Tribunal upholds CoC's authority in CIRP appeal, affirms replacement of IRP with new RP

The Tribunal dismissed the appeal, affirming the decision of the Adjudicating Authority to replace the Interim Resolution Professional (IRP) with a new Resolution Professional (RP) and extend the Corporate Insolvency Resolution Process (CIRP) period. The Tribunal upheld the paramount status of the Committee of Creditors' (CoC) commercial wisdom, citing previous Supreme Court judgments, and emphasized that the IRP had no vested legal interest to continue once the CoC decided on the replacement. The Tribunal confirmed the Adjudicating Authority's order, highlighting the CoC's authority in such matters.

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Issues Involved:
1. Replacement of the Interim Resolution Professional (IRP).
2. Extension of the Corporate Insolvency Resolution Process (CIRP) period.
3. Commercial wisdom of the Committee of Creditors (CoC).

Detailed Analysis:

Replacement of the Interim Resolution Professional (IRP):
The appeal was filed by the IRP of the Corporate Debtor, who was aggrieved by the order of the Adjudicating Authority replacing him with another Resolution Professional (RP). The CoC, with an 87% voting share, decided on 26th October 2020 to replace the IRP with Ms. Deepika Prasad. The IRP was directed to hand over the records and assets within 10 working days. The appellant argued that the application for his replacement was time-barred as more than 470 days had elapsed since the start of the CIRP. However, the respondent contended that the IRP had no vested legal interest to continue once the CoC decided to replace him, citing the Supreme Court's judgment in K. Shashidhar Vs. Indian Overseas Bank, which emphasized the paramount status of the CoC's commercial wisdom without judicial intervention.

Extension of the Corporate Insolvency Resolution Process (CIRP) Period:
The appellant argued that the extension of the CIRP period approved by the Adjudicating Authority could not remedy the wrong committed by the initial order. The respondent pointed out that due to the nationwide lockdown, the CIRP period had to be extended. The CoC resolved to extend the CIRP period, and the Adjudicating Authority excluded a period of 252 days from the CIRP timeline and allowed an additional 90 days for seeking a resolution plan.

Commercial Wisdom of the Committee of Creditors (CoC):
The respondent emphasized that the commercial wisdom of the CoC is supreme and not subject to judicial review, as reiterated by the Supreme Court in K. Shashidhar Vs. Indian Overseas Bank. The CoC's decision to replace the IRP falls within its commercial wisdom, which is beyond the scope of judicial intervention. The Appellate Tribunal also held in previous judgments that the replacement of the IRP/RP is within the commercial wisdom of the CoC.

Findings:
The Tribunal found that the appellant was appointed as IRP on 08.08.2019, and the CoC held its first meeting on 21.09.2019. The CoC, with 100% voting shares, rejected the appellant's proposal to continue as RP. Subsequently, the CoC resolved to appoint Ms. Deepika Bhugra Prasad as the new RP. The Tribunal noted that the commercial wisdom of the CoC, as upheld by the Supreme Court, is paramount and not subject to judicial review. The Tribunal confirmed that the appellant had no vested right to continue as IRP/RP and upheld the Adjudicating Authority's order.

Order:
The Tribunal dismissed the appeal, confirming the Adjudicating Authority's order dated 20.11.2020, which replaced the IRP with Ms. Deepika Prasad and extended the CIRP period. The Tribunal directed the registry to upload the judgment on its website and send a copy to the Adjudicating Authority.

Conclusion:
The appeal was dismissed, affirming the CoC's decision to replace the IRP and extend the CIRP period, emphasizing the supremacy of the CoC's commercial wisdom.

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