Skip to main content

Suspended Director Of Corporate Debtor Not Entitled To Confidential Info

In Vijay Kumar Jain vs Resolution Professional,  applicant was a suspended director of a corporate debtor who sought documents and information placed before the CoC and sought the tribunal to direct that all documents and information be provided to him for setting aside the CIRP process. The  CoC and the RP were apprehensive that doing so will be detrimental to the interest of the creditors in maximization of the value of the assets of the company.

He said being the suspended director of the corporate debtor, he had the right to participate in the CoC meetings and to receive all documents tendered before the CoC which are pertinent to the issues that come up in its meetings as well as CIRP proceedings of the corporate debtor.

The Mumbai bench of National Company Law Tribunal (NCLT) while rejecting the application referred to the Code and held that as per this code as well as the CIRP regulations, either the suspended director or any other person other than the CoC will not be called as members, they are defined as participants, therefore, wherever participants are entitled to get the information, this suspended Board of Directors are equally entitled to get the same. In the event where disclosure is limited to members alone, such information need not be given to the participants, other than the CoC. However, when it has come to a resolution plan in Regulation 35, it has been categorically mentioned that the resolution professional can provide the fair value and liquidation value to the members alone that too after taking confidentiality undertaking from such members and it has not been mentioned anywhere that this resolution plan or the valuations can be parted with the suspended directors.

Comments

Post a Comment

Most viewed this month

Deposit Of Minimum 20% Fine/Compensation U/s 148 NI Act Mandatory

In OP(Crl.).No.348 OF 2019, T.K.SAJEEVAN vs FRANCIS T.CHACKO, the appeal was filed against the order of the lower court to deposit 25% of the fine before filling of appeal. The appellant argued that the deposit introduced through the Section 148 of the NI Act after amendment was directory in nature as it used the term 'may' while mentioning the issue of deposit. The Kerala High Court however disagreeing held that in view of the object of the Legislature while incorporating Section 148 into N.I. Act, the word 'may' will have to be read as 'shall'. The imposition of payment contemplated under Section 148 N.I. Act cannot be restricted to some prosecutions and evaded in other prosecutions. Since the amount directed to be deposited being compensation, undoubtedly, it is liable to be ordered to be deposited irrespective of the nature of the prosecution. Therefore, the word 'may' can only be taken to have the colour and meaning of 'shall' and there
Post a Comment
Read more

NCLT - Mere admission of receipt of money does not qualify as a financial debt

Cause Title : Meghna Devang Juthani Vs Ambe Securities Private Limited, National Company Law Tribunal, Mumbai, CP (IB) No. 974/MB-VI/2020 Date of Judgment/Order : 18.12.2023 Corum : Hon’ble Shri K. R. Saji Kumar, Member (Judicial) Hon’ble Shri Sanjiv Dutt, Member (Technical) Citied:  Carnoustie Management India Pvt. Ltd. Vs. CBS International Projects Private Limited, NCLT Swiss Ribbons Pvt. Ltd. & Anr vs. Union of India & Ors. (2019) Sanjay Kewalramani vs Sunil Parmanand Kewalramani & Ors. (2018) Pawan Kumar vs. Utsav Securities Pvt Ltd 2021 Background Application was filed under section 7 of the Insolvency and Bankruptcy Code, 2016 alleging loan of Rs, 1.70 cr is due. The Applicate identified herself as the widow and heir of the lender but could not produce any documents proving financial contract between her Late husband and the CD but claimed that the CD has accepted that money was received from her husband. The applicant subsequently filed rejoinder claiming the debt t
Post a Comment
Read more

Vanishing promoters and languishing shareholders

Over Rs 60,000 crore of shareholders’ wealth is stuck in 1,450 companies suspended by the stock exchanges. More importantly, near 100 per cent pledging of promoter holding appears to be common in many of these companies. This, almost rules out any chance of the companies bouncing back. The suspension is for non-compliance of the listing norms. Vanishing Companies - Definition As per the definition stipulated by SEBI, any listed company, which raised moneythrough initial public offer and, thereafter, stopped operations, did not file returnseither with the RoC or SEBI and did not exist on the registered premises wastermed as vanishing.There are provisions under Companies Act under which companies are termedvanishing companies on satisfying certain conditions. it is provided a companywould be deemed to be a vanishing company, if it satisfies all the conditions given below : a) Failed to file returns with Registrar of Companies (ROC) for a period of two years; b) Failed to fil
3 comments
Read more