Axis Bank Ltd vs Sixth Dimension Project Solution Ltd

Company Appeal (AT) (Insolvency) No. 356 of 2019

IN THE MATTER OF:

Axis Bank Ltd. ...Appellant

Versus

Sixth Dimension Project Solution Ltd. ...Respondent

Present: For Appellant : Mr. Sanjeev Pathak, Advocate

For 1st Respondent: Ms. Udita Singh, Advocate Mr. S. Gopalakrishnan, IRP in person

ORDER

16.08.2019 An application under Section 9 of the Insolvency and

Bankruptcy Code, 2016 (for short, 'the I&B Code') filed by Ms. Rama

Subramaniam (Operational Creditor) against 'M/s. Sixth Dimensions Project

Solution Limited' (Corporate Debtor), was admitted by the Adjudicating Authority

(National Company Law Tribunal), Mumbai Bench, Mumbai in C.P. No.

587/I&BP/2018.

2. The 'Corporate Insolvency Resolution Process' continued for about 180

days and as no substantive progress was made, the 'Committee of Creditors' in

its meeting held on 3rd October, 2018 resolved to appoint 'Mr. Santanu T. Ray',

registered 'Resolution Professional' in place of 'Mr. S. Gopalakrishnan', Interim

Resolution Professional, who was allowed to continue as 'Resolution

Professional'. The prayer was also made to extend certain period to enable the

'Committee of Creditors' to ensure successful resolution process.

[Type here] 2

3. The Adjudicating Authority by impugned order dated 13th March, 2019

rejected the application for change of 'Interim Resolution Professional' and for

appointment of 'Mr. Santanu T. Ray' as 'Resolution Professional' though the

decision was taken with 100% voting share of 'Committee of Creditors'. It was

rejected on the ground that 'Committee of Creditors' failed to put forth any

tenable or valid or genuine reasons for the same. The matter relating to

extension of time is pending.

4. Learned counsel appearing on behalf of the Appellant submitted that

during 180 days, no progress was made by the 'Interim Resolution Professional'

- 'Mr. S. Gopalakrishnan', who was subsequently appointed as 'Resolution

Professional'. For the said reason, it was decided to appoint another 'Resolution

Professional' with 100% voting share of 'Committee of Creditors'.

5. Ms. Udita Singh, learned counsel appears on behalf of 'Mr. S.

Gopalakrishnan', IRP, who is still continuing as 'Resolution Professional' and

'Mr. S. Gopalakrishnan' is also present in person. It is submitted that the

'Committee of Creditors' have now made various allegations against the

Resolution Professional - 'Mr. S. Gopalakrishnan', which are not based on record

and will affect the career of the 'Resolution Professional'. She further submits

that 'Information-Memorandum' was not prepared because of non-cooperation

of the Directors/Partners of the 'Corporate Debtor'. However, we find that the

aforesaid fact was not brought to the notice of the Adjudicating Authority by the

IRP - 'Mr. S. Gopalakrishnan' within 30 days during which the IRP was supposed

to take possession of the record and the 'Corporate Debtor'. In fact, for one or

other reason, the matter could not progress. In this background, the 'Committee

of Creditors', by 100% voting share decided to replace the 'Resolution

Company Appeal (AT) (Insolvency) No. 356 of 2019 3

Professional' - 'Mr. S. Gopalakrishnan' and proposed another Resolution

Professional - 'Mr. Santanu T. Ray'. As we find that the Adjudicating Authority

rejected application on the basis that no specific ground has been given for

replacement of 'Mr. S. Gopalakrishnan', but we are of the opinion that if any

ground is given against the 'Resolution Professional' - 'Mr. S. Gopalakrishnan'

for removal, it would require first decision on the correctness of the ground and

would delay 'IRP' and such procedure is not in interest of the process. Sections

22 and 27 of the I&B Code do not require giving reasons for replacement and

Adjudicating Authority is not required to decide on such reasons. The

'Committee of Creditors', therefore, did not reflect any allegation or any

proceeding against 'Mr. S. Gopalakrishnan' and simply decided to replace him.

Further in the facts and circumstances, we are of the view that the Adjudicating

Authority though decided the matter relating to the 'Resolution Professional'

should have also decided the extension of period. We make it clear that the

'Committee of Creditors' having not recorded any allegation against 'Mr. S.

Gopalakrishnan', IRP/ RP, should not be taken into consideration for any action

against 'Mr. S. Gopalakrishnan'.

In view of the aforesaid observations above, we set aside the order dated

13th March, 2019 and allow the 'Committee of Creditors' to engage 'Mr. Santanu

T. Ray' as 'Resolution Professional' if there is no proceeding pending against him.

Insofar as the fee and cost incurred by 'Mr. S. Gopalakrishnan' is

concerned, he will place the evidence in support of the fee and cost incurred by

him and 'Committee of Creditors' will decide the same and admitted dues to be

released in his favour by the 'Committee of Creditors', which may be adjusted

Company Appeal (AT) (Insolvency) No. 356 of 2019 4

from the resolution cost. 'Mr. S. Gopalakrishnan' will hand over the charge to

'Mr. Santanu T. Ray'.

Further in the interest of the 'resolution process', we extend the period for

90 days in addition to 180 days, which have already lapsed. The extension of

period is from prospective date from the date of receipt of certified copy of this

order. In case the application has filed by the 'Committee of Creditors' for

extension of time before the Adjudicating Authority, that application shall also

stands disposed of.

The appeal is allowed with aforesaid observations.

[Justice S.J. Mukhopadhaya] Chairperson

[ Justice A.I.S. Cheema ] Member (Judicial)

[ Kanthi Narahari ] Member (Technical) /ns/sk

Company Appeal (AT) (Insolvency) No. 356 of 2019