Punjab National Bank vs Kiran Shah. Irp Of Org Informatics Ltd

Mr. Kirah Shah, IRP of ORG Informatics Ltd. ...Respondent

Present: For Appellant : Ms. Natasha Dhruman Shah , Mr. Atul Sharma and Mr. Vikky Dang, Advocates

For Respondent : Mr. Saurabh Kalia, Advocate

ORDER

06 .08.2019 This appeal has been preferred by the 'Punjab National Bank',

lead bank of the 'Committee of Creditors' against order dated 27th June, 2019

passed by the Adjudicating authority (National Company Law Tribunal),

Ahmedabad Bench, which reads as follows:

The parties are represented through their

respective Learned Counsel/FCA(s).

The instant application is filed under Section 22 of

the Insolvency and Bankruptcy Code on 18.04.2019 with

a prayer to replace the IRP with the proposed RP by the

COC.

On perusal of the record, it is found that, no ground

is given/mentioned in the application showing the cause

of replacement of the IRP, who is the appointee of this 2

Adjudicating Authority. It is a matter of record that CP(IB)

No. 120 of 2017 was admitted on 27.11.2018, whereas

the instant application was preferred on 18.04.2019,

after lapse of five months, when the CIRP is on the verge

of the completion.

As per Section 22(1) of the Insolvency &

Bankruptcy Code, the first meeting of the

committee of creditors shall be held within seven

days of the constitution of the committee of

creditors.

(2) The committee of creditors, may, in the first

meeting, by a majority vote of not less than seventy

five per cent of the voting share of the financial

creditors, either resolve to appoint the interim

resolution professional as a resolution professional

or to replace the interim resolution professional by

another resolution professional.

(3) Where the committee of creditors resolves

under sub-section (2) ----

(a) to continue the interim resolution professional

as resolution professional, it shall communicate its

decision to the interim resolution professional, the

corporate debtor and the Adjudicating Authority;

or (b) to replace the interim resolution professional,

it shall file an application before the Adjudicating

Company Appeal (AT) (Insolvency) No. 749 of 2019 3

Authority for the appointment of the proposed

resolution professional

(b) to replace the interim resolution professional it

shall file an application before the Adjudicating

Authority for the appointment of the proposed

resolution professional.

Thus, it is expected from the COC that immediately

after first meeting of the COC, the COC supposed to

prefer an application under Section 22 which was not

done in case.

On 11.06.2019 when the issue with regard to the

replacement as well as ground were asked by the bench

to the Learned Lawyer of the COC then the conducting

lawyer of the COC took time for taking necessary

instruction and to file supplementary affidavit. The said

supplementary affidavit is filed today with a copy to the

Resolution Professional.

It is pertinent to note that CIRP i.e. 180 days has

already been expired on 17.05.2019 but the COC has not

taken any necessary steps either to extend the time for

further 90 days or able to submit any resolution plan as

on date, rather came with an application under Section

22 of the Code on 18.04.2019, ignoring the time bound

process of CIRP.

Company Appeal (AT) (Insolvency) No. 749 of 2019 4

Learned FCA/ Resolution Professional is present

in person and apprised to this bench that the COC has

already passed Resolution for liquidation of the corporate

debtor. The said fact is also conceded by the Learned

Lawyer of the COC, if that be the situation, we don't find

any reason to replace the IRP/RP at this stage.

It is mentioned herein that the CIRP has to be

completed in time bound manner and as such the COC is

expected to take steps diligently and not in perfunctory

or casual manner.

The Resolution Professional who is present today

further submitted that from the date of his appointment

as IRP the professional fee as well as expenditure

incurred till date during the CIRP has not yet been paid

to him. Hence, an appropriate direction may be given to

the COC. The COC is hereby directed to take necessary

steps towards the payment of remuneration and

expenditure of the IRP.

Meanwhile, Resolution Professional is at liberty to

file his reply upon the supplementary affidavit within two

weeks by serving an advance copy to the COC.

The Registry is directed to inform this matter by

issuing notice to the GM as well as CMD of the respective

banks to look in to the matter along with the today's

order as well as the order dated 11.06.2019."

Company Appeal (AT) (Insolvency) No. 749 of 2019 5

Having heard the learned counsel appearing on behalf of the Appellant

and the learned counsel appearing on behalf of the 'Resolution Professional', we

are of the view that the 'Committee of Creditors' is not required to record any

reason or ground for replacing of the 'Resolution Professional', which may

otherwise call for proceedings against such 'Resolution Professional'. For the

purpose of proceedings reported to the 'Insolvency and Bankruptcy Board of

India' (for short, 'the IBBI', the 'Committee of Creditors' cannot await the decision

of the IBBI for the purpose of replacement. The 'Committee of Creditors' having

decided to remove the 'Resolution Professional with 88% voting share, it was not

open to the Adjudicating Authority to interfere with such decision, till it is shown

that the decision of the 'Committee of Creditors is perverse or without

jurisdiction. The 'Committee of Creditors' with majority voting share of 88%

having decided to replace 'Mr. Kiran Shah', he cannot function as 'Resolution

Professional', though he will be entitled to his fee and cost, if any, incurred by

him in terms of the 'I&B Code'.

For the aforesaid reason, it was not open to the Adjudicating Authority to

direct the same very 'Resolution Professional' to file an application for

'Liquidation' particularly when the 'Committee of Creditors' in its meeting

decided to request the Adjudicating Authority to extend certain period and if not

allowed, then pass order of 'Liquidation'.

For the reason aforesaid, we set aside the impugned order dated 27th June,

2019 passed by the Adjudicating Authority. It is informed that the Adjudicating

Authority has already passed the order of 'Liquidation' and therefore, we are not

Company Appeal (AT) (Insolvency) No. 749 of 2019 6

expressing any opinion with regard to such order in absence of challenge.

However, it will be open to the parties to challenge the same, if it is not in

accordance with law or there is a chance of resolution on 'exclusion of certain

period' or in view of the amended law. The appeal is allowed with aforesaid

observations. No costs.

[Justice S.J. Mukhopadhaya] Chairperson

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

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

Company Appeal (AT) (Insolvency) No. 749 of 2019