Nitin Desai Suicide Case: Insolvency Professionals Urge PM, MCA, IBBI To Remove IRP's Name from FIR, Edelweiss' Shah, Bansal Approach High Court

Moneylife Digital Team 11 August 2023

Economy & Nation

Expressing anguish over naming interim resolution professional (IRP) Jitendra Kothari in the first information report (FIR) filed in the veteran art director Nitin Chandrakant Desai suicide case, several insolvency professionals (IP) urged prime minister Narendra Modi, the secretary of the Union ministry of corporate affairs (MCA) and the chairperson of the Insolvency & Bankruptcy Board of India (IBBI) to remove Mr Kothari's name from the FIR. Separately, Rashesh Shah, the chairman of Edelweiss Financial Services and Raj Kumar Bansal, the managing director and chief executive officer (CEO) of Edelweiss Asset Reconstruction Co (ARC) Ltd have approached the Bombay High Court (HC) to quash the FIR against them for allegedly abetting Mr Desai's suicide.

According to letters sent by IPs, the national company law tribunal (NCLT) and national company law appellate tribunal (NCLAT) only have examined the debt and default of Mr Desai's company ND's Art World Pvt Ltd under the Insolvency and Bankruptcy Code (IBC) and IRP Mr Kothari has only invited the claims by 10 August 2023. "Thus, it remains a puzzle as to how the IRP is the cause of distress or death, especially when he is appointed by the NCLT to perform the statutory duties prescribed in the IBC. Thus, the FIR against IRP should not have been registered in this case or at all as done."

"Though the death of late Mr Desai is unfortunate and its cause must be investigated to punish the wrongdoers, if any, but you would appreciate that IRP cannot be made a scapegoat or victim for the same in any situation including in instant case," the letter says.

In an order on 27 July 2023, the NCLT, Mumbai bench, while admitting a plea by Edelweiss ARC, initiated corporate insolvency resolution process (CIRP) of ND's Art World under provisions of IBC and appointed Mr Kothari as the IRP.

Barely a week later, on 2 August 2023, Mr Desai's body was found hanging at one of the sets at his studio in Raigad. Neha Desai, the wife of Mr Desai, then filed the FIR against ECL and Edelweiss group and five of its officials, including group chief Mr Shah, Edelweiss ARC's MD&CEO and Mr Kothari, the IRP.

Mr Desai had borrowed Rs181 crore between 2016 and 2018 from ECL Finance Ltd, promoted by the Edelweiss group, and the repayment troubles started around the end of 2019. It became complicated the following year owing to various reasons, including the COVID-19 pandemic lock-downs, which played havoc with the entertainment industry. The loan amounts, interest, and other dues mounted to over Rs250 crore in the next three years.

According to insolvency professionals, IRPs act under the control and supervision of NCLT and IBBI. In an order on 2 March 2021, the Supreme Court also considered such issues when police authorities took coercive action against an IRP in violation of the provisions of the IBC, specifically Section 233 of the IBC.

"You are requested to take appropriate action in this matter, including to ensure that the name of the IRP is removed from FIR and no coercive action is being taken against IRP Mr Kothari, as it would otherwise create a new way to harass the insolvency professionals and to derail the CIRP and liquidation process under the IBC and thereby making the IBC a redundant piece of legislation," insolvency professionals urge PM, MCA and IBBI in their letters.

Comments

User

poonamdshah

1 year ago

If a person fails to pay from 2019 to 2023, and NCLT has appointed IRP to do necessary procedure, how he can be responsible for the death of the defaulter? With all sympathy to the deceased person, I would like to say that if ND couldn't sustain the pressure, it's not fault of any other person. No one else is responsible other than ND himself. People who have commented here about the pressure of recovery person, I want to check with them how they would react if they will lend 1 lakh Rupees to someone and can't get back? If IRP is to be named in FIR, then officers in NCLT are also to be named in FIR to appoint IRP. Entire parliament also should be named in FIR as they only have created insolvency law and NCLT. No financial institutions will be able to recover any dues in future. Banks were not able to recover the outstanding loans because of all this emotional threats and dramas. That's precisely the reason why Insolvency act came into existence. I too apeal to PM, parliament and entire law makers to remove IRP from criminal offence in such matter. Tomorrow income tax department will raid any one and suppose that person will do suicide, should that Income tax officer should be named in FIR? If a judge will sentence someone with imprisonment and he suicides, should FIR be registered against judge? I think professional must think before commenting.

Ninja_Patriot

1 year ago

Law must be allowed to take its own course.
If this IRP "Mr. kothari " is feeling aggrieved by this FIR then he should raise his concerns at proper forum and the proper forum in this case would be Mumbai High court. He should file petition to quash FIR at high court. Being a CA, I'm sure he must be aware about his rights. But why is he appealing to PM, MCA, IBBI ? Is he trying to show to people of Maharashtra that PM, MCA and IIBI are above law ?and more powerful than elected state govt?

In my opinion by appealing to PM, MCA and IIBI and making such appeals public IRP Mr. Kothari is trying to put pressure on investigating officer and trying to derail the investigation. This should not be allowed. In fact, pressurising investing officer and derailing investigation is itself an offence under IPC.

Hence, in my opinion one more FIR should be filed against IRP Mr. Kothari for attempt to pressurise investigating officer and attempt to adversely impact Criminal investigation.

vkt1952

1 year ago

Full sympathy for ND and family for the loss. But the issue of o.s. loan can not be allowed to be swept under the carpet Misusing the emotions. A loan of Rs. 180 cr.was taken and no details are available if the loan amount was spent judiciously. Finding fault with the lender will set a bad precedent in the economy. Simply sell off the studio to recover the loan with legitimate concessions. Why politicians poking their nose here is beyond common sense.

Ninja_Patriot

Replied to vkt1952 comment 1 year ago

I agree with you that "loan can not be allowed to be swept under the carpet Misusing the emotions " but then this rule should be applied to people from all the communities uniformly. If govt and RBI are so concerned about NPAs then why RBI defied the supreme court and refused to disclose the list of defaulters at PSBs.
Why some big defaulters are allowed to flee the country and not yet extradited ?
So my hunble question to you is whether strict application of SARFAESI and IBC depends on ethnicity of person or to which community he belongs to ? If that is the case then its quite problematic..

Kamal Garg

1 year ago

What a horrible state of affairs. An officer appointed by the Court to carry out legal duties, is blamed for coercion. Tomorrow, sitting and retired judges of various courts will be named in the FIRs, wherever, they have punished a guilty against the legal crime committed by him/her, if some thing happens to the accused/culprit. In civil society with rule of law, this kind of situation cannot be accepted.

Ninja_Patriot

Replied to Kamal Garg comment 1 year ago

Lol, In 2017 and 2018, RBI defied Supreme court order and refused to disclose the information on wilful defaulters who defrauded PSBs for thousands of crores. You did not find that horrible . When some defaulters committed big fraud and flee the country and govt did not take any action, you didnt find that horrible either, and now when one borrower committed suicide related default in private sector loan, you are finding it horrible. Interesting ! very Interesting !! Sorry to say this but I smell racism here (towards ND).
My logic is simple if you want to apply law , apply it uniformly for all communities dont give pick and chose communities for strict application of law.

Kamal Garg

Replied to Ninja_Patriot comment 1 year ago

All examples and instances cited by you are equally horrible and therefore should be condemned and law must apply uniformly in all cases. My comments were restricted to the headline story covered by ML in the instant case.

kangayan.s

1 year ago

Let the soul RIP. What coercion is in this episode. Edelweiss has taken a legal step. Court has appointed IRP, and the IRP as a court officer has invited claims as per IBC. If this is coercive, we can argue any legal step made by officials are coercion. We as a society who sympathize shall be prepared to accept bank's failures and let general public lose their hard earned savings, because ultimately those are public's money.

kavithagurram38

1 year ago

Why are banks and recovery Goons crying foul now after killing nitin desai. Banks do release Goons to terrorise individuals and force people to be killed. No question about it

cashaameet

1 year ago

The case is certainly not as simple and straight forward as it is being presented, all the stakeholders are hand in glove, banks and financial institutions are modern day dacoit they loot customers by various ways and means, if one fails to pay EMI on time the evil game of destroying him starts first they will slap heavy fines penalties and Interest than they will take away entire collateral assets and destroy the person. Appealing PM and others is just a drama we all know ND and his family will nevwr get justice. More ND's awaiting there destruction at the hands of financial terrorist

Ninja_Patriot

Replied to cashaameet comment 1 year ago

Agree with you. In fact, Appealing PM and others is not just drama but an attempt to pressurise investigating agency and attempt to derail the criminal investigation, which is itself an offence under IPC. In my opinion one more FIR should be filed against this IRP.

suketu

Replied to cashaameet comment 1 year ago

under normal circumstances i would agree what you.not this time.wait for adronochrome/child trafficking issue to come up in max few weeks.and then watch this issue coming up big way.

pankajpandya58

1 year ago

The basic rule is sensitive person should not enter in to business. Business is a thick skin person's arena.

santanutray

1 year ago

There is no case to file an FIR against the IRP. The action of the police is wholly arbitrary abuse of power.

vaibhavdhoka

1 year ago

In all such cases local politics make someone scapegoat to use public sentiments.

sunilvaidya3

1 year ago

I have my heartfelt sympathies and condolences to late Nitin Desai and his family. However, here in this case i too feel that IRP should not be and cannot be made a party and must enjoy privileges similar to the Hon Judges.

sumit807807807

Replied to sunilvaidya3 comment 1 year ago

In older days we had invaders and in morden days we have banks and NBFC's who goes to extreme in order to meet their goal without any human touch

ashishnverma75

Replied to sumit807807807 comment 1 year ago

Arrest these people for abatement of suicide.