2018 (12) TMI 1914 - AT - Insolvency and Bankruptcy

Seeking removal of Resolution Professional - order of liquidation has been passed u/s 33(1)(a)/34(1) of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - No resolution plan was approved by the committee of creditors and in the meantime 270 days having lapsed on 5th of September, 2018, the Resolution Professional filed a miscellaneous application for liquidation, which is accepted and order of liquidation has been passed. On such order, as the committee of creditors ceased to exist and become functus officio even if we set aside the impugned order dated 31st October, 2018 and remove Mr. V. Nagarajan, the order of liquidation cannot be declare illegal as more than 270 days having passed. Thus, no relief can be granted. The appeal is dismissed.

Summary

Issues: Appeal against the rejection of an application to remove the Resolution Professional and the subsequent order of liquidation under the Insolvency and Bankruptcy Code, 2016.

Analysis:
The appeals were filed by 'ICICI Bank' and 'State Bank of India' (Financial Creditors) challenging the order passed by the Adjudicating Authority rejecting the application to remove Mr. V. Nagarajan, the Resolution Professional, and approving the order of liquidation under sections 33(1)(a)/34(1) of the Insolvency and Bankruptcy Code, 2016. The appellant contended that the 'committee of creditors' had unanimously decided to remove Mr. V. Nagarajan, but their application was dismissed, and the liquidation application by the Resolution Professional was accepted. The Appellate Tribunal examined the records and noted that no resolution plan was approved by the committee of creditors within the stipulated 270 days. As a result, the Resolution Professional filed a liquidation application, which was granted, leading to the cessation of the committee of creditors. Even if the order removing Mr. V. Nagarajan was set aside, the liquidation order could not be declared illegal due to the expiry of the 270-day period. Consequently, the appeal was dismissed, and no costs were awarded.

Furthermore, the Appellate Tribunal clarified that its decision did not imply any findings regarding the performance or conduct of Mr. V. Nagarajan, the Resolution Professional/liquidator. Any complaints against him would be addressed by the Insolvency and Bankruptcy Board of India (IBBI) independently of the Tribunal's ruling. This distinction was crucial to ensure that the issues related to Mr. V. Nagarajan's activities were appropriately investigated and decided upon by the relevant regulatory body, unaffected by the Tribunal's dismissal of the appeal.