TaxTMI 
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2021 (11) TMI 795
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....A.(IBC) No. 346 of 2021 CP(IB) No. 02/95/HDB/2021 and I.A.(IBC) No. 347 of 2021 in CP(IB) No. 03/95/HDB/2021 whereby and whereunder he had appointed Mr. Anil Kohli as an 'Interim Resolution Professional' and directed him to file report under Section 90 of IBC, within 5en days from the date of his appointment etc. 3. The Learned Counsel for the Appellants submits that the 'Impugned Orders' are cryptic, unreasoned, nonest and non-speaking orders which were passed in violation of the ingredients of the Insolvency and Bankruptcy Code, 2016 (in short 'IBC'). 4. According to the Appellants during the year 2017, IDBI Bank initiated proceeding for the 'Corporate Insolvency Resolution Process' (in short 'CIRP') under Section 7 of IBC against Lanco Infratech Ltd before the 'Adjudicating Authority' and that the said Application was admitted on 07.08.2017 by the said authority and Mr. Savan Godiavala was appointed as Interim Resolution Professional (In short 'IRP'). 5. It is represented on behalf of the Appellants that the 'Adjudicating Authority' on 27.08.2018 passed an order for liquidation of Lanco Infratech Ltd and because of the reason that no Resolution Plan was approved by the 'Commi....
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....e firm. (5) The creditor shall also provide a copy of the application made under sub-section (1) to the debtor." 9. It is the contention of the Learned Counsel for the Appellant that within 7 (seven) days of filing of the Application under Section 95(1) of 'IBC', the 'Adjudicating Authority' shall direct the 'Board' to confirm that there are disciplinary proceedings pending against the Resolution Professional and the Board within 7(seven) days of receipt of the directions under sub-Section (1) is required to communicate the 'Adjudicating Authority' in writing either confirming or rejecting the appointment of Resolution Professional. Indeed, the 'Adjudicating Authority' upon Board's confirming/rejecting the Resolution Plan as per Section 97(1) of 'IBC' shall pass the orders in terms of Section 97(5) of the Code appointing such person as the 'Resolution Professional'. 10. The Learned Counsel for the Appellants adverts to Rule 8(1) of the Insolvency and Bankruptcy (Application to 'Adjudicating Authority' for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019 which provides that for the purposes of sub-Section (2) of Section 97 and sub-Section....
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....Singh & Ors. Vs. International Airport Authority' in (1997) 9 SCC 132. 14. The Learned Counsel for the Appellants takes a state that without determining the aspect of non-compliance of Section 97 of 'IBC', any determination under Section 100 of 'IBC' shall affect the vital rights of the Appellants. That apart, the Learned Counsel for the Appellants submits that the 'IBC' is a complete, exhaustive and inclusive Code and any deviation from the prescribed procedure would defeat the intent and purposes of the Code and refers to the decision of the Hon'ble Supreme Court of India in 'M/s Innoventive Industries Ltd. Vs. ICICI Bank & Anr.' Reported in AIR 2017 SC 4084 and 'M/s Embassy Property Developers Pvt. Ltd. Vs. State of Karnataka' reported in (2020) 13 SCC 308. 15. The Learned Counsel for the Appellants points out that the 'Impugned Orders' passed by the 'Adjudicating Authority' had ignored the Judgment of the 'National Company Law Tribunals' whereby the directions were issued to the Board to confirm the name of the 'IRP' prior to the passing of an order under Section 97(5) of 'IBC' and relies on the following cases: a) 'Tata Capital Financial Services Limited Vs. G. Ramakrishna....
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....e Limited observed: "The Insolvency and Bankruptcy Board of India vide its letter dated 01.01.2018 has recommended a Panel of 'Insolvency Professional's for appointment of Insolvency Resolution Professional in compliance with Section 16(3) (a) of the Code in order to cut delay. The list of recommended 'Insolvency Professional's provides instant solution to the Adjudicating Authority to pick up the name and make appointment. It helps in meeting the time line given in the Code and the unnecessary time wasted firstly in asking the Insolvency and Bankruptcy Board of India to recommended the name and then to appoint such Interim Resolution Professional by the Adjudicating Authority." (b) The NCLAT, in its order dated February 28, 2019 in Sandeep Kumar Gupta, Resolution Professional Vs. Stewarts & Lloyds of India Ltd. & Anr., observed: ".... Further, the list of 'Resolution Professionals' being made available by the 'Board', to the Adjudicating Authorities, any person is appointed out of the said list submitted by the 'Board', it should be treated to be an appointment of 'Resolution Professional'/ 'Liquidator' on the recommendation of the 'Board' " 18) The Learned Counsel for ....
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....application under Section 95 is filed by the Creditor himself, and not through the Resolution Professional, the Adjudicating Authority is required to direct the Board, within 7 days, to nominate a Resolution Professional and the Board needs to nominate the same within 10 days and then the Adjudicating Authority shall, by order, appoint the Resolution Professional recommended under Subsection (2) or as nominated by the Board under subsection (4). Here again, the procedure as provided under the Rules vide Rule 8 would apply and Section 97 of IBC will have to be read with Rule 8." 19 The Learned Counsel for the Respondents by placing reliance on the Judgment of this 'Tribunal' in 'Mr. Ravi Ajit Kulkarnis Vs. State Bank India' vide Company Appeal (AT)(Insolvency) No. 316 of 2021 contends that the provisions of Sections 97(1) & 97(2) of 'IBC' whereby the 'Adjudicating Authority' is required to confirm the Board before appointing 'Resolution Professional' is directory in nature and the same is not mandatory one. Moreover, the Rule 8(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) ....
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....fessional is missed out. Elaborate order has already been passed under section 95 of the Code. Upon having found that the RP is continuing on the rolls of IBBI as on date, we hereby direct that RP shall submit his report within 10 days of his appointment as stated u/s 99 of the Code. Accordingly, this (IB)-947(PB)/2020 is hereby allowed" 23. The Learned Counsel for the Respondents contends that the use of the word 'shall' under Section 97 of 'IBC' is directory and not mandatory and call for substantial and not rigid interpretation as used in Section 97 of "IBC'. In this regard, the Learned Counsel for the Respondent adverts to the decision of the Hon'ble Supreme Court in "Kailash Vs. Nanhku & Ors." reported in (2005) 4 SCC 480 wherein in paragraph-8 it is observed as under: "All the rules of procedure are the handmaid of justice. The language employed by the draftsman of processual law may be liberal and stringent, but the fact remains that the object of prescribing procedure is to advance the cause of justice. In an adversarial system, no party should ordinarily be denied the opportunity of participating in the process of justice dispensation. Unless compelled by express....
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.... under Section 94 or 95 is filed through the Resolution Professional, the ''Adjudicating Authority'' shall direct the Board within 7 (seven) days of the date of Application to confirm that there are no disciplinary proceedings pending against the Resolution Professional. Moreover, as per Section 97(2) of 'IBC', the Board within 7 (seven) days of receipt of direction under sub Section (1) communicate the 'Adjudicating Authority' either (a) confirm the appointment of the Resolution Professional or (b) reject the appointment of the Resolution Professional and nominate another Resolution Professional for Insolvency Resolution Process. As per Section 97(5) of 'IBC', the ''Adjudicating Authority'' by an order appoint the Resolution Professional recommended under sub Section (2) or as nominated by Board under sub Section (4). Rule 8(1) of the Insolvency and Bankruptcy (Application to 'Adjudicating Authority' for Insolvency Resolution Process for Personal Guarantor to Corporate Debtor) Rules, 2019 relates to confirmation or nomination of 'Insolvency Professional' by the Board which may share data base of the 'Insolvency Professional' including information about the disciplinary proceedings....
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....e list of IPs based on the registered office (address as registered with the Board) of the IP. 7.3 The Panel will have validity of six months and a new Panel will replace the earlier Plant every six months. For example, the first Panel under these Guidelines will be valid for appointments during July-December 2021, and the next Panel will be valid for appointments during January-June 2022. 7.4 The NCLT may pick up any name from the Panel for appointment of IRP, Liquidator, RP or BT, for a CIRP, Liquidation Process, Insolvency Resolution or Bankruptcy Process relating to a corporate debtors and personal guarantors to corporate debtors, as the case may be. 7.5 The DRT may pick up any name from the Panel for appointment as RP or BT, for an Insolvency Resolution or Bankruptcy Process for personal guarantors to corporate debtors, as the case may be." 32. A 'Resolution Professional' is an indispensable person in 'Insolvency Resolution Process', as he has a pivotal part to play. No wonder, an 'Adjudicating Authority' can exercise his judicial discretion in appointing a 'Resolution Professional' in a given case, based on the facts and circumstances of the case, which float on th....