Venus India Asset-Finance Pvt. Ltd Vs Suresh Kumar Jain
Company Appeal (AT) (Ins.) No. 1395 of 2022 & I.A. No.4539 of 2022
Facts:
1.M.K. Overseas Private Limited – Corporate Debtor was admitted into CIRP on 19.09.2019 following admission of Section 7 application filed by Mayoga Investment Private Limited, a financial creditor. Mr. Suresh Kumar Jain was appointed as Interim Resolution Professional on 19.09.2019 and later confirmed as Resolution Professional by the CoC in the 2nd CoC meeting which concluded on 30.10.2019.
2.CoC approved the Resolution Plan on 02.12.2020 and the application under Section 30(6) for approval of the Resolution Plan is pending before the Adjudicating Authority from 09.12.2020. CoC in its 21st meeting voted and approved the replacement of the Resolution Professional/Respondent with a voting share of 76.69% on 01.08.2022. The written consent of the newly proposed Resolution Professional was also obtained before submission to the Adjudicating Authority
3.Resolution for appointment of the new Resolution Professional, Mr. Sapan Mohan Garg in place of the existing Resolution Professional, Mr. Suresh Kumar Jain, was forwarded by the Appellant/VIAF for confirmation to the Adjudicating Authority in terms of Section 27 of the IBC. This application was rejected by the Adjudicating Authority.
4.Appellant is challenging the order
Issue: Whether the order passed by the AA was correct?
Arguments:
Appellant:
1.Counsel for the Appellant stated that in terms of Section 27(2) of the IBC, the CoC of a Corporate Debtor can resolve to replace the Resolution Professional appointed under Section 22 of the IBC with another Resolution Professional after putting such a resolution to vote and passed by a voting share of 66%. It has been further submitted that it is a settled principle that the CoC is not required to give reasons for replacing the Resolution Professional
2.In the present case, it was pointed out that the resolution for replacement of the existing Resolution Professional was approved by the CoC by a voting share of 76.69%. However, in spite of having followed the statutory prescription laid down for replacement of the Resolution Professional, the proposal has been erroneously turned down by the Adjudicating Authority
3.It was submitted that the Adjudicating Authority, disallowed the application for replacement of Resolution Professional on the ground that the IBC does not envisage any decision-making role for the CoC once it has approved the Resolution Plan and the Resolution Plan is pending adjudication of the Adjudicating Authority. Contending that the replacement of the Resolution Professional/Respondent would not in any way affect the Resolution Plan, it has been argued therefore that the Appellant along with other members of the CoC were well within their rights to pass a resolution seeking replacement of Resolution Professional in accordance with Section 27 of the IBC.
Respondent:
1.Counsel for the Respondent /Resolution Professional has contended that the appeal is not maintainable since it has been filed by VIAF in private and individual capacity and not representing the CoC. Further, in the absence of any Board resolution of VIAF authorising Ms. Prerna Bajaj to file the appeal, the appeal may be treated as non-instituted.
2.Counsel admitting that Section 27 of the IBC allows for replacement of the Resolution Professional but added that this replacement was only possible at “any time during the Corporate Insolvency Resolution Process”. Expanding on the words “during the CIRP period”, it was submitted that Section 12 of the IBC prescribes the tenure of CIRP as 180 days which can go up to a maximum of 330 days after factoring in extension/exclusion periods. The 330 days life span of CIRP of the present Corporate Debtor stood completed on 24.12.2020. Since CIRP cannot survive beyond 330 days, the applicability of Section 27 of IBC with regard to replacement of Resolution Professional also ceases to exist after 330 days of CIRP
3.Counsel representing HDFC Bank, in support of the Respondent/Resolution Professional contended that the CIRP period of 330 days having been completed, the IBC provisions do not provide any jurisdiction to the CoC to replace the Resolution Professional and that such replacement would be prejudicial to their interest
Decision: AA erred in passing the order.
Rationale:
1.NCLAT noted that CoC had also resolved that the application for replacement of the Resolution Professional will be presented before the Adjudicating Authority by VIAF and this resolution has also been complied with. This nullifies the contention of the Respondent/Resolution Professional that the present appeal having been filed by VIAF is not maintainable since VIAF had been clearly authorized to represent on behalf of the CoC before the Adjudicating Authority. VIAF is therefore entitled to defend the interests of the CoC when the matter has come up for appeal.
2.It noted that statutory provisions and related Regulations framed thereunder having laid down in unambiguous terms the manner and procedure for replacement of the Resolution Professional and the CoC having acted in conformity with those provisions, the CoC was well within its rights to replace the Resolution Professional with a new one of its own choice
3.There was no violation of the statutory provisions in bringing about the replacement of the Resolution Professional by the CoC and all procedural compliances having been met, there is no room to hold the process to have been vitiated in any manner. Since the requirements laid down by IBC have been met, the Adjudicating Authority is duty bound to abide by the discipline of the statutory provisions
Order:
