Whether Resolution Professional is bound to preserve data on the cloud service?

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Shubham Budhiraja[1]

 

ABC Limited undergone CIRP and moratorium ordered. The entire data of the company was stored in Cloud storage under administration of CEO. Mr. A, resolution professional, failed to make payment of cloud services and thus entire data got erased. It was held that Mr. A is guilty of violation of code cloud is an essential service to keep the data alive and corporate debtor as going concern. In addition to this, non-filling of section 19 application by Mr. A on non-cooperation by the management/directors is a violation of the code[2].

 

(I)                 Section 14 of the Code read with regulation 32 of the CIRP Regulations implies that essential services to the CD include information technology services.

 

(II)               The status quo cannot be construed as CIRP has been halted. Under section 20(2)(d) and (e), he was required to issue instructions to personal of CD and take all necessary action to keep the CD running as intended by status quo order. Further section 14(2A) refers to CD in CIRP under control of RP. Further, Mr. A submitted that after AA allowed extension of CIRP, he made pending payments by applying new debit card. The same could have been done earlier and the control of AWS and G Suites account should have been taken which might have saved data from being lost. Hence, he has inter alia violated sections 18(f)(iv), 20, 25(2)(a), 208(2)(a), 208(2)(e) of Code read with regulations 7(2)(a), 7(2)(h) of IP Regulations and clause 14 of Code of Conduct.

 

(III)             Though the deficiencies as noticed and conceded by Mr. A to be minor in nature, however, in the context of the independent role of Insolvency Professional as envisaged under the Code and Regulations framed thereunder, such acts of omission have larger ramifications. The scheme of running the CD as a going concern is an onerous responsibility of the Insolvency Professional.


[1] Advocate, Delhi High Court [LLB, ACS, BCOM (H)], ShubhamBudhiraja02@gmail.com

[2] IBBI No. IBBI/DC/106/2022

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