is concerned only with the record of two years.

7. We have heard the learned counsel for the parties at length and are of the view that this application merits acceptance. Section 19 of the Code casts an obligation on the ex-personnel of the corporate debtor, its promoter or any other person associated with the ex-management including ex-directors to extend all assistance and cooperation to the interim resolution professional as may be required by him in managing the affairs of the corporate debtor. Section 19 (2) of the Code then empowers the resolution professional to file appropriate application before the Adjudicating Authority-NCLT to seek necessary directions and the Adjudicating Authority must issue direction to such defaulting personnel of ex-management. Section 19 of the Code is set out below for a ready reference:-

"19. (1) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor shall extend all assistance and cooperation to the interim resolution professional as may be required by him in managing the affairs of the corporate debtor.

(2) Where any personnel of the corporate debtor, its promoter or any other person required to assist or cooperate with the interim resolution professional does not assist or cooperate, the interim resolution professional may make an application to the Adjudicating Authority for necessary directions.

(3) The Adjudicating Authority, on receiving an application under sub-section (2), shall by an order, direct such personnel or other person to comply with the instructions of the resolution professional and to cooperate with him in collection of information and management of the corporate debtor."

8. The aforesaid provision makes it abundantly clear that exmanagement like respondents No.1 to 4 must furnish information and all assistance to the resolution professional as required by him in managing the affairs of the corporate debtor. In the absence of cooperation, powers have been conferred on the Adjudicating Authority-NCLT. The language of S.19 suggests that it must issue directions to such a defaulting personnel of the exmanagement to comply with the directions of the resolution professional and to cooperate with him. The aforesaid provisions are mandatory in character so as to enable the resolution professional to complete the corporate insolvency resolution process expeditiously and manage the affairs of the corporate debtor as a going concern. Therefore, there is no escape from the conclusion that non-applicant respondents are under legal and moral obligation to comply with the direction issued by the resolution professional.

9. The Ex-Directors No.1 to 3 instead of cooperating with the resolution professional, have been engaging the COC/resolution professional in an irrelevant and unholy dialogue. In order to avoid furnishing of information, the provisions of Section 18 (1) (a) of the Code have been relied upon to argue that the resolution professional cannot seek information for any transaction for a period beyond two years preceding the date of triggering the CIRP process. We are afraid that this is not the intent and requirement of Section 18 (1) of the Code. A careful perusal of Section 18 (1) (a) would show that as a part of his duty, the interim resolution professional is to collect all information relating to assets, finances and operations of the corporate debtor for determining its financial position, which may include information relating to business operations, land, financial and operational payments. The use of word "includes" suggest that it is illustrative and is capable of bringing within its sweep collection of information by RP beyond two years. By no stretch of imagination, it restricts the right of the resolution professional / interim resolution professional to collect information relating to the assets, finances and operations of the corporate debtor for a period of two years only. The limit of two years imposed on Resolution Professional for presenting it before COC creates no right in the ex-management to deny any information prior to two years. This provision is couched in the language which requires performance of duties by interim resolution professional / resolution professional. It does not clothe the Ex-Directors with a right to withhold information beyond period of two years. Therefore, the attempt to escape from furnishing of information is wholly against the letter and spirit of the provisions of the Code. We have distinct impression that all this is being done to avoid furnishing of vital information necessary for CIR process. Sometime people think that attack is the best defence as has been done here. The allegations against the resolution professional are bald and lack substance. There is no supporting material to consider such allegations seriously. Therefore, we reject the stance taken by the Ex-Directors-respondents.

10. As a sequel to the above discussion, this application is allowed. The resolution professional shall take possession of the whole record which is stated to be av

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ailable at House No.22422, Bhagu Road, Bhatinda, where the record has been shifted from the registered office after it was sold by the financial creditor under Section 13 of the SARFAESI Act. A representative of the Ex-Directors shall remain present at the aforesaid address on 09.05.2018 and 10.05.2018 from 10.00 a.m. to 5.00 p.m. The resolution professional shall take possession of the whole record. We hope and trust that non-applicant would co-operate and furnish the record over which they have no right sparing us from taking any further coercive action. If the Ex-Directors-respondents No.1 to 3 refuse to cooperate and do not divulge necessary information, the matter be brought to the notice of the Tribunal by the resolution professional at the earliest. The resolution professional shall be entitled to costs which is quantified at Rs. 50,000/-. The Ex-Directors shall pay the costs within one week to the resolution professional, which shall be credited to the account of the corporate debtor. The application stands disposed of.
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