Failure To Coordinate With Administrator During Proceedings .
Failure To Coordinate With Administrator During Proceedings
This ground appears in 3 different proceedings, and failure to coordinate is treated as misconduct punishable by removal, fine, and even imprisonment. The term "Administrator" means:
- IBC Administrator - Interim Resolution Professional (IRP) / Resolution Professional (RP) / Liquidator / Administrator appointed by NCLT
- Estate Administrator - Executor / Administrator appointed under Indian Succession Act, 1925 / Court Receiver
- Company Administrator - Official Liquidator, Administrator under Sec 241
Failure to coordinate means: Not handing over books, assets, passwords, not attending CoC / probate meetings, not assisting valuer, or resigning without handover to successor.
A. Under Insolvency & Bankruptcy Code, 2016 - Most Litigated
Statutory Duty to Coordinate:
- Sec 19(2) IBC: Promoters / directors / employees must cooperate with IRP/RP. If they don't, RP can file application to NCLT and NCLT can direct them, including forcing presence.
- Sec 70 IBC: Punishment for non-cooperation - imprisonment upto 1 year + fine.
- Sec 34(3) IBC: Same for Liquidator.
- Regulation 4 & 7 of IP Regulations + Code of Conduct: IP must cooperate with Investigating Authority and successor IP.
Case Law 1: Manish Soni v. Concept Eduventures Pvt Ltd and Amit Pareek, RP - NCLT, 22 June 2020
The foundational NCLT order on this issue.
Facts: Directors of suspended board refused to handover assets, documents, tally data to RP.
Held: NCLT held this is deliberate resistance. Directed RP to seek reliefs under Sec 19(2) for non-cooperation. Observed failure to coordinate makes CIRP impossible and violates Sec 20 - RP's duty to keep company as going concern. Directors liable for contempt.
Ratio: Coordination is not voluntary - it is statutory. Valuers also tried to coordinate with ex-directors but could not get cooperation, thus valuation report could not be processed - as noted in Mr. Manmohan Jhawar, IBBI/DC/38/2020.
Case Law 2: NCLAT - Fine for Non-Cooperation is Penalty, Not Cost
Company Appeal AT Ins 1495/2026 and 2019 cases - NCLAT Delhi 2022-2023
Facts: NCLT vide order dated 02-03-2022 imposed fine of Rs 5 lakhs on suspended directors for non-cooperation during CIRP under Sec 19(2) and liquidation under Sec 34(3).
Directors appealed - NCLT has no power to impose fine.
Held by NCLAT: Fine imposed on non-cooperation by ex-management u/s 19(2) or 34(3) is covered under term "penalty" and not "cost" under Rule 149 NCLT Rules, 2016. NCLT has no jurisdiction to impose penalty. Only Special Court under Sec 70 can impose penalty after IBBI complaint. But NCLT can order attachment, police assistance, and adverse inference for failure to coordinate.
Impact: Now RP files Sec 70 complaint to IBBI instead of seeking fine. Leads to criminal prosecution.
Case Law 3: IBBI Disciplinary Actions for Failure to Coordinate With Successor Administrator
a) In re Mr. Ranjeet Kumar Verma - IBBI DC
IP was IRP for CMYK Printech Ltd and Straight Edge Contracts Pvt Ltd. Allegations: Non-cooperation in handing over documents to successor RPs and failure to conduct meetings transparently. IBBI inspection found multiple contraventions. Suspended.
b) In re Mr. Sandip Kumar Kejriwal - IBBI DC/14/2018
Kejriwal was IRP/RP for Upadan Commodities Pvt Ltd and Maa Tara Industrial. He resigned as RP without prior permission of AA, though he consented to act. Held: Displayed laid-back attitude, gave up even before trying and practically abandoned CIRP. During term as RP, he did not do anything which RP is required to do except one CoC meeting. Contravened Sec 20 and 23. Monetary penalty = 100% of fee + suspension.
Ratio: Administrator cannot abandon proceedings. Must coordinate with successor - handover IM, data room, claims.
c) IBBI/DC/149/2023 - Suspension for Repeated Non-Cooperation
IP suspended for repeated non-cooperation & series of non-compliances. Order noted: "Repeated non-cooperation and series of non-compliances is not justifiable, whatsoever, serious nature of trauma, at personal level one may be suffering."
d) IBBI/DC/300/2025 - IP Penalised for Non-Cooperation in Regulatory Investigation
Disciplinary Committee held IP failed to cooperate with Investigating Authority during investigation relating to valuation practices. Committee emphasised cooperation with regulatory investigation is statutory obligation under Code and Code of Conduct.
B. Under Indian Succession Act, 1925 - Estate Administration
Case Law 4: Bombay High Court Removes Executrix for Mismanagement - Sec 301
Ambadi House Case - Bombay High Court 2024, Test. Cas. 11/2015
High Court exercised power under Sec 301 to remove executrix due to gross misconduct and breach of fiduciary duties. Replaced with Court Receiver.
Court cited Mukesh Ramanlal Gokal v. Ashok Jagjivan Gokal - Executor must administer estate with absolute fidelity to Will and beneficiaries. Failure to coordinate with beneficiaries, submit accounts, and unjust enrichment = removal.
Case Law 5: Harsh Rajnikant Kilachand Removal - Bombay High Court 18 Feb 2026
Executor failed to complete father's estate distribution nearly ten years after probate. Single Judge removed Harsh under Sec 301 and appointed Justice Dilip Babasaheb Bhosale (Retd. Chief Justice, Allahabad HC) as administrator and directed Harsh to handover estate records and submit full inventory.
Upheld in appeal - Failure to coordinate with court and beneficiaries for 10 years is fatal.
Case Law 6: Vatsala Srinivasan v. Shyamala Raghunathan (2016) 13 SCC 253 - Supreme Court
Held: Probate and letters of administration proceedings are similar in nature. If executor fails in his duty, any of those whom he represents are entitled to intervene and carry on proceedings with formal modification that prayer be read for letters of administration with Will annexed.
If executor refuses to act despite repeated calls, beneficiaries can seek administrator.
Sec 230 & 222 Indian Succession Act: If executor renounces or fails to act, court will not compel, but right passes to alternate executor or court-appointed administrator.
C. Cross-Border Failure to Coordinate - Nortel & Lehman
Texas Law Review - Global Insolvency Proceedings
In Nortel case and Lehman case, there was failure to act quickly at start to seek recognition and coordination among courts. Result is two or more independent insolvency proceedings with limited cooperation. Failure to coordinate with foreign administrator led to value destruction of $ billions.
Now under IBC Sec 234-235 and UNCITRAL Model Law, coordination with foreign administrator is mandatory.
D. Consequences & Remedies
| Failure By | Provision | Remedy |
|---|---|---|
| Ex-Directors / Promoters not coordinating with RP | Sec 19(2), Sec 70 IBC | NCLT can order police assistance, asset attachment, take adverse inference, IBBI files criminal complaint - 1 year jail |
| Outgoing RP not handing over to successor | Reg 4A, IP Reg 7(2)(h) | IBBI suspension, cancellation of registration, refund of fee |
| Executor not coordinating | Sec 301 Indian Succession Act | Removal, Court Receiver appointed, costs, surcharge for loss |
| Beneficiary not coordinating with Administrator | Order 7 Rule 11 CPC | Suit for administration liable to rejection if administration not complete |
Practical Checklist to avoid allegation of failure:
- When appointed as RP - Issue Sec 19(2) notice within 7 days, record email + speed post
- If ex-directors don't respond - File IA under Sec 19(2) with affidavit of service, seek direction for cooperation and police help
- When resigning - File application under Sec 28, handover Information Memorandum, data room access, claims register to successor, file Form H
- As Executor - Maintain inventory under Sec 317, file accounts under Sec 316 annually, respond to beneficiary notices within 30 days.
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