1. This application is filed by the Applicant under Section 27(1) of IBC, 2016 praying to take on record the actual reasons for change of Resolution Professional in order pronounced dated 06.06.2022 in IA No. 467/2022.
2. Averments in brief:
a. The averments in the Application are that this Tribunal admitted the Petition filed under Section 9 of Insolvency & Bankruptcy Code, 2016 by the Operational Creditor on 03.11.2021 and Corporate Insolvency Resolution Process commenced by appointing Mr. K. Vatsa Kumar, as Interim Resolution Professional and later appointed the IRP as RP in the first COC meeting.
b. It is averred that from the Commencement of CIRP Directors of the Suspended Board are not co-operating and thus filed an Application under Section 19(2) which was allowed by this Tribunal by directing the Suspended Board to co-operate with the RP. Further it is stated that corporate debtor and financial creditor have not co-operated with RP with required information for taking custody of assets inspite of 19(3) orders from this Tribunal. Hence the process of CIRP has been hampered.
c. The financial creditor in order to cover up its irregularities has complained to IBBI against the RP and IBBI has given notice for investigating the RP in the matter of CL Engineering Equipment India Pvt. Ltd. vide letter dated June 22, 2022 and the Applicant is in the process of filing his reply in the concerned matter.
d. It is averred that financial creditor vide email dated March 11, 2022 wanted the RP/Applicant to convene the COC meeting to resolution passed for liquidation of the Company. Whereas the RP/Applicant has replied vide email dated March 16, 2022 that without primary responsibility of identifying and taking custody of assets, liquidation proposal will be against the spirit of IBC. Hence Financial creditor conducted COC and resolved to replace the Applicant by Shri Kamal Prakash Singh with 100% voting share. Thus COC filed an Application for change of RP by stating that "RP has not been acting in the best interest of the corporate debtor. The RP has not been acting under the instructions and guidance of the COC. The COC has therefore lost confidence in the functioning of the RP. The COC in its wisdom and best interest of the Corporate Debtor, in its meeting dated March 22, 2022 sought to change the RP.
e. It is averred that the Tribunal vide order dated 06.06.2022 allowed the IA No. 467/2022. However the Tribunal relied on the submission made by the Applicant that "the IRP Shri K. Vasta Kumar, was initially appointed and has not been acted in the best interest of the Corporate Debtor. The RP has not been acting under the instructions and guidance of the COC. Therefore, lost confidence in the RP. Accordingly we replace the RP"
f. It is averred that the reason given by COC is utterly false and baseless and misleading. The reason is not mentioned in the minutes of COC. The reasons given are far from the truth and reflects badly on the RP and needs to be corrected.
g. Thus this Application is filed to take actual reason for change of RP in order pronounced on 06.06.2022 in IA No. 467/2022.
3. We have heard Shri Vasta Kumar, carefully perused record and the enclosures thereto. According to the Erstwhile RP this Tribunal while disposing of IA No. 467/2022, vide order dated 06.06.2022, after having referred to the submissions and reports of the meeting dated 22.03.2000, filed by the COC, inter-alia, observed that "the IRP who is initially appointed has not been acted in the best interest of the corporate debtor. Therefore, Respondent No. 1 has not been acting under the instructions and guidance of the COC, hence lost confidence in RP. Accordingly we replaced the RP".
4. Mr. Vasta Kumar pointed out before us that resolution dated 22.03.2022 passed by the members of the COC is false and baseless and therefore, the observation, supra, of the Tribunal may be eschewed from the order dated 06.06.2022 in IA No. 467/2022.
5. In support of this plea that observations in the COC meetings dated 22.03.2022 are wrong and the erstwhile RP had invited our attention to the following aspects which are mentioned in the record placed before us:
• The FC-SREI wanted the RP to call for COC meeting to seek resolution to initiate liquidation of CD.
• Pending taking custody of assets of CD available on record and related due process envisaged under the Code, the RP did not agree to initiate liquidation process.
• The FC-SREI requested to convene COC to discuss and vote on replacement of RP.
• COC convened and resolution passed to change RP with 100% voting (sole financial creditor in COC is SREI Equipment Finance Ltd. with 100% voting share).
6. We have perused the record and found that the above observation of the COC on the conduct of the erstwhile RP in the resolution dated 22.03.2022 RP are neither warranted nor even necessary besides not supported by any acceptable basis. It is settled proposition that that a part it may be stated that in the event for replacement of RP, COC need not come out with any reason much less the so called reasons found in the resolution dated 22.03.2022 suffice if the resolution to replace RP/IRP is passed with requisite voting share, and the Adjudicating Authority will normally accept the CoC decision on replacement. Needless to say, that in this settled legal frame Members of COC while passing resolutions for replacement of IRP/RP should avoid casting aspersions against IRP/RP's conduct.
h. In view of our discussion above, while confirming the replacement of the then RP Mr. Vasta Kumar, we hereby order that the observations made in our order dated 06.06.2022 in IA No. 467/2022 to the effect the "the IRP Shri K. Vasta Kumar, was initially appointed and has not been acted in the best interest of the Corporate Debtor. The RP has not been acting under the instructions and guidance of the COC. Therefore, lost confidence in the RP. Accordingly, we replace the RP" be eschewed from the order. Registry is directed to prepare a fresh copy in line with this Order.
7. This Petition is accordingly allowed. No costs.
