Appointment of Interim Resolution Professional in CIRP case under IBC 2016

The Tribunal appointed Mr. Kurapati Singarayya Chowdary as the Interim Resolution Professional (IRP) in a case involving the initiation of Corporate Insolvency Resolution Process (CIRP) against the Personal Guarantor and compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC), 2016. The IRP was directed to submit his report within 10 days, and the order was communicated to the relevant parties for compliance.

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Issues Involved:
1. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Personal Guarantor.
2. Compliance with procedural requirements under Sections 95, 97, and 99 of the Insolvency and Bankruptcy Code (IBC), 2016.
3. Right of audience for the Respondents before the appointment of the Interim Resolution Professional (IRP).
4. Appointment of the Interim Resolution Professional (IRP).

Issue-wise Detailed Analysis:

1. Initiation of Corporate Insolvency Resolution Process (CIRP) against the Personal Guarantor:
The petition was filed by the State Bank of India (Financial Creditor) against the Personal Guarantor and the Corporate Debtor, seeking to initiate CIRP. The application was filed under Section 95 of IBC, 2016, and the prayer was against the Personal Guarantor of the Corporate Debtor. Thus, the application was treated as filed only against the Personal Guarantor, with the Corporate Debtor being formally added.

2. Compliance with Procedural Requirements under Sections 95, 97, and 99 of IBC, 2016:
The Corporate Debtor availed various credit facilities from the Financial Creditor, with the Personal Guarantor executing Guarantee Deeds. The outstanding debt and default as of 31.03.2021 amounted to Rs. 63,20,75,944.67. The Corporate Debtor's account was declared as NPA on 30.04.2019. Notices under Section 13(2) of the SARFAESI Act and demand notices were issued but the Respondents did not repay the outstanding amounts. The Tribunal noted that under Section 97, the Adjudicating Authority must direct the Board to confirm the absence of disciplinary proceedings against the Resolution Professional within seven days. The Board must then confirm or reject the appointment of the Resolution Professional within another seven days. The Resolution Professional must submit a report under Section 99, based on which the Adjudicating Authority will admit or reject the application under Section 100.

3. Right of Audience for the Respondents Before the Appointment of the IRP:
The Tribunal highlighted that no right of audience is provided under Sections 95 or 97 before appointing the IRP. The Tribunal referenced the Bombay High Court judgment in Surendra B. Jiwrajka vs Omkara Assets Reconstruction, which emphasized that while the principles of natural justice are important, the legislature has not mandated a notice before the appointment of the IRP. The NCLAT judgment in Mr. Ravi Ajit Kulkarni's case also supported the view that no notice is required to be given to the Personal Guarantor at the stage of appointing the IRP. The Supreme Court's judgment in Lalit Kumar Jain vs. Union of India was also considered, affirming the legislative intent behind the procedural requirements.

4. Appointment of the Interim Resolution Professional (IRP):
The Tribunal concluded that the application under Section 95 of IBC, 2016, was complete and there was no hurdle to entertain it. The Petitioner suggested Mr. Kurapati Singarayya Chowdary as the IRP, and the Tribunal appointed him as the IRP, confirming that no disciplinary proceedings were pending against him. The IRP was directed to submit his report within 10 days as per Section 99 of IBC, 2016.

Order:
A. Mr. Kurapati Singarayya Chowdary was appointed as the IRP and directed to file his written consent in Form No. 2.
B. The IRP was instructed to submit his report within 10 days.
C. The Registry was directed to communicate the order to the Petitioner and the Financial Creditor.
D. The Petitioner and the Registry were to send a copy of the order to the IRP for necessary compliance.

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