2020 (10) TMI 273 - Tri - Insolvency and Bankruptcy

Tribunal confirms Binani as Resolution Professional, dismisses objections.

Power Finance Corporation Limited and Ors. Versus Mahender Kumar Khandelwal and Ors.

The Tribunal upheld the Committee of Creditors' decision to appoint Mr. Sumit Binani as the Resolution Professional, finding it valid under Section 22 of ... Appointment/Replacement of RP - whether the decision of the CoC to appoint Mr. Sumit Binani as RP is valid in the eye of law or whether Mr. Mukesh Khandelwal, IRP should continue as RP? HELD THAT:- This Adjudicating Authority is of the view that a mere technical objection regarding the authorization on behalf of CoC to one of its members cannot construe a valid ground for rejection of Application under Section 22 of IB Code, 2016, as the same act conducted by PFC is basing upon the Resolution for Change of IRP to RP by CoC with 89.6% votes in favour and that such act would not cause any hardship to any of the members of the CoC - It is a fact not in dispute that the IRP herein has carried out various complicated CIRP's such as of BSPL in a fair manner, and the same is evident from the order of NCLT Principal Bench, Delhi in the matter of BSPL. It is also observed that the CoC in the instant manner has also not levelled any allegations against the conduct of the IRP herein. Further, this Adjudicating Authority observes that pursuant to stay on IBBI Order by Hon'ble High Court of Delhi, there is no bar on the CoC to continue IRP herein as the RP and the IRP herein cannot be excluded from the zone of consideration on the same ground. In relation to the recording of reasons by CoC in its meeting for removal of the IRP as RP, this Adjudicating Authority observes that the Hon'ble Supreme Court and Hon'ble NCLAT in plethora of Judgments has held that the CoC is not bound to record any reasons under Section 22 of IB Code, for change of IRP with another Insolvency professional as RP - On a plain reading of Section 22 of the Code, 2016, it is clear that the CoC is conferred with the power of replacing the IRP by another Resolution Professional and no reasons need to be recorded by the CoC for affecting such replacement. It is the prerogative of the CoC whether to continue the IRP as the RP or to replace the IRP with by another RP. It is pertinent to note that the CoC has decided to appoint Mr. Sumit Binani as RP in the 4th CoC meeting with 89.6% votes and that the written consent by way of Form-AA is also placed along with the instant Application. Further, the CoC has also filed an Application vide IA No. 234/2020 before this Adjudicating Authority for appointment of the proposed RP. Therefore, this Adjudicating Authority observes that the first three of the above conditions have been fulfilled and, therefore, what remains is only appointment by this Adjudicating Authority after confirmation by the IBBI. This Adjudicating Authority does not find any infirmity with the decision of CoC to replace Mr. Mukesh Khandelwal with Mr. Sumit Binani as RP to conduct the CIRP of M/s. KSK Mahanadi Power Company Ltd. Accordingly, IA No. 235/2020, filed by Mr. Mukesh Khandelwal, IRP is rejected - this Adjudicating Authority directs the Registry to forward the name of the proposed RP in IA No. 234/2020 to the IBBI for its confirmation, as contemplated under Section 22(4) of IBC, 2016. For confirmation from IBBI, put up the matter on 16.06.2020. Issues Involved:1. Urgency and adjournment due to COVID-19.2. Appointment of Mr. Sumit Binani as Resolution Professional (RP).3. Continuation of Mr. Mahender Kumar Khandelwal as Interim Resolution Professional (IRP).4. Validity of application filed by Power Finance Corporation (PFC) on behalf of Committee of Creditors (CoC).5. Compliance with Section 22 of the Insolvency and Bankruptcy Code (IBC), 2016.Issue-wise Detailed Analysis:1. Urgency and Adjournment Due to COVID-19:The applications IA No. 234/2020 and IA No. 235/2020 were initially scheduled for hearing on 08.04.2020 but were adjourned due to the COVID-19 pandemic. The urgency application IA No. 300/2020 was filed to expedite the hearing, leading to a directive for a hearing on 08.05.2020.2. Appointment of Mr. Sumit Binani as Resolution Professional (RP):The application IA No. 234/2020 was filed by Power Finance Corporation (PFC) on behalf of the CoC to appoint Mr. Sumit Binani as the RP. The CoC, with 89.6% voting in favor, resolved to appoint Mr. Binani, citing his qualifications and written consent. The Tribunal noted that the CoC's decision is not required to be justified with reasons and is within their prerogative as per Section 22 of the IBC.3. Continuation of Mr. Mahender Kumar Khandelwal as Interim Resolution Professional (IRP):Mr. Mahender Kumar Khandelwal, the current IRP, filed IA No. 235/2020 seeking to continue as RP, arguing that his previous conduct in CIRPs was fair and transparent. He contended that the CoC's decision was based on an IBBI order that was stayed by the Delhi High Court. However, the Tribunal observed that the CoC is not obligated to record reasons for replacing the IRP and that their decision is final unless it is perverse or without jurisdiction.4. Validity of Application Filed by Power Finance Corporation (PFC) on Behalf of CoC:The IRP challenged the validity of IA No. 234/2020, arguing it was not authorized by the CoC. The Tribunal dismissed this technical objection, stating that PFC, being a lead member of the CoC, acted based on the CoC's resolution with 89.6% votes in favor of appointing Mr. Binani. The Tribunal held that such technicalities should not hinder the application process.5. Compliance with Section 22 of the Insolvency and Bankruptcy Code (IBC), 2016:The Tribunal confirmed that the CoC followed the necessary prerequisites under Section 22 of the IBC, 2016:- The CoC passed the resolution with at least 66% voting shares.- Written consent from the proposed RP, Mr. Sumit Binani, was obtained.- An application was filed before the Tribunal for the appointment of the proposed RP.- The Tribunal directed the Registry to forward Mr. Binani's name to the IBBI for confirmation.The Tribunal concluded that the CoC's decision to replace Mr. Khandelwal with Mr. Binani was valid and in compliance with the IBC. Consequently, IA No. 235/2020 filed by Mr. Khandelwal was rejected, and the Registry was directed to seek confirmation from the IBBI for Mr. Binani's appointment as RP. The matter was scheduled for further proceedings on 16.06.2020.