NCLT Chandigarh: New Management Of The Corporate Debtor Not Responsible For Non-Compliance Of MCA Filing Before The Insolvency Commencement Date

The National Company Law Tribunal (“NCLT”), Chandigarh Bench, comprising of Mr. Harnam Singh Thakur (Judicial Member) and Mr. Subrata Kumar Dash (Technical Member), allowed an application filed in Skyhigh Infraland Private Limited vs. Monitoring Committee of Corporate Debtor. Skyhigh Infraland Private Limited (Applicant) had moved the application as it faced difficulty in making the statutory compliances with the office of Registrar of Companies (ROC) and Ministry of Corporate Affairs (MCA). The Tribunal directed the ROC and held that the current management of the corporate debtor should not be held accountable for any wrongdoings or misconduct committed by the previous promoters and directors of the Corporate Debtor. Background Facts: On 29.10.2018, NCLT admitted the Allahabad Bank’s application to invoke the Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor. The Committee of Creditors approved the Resolution Plan of the INR Constructions with 100% voting rights and was further approved by the NCLT vide order dated 06.10.2021. Upon approval of the Resolution Plan, the Successful Resolution Applicant (SRA) started the process of removing the previous directors and appointing new directors in line with the resolution plan. However, the SRA faced issues in complying with statutory requirements as when it tried to upload a form filled with ROC on the MCA portal, it received an error message stating that it couldn't file because the company was "not marked for management dispute" and that annual returns and balance sheets for the year 2017-18 needed to be filed. The Applicant highlighted that the approved Resolution Plan is binding on all parties including the ROC, and that the compliance requirements pertain to the period before the Plan's approval. The inability to accept current financial statements and returns was attributed to the lack of prior filings by the former management. The Application expressed its concerns and pointed out that the ex-directors have been absconding since the initiation of CIRP, leaving limited records available to the Resolution Professional. The SRA wishes to comply with the pending compliance issues but is facing heavy penalties under the Companies Act, 2013, and pointed out that the defaults of the former management should not be imposed on it as it acquired the company upon the plan's approval in October 2021. NCLT Verdict: The NCLT allowed the application and observed that the current management of the corporate debtor should not be held accountable for any wrongdoings or misconduct committed by the previous promoters and directors of the corporate debtor by placing reliance on the Supreme Court case of Committee of Creditor of Essar Steel India Limited vs. Satish Kumar Gupta & Ors. The Tribunal ordered the ROC that the current management of the corporate debtor should not be held responsible for any defaults that occurred before 29.10.2018. Further, it directed the ROC to permit the Applicant to submit the required returns and financial statements as mandated by the provisions of the Companies Act, 2013, and related laws. Furthermore, the NCLT directed that if there were any technical difficulties preventing the online acceptance of the returns and statements filed by the new management of the corporate debtor, they should be accepted through physical means. In conclusion, the NCLT stated that no penalties or interest resulting from the defaults of the previous management before 29.10.2018 could be imposed on the current corporate debtor under the new management. Case Title: Skyhigh Infraland Private Limited vs. Monitoring Committee of Corporate Debtor Case No.: IA No.924/23 in CP (IB) No. 161/Chd/Hry/2018 Click Here To Read/Download Order

NCLT Chandigarh: New Management Of The Corporate Debtor Not Responsible For Non-Compliance Of MCA Filing Before The Insolvency Commencement Date

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NCLT Chandigarh: New Management Of The Corporate Debtor Not Responsible For Non-Compliance Of MCA Filing Before The Insolvency Commencement Date

Sachika Vij

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Sachika Vij

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