CHAPTER II - CORPORATE INSOLVENCY RESOLUTION PROCESS
Section 19 of the Insolvency and Bankruptcy Code 2016: Cooperation With Interim Resolution Professional
Section 19 creates a mandatory cooperation framework for the corporate insolvency resolution process. Personnel of the corporate debtor, its promoters and other persons associated with its management must provide the assistance and cooperation required by the interim resolution professional for management of the corporate debtor. If cooperation is withheld, the IRP may approach the Adjudicating Authority for directions.
Section 19(1): Duty to Assist and Cooperate With the IRP
Personnel of the corporate debtor, its promoters and any other person associated with management of the corporate debtor must extend all assistance and cooperation to the interim resolution professional as may be required for managing the affairs of the corporate debtor.
The obligation is connected directly with the statutory transfer of management under Section 17 and the duties imposed on the IRP by Section 18. Effective cooperation enables access to books, records, accounts, assets, business information and other material required for CIRP.
Section 19(2): Remedy When Cooperation Is Refused
If personnel of the corporate debtor, its promoter or another person required to assist or cooperate does not do so, the interim resolution professional may apply to the Adjudicating Authority for necessary directions.
For corporate persons, the Adjudicating Authority under Part II is the National Company Law Tribunal having territorial jurisdiction determined in accordance with the Code.
Section 19(3): Directions by the Adjudicating Authority
On receiving an application under Section 19(2), the Adjudicating Authority may issue the statutory direction contemplated by Section 19(3), requiring the relevant personnel or other person to comply with the resolution professional's instructions and cooperate in collection of information and management of the corporate debtor.
Regulation 3A: Assistance and Cooperation by Personnel
The Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 supplement Section 19. Regulation 3A provides a procedural framework for the interim resolution professional or resolution professional to seek information, records, documents and assistance from personnel of the corporate debtor, promoters and persons associated with management.
The regulation is relevant to taking custody and control of assets, records and other information needed to conduct CIRP. Where cooperation is not provided despite a request, the Code permits recourse to the Adjudicating Authority under Section 19.
What Cooperation May Involve
The precise information or assistance required depends on the facts of the CIRP and must be considered with Sections 17, 18 and 20 and the applicable CIRP Regulations.
Section 19 and the Resolution Professional
Although Section 19 is titled by reference to the interim resolution professional, sub-section (3) refers to compliance with instructions of the resolution professional. The CIRP framework should therefore be read as a whole, including the transition from the IRP to the resolution professional under Section 22 and the continuing management functions under Section 23.
Definitions Relevant to Section 19
| Provision | Term | Meaning |
|---|---|---|
| Section 3(8) | Corporate debtor | A corporate person who owes a debt to any person. |
| Section 5(1) | Adjudicating Authority | For Part II, the National Company Law Tribunal constituted under the Companies Act, 2013. |
| Section 5(15) | Interim resolution professional | An insolvency professional appointed under Section 16. |
| Section 5(19) | Officer | For Part II, an officer who is in default as defined in Section 2(60) of the Companies Act, 2013, or a designated partner as defined in the Limited Liability Partnership Act, 2008, as applicable. |
| Section 5(23) | Personnel | Includes directors, managers, key managerial personnel, designated partners and employees, if any, of the corporate debtor. |
| Section 5(27) | Resolution professional | An insolvency professional appointed to conduct CIRP and includes an interim resolution professional. |
Section 19 in the CIRP Framework
| Provision | Connection with Section 19 |
|---|---|
| Section 17 | Management vests in the IRP and officers and managers must report to the IRP. |
| Section 18 | Requires collection of information, claims work, monitoring and control or custody of qualifying assets. |
| Section 19 | Requires assistance and cooperation and provides a remedy for non-cooperation. |
| Section 20 | Requires preservation of value and operation of the corporate debtor as a going concern. |
Official Legal Resources
For the current Code, regulations and orders, refer to the India Code portal, IBBI Legal Framework, IBBI Acts, IBBI Regulations, IBBI Notifications and IBBI Orders.