Resolution Professional Can Be Replaced U/S 60(5) IBC If He Deliberately Avoids Placing Agenda For His Replacement Before CoC: NCLAT

The NCLAT, Chennai Bench, comprising Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical), has held that Section 60(5) of the IBC can be invoked to replace a resolution professional (RP) if he deliberately avoids placing the agenda for his replacement before CoC The CIRP of the corporate debtor was initiated, and the appellant was appointed as the resolution professional. However, the financial creditor sought replacement of the appellant, citing the factor of non-cooperation, obstructionist behavior, and failure to facilitate the CIRP effectively. Via email communication dated 22.04.2025, the financial creditor requested the replacement of the RP. However, the same was not included by the RP in the agenda for the 2nd CoC meeting. Therefore, the financial creditor filed an application under section 60(5) of the IBC, and the adjudicating authority was pleased to allow the same by passing the impugned order. Contention of the Parties The resolution professional contended the maintainability of the petition under section 60(5) IBC for the relief prayed. It argued that the application seeking his removal cannot be filed under the provision. Further, he submitted that the direction issued by the NCLT is in violation of section 27 of the IBC, which was not complied in his removal. The respondent referred to the mail communication dated 22.04.2025, which was deliberately not made part of the agenda of the 2nd CoC meeting. It contended that despite having the knowledge regarding the resentment over his manner of functioning, the RP deliberately avoided placing the agenda of his replacement in the 2nd CoC meeting. And it was only when the RP didn't place the agenda of his replacement in the CoC meeting that the financial creditor filed an application before the adjudicating authority, resulting in the impugned order. Observations of the NCLAT The tribunal discussed that the replacement of the RP must be done in accordance with section 27(2) of the IBC, which is a CoC resolution with the consent of not less than 66% of the voting shares of the financial creditor. However, the application u/s 60 (5) would be tenable in cases where the resolution professional deliberately avoids placing the agenda for CoC consideration. It observed that any party aggrieved by any of the proceedings or inaction cannot be left remedy-less if the statute is silent with regard to prescribing a forum for redressal of the grievances. The bench clarified that the adjudicating authority has not erred in passing the impugned order in the section 60(5) application. But the order suffers from the procedural flaw of not placing the agenda for CoC approval as mandated u/s 27. Further, the bench observed that the order for the replacement would have a civil consequence and is required to be heard before the CoC. In furtherance to this, the bench directed to place the agenda before the CoC to comply with the provisions of section 27 IBC. Lastly, the bench clarified that these observations cannot be considered as a precedent. Case Name: Mathioli N, RP of MQ Networks Pvt. Ltd. Vs. Reliance Asset Reconstruction Company Ltd. Case No.: Company Appeal (AT) (CH) (Ins) No. 412/2025 (IA No.1172/2025) For Appellant: Mr. Mathioli N, RP/Party-in-person For Respondent: Mr. R. Imayavaramban, Advocate Coram: Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical), Judgment Date: 18.09.2025 Click Here To Read/Download The Order

Resolution Professional Can Be Replaced U/S 60(5) IBC If He Deliberately Avoids Placing Agenda For His Replacement Before CoC: NCLAT

Mohd.Rehan Ali

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