Mr. Mukund Choudhary (Appellant ) vs Mr. Subhash Kumar Kundra (Respondent)
CA.(AT) Ins 452 of 2021
Facts:
1.The Appellants are the Suspended Directors of the Corporate Debtor whereas the Respondent is the Resolution Professional of the Corporate Debtor.
2.An application was filed by the respondent in NCLT Delhi seeking direction to the Appellants to cooperate with the Respondent and provide the signed copies of financial statements to the Respondent which was disposed of by the AA by giving the direction to cooperate.
3.The Appellants being aggrieved by the Order of the Adjudicating Authority has preferred the present appeal
Issue: Whether the Appellants being the Suspended Directors of the Corporate Debtor are bound by the law to sign the financial statements of the Corporate Debtor during the process of CIRP
Arguments:
For the Appellants:
1.Counsel submitted that Adjudicating Authority disposed of the Application without giving opportunity to the Appellants to file reply placing on record their objections, while directing the Appellants to cooperate and provide the signed copy of the Financial Statement for Year 2019-20 within a period of two weeks from the date of receipt of the impugned order
2.Counsel further contended that RP acts and executes in the name and on behalf of the Corporate Debtor all deeds, receipts and other documents and hence the RP is competent to sign the Balance Sheet prepared by him and the Appellant should not be coerced to sign the Financial Statement as they are already suspended from the management by the Corporate Debtor company.
3.It is further contended that the draft Balance Sheet prepared by the RP had serious discrepancies and hence the Appellants sought clarification vide email dated 04.03.2021 but there was no reply.
4.Appellant relying on the General Circular No. 08/2020 dated 06.03.2020 submitted that it is the RP who should sign the Form in the capacity of CEO in order to meet the filing protocol and further it is not the suspended director who has to sign the Financial Statement for the Year 2019-20.
For Respondents:
1.Respondent / RP strenuously contended that despite repeated requests, the Appellants did not co-operate in signing the Financial Statement and therefore, he was constrained to file I.A. No. 2070(PB)/2021 before the Adjudicating Authority seeking direction to them to co-operate.
2.It is further contended that the Adjudicating Authority has rightly observed that the Appellants have to extend their co-operation to the RP in discharge of his functions.
Decision: Suspended Directors of the Corporate Debtor are bound by the law to sign the financial statements of the Corporate Debtor during the process of CIRP.
Rationale:
1.The Court does not release the directors of the Corporate Debtor company from their duties, but only suspends their power as directors and appoints a RP for managing the company
2.Section 19(2) of the Code clearly specified that the personnel of the Corporate Debtor, as promotors or any other persons are required to assist the RP failing which an Application can be filed before the Adjudicating Authority seeking direction for co-operation. This Tribunal is of the considered view that the circular dated 06.03.2020 relied upon by the Appellants provides only for the procedure of filing the Forms.
Order Copy:
