Court orders police assistance to enforce compliance as suspended directors obstruct resolution process under IBC.
In a significant development in the ongoing corporate insolvency proceedings, the Bombay High Court has issued a decisive order directing the petitioner and the Successful Resolution Applicant (SRA) to take possession of the corporate debtor’s property located at 37, Juhu Beach, Mumbai. The order comes amid allegations of obstruction by the suspended directors of the corporate debtor who are accused of deliberately frustrating the insolvency resolution process mandated under the Insolvency and Bankruptcy Code (IBC), 2016.
The court, comprising Justices Manish Pitale and Shreeram V. Shirsat, emphasized that the obstructionist behavior of the suspended directors was counterproductive to the resolution process and violated previous orders issued by the National Company Law Tribunal (NCLT) and the High Court itself. The bench directed that the police provide appropriate assistance, including necessary force, to ensure compliance with the court's directions.
This directive follows a series of legal maneuvers by the suspended directors, who had previously attempted to challenge the court’s orders through a Special Leave Petition in the Supreme Court. However, the petition was withdrawn, allowing the High Court's directive to stand.
In its judgment, the court noted that the suspended directors’ contentions regarding specific property exclusions were inconsistent with their earlier affidavits before the NCLAT and the Supreme Court. The court held that such submissions were an extension of their obstructionist attitude and could not be accepted.
The court further instructed that the possession of the property be executed with police assistance on May 7, 2026, and mandated that any obstruction by security personnel employed by the suspended directors be dealt with strictly. The judgment underscores the court's commitment to uphold the statutory provisions of the IBC and facilitate the resolution process without undue delay.
This ruling marks a critical step in resolving the corporate debtor’s insolvency and transferring its assets to the SRA, thereby advancing the objectives of the IBC to ensure a timely and effective resolution of financial distress in corporate entities.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 (IBC) - Suspended directors of corporate debtor continuing with obstructionist activities and attempting to frustrate the orders of NCLT and the Court - Directions issued for taking possession of corporate debtor's property in its entirety.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 19, 31.
Pravin R. Navandar v. State of Maharashtra, (Bombay)(DB) : Law Finder Doc id # 2905685
