Committee of Creditors' commercial wisdom supports replacement of a resolution professional absent any contravention of insolvency law.
Committee of Creditors' commercial decision to replace a resolution professional must be respected where it complies with the Insolvency and Bankruptcy Code, 2016, and applicable regulations. Although a resolution professional must act independently, the office carries no vested right to continue; replacement is objectionable only where it requires conduct contrary to the Code or regulations. Claims for professional fees and CIRP expenses require factual assessment of work performed, acceptable fees, expenses and objections, and require adjudication by the Adjudicating Authority. Potential effects on professional reputation are relevant when considering adverse observations concerning delay in replacement.
Issues: (i) Whether the former resolution professional's claim for professional fees and CIRP expenses should be determined in these appeals; (ii) Whether adverse observations against the former resolution professional should be expunged; (iii) Whether replacement of the former resolution professional pursuant to the Committee of Creditors' decision was valid.
Issue (i): Whether the former resolution professional's claim for professional fees and CIRP expenses should be determined in these appeals.
Analysis: The fee and expense claim required factual assessment of the work performed, the scale of fees acceptable to the Committee of Creditors, relevant expenses, and the objections of concerned parties. Such determination required adjudication before the Adjudicating Authority.
Conclusion: The claim for professional fees and CIRP expenses is left for determination by the Adjudicating Authority.
Issue (ii): Whether adverse observations against the former resolution professional should be expunged.
Analysis: The observations arose in the context of alleged delay in acting upon the request to replace the resolution professional. Their potential bearing on professional reputation justified their removal in the circumstances.
Conclusion: The adverse observations are expunged in favour of the appellant.
Issue (iii): Whether replacement of the former resolution professional pursuant to the Committee of Creditors' decision was valid.
Analysis: The Committee of Creditors' decision to replace a resolution professional falls within its commercial wisdom, subject to compliance with the Insolvency and Bankruptcy Code, 2016 and applicable regulations. A resolution professional must act independently, but has no vested right to continue in office; the majority decision of the Committee of Creditors must be respected unless it requires conduct contrary to the Code or regulations.
Conclusion: The replacement of the appellant as resolution professional is upheld against the appellant.
Final Conclusion: The removal of the former resolution professional remains effective, the adverse remarks stand removed, and the monetary claim requires adjudication before the Adjudicating Authority.
Ratio Decidendi: A resolution professional has no vested right to continue in office, and the majority commercial decision of the Committee of Creditors to seek replacement must be respected unless it requires action contrary to the Insolvency and Bankruptcy Code, 2016 or applicable regulations.