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2019 (11) TMI 1484 - Tri - Insolvency and BankruptcyReplacement of Interim Resolution Professional who was appointed by this Adjudicating Authority as per the proposal of the Operational Creditor - HELD THAT - The retiring IRP, who is also present in person, has submitted that he is having no objection so far as his replacement is concerned. However, he has pointed-out us about the decision passed by the Hon'ble National Company Appellate Tribunal (NCLAT) in Company Appeal No. 1059 of 2019, order dated 16.10.2019, confirming this Bench's order dated 06.07.2019, by directing the CoC to clear all the dues of IRP, which the CoC is required to determine in accordance with law. Thus, the Hon'ble NCLAT did not interfere with the impugned order passed by this Bench. The CoC is directed to make payment of the dues as per the above stated direction of the NCLAT read with the direction of this Adjudicating Authority, it is to be complied within two weeks, i.e. from the date of receipt of an authentic copy of this order. In case there remains any dispute, then the retiring IRP is at liberty to approach this Court. Nothing adverse is available on record to oppose the approval of the Resolution of the CoC for appointing new RP, Mr. Mangesh V. Kekre - Application allowed.
Issues:
1. Replacement of Interim Resolution Professional (IRP) by Committee of Creditors (CoC) under Section 22(3) of the Insolvency and Bankruptcy Code (I & B Code). 2. Dispute over the remuneration of the IRP leading to delay in the Corporate Insolvency Resolution Process. 3. Legal implications of the fees and expenses of the IRP as per regulations and judicial precedents. 4. Appointment of new Resolution Professional and the responsibilities associated with the transition. 5. Adherence to ethical standards and moral code of conduct by insolvency professionals. Issue 1: Replacement of Interim Resolution Professional (IRP) The CoC, with a 100% majority, sought the replacement of the existing IRP, Mr. Rajesh Lohia, with Mr. Mangesh Vitthal Kekre. The retiring IRP did not object to the replacement. The Hon'ble NCLAT upheld the decision of the Adjudicating Authority regarding the replacement. The CoC was directed to clear the dues of the retiring IRP within two weeks. The IA for the replacement was allowed, and the new RP, Mr. Mangesh V. Kekre, was approved. Issue 2: Dispute over IRP remuneration The CoC objected to the high remuneration demanded by the IRP, leading to a delay in the process. The CoC offered a lower remuneration of ?50,000 per month plus actual expenses, which the IRP did not find agreeable. The IRP filed applications seeking payment of fees, which were directed to be cleared by the CoC without delay. The delay caused by the fee dispute highlighted the need for a swift transition to a new RP to ensure the timely completion of the Corporate Insolvency Resolution Process. Issue 3: Legal implications of IRP fees and expenses The Supreme Court's interpretation of regulation 33 of the CIRP Regulations emphasizes that the applicant bears the expenses incurred by the IRP, to be reimbursed by the CoC upon ratification. The CoC's agreement to pay a lower fee and the recommendation to replace the IRP with a new RP indicate a resolution to the fee dispute. The difference in fees, if any, is to be borne by the Operational Creditor, not the CoC, as per the legal framework. Issue 4: Appointment of new Resolution Professional The appointment of a new RP, Mr. Mangesh Vitthal Kekre, was approved to manage the affairs of the Corporate Debtor and proceed with the Insolvency Resolution Process. The matter was referred to the Co-ordinate Bench for further consideration and necessary orders, ensuring a smooth transition and progress in the resolution process. Issue 5: Ethical standards for insolvency professionals The IBBI Circular emphasizes the need for IRPs to structure their fees reasonably and adhere to ethical standards, avoiding undue gains at the expense of distressed assets. The delay in the resolution process due to fee disputes underscores the importance of ethical conduct and timely completion of the Corporate Insolvency Resolution Process to protect stakeholders' interests. This detailed analysis of the judgment addresses the key issues surrounding the replacement of the IRP, fee disputes, legal implications, appointment of a new RP, and the ethical obligations of insolvency professionals, providing a comprehensive understanding of the tribunal's decision and its implications on the insolvency proceedings.
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