# In the matter of National Plywood Industries Limited CP (IB) No.9-GB-2018

> NCLT judgment dated 2020-05-20. Citation: TCN-2020-NCLT-01344. The case involves an application filed by the Interim Resolution Professional (IRP), Mr.…

- **Court:** NCLT
- **Order date:** 20 May 2020
- **Citation:** TCN-2020-NCLT-01344
- **Category:** IBC
- **Source page:** https://caseease.in/cases/ibc/nclt-chandigarh/national-plywood-industries-limited-cp-ib-no9-gb-2018-acc235a8

## Summary

### Background

The case involves an application filed by the Interim Resolution Professional (IRP), Mr. Sandeep Khaitan, against the respondents, seeking directions for the promoters and directors of the corporate debtor, National Plywood Industries Limited, to hand over the management for the smooth running and completion of the Corporate Insolvency Resolution Process (CIRP). The IRP was appointed by the Tribunal's order dated 25/8/2019. The CIRP was initiated following an application under Section 19 read with Sec.23(2) of the Insolvency and Bankruptcy Code, 2016, by the financial creditor, Stressed Assets Stabilization Fund [SASF]. The suspended Board of Directors of the corporate debtor allegedly attempted to delay the CIRP, did not fully cooperate, and unaudited provisional

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## Facts

The Stressed Assets Stabilization Fund [SASF] initiated CIRP against National Plywood Industries Limited. Mr. Sandeep Khaitan was appointed as the Interim Resolution Professional (IRP). The IRP filed an application seeking directions for the corporate debtor's directors to hand over management for CIRP completion. The Tribunal admitted the petition on 25/8/2019, declaring a moratorium and initiating a public announcement. The corporate debtor had 19 bank accounts, but details of only 17 were shared with the IRP. The suspended Board of Directors allegedly tried to delay the CIRP. The IRP communicated anomalies in the CIRP to the corporate debtor. The directors moved NCLAT to quash the CIRP initiation, but the appeal was dismissed on 25/11/2019. They then approached the

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## Issues and analysis

### Issue 1: Whether a direction for cooperation with the RP in order to complete the CIRP even in these …

**Ratio:** Section 19 of the Code mandates that the directors of the CD and any other person

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**Reasoning:** The Tribunal observed that the directors of the corporate debtor were not providing

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**Interpretation:** Section 19 of the IBC imposes a statutory duty on the directors and management

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**Application:** Given the directors' lack of cooperation and attempts to obstruct the CIRP, the

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## Parties

- **Judges:** Jinan…
- **Appellants:** Sandeep K…
- **Respondents:** National Plywood…; Piyush Pe…

## Timeline

- **2016-01-01 — Enactment…**: The Insolvency and…
- **2017-11-27 — Suspension of Hosur…**: The Hosur plant, a unit of the corporate debtor,…

## Legal provisions

- [Insolvency and Bankruptcy Code, 2016, Section 19 — Personnel to extend co-operation to interim…](https://caseease.in/legal-provisions/insolvency-and-bankruptcy-code-2016/section-19)

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