NCLT Hyderabad (2025.12.09) in H. Sambasiva Rao (IRP) Vs. BSE Ltd. and Anr. (2025) ibclaw.in 2924 NCLT, IA (IBC) 214/HDB/2025 in CP (IB) No. 164/7/HDB/2023] held that;
The Insolvency and Bankruptcy Board of India (IBBI), by way of Circular No. IP/002/2018, dated 03.01.2018, has clarified that RPs are required to comply with the applicable provisions of the SEBI (LODR) Regulations unless specifically exempted by the Competent Authority. Thus, the onus lies on the IRP/RP to seek exemption where compliance is rendered impossible.
It is also observed that after initiation of CIRP, the Applicant had sufficient time to make reasonable efforts to reconstruct the company’s financial records to ensure future compliance. Therefore, the Applicant has to approach the appropriate authorities seeking exemption and there is also provision in this regard. Moreover, the Respondent No.1 has already imposed penalty which was prior to the filing of the present Application.
Excerpts of the Order;
# 1. The short question involved in the present Interlocutory Application is whether the non-cooperation of the suspended management in providing relevant documents and information is sufficient ground for the Interim Resolution Professional/Resolution Professional (IRP/RP) to not hold the Annual General Meeting (AGM) for the Financial Year 2023–24.
# 2. The Applicant is the IRP/RP of M/s. Baron Infotech Limited, which was put into Corporate Insolvency Resolution Process (CIRP) vide Order dated 10.05.2024 in CP(IB) No.164/7/HDB/2023 filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 (IBC). Upon initiation of CIRP, the personnel of the Corporate Debtor (CD) were directed to extend full cooperation to the IRP/RP and provide access to all documents and records. The Applicant has placed on record copies of e-mails dated 18.05.2024, 26.05.2024, 28.05.2024, 03.06.2024, 17.06.2024 and 29.06.2024 sent to the suspended management requesting such cooperation.
# 3. It is the case of the Applicant that despite directions of this Authority and repeated requests, the suspended management has failed to provide the necessary information and documents, the details of which are specified in Para 6 of the Application.
# 4. In the absence of these documents, the Applicant states that he is unable to compile the quarterly, half-yearly, and Annual Financial Statements required to be submitted to the Stock Exchange. Consequently, the Financial Statements for the Financial Year 2023–24 could not be filed within the prescribed timelines under Regulation 33 and other relevant provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI (LODR) Regulations]. As a result, Respondent No. 2 imposed a penalty of Rs.1,71,100/- on the Corporate Debtor.
# 5. Respondent No. 1 has been proceeded ex parte. Respondent No. 2 has filed a reply referring to Circular No. IP/002/2018, dated 03.01.2018 (Annexure A to its Counter), stating that the IRP/RP is required to comply with the provisions of law unless specifically exempted by the Competent Authority. It is submitted that the Applicant is bound to hold the AGM and publish quarterly results in accordance with the applicable provisions, as such compliances are in the interests of the investors. The Applicant, therefore, cannot escape from his statutory obligations.
# 6. We have heard both the parties and have gone through the entire records.
# 7. Upon commencement of CIRP, the powers of the Board of Directors stand suspended and vest in the IRP/RP. It is, therefore, the duty of the IRP/RP to manage the operations of the Corporate Debtor as a going concern, including ensuring compliance with all statutory requirements under applicable laws.
# 8. We find merit in the submission of the Applicant that in the absence of the necessary records, it becomes practically impossible to finalize and file financial statements or hold an AGM as required. Such compliances necessarily depend on access to the company’s records, which are admittedly withheld by the suspended management.
# 9. However, such contingencies have already been contemplated under the provisions of the Companies Act, 2013 and the SEBI (LODR) Regulations, 2015. The Insolvency and Bankruptcy Board of India (IBBI), by way of Circular No. IP/002/2018, dated 03.01.2018, has clarified that RPs are required to comply with the applicable provisions of the SEBI (LODR) Regulations unless specifically exempted by the Competent Authority. Thus, the onus lies on the IRP/RP to seek exemption where compliance is rendered impossible. The Respondent No.1 has imposed a penalty of Rs.1,71,100/- for such non-compliance and this was also intimated to the Applicant vide e-mail dated 18.09.2024.
# 10. While it is appreciated that the Applicant faced genuine difficulties due to non-cooperation of the suspended management, it is also observed that after initiation of CIRP, the Applicant had sufficient time to make reasonable efforts to reconstruct the company’s financial records to ensure future compliance. Therefore, the Applicant has to approach the appropriate authorities seeking exemption and there is also provision in this regard. Moreover, the Respondent No.1 has already imposed penalty which was prior to the filing of the present Application.
# 11. In light of the above, we direct as under:
The Applicant shall approach the Competent Authority seeking exemption from holding the AGM and filing the Financial Statements for the relevant Financial Year, in accordance with law.
The Applicant shall also take immediate steps to reconstruct the financial records of the Corporate Debtor so that similar issues do not arise in the future.
# 12. With these directions, the Interlocutory Application stands disposed of.
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