Tuesday, 8 February 2022

Survival of Section 19 application filed by IRP/RP, after the liquidation order.

“Functus Officio”  Definition:

Latin: an officer or agency whose mandate has expired either because of the arrival of an expiry date or because an agency has accomplished the purpose for which it was created.


HC Delhi (26.11.2020) in Venus Recruiters Private Limited vs. Union of India & Ors. [Company Appeal [W.P.(C) 8705/2019 & CM Appl. 36026/2019] held that;

  • # 13. Mr. Kapil Sibal, ld. Senior Counsel appearing for the Petitioner raises a legal issue as to the jurisdiction of the NCLT. His submission is that under the scheme of the IBC, once the CIRP has reached finality, the Resolution Professional (RP) becomes functus officio and can no longer file or pursue any application on behalf of the company. He refers to various provisions of the IBC to submit that the RP merely conducts and manages the operations of the Corporate Debtor, during the CIRP process and not beyond.

 

Insolvency and Bankruptcy Code, 2016.

# Section 19. Personnel to extend co-operation to interim resolution professional. -

(1) The personnel of the corporate debtor, its promoters or any other person associated with the management of the corporate debtor shall extend all assistance and cooperation to the interim resolution professional as may be required by him in managing the affairs of the corporate debtor.

(2) Where any personnel of the corporate debtor, its promoter or any other person required to assist or cooperate with the interim resolution professional does not assist or cooperate, the interim resolution professional may make an application to the Adjudicating Authority for necessary directions.

(3) The Adjudicating Authority, on receiving an application under sub-section (2), shall by an order, direct such personnel or other person to comply with the instructions of the resolution professional and to cooperate with him in collection of information and management of the corporate debtor.


Section 19 speaks of “to cooperate and provide information to interim resolution professional/resolution professional” only. There is no similar provision in the Code for Liquidation Process (Chapter III of Part II of the Code). 


In my opinion, section 19 applications do not survive the approval of resolution plan or liquidation order by the Adjudicating Authority. Secondly with the passage of “Liquidation Order” Resolution Professional (RP) becomes a `` functus officio and can no longer file or pursue any application on behalf of the company.


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Arvind Mangla

08th Feb. 2022


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Disclaimer:

The sole purpose of this post is to create awareness on the "IBC - Case Law" and to provide synopsis of the concerned case law, must not be used as a guide for taking or recommending any action or decision. A reader must refer to the full citation of the order & do one's own research and seek professional advice if he intends to take any action or decision in the matters covered in this post.