The court upheld the commercial wisdom of the Committee of Creditors in approving the Resolution Plan, emphasizing the necessity of transparency and procedural fairness in the Corporate Insolvency Resolution Process.

ORDER

1. This is an application filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "Code") by the Applicants, who are the erstwhile promoters and suspended directors of the M/s.Fenoplast Ltd. (Corporate Debtor/CD), which is undergoing the Corporate Insolvency Resolution Process (’CIRP’), praying as follows:

a. Direct the Resolution Professional (RP) to produce the complete asset register taken charge of at the time of admission of the Corporate Insolvency Resolution Process (CIRP) on 07.02.2023 and to verify the existence and status of the Corporate Debtor’s assets at present.

b. Direct the RP to explain the delay in producing the transaction audit report, which was shared on 17.09.2024, after the approval of the resolution plan by the CoC on 12.09.2024, and clarify its contents in relation to the missing or sold assets.

Application:

2. The CD was admitted into CIRP vide order dated 07.02.2023, on a petition u/s 7 of the Code filed by the Canara Bank, in CP (IB) No. 10/7/HBD/2023. Smt. Kalpana was appointed as the Interim Resolution Professional (IRP).

3. The Applicants submitted that the RP had not granted access to the asset register despite their request during the initiation of CIRP. Additionally, the applicants stated that they were not provided any relevant information that would have been the basis for pointing out any irregularities in the CIRP.

4. The Applicants contended that the machine parts and cables were missing from the premises, raising serious concerns about asset management; it is stated that the missing of parts of the machine and cables are recorded in the audited balance sheet for the 2019-20 financial year.

5. The Applicants also alleged that the RP was negligent and has not provided access to the asset register as of 31.03.2020 for reports. The RP issued an email dated 12.11.2024, denying the promoter & suspended directors access to the premises of the CD and failed toprovide any relevant records. The Applicants argued that they cannot substantiate the allegations of mismanagement when they have no access to the asset register and the physical inspection.

6. The Applicants have relied upon the case of the Hon’ble Supreme Court in Committee of Creditors of Essar Steel India Limited v. Satish Kumar Gupta and Ors. [ (2020) 8 SCC 531 ], wherein it is observed that “The Court unequivocally emphasized the necessity of strict adherence to procedural fairness, accurate financial accounting, and the preservation of the Corporate Debtor’s assets during the CIRP. These principles are not mere suggestions but binding obligations on the RP and all parties involved in the CIRP.”

7. The Applicants allege that there has been improper removal of the assets of the CD and the same amounts to the mismanagement of affairs of the CD during the CIRP. The applicants have formally requested the RP via an email dated 13.11.2024 to review the assets verified by the RP’s staff, along with the corresponding report. However, the RP has failed to respond to the said request. In response to the same, the RP has asked the applicants not to make false allegations.

8. It is averred that the Applicants and Respondents were engaged in email correspondence from 11.11.2024 to 15.11.2024, Email is annexed on pages 17-24 of the petition during which the Applicants informed their intention to challenge and rectify the procedural lapses to safeguard the Corporate Debtor and its stakeholders.

9. It is further averred that the critical machinery from Unit-1 was left in sold-out premises without replacement, and machinery in other operational units remained unmaintained despite existing work orders. The RP has shown negligence in protecting the essential operational assets, which is contrary to her duties.

10. As per the Minutes of the Meeting, the original process for the approval of the CIRP commenced on 27.07.2024, by which date all Resolution Plans had been effectively closed. However, the RP only received th