NCLT Indore Clarifies Section 19 IBC Compliance: Directing RP to MCA Portal Not Treated as Cooperation

In a significant ruling under the Insolvency and Bankruptcy Code (IBC), 2016, the National Company Law Tribunal (NCLT), Indore Bench, has reaffirmed that merely asking a Resolution Professional (RP) to obtain information from public sources such as the Ministry of Corporate Affairs (MCA) website does not amount to genuine cooperation during the insolvency resolution process.

The Tribunal emphasized that former directors and suspended management must actively assist the RP by providing records, documents, and relevant information necessary for conducting the Corporate Insolvency Resolution Process (CIRP) effectively.

Background of the Case

The matter arose in relation to Xyron Technologies Limited, where the CIRP was initiated on March 24, 2025, following the admission of an insolvency application filed by Bank of Baroda.

Subsequently, Resolution Professional Teena Saraswat Pandey approached the Tribunal, alleging that despite repeated communications, reminders, and even a personal visit, the suspended management failed to provide several critical records required for carrying out the insolvency process.

According to the RP, the missing information included:

• Signed and board-approved audited financial statements for FY 2022-23 and FY 2023-24
• Details of company assets
• Lists of creditors and debtors
• Provisional financial statements as on the insolvency commencement date
• Other statutory and financial records necessary for CIRP proceedings

Former Management Denies Allegations

The suspended directors disputed the allegations of non-cooperation and argued that all available records and access credentials had already been provided to the RP.

They further contended that the company had been operating at a minimal level after being classified as a Non-Performing Asset (NPA) and that certain records were no longer available. Regarding assets, the management stated that the company possessed only a single wind turbine located in Ratlam, and symbolic possession of the asset had already been handed over to the RP.

NCLT Rejects "Refer MCA Website" Defence

After examining the submissions, the NCLT rejected the argument that directing the RP to public databases or statutory filings satisfies the requirement of cooperation under Section 19 of the IBC.

The Bench comprising Judicial Member Brajendra Mani Tripathi and Technical Member Man Mohan Gupta observed that cooperation under Section 19 requires meaningful and proactive assistance rather than routine or evasive responses.

The Tribunal noted that repeated replies such as "Refer MCA Website," "Not Applicable," or references to ROC and NCLT records do not fulfill the statutory responsibility imposed on the suspended management.

According to the Bench, the RP must receive all records, information, and documents that remain within the knowledge, possession, or control of the former management to effectively perform duties under the insolvency framework.

Statutory Record-Keeping Obligations Continue

The Tribunal also dismissed the argument that the company's inactive business status justified the absence of records.

It clarified that companies remain legally obligated to maintain books of accounts, financial statements, and statutory records regardless of whether business operations are ongoing. Failure to maintain such records cannot later be cited as a reason for obstructing or delaying insolvency proceedings.

During the proceedings, the Tribunal found that:

• Signed and approved audited financial statements were not furnished.
• Complete asset-related information available in the company's financial filings was missing.
• Detailed creditor and debtor lists, including names, addresses, and amount-wise particulars, were not supplied.
• Several responses from the suspended management were vague and evasive.

Tribunal Directs Compliance Within 30 Days

Concluding that the suspended management had only partially complied with its obligations, the NCLT allowed the application filed by the RP and directed the former directors and management of Xyron Technologies Limited to submit all requested records and information within 30 days.

The Tribunal also granted liberty to the RP to initiate further proceedings in case of continued non-compliance.

Significance of the Ruling

This decision reinforces the principle that active cooperation from former management is essential for the success of insolvency proceedings. The ruling sends a clear message that directing an RP to publicly available sources or providing incomplete responses cannot substitute the statutory duty to assist under Section 19 of the Insolvency and Bankruptcy Code.

The order is likely to serve as an important precedent for insolvency cases where suspended management attempts to avoid responsibility by relying solely on publicly accessible records instead of providing direct and comprehensive support to the Resolution Professional. CASANSAAR

Short Summary

The NCLT Indore Bench has ruled that merely directing a Resolution Professional to access information through the MCA website does not amount to cooperation under Section 19 of the IBC. The Tribunal directed the former management of Xyron Technologies Limited to provide all requested financial and statutory records within 30 days, emphasizing the obligation of active assistance during CIRP proceedings.