Ramachandran Subramanian vs Anil Kohli New Liquidator Of Tecpro ...

(Arising against the impugned order dated 09.01.2026 passed by the Ld. National Company Law Tribunal, Delhi Bench in I.A. No. 4269 of 2024 and I.A. No. 5798 of 2025 in Company Petition (IB) No. 197 (PB) of 2017)

IN THE MATTER OF:

Ramachandran Subramanian, Erstwhile Liquidator of Tecpro Systems Limited ...Appellant

Versus

1. Anil Kohli, New Liquidator of Tecpro Systems Limited, ARCK Resolution Professionals LLP, New ...Respondent No.1 Delhi.

2. Edelweiss Asset Reconstruction Company ...Respondent No.2 Limited (EARCL).

3. Bank of Baroda, Chennai. ...Respondent No.3

4. Assets Care and Reconstruction Enterprise ...Respondent No.4 Ltd. (Assignee of Standard Chartered Bank).

5. Pegasus Asset Reconstruction Company Ltd. (Assignee of IndusInd Bank). ...Respondent No.5

Present: For Appellant: Mr. Gaurav Mitra, Mr. Mohit Singh, Ms. Garima Jain, Ms. Arushi Mishra, Advocates. For Respondents: Mr. Sandeep Bajaj, Ms. Aakansha Nehra, Mr. Mayank Biyani, Mr. Shubham Jaiswal, Mr. Raj, Mr. N.S. Aulakh, Advocates for R-1. Mr. Arvind Nayyar, Sr. Advocate, Ms. Nisha, Ms. Charu Bansal, Ms. Diksha, Advocates for EARCL.

Cont'd..../ -2-

J U D G M EN T (10th March, 2026)

INDEVAR PANDEY, MEMBER (T)

The present Appeal has been preferred by Mr. Ramachandran

Subramanian, Erstwhile Liquidator of Tecpro Systems Limited under

Section 61 of the Insolvency and Bankruptcy Code, 2016, challenging the

Order dated 09.01.2026 passed by the Ld. National Company Law Tribunal,

Delhi Bench (Adjudicating Authority) in I.A. No. 4269 of 2024 and I.A. No.

5798 of 2025 in Company Petition (IB) No. 197 (PB) of 2017. By the said

order, the Adjudicating Authority dismissed the application filed by the

Appellant seeking declaration of Edelweiss Asset Reconstruction

Company Limited (Respondent No. 2) as a "related party" under Section

5(24) of the IBC and also allowed the application filed by Respondent No. 2

for replacement of the Appellant as Liquidator. Consequently, Mr. Anil Kohli,

New Liquidator of Tecpro Systems Limited (Respondent No. 1) was brought

into the proceedings in his capacity as the newly appointed Liquidator. The

other respondents in this proceeding are Bank of Baroda (Respondent

No.3); Assets Care and Reconstruction Enterprise Ltd., assignee of Standard

Chartered Bank (Respondent No. 4), and Pegasus Asset Reconstruction

Company Ltd., assignee of IndusInd Bank (Respondent No. 5), all being

stakeholders in the liquidation process of the Corporate Debtor. The

Appellant, being aggrieved by his removal on the basis of voting share

allegedly influenced by a creditor claimed to be a related party, has

approached this Appellate Tribunal seeking setting aside of the Impugned

Order.

Company Appeal (AT) (Ins.) No. 267 of 2026 -3-

Brief facts of the case

2. The brief facts of the case are as given below:

i. The Corporate Debtor, Tecpro Systems Limited, came under financial

distress, at this stage, State Bank of India, which was the main

Financial Creditor of CD assigned its debt of about Rs. 2200 crores to

Respondent No. 2 - Edelweiss Asset Reconstruction Company Limited

(EARCL), on 03.03.2015 for a consideration of approximately Rs. 171

crores. Respondent No. 2 subsequently acquired further stakes from

other lenders and thereby became the dominant financial creditor.

ii. Following such acquisition during the year 2015, EARCL actively

participated in the management and affairs of the Corporate Debtor by

forming committees, stipulating escrow mechanisms, corresponding

directly with clients and engaging Ernst & Young LLP (EY) under an

agreement dated 16.09.2015 for monitoring and advisory service.

iii. During a meeting held on 13.09.2017, the Committee of Creditors was

informed that EY had already been engaged by EARCL since

16.09.2015 for project monitoring and cash flow supervision with

respect to the Corporate Debtor, and thereafter on 16.09.2017 the

erstwhile Resolution Professional entered into a restructuring and IBC

advisory agreement with EY for preparation of the Information

Memorandum.

iv. Respondent no. 2 EARCL filed a petition under Section 7 of the Code,

which was admitted on 07.08.2017 and the Corporate Insolvency

Resolution Process was initiated against the Corporate Debtor. Mr.

Company Appeal (AT) (Ins.) No. 267 of 2026 -4-

Venkatesan Sankaranarayanan was appointed as Interim Resolution

Professional and later confirmed as Resolution Professional after

constitution of the Committee of Creditors.

v. During CIRP, the Committee of Creditors approved a Resolution Plan

submitted by Kridhan Infrastructures Private Limited on 08.03.2019

with 89.92% voting share, and the same was approved by the Ld. NCLT

under Section 31 of the IBC on 15.05.2019; however, the Resolution

Applicant failed to implement the plan and defaulted in fulfilling its

equity infusion obligations within stipulated timelines.

vi. Consequent upon failure CIRP, the Adjudicating Authority ordered the

liquidation of the Corporate Debtor on 16.01.2020 and appointed the

present Appellant as Liquidator to conduct the liquidation proceedings

in accordance with the provisions of the IBC and the Liquidation

Process Regulations.

vii. Respondent No.2, EARCL filed I.A. No. 4349 of 2020 on 08.10.2020

seeking replacement of the Liquidator, and parallel complaints were

also filed before the IBBI; however, such attempts did not culminate in

removal of the Appellant at that stage.

viii. During the liquidation process, a property of the Corporate Debtor was

auctioned in September 2022 yielding realization of approximately Rs.

28.28 crores against prior valuation of around Rs. 24 crores, and issues

arose regarding payment of alleged past dues of Rs. 7.89 crores to

HSIIDC, which according to the Appellant was commercially and legally

Company Appeal (AT) (Ins.) No. 267 of 2026 -5-

justified in order to maximize value and ensure viability of the

transaction.

ix. Respondent No. 2 EARCL filed I.A. No. 5780 of 2023 on 13.10.2023

seeking replacement of the Appellant as Liquidator. The application was

disposed of by the Adjudicating Authority on 26.09.2024 based on the

undertaking given by the Appellant, that he would conduct a meeting

of Stakeholder's Consultation Committee on 04.10.2024 on the agenda

of replacement of existing liquidator.

x. The Appellant filed I.A. No. 4269 of 2024 on 24.08.2024 seeking a

declaration that EARCL/R-2 be treated as a "related party" under

Section 5(24) of the IBC on account of its alleged managerial control

over the Corporate Debtor prior to and during CIRP.

xi. During meetings of the Stakeholders' Consultation Committee held on

04.10.2024, an agenda for replacement of the Appellant as Liquidator

was considered, and voting was conducted between 17.10.2024 and

18.10.2024, wherein the resolution for replacement was passed with

92.35% voting share, out of which 84.82% voting share were attributed

to EARCL.

xii. Based on the resolution passed on 18.10.2024, EARCL/R-2 filed IA No.

5798 of 2024 before Adjudicating Authority seeking replacement of

Appellant with Shri Anil Kohli/R-1.

xiii. Upon challenge and further judicial directions, a specific voting exercise

was conducted on 17.07.2025 under the independent observation of

Justice (Retd.) Sunil Gaur excluding the vote of EARCL, and in such

Company Appeal (AT) (Ins.) No. 267 of 2026 -6-

voting the resolution for replacement secured only about 59% voting

share, thereby failing to meet the mandatory threshold of 66%

prescribed under Regulation 31A(11) of the Liquidation Process

Regulations.

xiv. Despite the above, the Ld. NCLT by the Impugned Order dated

09.01.2026 dismissed I.A. No. 4269 of 2024 seeking declaration of

EARCL as related party and allowed I.A. No. 5798 of 2025, thereby

directing replacement of the Appellant as Liquidator based on voting

which, according to the Appellant, included invalid vote of a related

party.

xv. Aggrieved by the dismissal of his application and the consequential

order permitting his removal as Liquidator, and contending that the

Impugned Order violates Section 5(24), proviso to Section 21(2) of the

IBC and Regulation 31A(11) of the Liquidation Process Regulations, the

Appellant has preferred the present Appeal before this Appellate

Tribunal on 01.02.2026 challenging the legality and correctness of the

Impugned Order.

Submissions of the Appellant

3. At the outset, Ld. Counsel for the Appellant respectfully submits that

the present Appeal has been preferred against the Order dated 09.01.2026

("Impugned Order") passed by the Ld. NCLT, New Delhi Bench in I.A.

4269/2024 and I.A. 5798/2025 in Company Petition (IB) No. 197 (PB)/2017.

By way of the Impugned Order, the Ld. NCLT has (a) dismissed the

Company Appeal (AT) (Ins.) No. 267 of 2026 -7-

Appellant's application (I.A. 4269/2024) seeking declaration of Respondent

No. 2, Edelweiss Asset Reconstruction Company Limited ("EARCL"), as a

'related party' of the Corporate Debtor ("CD"), and (b) allowed EARCL's

application (I.A. 5798/2025) seeking replacement of the Appellant as

Liquidator of the CD.

4. Ld. Counsel submits that during the tenure of the Appellant as

Liquidator, the CD recovered approximately INR 620 Crores, which is

significantly higher than the value of INR 470 Crores contemplated under

the earlier Resolution Plan. Despite such demonstrable recovery and value

maximization, the Appellant has been removed at the behest of an entity

which is itself ineligible on account of being a related party.

5. It is submitted that on 23.03.2015, EARCL acquired the entire

stressed asset portfolio of the CD from State Bank of India for a consideration

of INR 171 Crores, thereby acquiring control over assets valued in excess of

INR 2700 Crores, including six immovable properties and 30% of the

underlying equity, on an absolute ownership basis. Ld. Counsel submits that

such acquisition was not a mere financial assignment but amounted to

assumption of managerial control over the CD.

6. Ld. Counsel further submits the following chronology to demonstrate

EARCL's pervasive control and conduct:

i. In April 2015, EARCL facilitated an External Financing Support

Agreement between the CD and CSPGCL for Rs. 55 Crores at 18%

interest, while exercising control over the CD.

Company Appeal (AT) (Ins.) No. 267 of 2026 -8-

ii. Vide Agreement dated 16.09.2015 between EARCL and EY, various

committees and Management Information Systems were established to

manage the CD, even while the erstwhile top management continued,

thereby reflecting direct operational structuring by EARCL.

iii. On 07.08.2017, CIRP was initiated on a Section 7 application filed by

EARCL and Mr. Venkatesan was appointed as IRP and subsequently

confirmed as RP.

iv. Since the Resolution Plan proposed by Kridhan Infrastructures Private

Limited failed implementation, liquidation was permitted on

16.01.2020 and the Appellant was appointed as Liquidator. The said

order was unsuccessfully challenged before this Hon'ble Tribunal as

well as before the Hon'ble Supreme Court, wherein EARCL supported

the challenge by filing impleadment applications.

v. In October 2020, EARCL filed I.A. 4349/2020 seeking removal of the

Appellant as Liquidator, which came to be dismissed on the basis of

an undertaking to cooperate with the SCC.

vi. On 05.03.2021, the IBBI Disciplinary Committee passed an Order

holding that the erstwhile RP acted under the influence of EARCL and

violated statutory duties.

vii. On 13.10.2023, EARCL filed a second application seeking replacement

of the Appellant, which was dismissed vide Order dated 26.09.2024.

viii. On 23.08.2024, the Appellant filed I.A. 4269/2024 seeking declaration

of EARCL as a related party and for denuding its voting rights.

ix. During 17-18.10.2024, voting was conducted for replacement of the

Appellant wherein EARCL, holding 84.82% share, participated, and

Company Appeal (AT) (Ins.) No. 267 of 2026 -9-

the agenda was passed with 92.25% votes. Based on the said voting,

EARCL filed I.A. 5798/2024 on 03.12.2024 seeking replacement.

x. On 09.07.2025, the Ld. NCLT directed an independent voting exercise

excluding EARCL under the supervision of Hon'ble Mr. Justice (Retd.)

Sunil Gaur. On 17.07.2025, the said voting was conducted and the

resolution for replacement secured only 59%, thereby failing to meet

the statutory 66% threshold. Despite this, the Impugned Order dated

09.01.2026 dismissed the Appellant's application and allowed

replacement.

7. Ld. Counsel submits that the Impugned Order is unsustainable as the

Ld. NCLT ignored material evidence demonstrating that EARCL qualifies as

a related party. It failed to appreciate the IBBI Order which categorically

recorded that the erstwhile RP was "guided by" EARCL and did not act

independently. Further, the third Proviso to Regulation 31A(2) of the

Liquidation Process Regulations bars a related party financial creditor from

voting in the SCC. The replacement of the Appellant was proposed by EARCL

itself, which also proposed the new Liquidator. Moreover, the Ld. NCLT's own

direction for independent voting excluding EARCL was rendered meaningless

by ignoring the outcome wherein the replacement failed.

8. Ld. Counsel submits that EARCL dictated the corporate management

of the CD in multiple ways. It installed EY for day-to-day management,

demonstrating conduct beyond agency and reflective of absolute ownership.

It directed that employees take instructions exclusively from EY; mandated

appointment of an EY representative as CRO and Board Observer; imposed

Company Appeal (AT) (Ins.) No. 267 of 2026 -10-

prior approval requirements for agendas; constituted and populated Core,

Sub and Asset Sale Committees with its personnel; incorporated turnaround

and restructuring within its agreement with EY; and ensured that all

outgoing vendor payments required EY approval, with ultimate control

resting with EARCL.

9. Ld. Counsel further submits that the IBBI Order conclusively

establishes EARCL's undue influence. It records that EARCL used its 85%

stake to unduly influence the CIRP process and that the RP violated Clause

5 of the Code of Conduct by acting at the instance of EARCL. Emails dated

14.11.2020 reveal admission that EY was engaged without competitive

quotes merely because EARCL suggested continuation for operational

convenience.

10. Ld. Counsel submits that the finding of the Ld. NCLT characterizing

the Appellant's application as a 'counterblast' is erroneous. The Appellant

was discharging fiduciary duties to preserve the integrity of the liquidation

process. It was the Appellant's refusal to facilitate handover of the CD to a

disqualified Resolution Applicant that triggered repeated attempts by EARCL

to remove him. Since October 2020, EARCL has persistently filed

applications seeking removal. Further, EARCL suppressed its related party

status and illegally exercised 85% voting rights, thereby diluting rights of

genuine external creditors such as Standard Chartered Bank, Bank of

Baroda and Pegasus ARC.

11. Ld. Counsel submits that adjudication of the related party issue is a

threshold jurisdictional issue. The Proviso to Section 21(2) of the IBC read

Company Appeal (AT) (Ins.) No. 267 of 2026 -11-

with the third Proviso to Regulation 31A(2) creates an absolute statutory

embargo against voting by related party financial creditors. If EARCL is held

to be a related party, its vote is void ab initio and any resolution based upon

such vote is a nullity. Allowing such participation defeats the legislative

intent behind the 2018 amendment to Section 5(24), intended to safeguard

genuine external creditors.

12. Lastly, Ld. Counsel submits that the Impugned Order itself records

that no adverse remark shall be pursued against the Appellant and that his

fee shall be paid in accordance with rules and regulations. The Appellant has

already filed I.A. No. 610/ND/2026 seeking payment of dues, and notice has

been issued on 09.02.2026. Without prejudice, in the event this Hon'ble

Tribunal upholds replacement, a specific direction may kindly be issued to

ensure expeditious adjudication of the said application so that the Appellant

is compensated for services rendered.

13. In view of the foregoing submissions, the Appellant prayed for setting

aside the Impugned Order dated 09.01.2026 and allow the prayer made in

I.A. 4269/2024 declaring EARCL as a related party and consequently hold

that its participation and vote in the SCC are void, and restore the Appellant

as Liquidator of the Corporate Debtor, along with such further orders as this

Tribunal may deem fit in the interest of justice.

Submissions of Respondent No. 1/ Liquidator Mr. Anil Kohli

14. Ld. Counsel for Respondent No. 1 respectfully submits that the

Preliminary Compliance of Impugned Order dated 09.01.2026 has been

Company Appeal (AT) (Ins.) No. 267 of 2026 -12-

made by the Respondent No. 1 by taking over charge as the newly appointed

liquidator of the Corporate Debtor

15. Ld. Counsel submits that pursuant to the Impugned Order,

representatives of Respondent No. 1 visited the office premises of the

Corporate Debtor on 02.02.2026 for taking charge. However, the Appellant

informed telephonically that an appeal had been filed/is being filed and, on

that ground, the handover process was not initiated by him.

16. It is further submitted that due to complete non-cooperation from the

Appellant, Respondent No. 1 was constrained to take charge of the premises

and documents on an "as is where is" basis in the presence of Mr. Rohit

Singh, an employee of the Corporate Debtor, since neither the Appellant nor

his representatives appeared for formal handover. The documents available

appeared to pertain only to the normal course of business, while insolvency

process records could not be traced.

17. Ld. Counsel submits that despite repeated requests, meetings and

correspondence, complete handover of process documents and case-specific

email credentials was not done. In view of multiple ongoing litigations and

arbitrations involving substantial recoveries in favour of the Corporate

Debtor, including matters where favourable awards have already been

passed, Respondent No. 1 was compelled to file 2 applications viz.:

i. I.A. No. 632 of 2026 seeking compliance of the Impugned Order, which

was allowed on 11.02.2026; and

Company Appeal (AT) (Ins.) No. 267 of 2026 -13-

ii. Contempt Application No. 2 of 2026, which was listed on 13.02.2026

and 18.02.2026 and stands adjourned to 27.02.2026.

18. It is submitted that even before this Hon'ble Tribunal on 16.02.2026,

despite statement of the Appellant's counsel that charge would be handed

over within the week, complete handover has still not been affected as on

20.02.2026.

19. Respondent No. 1 submits that a Liquidator does not possess any

personal or vested right to continue in the liquidation process once the

Adjudicating Authority has lawfully ordered his replacement.

20. He places reliance upon the judgment of this Appellate Tribunal in

Ranjeet Kumar Verma (Erstwhile IRP) v. Committee of Creditors of Straight

Edge Contract Pvt. Ltd., Company Appeal (AT) (Ins.) No. 1129 of 2020,

wherein it has been categorically held that an IRP/RP has no vested legal

interest to continue and has no locus to maintain an appeal against

replacement once the competent authority has taken a decision.

21. Respondent No. 1 further places reliance upon 'V. Venkata Sivakumar

v. IDBI Bank Limited', [2022 SCC OnLine NCLAT 1616], wherein this Hon'ble

Tribunal held that a Liquidator does not have any personal right to continue

in the liquidation process and that replacement by the Adjudicating

Authority, in exercise of its jurisdiction, is not liable to interference.

22. Ld. Counsel submits that in the present case, the jurisdiction of the

Learned Adjudicating Authority to pass the replacement order has not been

substantively challenged. No stakeholder has challenged the Impugned

Company Appeal (AT) (Ins.) No. 267 of 2026 -14-

Order. The Appellant, being merely a professional, cannot claim to be an

"aggrieved person" under Section 61 of the Code, as no legal right of his

stands infringed. Accordingly, the present appeal is not maintainable and

deserves dismissal on this ground alone.

23. Ld. Counsel submits that from the records, it is an admitted position

that EARCL was a member of the Committee of Creditors from

commencement of CIRP on 07.08.2017 (upon admission of CP (IB) 197 of

2017 under Section 7 filed by EARCL) until liquidation was ordered on

16.01.2020. It is submitted that EARCL held approximately 85% voting

share in the CoC, which remained unchanged and was never challenged at

any stage of CIRP, including when crucial commercial decisions were taken.

24. It is submitted that the Appellant himself was appointed as Liquidator

on 16.01.2020 based on the same composition and voting structure of the

CoC, wherein EARCL held overwhelming majority. Having accepted

appointment pursuant to such composition, the Appellant cannot now turn

around and challenge the constitution of the CoC or the status of EARCL.

25. It is further submitted that from 16.01.2020 (date of commencement

of liquidation) till 23.08.2024 (date of filing I.A. No. 4269 of 2024 by the

Appellant), no objection was ever raised by the Appellant regarding EARCL

being a related party.

26. This clearly demonstrates that the objection was an afterthought and

raised only to derail the liquidation process and resist lawful replacement.

Company Appeal (AT) (Ins.) No. 267 of 2026 -15-

27. Ld. Counsel submits that the appointment of Respondent No. 1 has

been made strictly in accordance with the provisions of the Insolvency and

Bankruptcy Code, 2016 and pursuant to judicial directions of the Learned

Adjudicating Authority. The Impugned Order was passed after due

consideration of pleadings and material placed on record. No procedural

illegality, perversity, or jurisdictional error has been demonstrated by the

Appellant.

28. He submitted that the entire conduct of the Appellant post

replacement--non-handover of charge, non-cooperation, and continuation of

representation--further reinforces the necessity and correctness of the

Impugned Order.

29. In light of the foregoing submissions, Ld. Counsel for Respondent No.

1 respectfully submits that:

 The Appellant has no vested right or locus to challenge his

replacement.

 The Impugned Order is lawful, reasoned and passed within

jurisdiction.

 No stakeholder has challenged the replacement.

 The appeal is devoid of merit and is not maintainable under Section

61 of the Code.

 The conduct of the Appellant post-Impugned Order further justifies

dismissal of the appeal.

Company Appeal (AT) (Ins.) No. 267 of 2026 -16-

Accordingly, Learned Counsel prayed for dismissal of the present Appeal with

costs.

Submissions of Respondent No. 2/ EARCL

30. Ld. Counsel for EARCL submits that the Impugned Order is well

reasoned, factually correct, and legally sustainable. The Appellant has

sought to misconstrue ordinary lender protection mechanisms as instances

of managerial control so as to wrongly classify EARCL as a related party

under Section 5(24) of the Insolvency and Bankruptcy Code, 2016 ("Code").

The allegations are factually incorrect, legally untenable, and devoid of any

evidentiary basis.

31. Ld. Counsel submits that the Appellant's allegation is premised upon

a fundamental misunderstanding of the nature of security interests. The

shares referred to were not equity investments by EARCL, but pledged shares

forming part of the original security package created in favour of SBI and

later assigned to EARCL. Upon assignment, EARCL merely stepped into the

shoes of the original lender and acquired the debt along with its underlying

securities.

32. It is submitted that the pledged shares were never invoked during the

CIRP. Consequently, no ownership rights, voting rights, or management

rights ever vested in EARCL. In law, a pledgee has only a limited right to

retain and, upon default, invoke and sell the pledged securities. Until

Company Appeal (AT) (Ins.) No. 267 of 2026 -17-

invocation, ownership remains with the pledgor. Therefore, holding pledged

shares cannot amount to management or policy control.

33. Ld. Counsel further submits that acceptance of the Appellant's

argument would lead to an absurd result whereby every secured creditor

holding pledged shares would automatically become a related party. Such

interpretation would disqualify a vast class of secured financial creditors and

is contrary to both statutory scheme and commercial reality.

34. Ld. Counsel submits that EARCL never appointed or nominated any

director to the Board of the Corporate Debtor. Mr. D. Venkatsubramaniam,

an employee of Ernst & Young, was appointed merely as an observer in

accordance with contractual lender rights. An observer is not recognised

under the Companies Act, 2013 as a director and possesses no voting or

statutory authority. The purpose of appointing an observer was limited to

oversight in a distressed financial scenario to safeguard lender exposure.

Oversight cannot be equated with management control.

35. With respect to the email dated 16.12.2015 relied upon by the

Appellant, Ld. Counsel submits that the communication merely required

sharing of agenda and prior information. It did not confer veto rights,

approval authority, or decision-making power upon EARCL. Lender oversight

in distressed accounts cannot be equated with assumption of control.

36. With respect to the escrow arrangement dated 08.09.2015, ld. Counsel

submitted that it was introduced as a cash-flow monitoring mechanism in

view of financial stress. Such arrangements are standard in lending

Company Appeal (AT) (Ins.) No. 267 of 2026 -18-

transactions to prevent diversion of receivables. The Corporate Debtor was a

consenting party to the Escrow Agreement. Monitoring of receivables does

not amount to management or operational control. It does not involve

business decision-making or policy direction. It is a protective mechanism to

preserve asset value. By the time EARCL acquired the debt, the Corporate

Debtor was already classified as NPA. Therefore, the measures adopted were

routine protective lender actions and cannot constitute control.

37. Ld. Counsel submits that prior to CIRP, EY was engaged under

contractual lender rights for advisory and monitoring purposes. In December

2015, Mr. D. Venkatsubramaniam was appointed Chief Restructuring Officer

for monitoring cash flows and restructuring performance. Such

restructuring support is standard in ARC transactions. The engagement

letter expressly provided that EY would not assume management

responsibility, which remained with the Corporate Debtor. EY's role was

advisory.

38. Post commencement of CIRP, EY was appointed at the instance of the

Resolution Professional under Sections 20(2)(a) and 25(2)(d) of the Code. The

appointment was ratified by an overwhelming majority of the CoC. EY

functioned only as a professional agency assisting the RP and not as a

managerial arm of EARCL. Continuity of advisor was logical and

commercially prudent.

39. Ld. Counsel submits that the allegation regarding facilitation of INR

55 crores funding from CGPGCL is wholly unsupported by evidence. No

material has been produced demonstrating EARCL's role. Similarly,

Company Appeal (AT) (Ins.) No. 267 of 2026 -19-

allegations regarding encashment of bank guarantees by NTPC are

speculative. Even assuming financial consequences arose, such commercial

arrangements do not establish managerial or policy control.

40. Regarding the sale of Property, Ld. Counsel submits that the sale was

conducted under the SARFAESI Act through private treaty following due

statutory procedure and was completed prior to initiation of CIRP. The

transaction attained finality and was expressly consented to by the ex-

management. It is impermissible for the Ex-Liquidator to challenge a

concluded SARFAESI sale years later. In any event, the transaction has no

nexus with related party determination.

41. It is the submission of the Ld. Counsel that reliance on the IBBI order

is misplaced. The observation in paragraph 6.3.5 merely notes that the RP

was guided by EARCL in appointing EY. This cannot be construed as

evidence of management control. Statutory responsibility for conducting

CIRP vests exclusively with the Resolution Professional. Observations

concerning appointment of advisors cannot lead to inference of control by

EARCL.

42. Ld. Counsel respectfully submits that none of the circumstances relied

upon by the Appellant demonstrate that EARCL exercised management

control, policy control, or control of any nature over the Corporate Debtor so

as to attract related party status under Section 5(24) of the Code. The Ld.

NCLT rightly rejected the Related Party Application and correctly allowed the

application for replacement of the Appellant based on the overwhelming

92.25% SCC vote.

Company Appeal (AT) (Ins.) No. 267 of 2026 -20-

43. The Impugned Order is legally sound, factually justified, and warrants

no interference. Accordingly, the present Appeal deserves to be dismissed.

Analysis and Findings

44. We have heard learned counsel for the parties at length and carefully

perused the record.

45. The first and foremost issue that arises for determination is whether

the Liquidator/Appellant has the locus to maintain the appeal against his

replacement. We would thereafter take up the issues raised in appeal on

merits.

46. The procedure for replacement of the liquidator is provided in

Regulation 31A of The IBBI (Liquidation Process) Regulations, 2016. The

relevant regulation 31A (11) is extracted below:

"Regulation 31A. Stakeholders' Consultation Committee (1) *

* (11) The consultation committee, after recording the reasons, may by a majority vote of not less, than sixty-six per cent., propose to replace the liquidator and shall file an application, after obtaining the written consent of the proposed liquidator in Form AA of the Schedule II, before the Adjudicating Authority for replacement of the liquidator:

Provided that where a liquidator is proposed to be replaced, he shall-

(a) continue to work till his replacement; and

(b) be suitably remunerated for work performed till his replacement.

Provided that where a consultation committee under Regulation 31A has been constituted before the commencement of Insolvency and Bankruptcy Board of India (Liquidation Process) (Second

Company Appeal (AT) (Ins.) No. 267 of 2026 -21-

Amendment) Regulations, 2022, the liquidator within thirty days of the commencement of the said Regulations, shall re-constitute the consultation committee as required under the said Regulations and provisions provided under amended Regulation 31A shall come into effect only after such constitution."

47. It is clear from the aforesaid regulation that the Stakeholders'

Consultation committee with a majority vote of not less than 66% may

propose replacement of Liquidator to the Adjudicating Authority.

48. In the facts of the present case, it is seen that as early as 08.10.2020,

an application was filed seeking removal of the Appellant. In the 22nd SCC

meeting held on 15.09.2023, it was noted that the Appellant had released

INR 3,71,06,440 to HSIIDC allegedly in violation of Section 53 of the Code

and the Process Memorandum, and the SCC decided to file an application

for replacement. Thereafter, voting in October 2024 reflected an

overwhelming majority of 92.25% in favour of replacement. Based on this,

EARCL filed the third removal application and the Impugned Order was

passed on 09.01.2026.

49. The Appellant argues that an independent voting exercise excluding

EARCL did not meet the 66% threshold. However, the power of the

Adjudicating Authority is not limited to mechanical counting of votes. The

liquidation process remains under the supervision of Adjudicating Authority.

If the Authority, on overall consideration of stakeholder confidence, conduct

of proceedings and repeated friction, forms an opinion that continuation of

the Liquidator is not conducive to smooth completion of liquidation, it is

within its jurisdiction to direct replacement.

Company Appeal (AT) (Ins.) No. 267 of 2026 -22-

50. This tribunal in Ranjeet Kumar Verma (Erstwhile IRP) v. Committee of

Creditors of Straight Edge Contract Ltd., Company Appeal (AT) (Ins.) No.

1129 of 2020, decided on 04.01.2021, observed as follows in para 3 of the

judgement:

"3. In the instant case, it is not disputed that the replacement has been done by the Committee of Creditors with 100% vote share, the requisite vote share being 66%. It is indisputable that the Appellant has no vested legal interest and he has no right to continue once the decision is taken by the Committee of Creditors to replace him. He has no locus standi to maintain the Appeal as he cannot claim invasion of any of his legal rights and under the I&B Code, we say so because the Interim Resolution Professional is not a stake holder. That apart, Committee of Creditors which decided to replace Appellant was itself constituted by the Appellant and he would not be permitted to argue that the constitution of Committee of Creditors was bad."

(Emphasis Supplied)

51. In this judgment, the Appellate Tribunal clearly held that an Interim

Resolution Professional does not have any vested legal right to continue once

the Committee of Creditors, by the requisite majority, decides to replace him.

The Tribunal further observed that the IRP is not a stakeholder in the

insolvency process and therefore cannot claim that any of his legal rights

have been invaded, merely because he has been replaced. It was also

specifically noted that where the CoC, which was constituted during the

tenure of the professional himself, decides to replace him, he cannot

subsequently challenge the very constitution or decision-making authority

of that CoC. Applying this principle to the present case, the Appellant, having

Company Appeal (AT) (Ins.) No. 267 of 2026 -23-

functioned as Liquidator pursuant to the decision of the CoC/SCC structure

in which EARCL was a dominant voting member, cannot now assert that he

has a legal right to continue in office or challenge the validity of the very

decision-making body from which his authority originated. The ratio of this

judgment directly supports the position that the Appellant has no vested

right to insist upon continuation and that replacement, by itself, does not

give rise to a cause of action unless some statutory violation is shown.

52. The matter relating to removal of liquidator was examined by Chennai

bench of this Tribunal in V. Venkata Sivakumar v. IDBI Bank Limited, in

Company Appeal (AT) (Ins.) No. 269/decided on 20.12.2022. The relevant

extracts of para 48 relevant portions of which are extracted below:

 "This 'Appellate Tribunal' also notes that in recent

judgement passed by Principal Bench, NCLAT vide order dated

13.10.2022 in Company Appeal (AT) (Ins.) No. 1234 of 2022 as

held:

"The Liquidator does not have any personal right to continue in

the Liquidation Process and the reasons which have been

noted in the order are sufficient to exercise even the inherent

power by NCLT to replace the Liquidator. It is not a fit case to

interfere in exercise of our Appellate Jurisdiction."

[emphasis supplied]

 This clearly establishes that, no Liquidator, has any

`personal rights', to continue in `Liquidation' and the

'Adjudicating Authority', can order for `Replacement' of the

'Liquidator', recording sufficient reasons, as per `Law'.

Company Appeal (AT) (Ins.) No. 267 of 2026 -24-

 Further, since the 'Adjudicating Authority', is vested with

the power, to `appoint a Liquidator', under Section 33 and 34

of the I & B Code, 2016. It is by the virtue of the Section 16 of

the General Clauses Act, 1897, that an 'Adjudicating

Authority', who also, has the power, to remove the `Liquidator'.

 Combined reading of above Case Laws and Provisions

along with Section 33 and Section 34 of the I & B Code, 2016,

would make it clear that the 'Adjudicating Authority', which

had the `powers', to appoint the 'Liquidator', will also have the

powers, to remove the 'Liquidator' for reasons, the

'Adjudicating Authority', may find fit, just, valid and proper."

53. In this decision, the Appellate Tribunal reaffirmed that a Liquidator

does not possess any personal right to continue in the liquidation process

and that the Adjudicating Authority is competent to replace a Liquidator if

reasons exist which justify such action. The Tribunal further observed that

where the Adjudicating Authority has recorded reasons and exercised even

its inherent powers to ensure proper conduct of the liquidation process,

appellate interference is unwarranted, unless the order is perverse or without

jurisdiction. The emphasis was that the office of Liquidator is functional and

fiduciary in nature, and continuation depends upon the confidence of

stakeholders and supervision of the Adjudicating Authority, not upon

personal entitlement. In the present case, where repeated removal

applications were filed, stakeholder dissatisfaction was recorded, and an

overwhelming majority supported replacement, the principle laid down by

this judgment squarely applies. It reinforces that once the Adjudicating

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Authority, upon consideration of material on record, forms an opinion that

replacement is necessary for smooth conduct of liquidation, such decision

does not violate any personal right of the outgoing Liquidator and does not

warrant appellate interference.

54. These two judgments establish that the Liquidator's position is not

proprietary, that he has no vested right to continue, and that replacement is

legally sustainable. A Liquidator is appointed under the statutory scheme of

the IBC. He acts as an officer of the process and performs fiduciary duties

for the benefit of all stakeholders. He does not acquire any personal or vested

right to continue in office. It is well settled that once the Adjudicating

Authority, for reasons recorded, directs replacement of a Liquidator, he

cannot claim continuation as a matter of right. Section 61 permits an appeal

by a "person aggrieved." Removal from a statutory assignment, without

affecting any independent civil or proprietary right, does not automatically

create a vested entitlement to continue and such a person can not be treated

as "person aggrieved" and would therefore have no locus to maintain an

appeal before this tribunal merely on the ground of replacement.

55. We now turn to the address the appeal on merit on whether EARCL is

a related party within the meaning of Section 5(24) of the IBC. The Appellant

contends that EARCL exercised control over the Corporate Debtor by virtue

of pledged shares, appointment of EY, oversight over board meetings, escrow

arrangements, facilitation of funding, and alleged influence over the

Resolution Professional. It is argued that such conduct amounts to

management and policy control and therefore EARCL must be treated as a

related party.

Company Appeal (AT) (Ins.) No. 267 of 2026 -26-

56. Respondent No.2 has, however, given a detailed factual explanation. It

is clarified that the 30% shares referred to by the Appellant were not equity

investments made by EARCL, but were pledged shares forming part of the

security package originally created in favour of SBI and later assigned to

EARCL. The pledged shares were never invoked. Until invocation of a pledge,

ownership and voting rights remain with the pledgor. A pledgee merely holds

a security interest. If mere holding of pledged shares were to make a financial

creditor a related party, then almost every secured lender would become

ineligible under the Code, which would defeat the statutory framework. We

find merit in this submission.

57. With regard to appointment of board observers, Respondent No.2 has

clarified that no director was appointed by EARCL. An observer from EY was

present for monitoring purposes. An observer has no voting rights under the

Companies Act, 2013 and does not form part of the Board. Sharing of agenda

papers with lenders prior to meetings is a common protective measure in

distressed accounts. It does not confer decision-making power. Oversight is

not equivalent to control.

58. The escrow arrangement dated 08.09.2015, relied upon by the

Appellant, has also been explained. Escrow mechanisms are routinely used

in stressed accounts to monitor cash flows and prevent diversion of

receivables. The Corporate Debtor was itself a consenting party to the

arrangement. Monitoring of receivables cannot be equated with taking over

business decisions or corporate policy.

Company Appeal (AT) (Ins.) No. 267 of 2026 -27-

59. With respect to engagement of EY, Respondent No.2 has clarified that

prior to CIRP, EY was engaged in advisory and restructuring capacity under

contractual rights of lenders. The engagement letter specifically provided

that management decisions remained with the Corporate Debtor. After

commencement of CIRP, EY was appointed by the Resolution Professional

under Sections 20(2)(a) and 25(2)(d) of the Code and the appointment was

ratified by the CoC. Therefore, EY functioned as a professional advisor

assisting the Resolution Professional and not as a managerial arm of EARCL.

The continuity of EY post-CIRP seems to be based upon familiarity with the

account and ratification by the CoC.

60. The allegation that EARCL facilitated external funding of Rs. 55 crores

or permitted encashment of bank guarantees has not been supported by

documentary evidence, demonstrating management control. Even assuming

such commercial events occurred, they do not automatically establish policy

control or managerial takeover. These are mere allegations, not based on any

documentary evidence.

61. The Appellant has placed reliance on the IBBI Order dated 05.03.2021.

The relevant para 11.6(iv) of the IBBI order is extracted below:

"11.6 (iv) Mr. Venkatesan was guided by one of the members

of CoC Edelweiss while appointing professional services of EY

and did not act independently nor did he discharge his duty of

undertaking due diligence before appointing any professional,

therefore, has contravened section 208(2)(a) and (e) of the

Code, Regulation 7(2)(a) and (h) of the IP Regulations read with

clauses 3, 5 and 14 of the Code of Conduct."

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62. It can be seen from the findings in that order relates to the conduct of

the Resolution Professional and his independence. The observation that the

RP was "guided by" EARCL while appointing EY is not equivalent to a finding

that EARCL exercised statutory control over the Corporate Debtor's

management. The responsibility for CIRP vests with the Resolution

Professional. Any lapse in professional independence cannot be

automatically converted into related party status of a financial creditor.

63. We must also have a look at chronology of events in this case. CIRP of

the CD commenced in 2017, thereafter, Liquidation was ordered on

16.01.2020. The Appellant was appointed Liquidator pursuant to a decision

of the CoC in which EARCL held approximately 85% voting share. From 2020

till August 2024, no application was filed by the Appellant to declare EARCL

a related party. The related party application was filed only after replacement

proceedings were revived against the appellant on 13.10.2023. The facts

relied upon by the appellant related to period from 2015 onwards, when the

Corporate Debtor was undergoing restructuring. Thereafter, the CD went in

CIRP on 07.08.2017 and in liquidation on 16.01.2020. No one including RP;

erstwhile Directors of CD; members of the CoC; members of Stakeholders

Committee and Liquidator raised any issue of related party till 2024. It's only

after the Respondent-2 filed the application for replacement of liquidator,

that the appellant suddenly realised that the Respondent-2 was a related

party and filed the I.A. 4269 0f 2024. The conduct of the liquidator has been

duly noted by the Adjudicating Authority in the impugned order.

Company Appeal (AT) (Ins.) No. 267 of 2026 -29-

64. Section 5(24) defines "related party" in specific and precise terms.

Commercial influence, monitoring rights, and restructuring supervision, are

common features of lending transactions involving distressed companies.

These do not automatically amount to management or policy control. Control

in the statutory sense requires something more concrete and demonstrable.

We have also noted that almost all the events through which the appellant

has tried to prove that EARCL is a related party relate to a period prior to

initiation of CIRP proceedings. Such events are not relevant to the present

proceedings in any case. Action taken by EARCL during that period are in

line with restructuring of CD which was under financial stress and EARCL

as the largest secured creditor was well within its rights to monitor the

progress of restructuring of the CD.

65. The appellant has relied on first proviso to Section 21 (2) of the Code

to state that EARCL as a related party could not have taken part in meeting

of Committee of Creditors. We now have a look at the Section 21 (2) of the

Code which is extracted below:

"21. (2) The committee of creditors shall comprise all financial creditors of the corporate debtor:

Provided that a financial creditor or the authorised representative of the financial creditor referred to in sub- section (6) or sub-section (6A) or sub-section (5) of section 24, if it is a related party of the corporate debtor, shall not have any right of representation, participation or voting in a meeting of the committee of creditors:

Provided further that the first proviso shall not apply to a financial creditor, regulated by a financial sector regulator, if it is a related party of the corporate debtor solely on account

Company Appeal (AT) (Ins.) No. 267 of 2026 -30-

of conversion or substitution of debt into equity shares or instruments convertible into equity shares or completion of such transactions as may be prescribed], prior to the insolvency commencement date."

66. It can be seen from the first proviso debars the related parties from

participating in the CoC meetings. However, it can be seen that the present

case is covered by the second proviso which is applicable to a Financial

Creditor regulated by financial sector regulator, which would be RBI in the

case of Asset Reconstruction Companies (like EARCL in this case) if such an

entity becomes a related party solely due to conversion or substitution of

debt into equity shares prior to the insolvency commencement date. The fact

that EARCL held 30% of the equity shares prior to the initiation of CIRP due

to assignment of pledged shares which were held by SBI prior to assignment

of such shares to EARCL does not make EARCL as related party of the

Corporate Debtor in terms of second proviso of Section 21 (2) of the Code.

67. On the basis of the material placed before us, we are of the view that

the EARCL does not fall within the statutory definition of related party in the

present case.

68. It is equally important to reiterate that the Liquidator has no vested

right to continue in office. Performance during tenure, even if commendable,

does not create an indefeasible right. The Code prioritizes institutional

integrity of the process over individual tenure.

69. Under Section 61, this Appellate Tribunal interferes only if the order

is arbitrary, perverse, or contrary to law. The Impugned Order reflects

consideration of the related party issue, the history of removal applications,

Company Appeal (AT) (Ins.) No. 267 of 2026 -31-

SCC decisions, and voting patterns. We do not find any jurisdictional error

or material irregularity warranting interference.

70. In conclusion, we hold that the direction replacing the Appellant as

Liquidator was within the supervisory powers of the Adjudicating Authority

and does not suffer from illegality. The Appellant, in any event, has no vested

right to continue in office and he had no locus to maintain the appeal against

his replacement. We further hold that the EARCL cannot be considered as

related party under Section 5(24) of the code. Accordingly, the Appeal is

dismissed. Pending I.As, if any, are closed. There shall be no order as to

costs.

[Justice Ashok Bhushan) Chairperson

[Mr. Indevar Pandey] Member (Technical)

SA/Pragya (LRA)

Company Appeal (AT) (Ins.) No. 267 of 2026