Resolution Professional Can't Question COC Decision Of Replacement: NCLAT Delhi
Pallavi Mishra
9 Jan 2024 8:30 AM GMT
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that when the Committee of Creditors (CoC) passes a resolution to replace the Resolution Professional, then it is not open for the Resolution Professional to question the reasons for its replacement and ask NCLT...
The National Company Law Appellate Tribunal (“NCLAT”), New Delhi Bench, comprising of Justice Ashok Bhushan (Chairperson) and Shri Barun Mitra (Technical Member), has held that when the Committee of Creditors (CoC) passes a resolution to replace the Resolution Professional, then it is not open for the Resolution Professional to question the reasons for its replacement and ask NCLT to adjudicate upon the reasons which persuaded the CoC to pass the resolution.
Background Facts
On 28.02.2022, M/s. Modern Syntex India Limited (“Corporate Debtor”) was admitted into Corporate Insolvency Resolution Process (“CIRP”) by the NCLT. Mr. Partha Sarathy Sarkar (“Appellant”) was appointed as the Interim Resolution Professional and later confirmed as the Resolution Professional.
Specified Undertaking of Unit Trust of India Ltd. (SUUTI) is a member of the Committee of Creditors (CoC) having 74.64% vote share.
In July 2023, SUUTI asked the Resolution Professional (Appellant) to reduce his fee as well as CIRP Cost. The Appellant intimated SUUTI that he is unable to reduce his fee.
On 28.08.2023 a Lenders Meeting was conducted and a Resolution was passed to replace the Appellant by Mr. Ankit Goel as the Resolution Professional, who quoted minimum fee of Rs. 2 Lakh per month. A meeting of CoC was held on 01.09.2023 in which Resolution to replace the Appellant with Mr. Ankit Goel was passed with 100% votes.
An application under Section 27 of IBC was filed before the NCLT seeking replacement of the Appellant with another Resolution Professional-Mr. Ankit Goel. On 27.09.2023, the NCLT allowed the application and Appellant was removed from the position of Resolution Professional.
The Appellant filed an appeal before NCLAT against the order dated 27.09.2023. It was argued that Appellant was not given an opportunity to place facts before NCLT when the Order for his replacement was passed. It was further contended that in June 2018, the Appellant visited the factory premises and found stripping off of the Corporate Debtor's assets. Accordingly, the Appellant requested SUUTI to lodge a First Information Report (FIR) but SUUTI did not accept the request and rather decided to replace the Appellant.
NCLAT Verdict
The Bench took the view that when the CoC has passed a resolution to replace the Resolution Professional, then it is not open for the Resolution Professional to question the reasons for replacement and ask NCLT to adjudicate upon those reasons.
“The submission of the Appellant that Appellant was not given opportunity to place all relevant facts before the Adjudicating Authority especially details as contained in the minutes of 01st September, 2023 for illegal refusal of SUUTI to lodge FIR with regard to hypothecated assets of the Corporate Debtor in June, 2018, we are of the view that when Resolution was passed by the CoC resolving to replace the Resolution Professional, it is not open for the Resolution Professional to question the reasons and ask Adjudicating Authority to adjudicate upon the reasons which persuaded the CoC to pass the Resolution.”
The appeal has been dismissed.
Case title: Partha Sarathy Sarkar v Specified Undertaking of Unit Trust of India Ltd (SUUTI) & Ors.
Case No.: Company Appeal (AT) (Insolvency) No. 1340 of 2023
Counsel For Appellant: Mr. Adish Agarwalla, Sr. Advocate with Mr. Kairav Anil Trivedi, Mr. Hargun Singh Kalra, Advocates.
Counsel For Respondent: Mr. Amar Vivek, Ms. Ritika Gaur, Advocates for RP. Mr. Deeptakirti Verma, Advocate.
