NCLT Recalls Order Following Karnataka High Court Decision To Maintain Status Quo On IBBI Recommendation

The National Company Law Tribunal (NCLT), Chennai Bench of Ravichandran Ramasamy (Technical Member) and Jyoti Kumar Tripathi (Judicial Member) has recalled its order. This order follows a directive from the Karnataka High Court, which ordered maintaining the status quo on the Insolvency and Bankruptcy Board of India's (IBBI) recommendations for appointment of liquidator other than Insolvency Resolution Professional (IRP)/Resolution Professional (RP). IBBI issued directive via notification Liq12011/214/2023-IBBI/840 in 2023 which recommends appointing a person other than the IRP/RP of the Corporate Debtor as the Liquidator in cases of liquidation. Previously, the RP handling the CIRP automatically transitioned into the role of liquidator unless replaced by the Adjudicating Authority. The IBBI's recommendation required appointing a new Insolvency Professional as the liquidator in cases requiring liquidation. This recommendation was challenged in the Karnataka High Court in the case of Ravindra Beleyur vs Isolvency And Bankruptcy Board Of India. The High Court, on January 9, 2024, heard arguments contesting the sweeping nature of the IBBI's directive under Section 34(4)(b) of the Insolvency and Bankruptcy Code (IBC). The High Court ordered that the status quo be maintained regarding the appointment of the Resolution Professional as the Liquidator in the ongoing liquidation process. The High Court observed: “Till such time, the petitioner insofar as he is appointed as Resolution Professional/Liquidator in the subject liquidation shall not be precipitated.” The Applicant pointed out to the NCLT that its earlier order appointed Mr. GS Sudhir as the Liquidator did not take into account the Karnataka High Court's interim directive. Therefore, the NCLT invoked Rule 11 of the NCLT Rules, 2016, and subsequently recall its order. The NCLT held: “Upon perusing the order passed by the Hon'ble Karnataka High Court we find that due to inadvertence the same was not considered by this Tribunal in its order dated 31.05.2024.” Case Title: Mr. Ravindra Beleyur Resolution Professional Reliable Cashew Company Pvt Ltd Case Number: IA(IBC)/2308(CHE)/2023 Click Here To Read/Download Order or Judgment

NCLT Recalls Order Following Karnataka High Court Decision To Maintain Status Quo On IBBI Recommendation

Rajesh Kumar

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