The National Company Law Tribunal (NCLT), Ahmedabad Bench has recently ruled that, promoters and persons associated with the management of the corporate debtor are statutorily obligated to extend all assistance to the Resolution Professional(RP).
In a petition filed by the Indian Overseas Bank seeking Corporate Insolvency Resolution Process (CIRP) against AMW Autocomponent Ltd. , who was subsequently admitted into the CIRP. The Applicants, Mr. Babubhai Shrimali, Mr. Rakesh Jagetiya and Mr. Dinesh Bahadur Singh were suspended directors of the Corporate Debtor, AMW Autocomponent Ltd.
After initiation of CIRP, on request of Resolution Professional the Applicant No. 1 has rendered service as Director, Legal and Administrative Head, Applicant No. 2 has rendered service as Director, CFO and Applicant No. 3 has rendered service as Director, Head of Operations and were assured that salaries during the period of CIRP would be paid. The Committee of Creditors (COC) in its 1st meeting, took note of the engagement of Applicants by Resolution Professional. The CoC in its 1st and 2nd meeting discussed on the salaries of the Applicant but did not come to any conclusion.
It was submitted by the respondent that, the Applicants being the directors are the related party of the Corporate Debtor and any payment to them would fall under related party transactions as per Section 28(f) of the Insolvency and Bankruptcy Code,2016 and the decision failed to succeed in securing requisite votes.
It was observed by the tribunal bench of Judicial Member Dr. Deepti Mukesh and Technical Member Ajai Das Mehrotra that, in view of Section 5(24)(a) of the Insolvency and Bankruptcy Code, the Applicants fall under the category of related party of the Corporate Debtor and held that, “If in commercial wisdom the CoC has rejected the resolution for payment of salary to the Applicants, the question of reversing the decision cannot be considered” and refused to interfere with the decision of the CoC.
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