2018 (4) TMI 276 - AT - Insolvency and Bankruptcy

Corporate insolvency process - Resolution Professional appointment - Held that - The observations made in the impugned order should not be construed to be misconduct on the part of the Appellant, but as we find that the Adjudicating Authority was not satisfied with the performance of the Resolution Professional , we hold that the Adjudicating Authority was well within its jurisdiction to engage another person as Resolution Professional or Liquidator . 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 .

Summary

Issues:
1. Appointment of Resolution Professional as Liquidator
2. Failure to complete Resolution Plan
3. Authority to replace Resolution Professional

Analysis:
1. The appeal was filed by the Resolution Professional against the orders of the Adjudicating Authority, which declined to appoint the Resolution Professional as Liquidator due to alleged failure in completing the Resolution Plan. The Adjudicating Authority appointed another individual as Liquidator instead. The Resolution Professional contended that the observations made against him were contrary to the facts and that he had duly issued advertisements inviting Resolution Plans, which were approved by the Committee of Creditors and the Adjudicating Authority.

2. The Resolution Professional argued that as per the Insolvency and Bankruptcy Code, he could only be replaced as Liquidator under specific circumstances outlined in the Code. These circumstances included the rejection of the Resolution Plan or a recommendation by the Insolvency and Bankruptcy Board of India (IBBI) for replacement. The Resolution Professional asserted that since there was no Resolution Plan for the Corporate Debtor, the conditions for his replacement were not met, and there was no recommendation from the IBBI for his replacement.

3. The Adjudicating Authority noted that only one meeting of the Committee of Creditors had taken place within 180 days, and no progress was made thereafter. The Resolution Professional reported that no Resolution Plan had been submitted by any Resolution Applicant before the completion of the 180-day period. While the court did not find misconduct on the part of the Resolution Professional, it upheld the Adjudicating Authority's decision to appoint another person as Resolution Professional or Liquidator due to dissatisfaction with the Resolution Professional's performance. The appointment of a Resolution Professional from the list provided by the IBBI was considered a recommendation by the IBBI.

In conclusion, the appeal was dismissed, and no costs were awarded. The court held that the Adjudicating Authority was justified in appointing a new Resolution Professional based on the unsatisfactory performance of the original Resolution Professional, despite no misconduct being found.