CoC can replace unconfirmed IRP under Section 22 when meetings not convened despite directions

NCLAT dismissed appeal challenging replacement of IRP. Appellant was appointed as IRP but appointment was never confirmed by CoC as required under Section 22. CoC filed application seeking IRP replacement after appellant failed to convene meetings despite court directions. Adjudicating Authority correctly allowed replacement since unconfirmed IRP could be replaced by CoC. Appellant's objection regarding debt assignment was rejected as assignment occurred after replacement resolution was passed. NCLAT found no error in lower court's order and dismissed appeal finding no merit.

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Issues Involved:
1. Replacement of the Interim Resolution Professional (IRP).
2. Compliance with procedural requirements under the Insolvency and Bankruptcy Code (IBC).
3. Alleged non-cooperation by the Committee of Creditors (CoC).
4. Pending applications and their impact on the decision.

Summary:

Issue 1: Replacement of the IRP
The appeal challenges the order dated 17.10.2023 by the National Company Law Tribunal (NCLT), Mumbai Bench, which allowed the replacement of the Appellant (IRP) with a new Resolution Professional (RP), Mr. Prawincharan Prafulcharan Dwary, based on the CoC's resolution dated 06.10.2023. The CoC's decision was supported by 100% votes.

Issue 2: Compliance with Procedural Requirements under IBC
The Corporate Insolvency Resolution Process (CIRP) against the Corporate Debtor was initiated on 09.02.2023, appointing the Appellant as IRP. Despite directions from the Adjudicating Authority on 12.05.2023 to convene a CoC meeting to discuss the replacement of the IRP, the Appellant failed to do so. Consequently, another order was issued on 27.09.2023, leading to the CoC meeting on 06.10.2023, where the resolution for the replacement was passed.

Issue 3: Alleged Non-Cooperation by the CoC
The Appellant alleged non-cooperation by the CoC, claiming that the first CoC meeting was not concluded until April 2023 and that the CoC did not cooperate with the IRP. However, the Tribunal found that the Appellant failed to convene the meeting despite multiple directions and that the CoC had acted within its rights under the IBC.

Issue 4: Pending Applications and Their Impact
The Appellant argued that pending applications, including a Contempt Application and a claim for CIRP expenses, should have been resolved before deciding on the replacement. However, the Tribunal noted that these applications were scheduled for hearing on 26.10.2023 and did not impact the decision on the replacement of the IRP.

Conclusion:
The Tribunal dismissed the appeal, affirming that the CoC's resolution to replace the IRP was in accordance with the provisions of the IBC. The Tribunal found no merit in the Appellant's claims of procedural violations or non-cooperation by the CoC. The decision to replace the IRP was upheld as valid and binding.

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