2026 (3) TMI 1513 - AT - IBC

Adverse remarks against a resolution professional must be record-based; facilitation of CIRP under CoC directions is not canvassing.

Adverse remarks against a resolution professional must rest on the record and on established duties. Remarks on delayed filing of extension and ... Adverse remarks against resolution professional - Delayed filing of CIRP extension and liquidation applications - Duty to file progress reports - Role of resolution professional vis-a-vis Committee of Creditors - Canvassing for approval of resolution plan. Adverse remarks against resolution professional - Delayed filing of CIRP extension and liquidation applications - HELD THAT: - The Appellate Tribunal found that the observations in the impugned order regarding late physical filing of applications were founded on the admitted factual position. It held that the extension application had been pursued belatedly and, in one instance, when the period sought to be extended had already expired, rendering the application infructuous. It further held that the liquidation initiation application had also been filed with delay after rejection of the resolution plan by the CoC. Since these remarks were supported by the material on record, no case was made out to expunge or modify them. [Paras 35, 36, 38, 45] The adverse remarks in paragraph 74, paragraph 84, and the second part of paragraph 85 of the impugned order were left undisturbed. Duty to file progress reports - Adverse remarks against resolution professional - The remark that the appellant was lax in filing progress reports could not be sustained in the absence of any shown direction or legal requirement obliging such periodic filing. - HELD THAT: - The Appellate Tribunal held that the adverse observation on non-filing of progress reports was not substantiated by the record. The Adjudicating Authority had neither referred to any order requiring the appellant to file periodic progress reports nor identified any provision of the Code or the Regulations imposing such a duty in the manner suggested. In the absence of such factual or legal foundation, that part of the remark could not be treated as adverse to the appellant. [Paras 37, 45] The first part of paragraph 85 of the impugned order was held not to operate adversely against the appellant. Canvassing for approval of resolution plan - Role of resolution professional vis-a-vis Committee of Creditors - The observation that the appellant had canvassed the CoC to approve a particular resolution plan was not borne out by the facts. - HELD THAT: - The Appellate Tribunal found that the negotiations and revisions to the plan had occurred at the instance of the CoC, and that the appellant acted on the CoC's directions during the CIRP. It emphasised that resolution of the corporate debtor is primarily creditor-driven and the CoC takes decisions in its commercial wisdom, while the RP's role is supervisory and to act in accordance with law. On that factual basis, informing the CoC of the scheme of the relevant regulation and circulating a note as requested could not be characterised as canvassing for approval of any particular plan. The adverse imputation on that count was therefore held to be unsupported. [Paras 42, 43, 44, 45] The remarks in paragraph 87, insofar as they imputed canvassing by the appellant for approval of a particular resolution plan, were held not to be adverse to the appellant. Final Conclusion: The appeal was partly allowed. The Appellate Tribunal declined to interfere with the remarks founded on delay in filing applications, but held that the observations regarding alleged laxity in filing progress reports and alleged canvassing for a resolution plan should not be read adverse to the appellant. Issues: (i) Whether the adverse remarks concerning delay in filing extension and liquidation applications, and the belated submission of hard copies, called for interference; (ii) Whether the observations that the Resolution Professional was lax in filing progress reports and was canvassing for a particular resolution plan could stand.Issue (i): Whether the adverse remarks concerning delay in filing extension and liquidation applications, and the belated submission of hard copies, called for interference.Analysis: The extension applications were moved with delay, and the record showed that in some instances the applications were received after the extended period had already expired. The liquidation-related application was also filed belatedly. Those remarks were supported by the record and did not warrant interference.Conclusion: The remarks on delay and belated filing were upheld and remained adverse to the Appellant.Issue (ii): Whether the observations that the Resolution Professional was lax in filing progress reports and was canvassing for a particular resolution plan could stand.Analysis: The record did not show any specific duty or direction requiring periodic progress reports in the manner assumed by the Adjudicating Authority, and the criticism on that score was not supported by the established facts. The remarks on canvassing were also unsustainable because the Resolution Professional acted on the CoC's directions and merely facilitated the process, including by explaining the applicable regulatory framework. Such conduct could not be treated as taking sides in the resolution process.Conclusion: The remarks on progress reports and canvassing were directed not to be read adversely against the Appellant.Final Conclusion: The appeal succeeded only in part, with the impugned observations partly retained and partly neutralised.Ratio Decidendi: Adverse remarks against a resolution professional must be grounded in the record, and facilitating the CIRP in accordance with CoC directions does not amount to impermissible canvassing.