India’s insolvency courts are stepping in to provide a judicial shield to the country’s bankruptcy administrators, hauling promoters up for putting undue pressure on the officials overseeing the debt resolutions.
Any hindrance to a resolution professional’s (RP) work would now be treated as contempt of court, potentially inviting criminal proceedings.
“The RP is acting as an officer of the court and any hindrance in the working…. will amount to contempt of court,” Ravikumar Duraisamy and VP Singh, member judges, said in an order related to the Ahmedabad-based Shivam Water Treaters .
The National Company Law Tribunal (NCLT) began insolvency proceedings in the Shivam Water Treaters case in October last year. An asset reconstruction company was fighting the insolvency case against Shivam.
But the former director of the company, Gaurav Dave, allegedly created obstacles for the RP Hema Shah, prompting the complaint.
The court sent a notice to the director, asking him to be present in the court on January 16. Dave did not turn up citing health issues
“The ex-director…. Gaurav Dave and all other directors are directed to appear in person before this bench” on January 31, failing which they could become liable for contempt of court, the order said, while providing police protection to the resolution professional.
The Police Commissioner, Ahmedabad, has been directed to provide police assistance to the RP.
Shivam Water Treaters was one of those entities that had challenged the constitutional validity of the Insolvency and Bankruptcy Code.
Source : PTI