Valid authorisation for assignment on the appointment date is mandatory for liquidation, and later grant cannot cure earlier non-compliance.

An insolvency professional must hold a valid authorisation for assignment on the date of accepting a fresh liquidation assignment; deemed issuance under the Model Bye-Laws or a later grant does not retrospectively cure earlier non-compliance. An interim order of the Madras High Court confined to disciplinary proceedings did not restrain removal proceedings in the liquidation matter or prevent scrutiny of the liquidator's eligibility. The Adjudicating Authority, having power to appoint a liquidator under the Insolvency and Bankruptcy Code, also had power to replace him for sufficient cause. The appeal therefore failed and the order replacing the liquidator was upheld.

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Issues: (i) Whether the appellant held a valid Authorisation for Assignment on the date of appointment as liquidator and whether deemed issuance or subsequent grant could cure the defect; (ii) whether the interim order of the Madras High Court had any bearing on the removal proceedings; (iii) whether the Adjudicating Authority had power to remove and replace the liquidator.

Issue (i): Whether the appellant held a valid Authorisation for Assignment on the date of appointment as liquidator and whether deemed issuance or subsequent grant could cure the defect.

Analysis: Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 requires an insolvency professional to hold a valid authorisation for assignment after 31 December 2019 before accepting or undertaking a fresh assignment. Regulation 12A of the Model Bye-Laws provides for deemed issuance or renewal if the application is not decided within the prescribed time, but that deeming provision could not override the requirement of compliance on the date of acceptance of the assignment. The appointment as liquidator was a separate and independent assignment, and the later grant of authorisation did not operate retrospectively to validate the earlier acceptance.

Conclusion: The appellant did not possess a valid authorisation for assignment on the relevant date, and the defect was not cured by deemed issuance or subsequent grant.

Issue (ii): Whether the interim order of the Madras High Court had any bearing on the removal proceedings.

Analysis: The interim injunction granted by the High Court was confined to the disciplinary proceedings arising from the professional misconduct action and did not amount to a stay against proceedings for removal as liquidator. The writ challenge to the validity of the relevant AFA regime had also been dismissed, and nothing in the High Court's interim order restrained the Adjudicating Authority from examining the liquidator's eligibility or passing appropriate orders in the liquidation matter.

Conclusion: The High Court's interim order did not bar or control the removal proceedings before the Adjudicating Authority.

Issue (iii): Whether the Adjudicating Authority had power to remove and replace the liquidator.

Analysis: The power to appoint the liquidator under Sections 33 and 34 of the Insolvency and Bankruptcy Code, 2016 carries with it the power to replace the liquidator where sufficient cause exists. Section 16 of the General Clauses Act, 1897 supports the principle that the power of appointment includes the power of removal, unless a contrary intention appears. Section 276 of the Companies Act, 2013 also recognises removal and replacement of a liquidator for specified grounds. On this footing, the Adjudicating Authority was competent to replace the liquidator for non-compliance and related reasons.

Conclusion: The Adjudicating Authority had the power to remove and replace the liquidator.

Final Conclusion: The appeal failed on merits, and the impugned order replacing the liquidator was upheld.

Ratio Decidendi: An insolvency professional must possess a valid authorisation for assignment on the date of accepting a fresh liquidation assignment, subsequent authorisation does not cure prior non-compliance retrospectively, and the authority that appoints a liquidator retains the power to replace him for sufficient cause.

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