2018 (8) TMI 2039 - AT - Insolvency and Bankruptcy

IRP sought to withdraw from CIRP - Adjudicating Authority while rejected the plea taken by the interim resolution professional observed that the attitude of the appellant is unprofessional and directed the Insolvency and Bankruptcy Board of India (IBBI) to take action against the appellant as contemplated under the Regulations framed by it - HELD THAT - In the present case, the committee of creditors have decided to continue the appellant as resolution professional and the said order has not been challenged by the appellant. On the other hand he is already functioning as the resolution professional. In the facts and circumstances and perusal of the records the Adjudicating Authority's directions to impose cost and to refer the matter to IBBI for initiating action against the appellant is uncalled for. Application disposed off.

Summary

Issues:
1. Whether the interim resolution professional has the right to withdraw from the resolution process.
2. Authority to discharge the interim resolution professional.
3. Compliance with the tenure of the interim resolution professional.
4. Consent requirement for continuation as resolution professional.
5. Committee of creditors' decision on the appointment of resolution professional.
6. Validity of Adjudicating Authority's directions and imposition of cost.

Issue 1:
The appellant, an interim resolution professional, sought to withdraw from the corporate insolvency resolution process. The Adjudicating Authority rejected this plea, citing unprofessional behavior and imposed a cost of ?50,000. The appellant argued that he has the right to withdraw, and the Authority cannot compel him to continue. The IBBI contended that the Authority has the discretion to discharge the interim resolution professional based on genuine reasons provided. The Adjudicating Authority's decision not to discharge the appellant was upheld.

Issue 2:
The appointment and tenure of the interim resolution professional are governed by section 16 of the Insolvency and Bankruptcy Code. The Code specifies that the interim resolution professional's term cannot exceed thirty days from the date of appointment. Despite the appellant's application for discharge before the completion of his tenure, the Adjudicating Authority refused to accept it. The Tribunal found no grounds to interfere with this decision, given the statutory provisions.

Issue 3:
Section 22 of the Insolvency and Bankruptcy Code addresses the appointment of a resolution professional. The committee of creditors, by majority voting, may decide to appoint the interim resolution professional as the resolution professional or replace them. Consent is crucial for the continuation of the interim resolution professional beyond thirty days. In this case, the committee of creditors chose to retain the appellant as the resolution professional, a decision unchallenged by the appellant. The Tribunal observed that the Adjudicating Authority's directions to impose costs and initiate disciplinary proceedings were unwarranted.

Conclusion:
The Tribunal set aside the Adjudicating Authority's order imposing costs, passing strictures, and directing disciplinary action against the appellant. It declared that the Authority's order should not influence future engagements of the appellant in insolvency resolution or liquidation proceedings. The appeal was disposed of with these observations and directions, with no costs awarded.