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.