Erstwhile RP Cannot Refuse Handover Of Records To Liquidator Citing 'Functus Officio': NCLT Indore

The Indore Bench of the National Company Law Tribunal (NCLT), on 7 October held that an erstwhile Resolution Professional remains obligated to furnish records sought by the Liquidator even after approval of a Resolution Plan, as Regulation 9(1)(b) of the IBBI (Liquidation Process) Regulations, 2016, expressly covers a person who “was” the Resolution Professional.

A Division Bench comprising Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta partly allowed an application filed by Gagan Jhavar, Liquidator of Arya Filaments Private Limited, under Section 19(2) of the Insolvency and Bankruptcy Code, 2016, read with Regulation 9 of the IBBI Regulations. It observed:

“The present Application seeks information and records and does not require Respondent No. 3 to perform any function of the Liquidator. The objection on this ground, as also the objection regarding mis-joinder, is not sustainable.”

On 2 November 2023, the NCLT ordered the liquidation of Arya Filaments Private Limited and appointed Jhavar as its Liquidator. The liquidation order directed the Resolution Professional to hand over the relevant documents and control of the Corporate Debtor to the Liquidator forthwith.

Subsequently, Jhavar approached the Tribunal, stating that he had not received all the books of accounts, registers and other records required for the liquidation. He submitted that the available records were incomplete and that the Tally data did not match the audited financial statements for the financial years 2021–22 and 2022–23. He also argued that the missing records hindered the verification of claims, valuation of assets and examination of past transactions.

Ravi Kapoor, the erstwhile Resolution Professional, opposed the application, contending that he had become functus officio after the Resolution Plan was approved on 23 October 2020. He argued that the IBC did not assign him any role in the subsequent liquidation process and sought deletion of his name from the array of respondents on the ground of mis-joinder.

Rejecting Kapoor's objections, the Tribunal held that Regulation 9(1)(b) covers a person who was previously the Resolution Professional. It observed that the cessation of his role did not absolve him of the obligation to furnish the records sought by the Liquidator, particularly when the liquidation order expressly directed the handover of relevant documents and control of the Corporate Debtor.

It directed the suspended directors and the erstwhile Resolution Professional to furnish the documents and information listed in the schedule to the order, to the extent they were in their possession or control, within 30 days.

The Bench also directed them to file affidavits specifying which documents they had already handed over, which remained available and, for documents no longer in their possession, when and to whom they had transferred them. Further, it issued directions concerning documents relating to the cancellation of the Corporate Debtor's industrial land lease.

Accordingly, the NCLT partly allowed the application and directed the suspended directors and the erstwhile Resolution Professional to furnish the specified records within 30 days.