In the matter of Dr. K.V. Srinivas
Company Appeal (AT) (CH) (INS.) No. 319 / 2022
Facts:
1.An interlocutory application was filed for the for replacement of resolution professional in a section 33 application by another person as the liquidator though RP having consented to act as the Liquidator.
2.AA passed the order replacing the RP with the new resolution professional to act as the liquidator. Appellant is aggrieved with the order.
Issue: Whether order passed by AA was correct ?
Arguments:
For Appellant:
1.Counsel for the Appellant’, submit that the Appellant’, was appointed’, as anInterim Resolution Professional’, of M/s. Sainath Estates Pvt. Ltd.’ (Corporate Debtor’) in CP(IB) No. 651 / 7 / HDB / 2018, passed by the Adjudicating Authority’, (National Company Law Tribunal’, Hyderabad Bench – I, Hyderabad. Further, theCorporate Insolvency Resolution Process’ of the Corporate Debtor’, was set into motion, in accordance with the provisions of I & B Code, 2016 and theRules’ and `Regulations’, applicable thereto.
2.It was further submitted that he had discharged his Role’ and Responsibilities’, as per the I & B Code, 2016, applicable Rules and Regulations. Ultimately, a Resolution Plan’, came to be presented, before theCommittee of Creditors’, wherein, the Promoter’ of the Corporate Debtor’, was the `Resolution Applicant’. On 19.09.2020, the Committee of Creditors’, in their 16th Meeting, had approved theResolution’, seeking Appointment’ of the Appellant’, as the Liquidator’, by a majority Vote.
3.On 07.01.2021, the Committee of Creditors’, had approved’ the Resolution Plan’, given by the Resolution Applicant’, with a Vote’ of 100%. Later, an Interlocutory Application’, was projected by the Appellant’, before the Adjudicating Authority’, seeking an Approval’ of the Resolution Plan’, which was approved, through an `Order’ dated 09.11.2021 but there was a Violation’ of the Terms’ of the Plan’, by the Resolution Applicant’, wherein, no payments’, were effected towards the3rd Tranche’. On account of non-adherence with the Terms’ of the Resolution Plan’, , the corporate debtor was put to liquidation wherein, the Appellant’, was replaced as the Liquidator’, and one Mr. Gollamudi Krishna Mohan was appointed’, as the Liquidator’ of the `Corporate Debtor’, in contravention to the provisions of Section 34 (1) and Section 27 (2) of IBC, 2016.
4.Counsel pleaded that except, for the grounds’, specified in Section 34 (4) of the I & B Code, 2016, no change of Liquidator’, may be permissible, on any other `grounds’, having satisfied the requirements of the ingredients of Section 34 (1) of the Code. According to the Appellant, the I & B Code, 2016, does not contain any provision for an Appointment’ of any other person’, as Liquidator’, except the incumbent Resolution Professional’.
5.Counsel further submitted that Statute’ has not conferred any Authority’ or Power’, either to an Adjudicating Authority’ or to the Committee of Creditors’, in regard to an Appointment’ of Liquidator’, as well as the Replacement’ ofResolution Professional’, as `Liquidator’. he further submitted that no judicial order can be passed based on a Memo.
6. Counsel for the Appellant points out that when the Committee of Creditors’, is not clothed with the power ofAppointment’ of Liquidator’, it could not have recommended theReplacement’, thereof and further, when the Committee of Creditors’, does not have the power toAppoint’, a Liquidator’ itself, it cannot and could not recommend the name of any otherResolution Professional’, as `Liquidator,
Decision: Order passed by AA was upheld by the NCLAT.
Rationale:
1.It noted that in the absence of circumstances, provided under Sub Section (4) of Section 34 of the I & B Code 2016, an ‘Adjudicating Authority’, is not enjoined to replace a ‘Resolution Professional’. In fact, an Appointment’, of aResolution Professional’, as a Liquidator’, can beRejected’ / Negatived’ by an Adjudicating Authority’, on grounds, other than those mentioned under Section 34 (4) of the I & B Code, 2016, and there is no `Legal Impediment’, in this regard.
2. If an Adjudicating Authority’, is dissatisfied with the Performance of Resolution Professional’, as Liquidator, it may appoint’ another Insolvency Professional’, as Liquidator’, in the considered opinion of this `Tribunal’. Liquidator is to Discharge’ his functions’ / duties’, keeping in tune with the tenor and spirit of the I & B Code, 2016 and Regulations, made thereunder, dehors the fact that the Insolvency and Bankruptcy Board of India’, may recommend the Replacement’ of the Resolution Professional’, as per Section 34 (4) (b) of the `Code’. There is no embargo’ in Law’, for the Replacement’ of Liquidator’, by another Liquidator’, on grounds’ / `reasons’, other than those specified under Section 34 (4) of the I & B Code, 2016.
Order:
