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2019 (9) TMI 1406 - Tri - Insolvency and BankruptcyJurisdiction - power of CoC to change the RP - Replacement of Mr. Mahendra Khandelwal with Mr. Abhijit Guhathakurta - HELD THAT - This Bench is of the view that the power of CoC, to replace the IRP with RP in the first CoC meeting as prescribed under section 22 of the I B Code or the power to replace the RP at any time during the CIRP proceedings as prescribed under section 27 of the I B Code, cannot be interfered with. In the insolvency resolution mechanism, the RP acts as a bridge between the CoC and the prospective investors and other stakeholders of the Corporate Debtor. Hence, the appointed RP should be the one in active confidence of the CoC - All the contentions and objections to this application, made by the Operational Creditors and the erstwhile IRP Mr. Mahendra Khandelwal, have been answered by the Applicant. Application allowed.
Issues Involved:
1. Replacement of Resolution Professional (RP) for Consolidated Corporate Debtors of Videocon Group by State Bank of India. 2. Power of Committee of Creditors (CoC) to recommend change of RP. 3. Objections raised against the replacement of RP. 4. Conflict of Interest concerns regarding the proposed RP. 5. Legal provisions under the Insolvency and Bankruptcy Code (I&B Code) related to the replacement of RP. Issue 1: Replacement of Resolution Professional (RP) The State Bank of India filed an application to replace Mr. Mahendra Khandelwal with Mr. Abhijit Guhathakurta as the RP for the Consolidated Corporate Debtors of Videocon Group. Mr. Khandelwal had been appointed as the IRP/RP for the companies as per a previous order. The CoC, in its first meeting, voted by a majority to appoint Mr. Guhathakurta as the RP. Issue 2: Power of Committee of Creditors (CoC) The CoC argued that it has the authority to replace the RP as per sections 22(3)(b) and 27 of the I&B Code, which allow for the replacement of the RP at any time during the Corporate Insolvency Resolution Process (CIRP). The CoC emphasized that insolvency is a creditors-driven process, and the RP should have the confidence of the CoC to facilitate the resolution process effectively. Issue 3: Objections Raised Objections were raised against the replacement of RP, citing delays in the CIRP proceedings and concerns about a conflict of interest. The opposing counsels argued that the change of RP at that stage could hinder the time-bound resolution and impact stakeholders negatively. They also contended that the reasons for the change were not adequately provided by the CoC. Issue 4: Conflict of Interest Concerns Concerns were raised regarding a potential conflict of interest in appointing Mr. Guhathakurta as the RP due to his previous association with SBI and Deloitte. However, it was clarified that Mr. Guhathakurta had given a "No Conflict of Interest" undertaking as per IBBI regulations, and his appointment was in line with the prescribed code of conduct for RP. Issue 5: Legal Provisions under the I&B Code The Tribunal upheld the power of the CoC to replace the IRP with RP as per the provisions of the I&B Code. It was noted that the CoC need not provide reasons for the replacement, and the RP plays a crucial role in the insolvency resolution mechanism by bridging the gap between the CoC and stakeholders. The decision to replace Mr. Khandelwal with Mr. Guhathakurta was approved, with directions for reimbursement and handover of documents. In conclusion, the Tribunal approved the replacement of Mr. Khandelwal with Mr. Guhathakurta as the RP for the Consolidated Corporate Debtors of Videocon Group, emphasizing the CoC's authority in such decisions and ensuring compliance with legal provisions under the I&B Code.
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