Proceedings against ex-directors u/s 70 couldn’t be sustained as RP could’ve obtained a/c details from creditor bank

Case Details: Venugopal Dhoot v. Pravin R. Navandar - [2021] 130 taxmann.com 286 (NCLAT- New Delhi)

Judiciary and Counsel Details

• • Jarat Kumar Jain, Judicial Member and Dr. Ashok Kumar Mishra, Technical Member
  • Amir Arsiwala, for the Appellant. Shyam Kapadia, Vishnu Shriram, Aditya V. Singh, Ashwij Ramaiah, Kesarlal Gandhi, Advs., Ms. Sarita Surve, U.S. Kadam and Pradipkumar N. Dhoot for the Respondent.

Facts of the Case

The Corporate Insolvency Resolution-Process (CIRP) of the corporate debtor was commenced and RP was appointed. The RP had alleged that despite repeated requests and instructions, appellant-ex-directors of corporate debtor failed to hand over all information including books of account/bank accounts of the corporate debtor.

Consequently, the RP filed an application under section 19(2) against appellants seeking necessary direction for co-operation. In response, appellants contended that whatever documents in their possession had already been handed over to RP.

NCLAT Held

However, It was noted that the bank account details of the corporate debtor could be obtained by RP from a bank that was under his control at moment. Further, RP being a competent professional and banker within his charge could have reconstructed books of account with the assistance of an expert IT professional.

Also, the RP could also have taken the assistance of the concerned Registrar of Companies/MCA website and had obtained financial statements/annual return – But, he failed to do so.

In such circumstances, it could not be said that appellants were fully responsible for the non-availability of documents. Therefore, proceedings initiated by NCLT under section 70 against the appellant for alleged misconduct in course of CIRP could not be sustained.

Case Review

• • Pravin R. Navandar, In re [2021] 125 taxmann.com 173/164 SCL 441 (NCLT – Mum.) (SB) (para 13) reversed.

List of Cases Referred to

• • Pravin R. Navandar, In re [2021] 125 taxmann.com 173/164 SCL 441 (NCLT – Mum.) (SB) (para 1).