2021 (1) TMI 507 - Tri - Insolvency and Bankruptcy

Tribunal orders prompt appointment of Resolution Professional to ensure compliance with Insolvency and Bankruptcy Code

The Tribunal directed the Committee of Creditors (CoC) to appoint a Resolution Professional (RP) promptly to replace the Interim Resolution Professional ... Seeking a direction to the Committee of Creditors represented by 100% voting power by Petitioner - M/s. Suryawanshi Garments LLP to appoint Resolution Professional replacing the IRP at the earliest or withdraw the application and pay the Professional charges for IRP - Rule 11 of the NCLT Rules, 2016 r/w Sec. 60(5)(c) of the I&B Code, 2016 - HELD THAT:- The CoC, comprised of only the Petitioner has not carried out its duties as required by the I&B Code, 2016. When the IRP's resignation has been accepted in the first CoC meeting, it was duty bound to replace the IRP by filing an application before this Adjudicating Authority for appointment of the RP, in terms of Section 22(3)(b) of the Code. This has not been done. The CIRP cannot move forward unless this step is taken, as all such duties as are listed in section 25 of the Code are required to be carried out by the RP. The CoC is directed to immediately, and not later than 30 days from the date of this Order, convene a meeting and pass a resolution for appointing a Resolution Professional, and file an application before this Adjudicating Authority for the appointment of the proposed RP in terms of section 22(3)(b) of the Code - All fees due and payable to the IRP, as agreed to in the CoC, shall be paid forthwith. Issues Involved:1. Appointment of Resolution Professional by Committee of Creditors.2. Non-compliance with the provisions of the Insolvency and Bankruptcy Code, 2016.3. Failure to replace the Interim Resolution Professional.4. Payment of professional fees to the Interim Resolution Professional.Appointment of Resolution Professional by Committee of Creditors:The case involved an application filed by the Interim Resolution Professional (IRP) seeking a direction for the Committee of Creditors (CoC) to appoint a Resolution Professional (RP) to replace the IRP or to pay the balance amount of professional charges. The CoC, represented by the sole member with 100% voting power, had not appointed an RP despite the IRP's resignation being accepted in a meeting. The CoC's indecision led to non-compliance with the Code and relevant Regulations. The Tribunal directed the CoC to convene a meeting within 30 days to appoint an RP and file an application for the appointment, emphasizing the necessity for the RP to carry out duties essential for the Corporate Insolvency Resolution Process (CIRP).Non-compliance with the provisions of the Insolvency and Bankruptcy Code, 2016:The Tribunal noted that the CoC, consisting only of the Petitioner, failed to fulfill its duties as required by the Insolvency and Bankruptcy (I&B) Code, 2016. Despite the IRP's resignation being accepted, the CoC did not initiate the process to appoint an RP, as mandated by Section 22(3)(b) of the Code. This failure hindered the progress of the CIRP, as duties listed under Section 25 of the Code must be performed by the RP. The Tribunal, exercising its powers under Rule 11 of the NCLT Rules, 2016, directed the CoC to promptly appoint an RP to ensure the effective continuation of the resolution process.Failure to replace the Interim Resolution Professional:The Tribunal highlighted the importance of replacing the IRP with an RP to facilitate the CIRP effectively. The CoC's delay in appointing an RP post the IRP's resignation impeded the resolution process. The Tribunal emphasized that the RP plays a crucial role in carrying out duties essential for the CIRP, as outlined in the Code. Therefore, the CoC was directed to take immediate steps to appoint an RP to ensure compliance with the statutory requirements and facilitate the resolution process in a timely manner.Payment of professional fees to the Interim Resolution Professional:The Tribunal ordered the immediate payment of all fees due to the IRP, as agreed upon by the CoC. The IRP was directed to continue her term until the RP's appointment, ensuring the seamless discharge of functions as prescribed under the Code and relevant Rules. Additionally, the Corporate Debtor and associated persons were instructed to assist and cooperate with the IRP in executing her duties effectively. The Tribunal's decision aimed at maintaining the integrity of the resolution process and upholding the principles of the I&B Code.This detailed analysis of the judgment provides a comprehensive understanding of the issues addressed and the Tribunal's directives to ensure compliance with the statutory provisions governing the insolvency resolution process.