Vivek Prakash vs Dinesh Kumar Gupta And Anr

Vivek Prakash (Suspended Director & MD) ....Appellant Vs. Dinesh Kr. Gupta, ...Respondents Liquidator of M/s Jarvis Infratech Pvt. Ltd. & Anr.

For Appellant: Dr. Farrukh Khan, Mr. Ateendra Singh, Mr. Prateek Gupta, Advocates. For Respondents: Mr. Govind Bhardwaj, Advocate for R1.

ORDER

(Through Virtual Mode)

21.02.2022: Heard Learned Counsel for the Appellant and Learned

Counsel for the Respondents. With the consent of the Learned Counsel for

the parties, the Appeal is disposed of at the stage of admission itself.

2. This Appeal has been filed against the judgment dated 16.12.2021

passed by the Adjudicating Authority (National Company Law Tribunal), New

Delhi, Court-V on I.A 4480/2020. By I.A 4480/2020 filed by the Resolution

Professional direction was sought that suspended directors and management

be directed to handover the complete books of accounts and other financial

records and information to Resolution Professional and further all the fixed

assets which belong to the Corporate Debtor and provide for clarification and

explanation as to the financial transactions which have been reported in

Provisional Transaction Audit Report. Further, direction was sought to the

suspended directors to extend full assistance and cooperation in complete 2

harmony and peace to the Resolution Professional. On the Application filed

by the Resolution Professional, the parties were heard and by impugned

order, Learned Adjudicating Authority has come to the conclusion that the

documents as claimed were not provided and suspended directors failed to

cooperate. The cause shown by the Appellant was also examined and

ultimately the Adjudicating Authority in last para of the impugned order

observed following:-

"At this juncture, we would like to refer to the arguments advanced on behalf of respondent no.1. Ld. Counsel appearing for respondent no.1, in course of his arguments submits that all the information is under control of Respondent no.2, therefore, only respondent no.2 is responsible for furnishing information and hand over the documents. Since the respondent no.1 was also the Director of the Corporate Debtors before the initiation of the CIRP, therefore, in our considered view, the respondent no.1 cannot be escaped from its liability, by shifting the responsibility solely on the respondent no.2. Since, both the respondents were the directors of the Company prior to the initiation of the CIRP, therefore, they are supposed to hand over the documents and furnish the information as required by the RP. Since both of them have failed to furnish the information as required under the law, therefore the RP is directed to institute a criminal case against both the Suspended Board of Directors under Section 70 of the IBC along with the other relevant Comp. App. (AT) (Ins.) No. 169 of 2022 3

Sections of the law. With this the present application stands disposed of."

3. Dr. Farrukh Khan, Learned Counsel for the Appellant submits that

there was no occasion to issue any direction for initiating prosecution by

Resolution Professional under Section 70. He further submits that all

documents have been supplied by the Appellant and it was Respondent No.2

who could have been asked for any further document if required. He submits

that a police complaint has been filed by the Resolution Professional before

the Police Station, Kalkaji on which an F.I.R has not yet been registered and

Police is making enquiry with regard to the said complaint.

4. Learned Counsel for the Respondent No.1 submits that there has been

total non-cooperation by the Appellant and the Respondent No.2. Requisites

documents were never provided which compelled the Resolution Professional

to file an Application under Section 19(2) on which the impugned order has

been passed. It is submitted that with regard to offences under Section 70,

Resolution Professional has sent information to the IBBI and Resolution

Professional has not initiated any prosecution on his own. He further

submits that with regard to complaint which is said to be filed before the

Police Station, Kalkaji that relates to other offences committed by the

suspended directors and not the IBC offences.

5. We have considered the submissions of the parties and perused the

record.

6. The order impugned has been passed in exercise of power under

Section 19(2) of the IBC. Section 19 of the IBC gives extensive power to the Comp. App. (AT) (Ins.) No. 169 of 2022 4

Adjudicating Authority to issue direction to the personnel of the Corporate

Debtor to cooperate. Section 19(3) provides:-

"19. Personnel to extend co-operation to interim resolution professional. - ..........(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."

7. In event requisites, cooperation and information not supplied and any

offence is committed within the meaning of Section 70 of the Code, it is true

that neither the Adjudicating Authority nor Resolution Professional can

initiate the prosecution under Section 70 and the prosecution under Section

70 can be initiated only in manner as provided under Section 236 which is to

the following effect:-

"236. Trial of offences by Special Court. - (1) Notwithstanding anything in the Code of Criminal Procedure, 1973(2 of 1974), offences under of this Code shall be tried by the Special Court established under Chapter XXVIII of the Companies Act, 2013 (18 of 2013).

(2) No Court shall take cognizance of any offence punishable under this Act, save on a complaint made by the Board or the Central Government or

Comp. App. (AT) (Ins.) No. 169 of 2022 5

any person authorised by the Central Government in this behalf.

(3) The provisions of the Code of Criminal Procedure, 1973 shall apply to the proceedings before a Special Court and for the purposes of the said provisions, the Special Court shall be deemed to be a Court of Session and the person conducting a prosecution before a Special Court shall be deemed to be a Public Prosecutor.

(4) Notwithstanding anything contained in the Code of Criminal Procedure, 1973, in case of a complaint under sub-section (2), the presence of the person authorised by the Central Government or the Board before the Court trying the offences shall not be necessary unless the Court requires his personal attendance at the trial."

8. Thus, prosecution under Section 70 has to be on complaint filed by the

Board or Central Government or person authorized by the Central

Government. The submission of the Learned Counsel for the Appellant that

Resolution Professional is not empowered to initiate the prosecution is

correct. Learned Counsel for the Resolution- Resolution Professional has

however, explained that no prosecution has been initiated under Section 70

by the Resolution Professional and he has only sent the information to the

Board and it is for the Board to take appropriate action. We, thus, clarify

that any prosecution under Section 70 can be initiated only in accordance

with the procedure as provided under Section 236(2) and not by the

Resolution Professional. However, with regard to any other offences including Comp. App. (AT) (Ins.) No. 169 of 2022 6

the offences under Indian Penal Code, if any complaint is filed by the

Resolution Professional before a Police Station that is separate issue and has

no concern with the offences under Section 70 and the order impugned shall

have no bearing on such proceedings by a Police Station and they are

independent proceedings which has to be considered and decided in

accordance with law.

9. We thus are of the view that subject to clarification as made above,

there is no ground to entertain this Appeal. The Appeal is disposed of

accordingly.

[Justice Ashok Bhushan] Chairperson

[Dr. Alok Srivastava] Member (Technical) Anjali/nn

Comp. App. (AT) (Ins.) No. 169 of 2022