Allowed

In the mater of Bhandari Deepak Industries Pvt. Ltd. Ia No. 666-2021 in Cp (Ib) No. 269-Chd-HP-2019

NCLT12 Jan 2023

Case brief

AI extract

What is this about?

This order allows an interim application directed to compel the resolution professional to share valuation and forensic audit reports with the suspended board of directors to ensure their effective participation in the Committee of Creditors meeting, requiring a confidentiality undertaking.

What did the court decide?

The Resolution Professional was directed to provide copies of valuation reports and Forensic Audit Report to the applicant within seven days, subject to an undertaking for confidentiality, and to cons

In the mater of Bhandari Deepak Industries Pvt. Ltd. Ia… — Insolvency and Bankruptcy | NCLT (2023)

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relied on the order of Hon’ble NCLT, New Delhi Bench III dated 26.08.2019; Oriental Bank of Commerce vs. Shekhar Resorts , CA 260-261/c-III/ND/2019 in IB-22 (ND)/2018.

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The applicant has filed a rejoinder vide Diary No. 00765/2 dated 21.02.2022, wherein the averments made by the respondents have been denied, and the contents of the application are reiterated.

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We have heard the learned counsel for the applicant and respondent-Resolution Professional. Also, perused the written submission and record available.

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In this context, we are conscious of the decision of Hon’ble NCLT, Ahmedabad Bench in the order dated 30.03.2022 in IA No. 434 of 2020 in CP(IB) No. 602/2018 in the matter of Hemant Shantilal Shah & Anr. vs. Care Office Ltd, wherein the judgment dated 31.01.2019 of Hon’ble Supreme Court in case of Vijay Kumar Jain V. Standard Chartered Bank & Ors. (Civil Appeal No. 8430 of 2018) has been referred. The relevant para is extracted below for the sake of clarity:

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“In present case it is the valuation report which is in question. Whether it can be shared by Resolution Professional with ex-directors specially when the ex-management alleges and apprehends that properties of corporate debtor are being valued and offered at throw away price. In our view, the ex-management is the appropriate concerned parties to comment on valuation of properties of corporate debtor. The corporate debtor is the body of Ex-management and they were in control and handling the same till CIRP initiation. It would be pre-judicial if they are not even allowed to view the valuation and point out the shortfalls in valuation, if any.

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The intent of code being maximization of value while insolvency resolution process, all concerned should be given access to the document which will be crucial for deciding worth of corporate debtor which is intended to be given new lease of life. There is no specific provision to not to share copy of valuation report with ex-directors, we hold that in interest of justice the copy of valuation report needs to be supplied to ex-directors, as already directed by the Predecessor Bench.

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IA No. 666/2021

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in CP (IB) No.269/Chd/HP/2019

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Accordingly, we direct Resolution Professional to supply copy of valuation report to the applicants within 2 days of this order.

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We are of the opinion that Resolution Professional shall provide a copy of the valuation report to the suspended management of the corporate debtor subject to an undertaking from members of the suspended management, to maintain confidentiality. The source of this power is Regulation 7(2)(h) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, read with paragraph 21 of the First Schedule thereto. This can be in the form of a non-disclosure agreement in which the resolution professional can be indemnified in case information is not kept strictly confidential”.

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The applicant i.e., Members of the Suspended Board of Directors have the right to participate in the CoC meeting as per the provisions of Section 24 (3) (b) of the Insolvency and Bankruptcy Code. In order to ensure their effective participation, we direct the respondent-Resolution Professional to provide copies of valuation reports and Forensic Audit Report to the applicant after obtaining an undertaking from members of the Suspended Board of Directors to maintain confidentiality within seven days of this order.

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Also, keeping in view the aforementioned decisions of a coordinate Bench, the applicant is directed to submit its opinion/suggestions in the meeting of the CoC to be held two weeks after the handing over of the above-mentioned documents.

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