Tribunal Grants Appeals, Approves New RP, Orders Fee Evidence

The Tribunal allowed the Appeals, setting aside the Impugned Orders and granting permission for the engagement of Mr. B. Naga Bhushan as the RP in each matter. The Tribunal directed the IRP to provide evidence of fees and costs incurred, to be decided by the COC and released from resolution costs. Additionally, the outgoing IRP was instructed to hand over charge to the newly appointed RP.

---

---

Issues involved:
Appeals arising from proceedings against Corporate Debtors regarding the replacement of Interim Resolution Professional (IRP) with Resolution Professional (RP) by Committee of Creditors (COC).

Detailed Analysis:

1. Replacement of IRP with RP by COC:
The Appeals concern five separate proceedings initiated against the Corporate Debtors, where the Appellant Bank, with 100% voting share in the Committee of Creditors (COC), sought to replace the initially appointed IRP with a new RP, Mr. B. Naga Bhushan. The COC, in its third meeting, passed a resolution to effect this change, which was contested by the Adjudicating Authority, leading to the rejection of the Applications in all five matters. The Counsel argued that the COC has the right to decide on the replacement of the IRP/RP, and the rejection by the Adjudicating Authority was erroneous, as it was in the interest of the Corporate Debtors to make the change promptly.

2. Legal Provisions and Precedents:
The Appellants cited Section 22 of the Insolvency and Bankruptcy Code, 2016 (IBC) along with Section 27 to support their argument that the COC has the authority to replace the IRP with another RP. They referred to past judgments, including "Punjab National Bank vs. Mr. Kiran Shah" and "Axis Bank Ltd. vs. Sixth Dimension Project Solution Ltd.," to emphasize that the COC does not need to provide reasons for such replacements. The Adjudicating Authority's stance that the COC cannot replace the IRP in subsequent meetings if not done in the first meeting was deemed legally incorrect.

3. Authority of COC and IRP/RP Relationship:
The Tribunal highlighted the importance of the relationship of confidence between the COC and the IRP/RP, stating that a loss of confidence could adversely affect the Corporate Debtor. It was noted that the law does not mandate the COC to give reasons for replacing the IRP, emphasizing the discretionary power of the COC in such matters.

4. Decision and Orders:
After a thorough analysis of the legal provisions and arguments presented, the Tribunal allowed the Appeals, setting aside the Impugned Orders. It granted permission for the engagement of Mr. B. Naga Bhushan as the RP in each matter, subject to no pending proceedings against him. The Tribunal directed the IRP, Pavan Kankani, to provide evidence of fees and costs incurred, to be decided by the COC and released from resolution costs. Additionally, Mr. Pavan Kankani was instructed to hand over charge to the newly appointed RP.

This detailed analysis of the judgment showcases the legal intricacies involved in the decision-making process regarding the replacement of the IRP with a new RP by the Committee of Creditors in insolvency proceedings.

---