Application to Substitute Resolution Professional Dismissed for Lack of Evidence

The Tribunal dismissed the application seeking substitution of the Resolution Professional, citing lack of substantiated proof. Emphasizing adherence to Section 27 of the Insolvency and Bankruptcy Code, the Tribunal reiterated the necessity of complying with the specified provisions for replacing the Resolution Professional. Another similar application was also dismissed, with the applicants advised to address complaints through appropriate channels.

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Issues Involved:
1. Substitution/Change of the present Resolution Professional.
2. Compliance with Section 24(3)(b) of the Insolvency and Bankruptcy Code, 2016.
3. Allegations of misrepresentation and non-compliance by the Resolution Professional.
4. Maintainability of the application under Section 27(2) of the Insolvency and Bankruptcy Code, 2016.
5. Alleged collusion between the Resolution Professional and Alchemist Asset Reconstruction Company Limited.
6. Interim financing and related party transactions.
7. Authority and authorization of the applicant.
8. Conduct and independence of the Resolution Professional.
9. Complaints and objections against the Resolution Professional.

Detailed Analysis:

1. Substitution/Change of the present Resolution Professional:
The State of Rajasthan filed an application under Section 60(5)(c) of the Insolvency and Bankruptcy Code (IBC), 2016, seeking substitution/change of the present Resolution Professional, Mr. Arunava Sikdar. The application was based on several grounds, including non-compliance with mandatory provisions, misrepresentation, and lack of impartiality.

2. Compliance with Section 24(3)(b) of the Insolvency and Bankruptcy Code, 2016:
The applicant contended that the Resolution Professional failed to give notice of the Committee of Creditors (CoC) meetings to all members of the Suspended Board of Directors, as mandated under Section 24(3)(b) of the Code. The applicant argued that this non-compliance rendered the meetings void-ab-initio.

3. Allegations of misrepresentation and non-compliance by the Resolution Professional:
The applicant alleged that the Resolution Professional misrepresented facts before the CoC and failed to issue notices to the majority of the directors. It was also contended that the Resolution Professional did not provide access to the details of claims filed by creditors, despite repeated requests.

4. Maintainability of the application under Section 27(2) of the Insolvency and Bankruptcy Code, 2016:
The Resolution Professional argued that the application was not maintainable as it did not comply with Section 27(2) of the Code, which requires a resolution by the CoC with a 66% voting share to replace the Resolution Professional. The applicant, holding only 4% shares in the CoC, did not have the required majority to propose such a change.

5. Alleged collusion between the Resolution Professional and Alchemist Asset Reconstruction Company Limited:
The applicant raised concerns about the collusion between the Resolution Professional and Alchemist Asset Reconstruction Company Limited. It was alleged that Alchemist was allowed to participate as a Prospective Resolution Applicant (PRA) despite restrictions under the SARFAESI Act. Further, it was contended that other PRAs were related parties of Alchemist, indicating a conflict of interest.

6. Interim financing and related party transactions:
The applicant highlighted that the Resolution Professional obtained interim financing from JFC Finance (India) Limited, a related party of Alchemist, without following a public process. This financing was approved by the CoC, controlled by Alchemist, raising questions about transparency and fairness.

7. Authority and authorization of the applicant:
The Resolution Professional challenged the authority of Mr. Panchu Ram Sharma, who filed the application on behalf of the State of Rajasthan. It was argued that Mr. Sharma was not duly authorized to file the application, as he was no longer the Joint Director of the Corporate Debtor.

8. Conduct and independence of the Resolution Professional:
The applicant questioned the conduct and independence of the Resolution Professional, alleging bias and lack of impartiality. It was argued that the Resolution Professional's actions raised serious doubts about his ability to carry out the Corporate Insolvency Resolution Process (CIRP) fairly.

9. Complaints and objections against the Resolution Professional:
The Tribunal noted that if the applicant had any objections or complaints against the Resolution Professional, they could approach the relevant authority under Sections 217 and 218 of the Code.

Judgment:
The Tribunal dismissed the application filed by the State of Rajasthan, stating that the allegations were not substantiated with substantial proof. It emphasized that the explicit provisions of Section 27 of the Code must be followed for the replacement of the Resolution Professional. The Tribunal also dismissed a similar application filed by Metals & Electrical Majdur Sangh, reiterating the need to comply with Section 27(2) of the Code. The applicants were advised to approach the concerned authorities for any complaints against the Resolution Professional.

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