Limtex Tea And Industries Limited And Ors. vs Bihariji Cold Rollers (P) Limited And Ors.

Jinan K.R., Member (J)

Mr. Manish Jain, Resolution Professional of Shri Bihariji Cold Rollers Pvt. Ltd. has filed this Interlocutory Application under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 read with Regulation 30 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 and Rule 11 of the National Company Law Tribunal Rules, 2016 against the 1st respondent praying for issuance of directions as follows:

• Order directing State Bank of India to forthwith allow the applicant physical access to the registered office and corporate office of the Corporate Debtor to enable the applicant to take custody of the books of accounts and all other records of the Corporate Debtor;

• Order directing State Bank of India to handover to the applicant peaceful physical possession of all assets and properties of the Corporate Debtor that are presently in its possession;

• Order directing State Bank of India to forthwith disclose to the applicant full details and particulars of the steps taken by it in relation to the assets and properties of the Corporate Debtor, including records of all steps taken under the SARFAESI Act and records of all connected proceedings;

So also prayed for issuing directions as against 4th respondent to 6th respondent as follows:

• Order directing the suspended directors and management and concerned employees of the Corporate Debtor to provide full cooperation to the applicant in all respects and particularly relating to any assistance required for enabling the applicant to verify and take custody of books, records and assets of the Corporate Debtor;

• Order directing the local district administration including the police authorities to render assistance to the applicant in discharging his duties in respect of taking custody of books, records and assets of the Corporate Debtor;

The urgency set out in the application being found satisfactory the IA is taken up for hearing on today through Video Conferencing on account of disruption of normal work of the Tribunal due to Pandemic COVID-19 situation and consequential lockdown upon serving notice from the Registry to the respondents directing them to submit their written notes of defence, if any in advance.

Ld. Counsel for the Applicant appeared through Video Conferencing. Ld. Counsel on the side of R-1, R-4 and R-6 also appeared through Video Conferencing. They have submitted written notes on defence. However, nobody appeared on the side of R-2, R-3 and R-5.

Heard Ld. Counsel for the Applicant as well as the Ld. Counsel appearing on behalf of R-1, R-4 and R-6. Perused the documents and written notes on defence submitted on the side of R-1, R-4 and R-6.

This is a unique application filed by the Resolution Professional appointed at the choice of the CoC as against one among the member of the CoC as well as the directors of the suspended Board of Directors of the Corporate Debtor seeking issuance of orders for handing over peaceful physical possession of assets and properties of the Corporate Debtor that are presently in the possession of R-1, State Bank of India, by virtue of the order passed by the Debt Recovery Tribunal as well as various other reliefs as set out above.

It is submitted by the Ld. Counsel Shri Shaunak Mitra, for the RP that before the CIRP, the possession of a Flat of the Corporate Debtor has been taken by the SBI under SARFEASI Act, 2002. The said flat of the Corporate Debtor was ordered to be taken possession of by SBI by Debt Recovery Tribunal. But under Sections 18-25 of IBC, RP has to take possession of such property and no other authority has to pass an order to take custody of the flat. All other books and accounts related to the Corporate Debtor are possessed by the State Bank of India, Financial Creditor, which should have given access to the RP. The defence note filed by SBI has been gone through. No objection in granting the prayers. But objection has been raised in regard to access to Office and books and accounts of the Corporate Debtor. The RP is not aware of the status of the property and books and accounts of the Corporate Debtor which has to be disclosed by the State Bank of India, Financial Creditor. The issues were taken up in the third meeting of the COC of the applicant that the State Bank of India had taken possession of some of the properties of the Corporate Debtor including the Registered Office and the Corporate Office of Corporate Debtor by virtue of an order passed by the Debt Recovery Tribunal (in short, 'DRT') in a proceeding initiated under the SARFAESI Act, 2002. Since the Resolution Professional has no access to the Registered Office and the Corporate Office, which is under lock and key, the applicant could not take possession of the books of account and other records lying at the aforesaid office of the Corporate Debtor. As such, Resolution Professional was not able to carry out the CIRP process successfully and hence filed his applications for issuance of directions against the State Bank of India for handing over the physical possession of the properties and records of the Corporate Debtor for completion of CIRP process.

It is also submitted by the Ld. Counsel of the applicant that the Directors of the suspended Board of Directors of the Corporate Debtor are also not cooperating with the Resolution Professional in spite of an affidavit affirmed by one Shri Ankur Agarwal, son of Shri Durga Prasad Agarwal, R-4, seeking exemption from personal appearance on medical grounds and the undertaking given by the Ld. Counsel appearing on behalf of R-4 in a proceeding filed u/s. 19(2) of the Insolvency and Bankruptcy Code, 2016. He referred to Annexure 'F' to the Application and submitted that it reveals the details of the information and documents to be furnished by the R4 to R6. The Respondent No. 4 has filed an Appeal before the National Company Law Appellate Tribunal for status quo of the CIRP. After filing of this Appeal, rampant non cooperation is there. Suspended Board of Directors are washing their hands of any responsibility and informing that those documents called for were in the possession of SBI. So unless further directions are issued to them to provide the information and documents called for the process would be delayed. He argued.

Ld. Counsel Shri Shiv Mangal Singh, for the State Bank of India submitted that the Bank has taken possession of certain property under the Securitization Act. The Office is in possession of SBI. Bank is not aware what movable property is there. SBI has no objection to the Application of the RP and order may be passed in respect of prayers (a) (d) and (f). According to him, the only predicament of the R-1 in not allowing the Resolution Professional to get access to the Registered Office of the Corporate Debtor in the absence of any specific order from the Adjudicating Authority because of the litigious nature of the Corporate Debtor and its suspended directors.

Ld. Counsel Shri Avirup Chatterjee, for the Suspended Board of Directors submitted that this Application is filed after expiry of 180 days of CIRP. The Adjudicating Authority may allow filing of affidavit since a lot of allegations have been made against the Suspended Board of Directors in the Application. All the books of accounts, documents are in the Registered Office of the Corporate Debtor. No other information is available with the Suspended Board of Directors. The property of the Corporate Debtor is the individual assets of the family members of the Corporate Debtor. Nothing is available with the Directors of the suspended Board of Directors of the Corporate Debtor. According to him SBI to give details of the Flat of the Corporate Debtor and the books of accounts. No information is available from the suspended Board of Directors. However, he showed his readiness to assist and cooperate with the RP if directed.

Having heard the Ld. Counsel appearing on behalf of the applicant, R-1, R-4 and R-6 and the written notes on defence, it appears to us that filing of an application like the one in hand as against one of the members of the CoC is found not fair and just. It is the CoC who has to give proper diction to RP to expedite the process so as to reduce the CIRP cost. If one among the members of the CoC is holding possession of secured interest and registered office of the CD, keeping in hand even long after the initiation of CIRP, it is improper and contrary to the provisions of the Code. The submission of the Ld. Counsel for the R1 that the only predicament of the R1 in not allowing the Resolution Professional to get access to the Registered Office of the Corporate Debtor in the absence of any specific order from the Adjudicating Authority because of litigious nature of the Corporate Debtor and its suspended directors is found devoid of any merit. R1 is bound to hand over all the assets in its possession inclusive of the registered office. The registered office is to be opened by the RP in the presence of R4 to R6, the directors of the suspended board of CD. The RP can make an inventory of the documents and movables kept inside the office so as to rule out all possibility of disputes that may arise on the side of the directors. In view of the facts that SBI holds possession of the registered office and according to R4 to R6 all the documents are kept in the office, unless and until it is open, the RP could not ascertain what further documents or information is required from R4 to R6.

Keeping in view of the above mentioned facts and circumstances, and the arguments advanced on the side of the parties, and in order to avoid multiplicity of litigation at the instance of the Resolution Professional, a direction to the respondents in order to assist or cooperate with the Resolution Professional is to be issued upon the following orders:

ORDERS

i). R1/State Bank of India is directed to forthwith hand over possession of all the assets of the CD and the registered office and corporate office of the Corporate Debtor in its possession to the RP;

ii). The RP shall open the office in the presence of directors of the suspended board of the CD and to take custody of the books of accounts and all other records of the Corporate Debtor if any available in the office after preparing an inventory in their presence;

iii). The directors of the suspended board and management and concerned employees of the Corporate Debtor shall provide full cooperation to the RP in all respects and particularly relating to any assistance required for enabling the applicant to verify and take custody of books, records and assets of the Corporate Debtor from the registered office;

iv). Upon taking custody of the available documents, if the RP requires any further information, documents etc'' he shall give a list of information and documents to be furnished by the directors, and the directors shall provide the same to the RP within one week of the receipt of the list;

v). The RP is given liberty to initiate contempt proceedings in case there is disobedience of any one of the directions issued as per this order.

IA (IB) No. 605/KB/2020 in CP (IB) No. 535/KB/2018 is disposed of as above.

There shall be no orders as to cost.

Registry is directed to serve an e-mail copy of the order to the parties concerned.

Certified copy of the order may be issued to all the concerned parties, if applied for, upon compliance with all requisite formalities.