Mr. Anil Kumar, ‘IRP’ Vs Rolex Cycles Pvt. Ltd-Resolution Personnel Role under IBC Code 2016 is not a Cakewalk Going

Resolution Personnel Role under IBC Code 2016 is not a Cakewalk Going

Mr. Anil Kumar, ‘IRP’ Vs Rolex Cycles Pvt. Ltd

An application was filed against the Debtor, its personnel and chartered accountant by the Interim Resolution Professional claiming non-cooperation.

The personnel of the debtor contended that the IRP was acting out of jurisdiction and that the 30-day period of his appointment had expired. The NCLT (Chandigarh) held that the IRP was acted within his powers and that the Debtor had to extend co-operation for the completion of CIRP.

NCLT CHANDIGARH :

Held that Police protection to IRP in ‘stressful’ circumstances; Directs creditors' & auditors' cooperation NCLT (Chandigarh Bench) disposes application filed by Interim Resolution Professional (Mr. Anil Kumar, ‘IRP’ / ‘Applicant’) u/s 19(2) and 19(3) of Insolvency and Bankruptcy Code, 2016 (‘Code’) against Rolex Cycles Pvt. Ltd. and Directors (‘Corporate Debtor’ / ‘Interveners’);

NCLT sought  explanation from Statutory Auditor and Co. Directors for their inaction with regard to handing over statutory records and not complying with IRP’s instructions respectively, while directing Police Commissioner to provide police protection / assistance to IRP in performing his functions;

IRP visited Corporate Debtor’s site to take over the control of management, however, the Interveners refused to extend cooperation and advised IRP to visit on some other day;

 In the next visit, IRP could not find any plant and machinery, spare parts, tool kit, raw material, work in progress, finished goods, books of accounts, records or any computer system at the office of Corporate Debtor;

Whether IRP can Continue as Resolution Personnel after 30 days of his Appointment?

On issue whether the Applicant as an IRP can function after the expiry of original term of appointment for 30 days, NCLT peruses the provisions of Sec. 16(5) of the Code and refers to SC ruling in Commissioner of Income Tax, Mumbai vs NOTEWORTHY RULINGS UNDER INSOLVENCY & BANKRUPTCY CODE, 2016 Anjum M.H. Ghaswal wherein it was held that inherent powers in Settlement Commission cannot be exercised contrary to express provisions of Income Tax Act;

Commissioner of Income Tax, Mumbai vs Anjum M.H. Ghaswal

Applying said principle to present case, NCLT rules that “….consequences of non-appointment of Resolution Professional before the expiry of 30 days period of IRP have not been provided in the Code.

The proceedings before the IRP or the Resolution Professional, as the case may be, cannot be left in the lurch as there is a specific period for completion of insolvency process as provided in Section 12 of the Code….”;

As to whether provisions in the Code w.r.t. fixing the term of IRP are mandatory or directory, NCLT peruses IBBI (CIRP) Regulations, 2016 whereby in terms of Regulation 17(1), IRP is required to file the report certifying constitution of Committee of Creditors (‘COC’) on or before 30 days from date of his appointment;

RULING BY NCLT CHANDIGARH

Hence, in light thereof as also the facts of present case, NCLT observes, “Facts are self-explanatory reflecting as to under what stressful and difficult circumstances the Applicant is working and facing an uphill task…..

Looking at the circumstances and the dilly dallying tactics of the Financial Creditors, necessary directions apart from the directions to the responsible officers of the Bank needs to be issued”;

NCLT Ruled that the Applicant appointed as IRP would continue as Resolution Professional, while stating that “IRP does not become functus officio to stall the resolution process in the petition which has already been admitted..”:

RULING BY NCLAT

In Appeal , NCLAT held that the Committee-of-Creditors had the decision to allow the IRP to continue or to appoint a new Insolvency-Resolution-Professional and directed NCLT(Chandigarh) to act accordingly.