Case Note & Summary
The case involved an appeal by the Suspended Director of KSL & Industries Ltd. against an order of the National Company Law Tribunal (NCLT) regarding non-cooperation during the Corporate Insolvency Resolution Process (CIRP). The CIRP was initiated on 06.09.2019, and Kiran Shah was appointed as the Resolution Professional (RP) on 28.07.2020. The Appellant claimed to have cooperated fully, providing numerous documents, but the RP alleged incomplete submissions, leading to an application under Section 19(2) of the Insolvency and Bankruptcy Code, 2016. The NCLT found the Appellant's cooperation lacking and imposed costs for non-compliance. The Appellant contended that the documents were supplied and that the imposition of costs was unwarranted. The Tribunal analyzed the obligations under Section 19(2) and concluded that the Appellant had not fully complied with the requests for documents, justifying the costs imposed. The appeal was dismissed, and the NCLT's order was upheld, emphasizing that the duty to cooperate is continuous and that partial compliance does not equate to full compliance.
Headnote
A) Insolvency Law - Non-Cooperation - Imposition of Costs - Insolvency and Bankruptcy Code, 2016, Section 19(2) - The Appellant's failure to provide necessary documents during the CIRP led to the imposition of costs by the Adjudicating Authority. The court held that the duty to cooperate is ongoing and partial compliance does not suffice, justifying the costs imposed (Paras 25-26).
Issue of Consideration
Whether the imposition of costs on the Appellant for non-cooperation during the Corporate Insolvency Resolution Process (CIRP) was justified.
Final Decision
The appeal was dismissed, and the impugned order dated 11.06.2024 was upheld. The Tribunal found that the Appellant did not fully cooperate with the RP, justifying the imposition of costs of Rs. 25,000.
Law Points
- Insolvency and Bankruptcy Code
- 2016
- Section 19(2)
- Section 60(5)
- NCLT Rules
- non-cooperation
- imposition of costs
