Non Cooperation of CocC Members and Suspended Management against Liquidator: NCLT Directs to Cooperate with Liquidator [Read Order]

In af recent case, the National Company Law Tribunal (NCLT) on finding that the IRP has faced resistance from suspended management and the non-cooperation from the members of CoC, and directed the members to corporate with the Liquidator.

The application has been filed by the Interim Resolution Professional (IRP) acting as Resolution Professional (RP), seeking orders for Liquidation of the Corporate Debtor (CD) Neocortex Life Sciences Private Limited. The CD was admitted into Corporate Insolvency Resolution Process (CIRP) under Section 10 of IBC vide Order of this Tribunal dated 13.02.2024 in CP (IB) No. 186/10/HDB/2023, and the Applicant herein was appointed as Interim Resolution Professional (IRP). Subsequently, the IRP made public announcement on 16.02.2024 in Form A through daily newspapers, inviting claims from creditors of the CD.

It is submitted that, after receipt of claims, IRP verified the claims and submitted the List of Creditors and constituted the CoC , which was taken on record by this Tribunal on 24.06.2024. Further, the CoC was reconstituted on 08.03.2025 as under, and was taken on record by this Authority on 26.03.2025.

It is stated that, the CoC during its 1st meeting held on 03.04.2024 approved an amount of Rs 2,96,682.56 towards IRP fees, CIRP expenses incurred upto 1st CoC meeting. The proposal for interim finance/sharing the expenses required to run the process was not approved by CoC, and no items were transacted in other CoC meetings.

It is submitted that, the value of assets of the CD are insignificant, and the Bank balance as on CIRP commencement date was Rs 70,650.56. The CD has discontinued the operations and has a weak asset base to help it revive. It is further asserted that, the IRP has not only faced resistance from suspended management but has also faced the non-cooperation from the members of CoC. The members of CoC after its 1st meeting, neither attended the meeting nor have casted votes through e-voting. Even after reminder emails to join the meeting and also requesting them to attend the meeting over phone, the members have not attended the CoC meetings.

A two member bench of Sri Rajeev Bhardwaj,Member (Judicial) and Sri Sanjay Puri,Member (Technical) held that the Applicant IRP Mr Racharla Ramakrishna Gupta is appointed as Liquidator. His fees of Rs 3,00,000 (Rupees Three Lakhs) for the first six months plus the expenses of Liquidation will be paid by the promoters/directors of the CD, to the extent it is not recovered from the liquidation of the CD’s assets.

The Liquidator shall issue public announcement stating that Corporate Debtor is in Liquidation. Subject to section 52 of the IBC 2016 no suit or other legal proceedings shall be instituted by or against the Corporate Debtor. This shall however not apply to legal proceedings in relation to such transactions as may be notified by the Central Government in consultation with any financial sector regulator.

All powers of the Board of Directors, Key Managerial Personnel and partners of the Corporate Debtor shall cease to have effect and shall be vested in the Liquidator. The Liquidator shall exercise the powers and perform duties as envisaged under Sections 35 to 50 and 52 to 54 of the Code, read with Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations 2016.

Personnel connected with the Corporate Debtor shall extend all assistance and cooperation to the Liquidator as will be required for managing its affairs. The Liquidator shall be entitled to such fees as may be specified by the Board in terms of Section 34 (8) of the Code.

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