Tribunal approves replacement of Interim Resolution Professional with Resolution Professional

The Tribunal allowed the application to replace the Interim Resolution Professional (IRP) with the proposed Resolution Professional (RP) based on the Committee of Creditors' (CoC) decision supported by over 66% voting share. The objections raised by financial creditors were dismissed, emphasizing the CoC's authority in commercial decision-making. Mr. Ayyagari Viswanadha Sarma was approved as the RP, and the IRP was directed to transfer all records and assets to the new RP. The application was disposed of with these directions, recognizing the CoC's resolution as a valid commercial decision.

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Issues Involved:
1. Replacement of Interim Resolution Professional (IRP) with a proposed Resolution Professional (RP).
2. Voting share and decision-making within the Committee of Creditors (CoC).
3. Objections raised by financial creditors regarding the replacement of IRP.
4. Procedural aspects and maintainability of the application under Section 22 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016).

Detailed Analysis:

1. Replacement of Interim Resolution Professional (IRP) with a proposed Resolution Professional (RP):
The application was filed by a financial creditor seeking to replace the current IRP, Mr. Pawan Kumar Singal, with Mr. Ayyagari Viswanadha Sarma as the RP. The relief sought included forwarding the name of the proposed RP to the Insolvency and Bankruptcy Board of India (IBBI) for confirmation, as per Section 22(3)(b) read with Section 22(4) of the IBC, 2016. The application cited that 68.87% of the CoC members approved the replacement.

2. Voting Share and Decision-Making within the Committee of Creditors (CoC):
The CoC convened a meeting on 04.05.2021, where 68.87% of the members voted in favor of appointing Mr. Ayyagari Viswanadha Sarma as the RP. The voting shares were detailed as follows: Punjab National Bank Housing Finance Ltd. (30.82%), Dhankalash Distributors Pvt. Ltd. (0.31%), and Homebuyers (68.87%). The Homebuyers' significant voting share facilitated the approval of the proposed RP.

3. Objections Raised by Financial Creditors Regarding the Replacement of IRP:
Dhankalash Distributors Pvt. Ltd. opposed the resolution, citing procedural issues and the maintainability of the application. They argued that the application should be collectively filed by the CoC, not by an individual financial creditor. Punjab National Bank Housing Finance Ltd. abstained from voting but later sought to intervene and filed objections against the replacement. The Tribunal dismissed these objections, emphasizing the CoC's commercial decision-making authority.

4. Procedural Aspects and Maintainability of the Application under Section 22 of the IBC, 2016:
The Tribunal addressed the procedural objections, stating that the CoC's resolution authorized any financial creditor to file the application. The Tribunal highlighted that the CoC's decision, supported by more than 66% voting share, was valid and binding. The Tribunal also noted that the Supreme Court and NCLAT have consistently upheld the CoC's commercial decisions, including the replacement of IRP with RP, without requiring specific reasons.

Conclusion:
The Tribunal allowed the application, recognizing the CoC's resolution as a commercial decision. The name of Mr. Ayyagari Viswanadha Sarma was forwarded to the IBBI for confirmation, with the IBBI's counsel stating no objections. The IRP was directed to hand over all records and assets to the incoming RP. The application was disposed of with these directions.

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