Tribunal Substitutes Interim Resolution Professional to Address Bias Concerns

The Tribunal upheld the decision to substitute the proposed Interim Resolution Professional, an ex-employee of the Financial Creditor, due to valid concerns of bias raised by the Corporate Debtor. The Tribunal emphasized that past employment and drawing pension do not automatically disqualify an individual from serving in this role, but in this case, the apprehension of bias warranted substitution to maintain the integrity of the insolvency resolution process. The appeal was dismissed, affirming the importance of addressing perceptions of bias and ensuring fairness in Corporate Insolvency Resolution Processes.

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Issues:
1. Whether an ex-employee of the Financial Creditor can be appointed as an Interim Resolution Professional.
2. Whether drawing pension from the Financial Creditor renders an individual ineligible to act as an Interim Resolution Professional.
3. Whether apprehension of bias against a proposed Interim Resolution Professional justifies substitution.

Issue 1: Appointment of Ex-Employee as Interim Resolution Professional
The Appellant, State Bank of India, sought initiation of Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016. The Adjudicating Authority directed the substitution of the proposed Interim Resolution Professional, Mr. Shailesh Verma, due to concerns of bias as he was an ex-employee of the Financial Creditor. The Appellant argued that being an ex-employee does not disqualify an individual from serving as an Interim Resolution Professional and that the Resolution Professional's role is merely facilitative without adjudicatory powers. The Tribunal noted that the proposed professional was qualified and not connected with the Corporate Debtor, emphasizing that past employment and pension do not automatically indicate bias.

Issue 2: Pension and Eligibility as Interim Resolution Professional
The Respondent, Corporate Debtor, contended that drawing pension from the Financial Creditor made Mr. Shailesh Verma an interested person, rendering him ineligible as an Interim Resolution Professional. The Tribunal analyzed relevant regulations and the Income Tax Act, highlighting that pension does not equate to current employment status. It clarified that pension is a benefit earned for past services and does not create a conflict of interest. The Tribunal emphasized that the definition of 'salary' under the Income Tax Act is for tax purposes and does not affect eligibility under the statutory framework.

Issue 3: Apprehension of Bias and Substitution
The core issue for determination was whether an ex-employee of the Financial Creditor should be allowed to act as an Interim Resolution Professional. The Tribunal referenced a previous case to establish that mere past association with the Financial Creditor does not automatically disqualify a professional. However, in this case, the Respondent's apprehension of bias was considered valid, leading to the Adjudicating Authority's decision to substitute Mr. Shailesh Verma. The Tribunal upheld this decision, emphasizing the importance of ensuring a fair and unbiased Corporate Insolvency Resolution Process, even if the professional was not technically disqualified.

In conclusion, the Tribunal dismissed the appeal, affirming the Adjudicating Authority's order for substitution to maintain the integrity of the insolvency resolution process. The decision highlighted the significance of addressing perceptions of bias and ensuring fairness in such proceedings, even when no explicit disqualification exists.

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