Resolution Professional cannot challenge Committee of Creditors' decision to replace them under IBC provisions

The NCLAT Principal Bench dismissed an appeal by a replaced Resolution Professional challenging the Committee of Creditors' decision to replace them with another RP. The Tribunal held that once CoC passes a resolution for replacement in accordance with IBC provisions, the replaced RP cannot question the decision. The appellant's contention regarding name discrepancy between "Anil Goel" and "Ankit Goel" was rejected as both shared the same registration number, making it a mere clerical error. The Adjudicating Authority's order approving the replacement was upheld as error-free.

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Issues Involved:
1. Replacement of the Resolution Professional (RP).
2. Alleged reasons for replacement.
3. Procedural adherence and correctness of the replacement process.

Summary:

Issue 1: Replacement of the Resolution Professional (RP)
This Appeal was filed against the Order dated 27th September 2023 by the National Company Law Tribunal, Jaipur Bench, which approved the application under Section 27 of the Insolvency and Bankruptcy Code, 2016 (The Code) for replacing the Appellant with Mr. Ankit Goel as the new Resolution Professional. The Committee of Creditors (CoC) had a 100% vote share in favor of the replacement during the 19th CoC Meeting held on 1st September 2023.

Issue 2: Alleged reasons for replacement
The Appellant contended that the replacement was due to his refusal to reduce his fee and his insistence on taking legal action regarding the stripping off of the Corporate Debtor's assets in June 2018, which was not accepted by the CoC. The Appellant argued that he was not given an opportunity to present all relevant facts before the Adjudicating Authority. However, the Tribunal noted that the alleged illegal auctioning of assets occurred four years before the commencement of the Corporate Insolvency Resolution Process (CIRP) on 28th February 2022. The Tribunal found no fault with the CoC's decision to replace the RP, emphasizing that the CoC is empowered to pass such a resolution under Section 27 of the Code.

Issue 3: Procedural adherence and correctness of the replacement process
The Tribunal examined the procedural aspects and found that the CoC had followed the provisions of Section 27 of the Code. The Tribunal referenced a recent judgment (Company Appeal (AT) Ins. No. 1439 & 1440 of 2023) which upheld the CoC's authority to replace the RP without the need for the RP to challenge the reasons for replacement before the Adjudicating Authority. The Tribunal also addressed the discrepancy in the names mentioned in the minutes (Anil Goel vs. Ankit Goel) and concluded that it did not affect the validity of the replacement resolution, as the registration number was correctly mentioned and the written consent of Ankit Goel was obtained.

Conclusion:
The Tribunal found no error in the Adjudicating Authority's order approving the replacement of the Resolution Professional. The appeal was dismissed, affirming the CoC's decision to replace the Appellant with Ankit Goel as the new Resolution Professional.

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