NCLT Guwahati Orders Suspended Directors of Sree Bajrang Infracon to Cooperate with Liquidator
NCLT Guwahati Orders Suspended Directors of Sree Bajrang Infracon to Cooperate with Liquidator
Introduction
The National Company Law Tribunal, Guwahati Bench, directed the suspended directors of Sree Bajrang Infracon Pvt. Ltd. to extend full cooperation to the liquidator and hand over all records and assets, holding that continued non-cooperation defeats the time-bound insolvency and liquidation framework under the Insolvency and Bankruptcy Code, 2016.
Factual Background
The CIRP of Sree Bajrang Infracon Pvt. Ltd. commenced on 12 January 2024. During the CIRP, the Interim Resolution Professional sought financial statements, books of accounts, asset details, statutory records, and other operational documents from the suspended board of directors. However, the directors furnished only partial information and failed to provide complete records despite repeated reminders. Even after the company was ordered into liquidation on 20 December 2024 and Mr. Purshotam Gaggar was appointed as liquidator, the suspended directors continued to withhold records, assets, and clarifications essential for conducting the liquidation process.
Procedural Background
An application under Section 19(2) of the IBC was initially filed by the IRP complaining of persistent non-cooperation by the suspended management. After liquidation commenced, the liquidator was substituted in place of the IRP and continued to press the application before the NCLT. The Tribunal had granted several opportunities to the directors, including directions for personal appearance and specific compliance, yet the required records and assets remained unhanded over. The continued defaults compelled adjudication of the application.
Issues
1. Whether suspended directors and other personnel of the corporate debtor are under a statutory obligation to cooperate with the IRP, RP, and liquidator.
2. Whether failure to hand over records and assets after repeated directions warrants coercive directions from the Tribunal.
3. What relief should be granted to ensure effective conduct of liquidation.
Contentions of Parties
The liquidator submitted that despite repeated notices, reminders, and prior Tribunal directions, the suspended directors had only partially complied and were continuing to obstruct the liquidation by withholding books, records, and control over assets. It was argued that such conduct directly violated the mandate of Section 19 of the IBC and made it impossible to complete the process within the timelines contemplated by the Code. The respondents, despite appearing through counsel, failed to justify the continued withholding of crucial documents and assets.
Reasoning and Analysis
The Tribunal undertook a detailed examination of Section 19(2) of the IBC and held that the obligation to cooperate is mandatory in nature. It observed that the term “personnel” includes directors, employees, and key managerial personnel, all of whom remain duty-bound to assist the IRP, RP, or liquidator in discharge of their statutory functions. The Bench emphasized that insolvency proceedings are designed to be completed in a strict time-bound manner, and any obstruction by suspended management undermines the legislative objective of the Code. The Tribunal noted that multiple opportunities had already been granted, yet substantial information and assets were still not handed over. Such persistent non-compliance, in the Bench’s view, could not be countenanced and warranted strict directions to secure cooperation.
Decision
The NCLT allowed the application and directed the suspended directors of Sree Bajrang Infracon Pvt. Ltd. to fully cooperate with the liquidator, Mr. Purshotam Gaggar, and hand over all records, books, and assets of the corporate debtor within 15 days. The Tribunal further clarified that failure to comply would invite appropriate coercive action against the members of the suspended management.
In this case the appellant was represented by Advocate Nirmal Goenka. Meanwhile the respondent was represented by Advocate R Dubey and CS Biman Debnath.
