Resolution Professional replaced in personal guarantor case for bringing unauthorized lawyers during repayment plan meetings under Section 105

NCLT New Delhi replaced the Resolution Professional in a personal guarantor insolvency case. The Tribunal held that under Sections 102-112 of IBC 2016, the RP cannot bring lawyers when meeting the personal guarantor during repayment plan preparation under Section 105. The repayment plan must be prepared by the debtor who consults the RP, not vice versa. Without proper authorization under Section 105(2), the RP cannot rely on Regulation 18 powers. The original RP was replaced with a new appointee to discharge functions afresh per the Tribunal's earlier order.

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Issues Involved:
1. Change in hearing schedule.
2. Replacement of the Resolution Professional (RP).

Summary:

1. Change in Hearing Schedule:
The application IA-2148/2024 was initially scheduled for hearing at 2 pm. However, due to the Judicial Member presiding over three benches, the time was changed to 11:30 am on 18.05.2024. The Counsel for the Creditor requested an opportunity to file a reply within three days, citing the sudden change in the schedule as the reason for their absence. The Tribunal allowed the prayer and advanced the hearing for adjudication.

2. Replacement of the Resolution Professional (RP):
The Personal Guarantor filed an application u/s 98(2) for the replacement of the RP, Mr. Raj Kamal Saraogi, with Mr. Arvind Kumar. The grounds for replacement included:
- Lack of confidence in the RP's understanding of the business's complexity.
- The RP's conduct during a meeting on 24.04.2024, where he allegedly suggested the proceedings would lead to bankruptcy.
- The RP's failure to seek Tribunal permission for negotiations between the debtor and creditors u/s 100(2).
- Lack of transparency and collaboration in the insolvency resolution process.

The Tribunal noted that the RP met the Personal Guarantor in an expensive hotel with a lawyer, which was unnecessary and not supported by the regulations. The Tribunal emphasized that the RP's role is to act as a consultant, and there was no authorization for the RP to involve a lawyer at this stage.

The Tribunal appointed Mr. Shiv Nandan Sharma as the new RP, considering the beneficial nature of the procedure and the need for a facilitator between the Personal Guarantor and creditors. The order clarified that the replacement should not be held against Mr. Chaurasia or Mr. Raj Kamal Saraogi and that Mr. Saraogi is entitled to claim his professional fees and expenses as CIRP cost. The newly appointed RP is to discharge his functions afresh as per the Tribunal's order dated 22.04.2024.

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