The National Company Law Appellate Tribunal ( NCLT ) held that the adjudicating authority being the appointing authority of Insolvency Resolution Process (IRP)/RP has jurisdiction to remove Resolution Professional (RP).
Srigopal Choudary Resolution Professional of Shree Ram Urban Infrastructure Ltd challenged the order passed by the Adjudicating Authority, National Company Law Tribunal, Mumbai Bench, Mumbai which directed the appellant who was RP of a Corporate Debtor to be removed and was directed to hand over all records/documents to the newly appointed RP.
The appellant submitted that the order passed by the Adjudicating Authority is contrary to the statutory provisions as contained under Sections 22 and 27 of the Insolvency and Bankruptcy Code, 2016 (IBC).Further submitted that NCLAT had never directed to reconstitute the CoC rather it directed that in the meanwhile CoC shall not take any further steps in the matter.
A Coram comprising of Justice Rakesh Kumar, Member (Judicial) and Ms Shreesha Merla, Member(Technical) that the Adjudicating Authority being the appointing authority of IRP/RP was well within its jurisdiction to pass an order for removal of the RP particularly in a situation where the RP had not taken any steps to convene a meeting of the CoC for removal of RP.
It was evident that the CIRP was initiated vide order dated 06.11.2019 and the first CoC Meeting was conducted on 19.04.2021 after a lapse of one and half years and the Adjudicating Authority has categorically observed that the RP has miserably failed to adhere to the timelines stipulated in the Code.
Further observed that the provision of Section 27 of the Code contemplates that the replacement of the Resolution Professional can be done by the CoC alone. But if the ingredients of Section 27 of the Code cannot be met i.e. in the event, the RP is not convening the meeting of CoC, which in turn has to decide the replacement of the RP himself.
While dismissing the appeal, the authority held that “there is no defect in the impugned order warranting interference by this Tribunal. On the contrary, the conduct of the appellant/RP which was observed by the Adjudicating Authority and reflected so in the impugned order is sufficient enough to direct IBBI to conduct an inquiry regarding the role played by the RP in this matter.”
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