Sanjai Kumar Gupta vs Gouri Prasad Goenka

NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI Company Appeal (AT) (Insolvency) No.70 of 2023 (Arising out of Order dated 02.12.2022 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata in IA(I.B.C.)/678(KB)2022 in CP(IB)/565(KB)2020)

IN THE MATTER OF: Sanjai Kumar Gupta, Resolution Professional of Stone India Limited, A-6, Charulata, BE 8, Rabindra Pally, Kolkata, West Bengal - 700101. .... Appellant Vs Gouri Prasad Goenka 17 D, Alipore Road, Alipore HO, Kolkata, West Bengal - 700027. ... Respondent

Present: For Appellant: Mr. Rishav Banerjee, Mr. Arijit Mazumdar and Mr. Siddharth Shukla, Advocates. For Respondent: Mr. Anirban Bhattacharya and Mr. Rajeev Chowdhary, Advocates for R-1.

JUDGMENT

ASHOK BHUSHAN, J.

This Appeal by Resolution Professional ("RP") of the Corporate Debtor

has been filed against the order dated 02.12.2022 passed by the National

Company Law Tribunal, Kolkata Bench, Kolkata, by which

IA(I.B.C.)/678(KB)2022 filed by the RP under Section 19, sub-section (2) of

the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as the

"IBC") has been dismissed as infructuous. The Adjudicating Authority has

also imposed cost of Rs.25,000/- on the RP. Aggrieved by the order, RP

has come up in this Appeal.

Company Appeal (AT) (Insolvency) No. 70 of 2023 1

2. Brief facts, necessary to be noticed for deciding this Appeal are:

(i) Corporate Insolvency Resolution Process ("CIRP") commenced

against the Corporate Debtor Stone India Limited vide order

dated 09.11.2021. Earlier Interim Resolution Professional

("IRP") was replaced by order of the Adjudicating Authority

dated 28.02.2022. The Appellant as RP issued email on

30.03.2022 and 02.04.2022 to the Respondent to cooperate

and disclosed information.

(ii) An IA(I.B.C.)/678(KB)2022 was filed by the RP under Section

19, sub-section (2) against the Respondent praying for

direction to Respondent to disclose documents sought by the

RP, after their being non-cooperation by the Respondent.

(iii) Adjudicating Authority vide order dated 18.08.2022 issued

notice to the Respondent and a direction was also issued to

Respondent to furnish the entire information and all

documents sought by the RP before the next date. Further

direction was issued on 07.09.2022 on the said Application to

Respondent No.1 to comply the directions issued in the order

dated 25.04.2022.

On 16.09.2022 and 14.10.2022 the non-cooperation was

continued and on 14.10.2022 further order was passed by the

Adjudicating Authority where Respondent No.1 was directed to

appear in person on 21.11.2022.

Company Appeal (AT) (Insolvency) No. 70 of 2023 2 On 09.11.2022, the Adjudicating Authority dispensed with the

personal appearance of Respondent No.1.

On 02.12.2022, when Application was taken up, the same was

rejected as frivolous. Aggrieved by which order, this Appeal

has been filed.

3. The learned Counsel for the Appellant submits that the basis of

impugned order is on an earlier order dated 25.04.2022 in IA No.13 of

2022, which was filed by earlier IRP, which was disposed of due to

cooperation offered at that time. The order dated 25.04.2022 also granted

liberty to move a fresh Application. Thus, the Application

IA(I.B.C.)/678(KB)2022 was in accordance with the earlier order dated

25.04.2022 and cannot be said to be frivolous. It is further submitted that

when Adjudicating Authority on the said Application having issued several

directions to Respondent No.1 to extend cooperation and has also

summoned Respondent No.1 to appear in person, how on the next date

Application can be said to be frivolous and be dismissed as infructuous. It

is further submitted by learned Counsel for the Appellant that order dated

02.12.2022 shows complete non-application of mind by the Adjudicating

Authority and prejudicially affect the rights of RP. It is submitted that there

is no reason for imposing cost of Rs.25,000/-.

4. The learned Counsel appearing for Respondent No.1, who has also

filed a reply, submits that Application under Section 19, sub-section (2) is

only filed to delay the process. It is submitted that Resolution Plan has

already been approved by the Committee of Creditors ("CoC") and orders

Company Appeal (AT) (Insolvency) No. 70 of 2023 3 on the Application seeking approval of Resolution Plan has been reserved

on 09.12.2022. The Application under Section 19, sub-section (2) filed by

the RP has thus, become infructuous. It is submitted that the Respondent

has resigned from the Directorship of the Corporate Debtor on 14.08.2019,

hence, there was no question of non-cooperation by Respondent No.1 The

Appellant has not made out a prima facie case for issuing any direction.

The Application filed with the intent to delay the resolution process.

5. We have considered the submission of learned Counsel for the

parties and have perused the record.

6. The Application IA(I.B.C.)/678(KB)2022 was entertained by the

Adjudicating Authority and order was passed on 10.08.2022 issuing notice

to Respondent and the matter was listed for 18.08.2022. On 18.08.2022

in IA(I.B.C.)/678(KB)2022 following order was passed:

"IA(IBC)/678/KB/2022

1. Registry is directed to issue notice to the Respondent by speed post and e-mail and place tracking information on record.

2. It is stated in this IA the Respondent is not cooperating in furnishing the information sough tby the Resolution Professional which is at page 505.

3. Our attention has been drawn to e-mail dated 2nd April, 2022, 19th May, 2022 in this regard.

4. Post this matter on 07.09.2022. In the meantime, we direct the respondent to furnish the entire information and all documents sought by the RP on or before next date. If this is not done, appropriate orders shall be passed with further necessary directions."

Company Appeal (AT) (Insolvency) No. 70 of 2023 4

7. On 14.10.2022, when the Adjudicating Authority issued a direction

taking a view that Respondent No.1 is trying to avoid the process of this

Court and Respondent No.1 was directed to personally appear on

21.11.2022. Following was the order passed by the Adjudicating Authority

on 14.10.2022 in IA(I.B.C.)/678(KB)2022:

"IA (I.B.C)/678/KB/2022

1. This is an application filed under section 19(2) of IBC, 2016 vide order dated7thSeptember, 2022. Keeping in view, the non-cooperation of Respondent No. 1 we directed the personal presence of Respondent No. 1 before this Adjudicating Authority on 16th September, 2022.

2. On 16th September, 2022 when this matter was taken the Ld. Counsel appearing for R1 inform that his client unable to move and therefore cannot be present personally. Today when the matter is taken up for consideration the resolution professional who is present in person states that R1 went to his office personally on 19th September 2022 at around 2:30 PM for discussing the issues relating to the information sought by the Resolution Professional.

3. We that as it may we consider it appropriate to call the Respondent No. 1 in person before this Adjudicating Authority.

4. Since 16th September, 2022 nothing has been placed on record in support of the reasons of non-appearance of Respondent No. 1 before this Adjudicating Authority as directed earlier. Non-appearance and poor conduct is viewed seriously.

5. It is stated by Ld. Counsel appearing for Respondent No. 1 that this appeal under section 19(2) is not maintainable. It is noted that no reply has been filed to this application.

Company Appeal (AT) (Insolvency) No. 70 of 2023 5 The Ld. Counsel states that no opportunity is granted to file reply affidavit and in the absence of unable to take its stand.

6. After going through the record of proceedings, we see that notice was issued to Respondent No. 1 on 18th August, 2022. Wherein it was directed that the respondent to furnish entire information and all documents sought by RP on or before next date.

7. It was further made clear if this was not done, appropriate orders shall be passed with further necessary directions. After that the matter has been listed a number of times. We have considered the submission Ld. Counsel appearing for R1 we are of the view over this period after issues of notice till today he had enough time to file reply or take its stand to the maintainability or the merits of the IA by way of appropriate proceedings.

8. From the entire circumstances we are convinced R1 is trying to avoid the process of this court as well as the directions issued by this Adjudicating Authority, which would ultimately cause delay in process initiated under Insolvency and Bankruptcy Code, 2016.

9. We direct R1 to appear in person before this Adjudicating Authority on 21.11.2022. It is also made clear if, R1 fails to appear on the next date, we will be constrained to seek police assistance to ensure his appearance.

10. Rejoinder affidavit if any, be filed in the interregnum.

11. Post this matter on 21.10.2022."

8. On the next date, i.e. 21.10.2022, no order was passed on

IA(I.B.C.)/678(KB)2022. On 09.11.2022, the Adjudicating Authority

dispensed with the personal appearance of Respondent No.1 and fixed the

Company Appeal (AT) (Insolvency) No. 70 of 2023 6 matter for 02.12.2022. On 02.12.2022, following order was passed on

IA(I.B.C.)/678(KB)2022:

"3. IA(I.B.C)/678(KB)2022:

a. This IA has been filed under Section 19(2) of IBC, 2016 for seeking books and accounts of records and other relevant documents from respondents. We note from the order dated 25.04.2022 that RP had filed IA 13 of 2022seeking cooperation from the Suspended Board of Directors. The said application was disposed of in view of the cooperation offered as stated by the RP. It was further mentioned in this matter that if there is no continued cooperation from the Suspended Board of Directors, then the RP can file an application for seeking prosecution under Section 236 of the Code. In view of the above position, we find this IA is absolutely frivolous and wastage of time. Accordingly, this application vide IA(I.B.C)/678(KB)2022 is dismissed as infructuous. b. A cost of Rs.25,000/- to be paid by the Resolution Professional from his own sources to be deposited in the Prime Minister's National Relief Fund within a period of one week."

9. The reason apparent from the order dated 02.12.2022 for rejecting

the Application as infructuous is that earlier IA No.13 of 2022 seeking

cooperation was disposed of. When we look into the order itself, it is clear

that in 25.04.2022 order, liberty was reserved to RP to file an Application,

if there is no continued cooperation from the suspended Board of Directors,

for seeking prosecution under Section 236 of the Code. The prosecution

under Section 236 is a different aspect from running a CIRP as per timeline

Company Appeal (AT) (Insolvency) No. 70 of 2023 7 prescribed in the IBC. The order dated 25.04.2022 was passed on IA filed

by the IRP. The Appellant, who is a present RP was appointed by the order

of the Adjudicating Authority dated 28.02.2022 and thereafter

IA(I.B.C.)/678(KB)2022 was filed by the RP, on which on 10.08.2022

notices were issued. The Adjudicating Authority passed several orders on

IA(I.B.C.)/678(KB)2022 as noticed above, where Adjudicating Authority

opined that Respondent No.1 is deliberately not cooperating with the RP

and is not complying with the directions issued by the Adjudicating

Authority. The Adjudicating Authority directed personal appearance of

Respondent No.1 on 07.09.2022 and the same was again reiterated on

14.10.2022 when Adjudicating Authority noted the non-cooperation of

Respondent No.1, then suddenly how the Application has been rendered

infructuous and frivolous is not explained in the order dated 02.12.2022.

The mere fact that in an earlier Application filed by RP, liberty was granted

only to file prosecution, does not preclude the Adjudicating Authority to

consider a subsequent Application filed by the RP due to continued non-

cooperation by suspended Directors. The Application had substantial

grounds as evidenced from the orders of the Adjudicating Authority itself

that it had issued various directions including a direction of personal

appearance of Respondent No.1, which was issued after the Adjudicating

Authority was fully satisfied, hence, there is no occasion to dismiss Section

19, sub-section (2) Application as frivolous and infructuous. There is not

even an indication or any reason given in the order of the Adjudicating

Authority, as to why cost of Rs.25,000/- was imposed on the RP. We, thus,

Company Appeal (AT) (Insolvency) No. 70 of 2023 8 are satisfied that order dated 02.12.2022 is clearly unsustainable and

cannot be maintained.

10. Coming to the submission of learned Counsel for Respondent that

Resolution Plan had already been approved by the Adjudicating Authority,

which is pending consideration before the Adjudicating Authority, it is for

the Adjudicating Authority to consider as to what directions can be issued

in IA(I.B.C.)/678(KB)2022.

11. In result, we allow the Appeal and set aside the order dated

02.12.2022 passed in IA(I.B.C.)/678(KB)2022 and revive the

IA(I.B.C.)/678(KB)2022 before the Adjudicating Authority for passing a

fresh order in accordance with law. No order as to costs.

[Justice Ashok Bhushan] Chairperson

[Barun Mitra] Member (Technical)

NEW DELHI

22nd February, 2023

Ashwani

Company Appeal (AT) (Insolvency) No. 70 of 2023 9