Adverse remarks against a resolution professional expunged after the record showed committee-approved settlement and no proven dereliction.

Adverse observations against the erstwhile resolution professional concerning a third-party settlement, delay in seeking fresh valuation, and alleged indifference to duties were held unsupported by the record and directed to be expunged. The settlement with M/s Shomit Finance Limited had been placed before the Adjudicating Authority pursuant to committee of creditors approval, so criticism of the professional's role in bringing it on record could not stand. Earlier valuation reports were already on file when the appellant took charge, and the pending plan approval did not justify an inference of dereliction from the later request for fresh valuation. Materials also showed prior contractor engagement and committee consideration of its work, making the adverse inference on that issue unsustainable.

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Issues: Whether the adverse observations recorded against the erstwhile resolution professional in the impugned order, relating to settlement with a third party, delay in seeking fresh valuation, and alleged indifference to duties, were sustainable and liable to be expunged.

Analysis: The Appeal was confined to the remarks made in paragraphs 63, 64 and 67 of the impugned order. The settlement with M/s Shomit Finance Limited had been placed before the Adjudicating Authority pursuant to the committee of creditors' approval, and the record showed that the resolution professional's act of bringing the settlement on record was within the framework approved by the committee of creditors. The observations questioning the involvement of the successful resolution applicant in the settlement, and the distribution of the settlement proceeds, were not supported by the record in the manner suggested in the impugned order. On the issue of valuation, the record showed that the earlier valuation reports were already on file and that the application for approval of the resolution plan was pending consideration when the appellant took over as resolution professional. In those circumstances, the criticism that a fresh valuation was sought only in 2024 did not justify an inference of dereliction of duty. As regards the contractor engagement and the remarks that the appellant remained oblivious to vital aspects, the materials disclosed prior engagement of the contractor and committee of creditors' consideration of its work, so the adverse inference drawn in the impugned order could not be sustained on the facts placed before the Tribunal.

Conclusion: The adverse observations in paragraphs 63, 64 and 67 were not sustainable and were directed to be expunged, with those remarks not to be treated as adverse to the appellant.

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