Tribunal rejects lenders' bid to replace Resolution Professional under Insolvency and Bankruptcy Code

The tribunal dismissed the lenders' application to replace the Resolution Professional, stating it was not maintainable under Section 33 of the I&B Code, 2016. The tribunal found the lenders' meeting invalid and upheld the order for liquidation of the Corporate Debtor, emphasizing that the application to replace the RP was unfounded and filed after the CIRP period had ended.

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Issues Involved:
1. Allegations against the Resolution Professional (RP) by the lenders.
2. Reply and defense by the Resolution Professional.
3. Validity of the application under Section 33 of the I&B Code, 2016.
4. Conduct and procedures followed during the Corporate Insolvency Resolution Process (CIRP).
5. Validity of the lenders' meeting held on 03.09.2018.
6. Request for replacement of the Resolution Professional.
7. Application for liquidation of the Corporate Debtor.

Issue-wise Detailed Analysis:

1. Allegations against the Resolution Professional (RP) by the lenders:
The lenders filed an application on 06.09.2018 under Section 33 of the Insolvency and Bankruptcy Code, 2016 (I&B Code, 2016), alleging various technical violations by the RP, including delays in providing draft minutes, insufficient notice for meetings, incomplete Information Memorandum, lack of due diligence on related party transactions, and arbitrary actions without discussing key issues with the Committee of Creditors (CoCs). The lenders claimed these actions caused prejudice to CoCs members and warranted the RP's removal.

2. Reply and defense by the Resolution Professional:
The RP denied all allegations, stating the application was baseless, malicious, and ultra vires. The RP argued that the application was filed to settle personal scores and became infructuous as the CIRP period had ended. The RP maintained transparency in dealings and conducted nine CoCs meetings, ensuring the Information Memorandum was dynamic and updated. The RP also highlighted that the CoCs refused to allow Resolution Applicants to present their plans and that the termination of a key contract by PepsiCo during the CIRP was not challenged by the CoCs.

3. Validity of the application under Section 33 of the I&B Code, 2016:
The tribunal noted that Section 33 deals with liquidation and not the replacement of the RP. The application by the lenders to replace the RP was not maintainable under this section, especially since it was filed after the CIRP period had expired.

4. Conduct and procedures followed during the CIRP:
The RP ensured the CIRP was conducted within the stipulated timeframe, despite delays caused by disagreements among CoCs members. The RP's actions, including the preparation of the Information Memorandum and inviting Resolution Applicants, were in compliance with the I&B Code, 2016. The tribunal found the grounds for the application to be false and frivolous.

5. Validity of the lenders' meeting held on 03.09.2018:
The tribunal found the meeting held by the lenders on 03.09.2018 to be invalid as it was not conducted in accordance with the I&B Code, 2016. The meeting was not requested by the CoCs to the RP, who is responsible for convening such meetings. Therefore, the resolution passed by the lenders to replace the RP was declared null and void.

6. Request for replacement of the Resolution Professional:
The tribunal dismissed the request to replace the RP, noting that the application was filed at the fag end of the CIRP and the reasons for replacement were not in accordance with the law. The tribunal emphasized that the RP was already acquainted with the Corporate Debtor's details, and replacing him at this stage was not justified.

7. Application for liquidation of the Corporate Debtor:
The RP had already filed an application seeking an order for liquidating the Corporate Debtor, which was granted by the tribunal. The tribunal concluded that the lenders' application to replace the RP was an afterthought and not backed by any provisions of the I&B Code, 2016. Therefore, the application filed by the lenders was dismissed, and the order for liquidation was upheld.

Conclusion:
The tribunal dismissed the application filed by the lenders to replace the Resolution Professional, declared the lenders' meeting and resolution null and void, and upheld the liquidation order for the Corporate Debtor.

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