2020 (9) TMI 553 - Tri - Insolvency and Bankruptcy

Approval for replacement of the present IRP - appointment of RP in the place of IRP and CIRP proceedings - HELD THAT - It is evident that if a class of creditors represented by Authorized Representative voted for more than 50% on a resolution, such voting is to be considered as 100% by the respective class of creditors in the resolution passed by the CoC. In this case, for the class of creditors were present in the meeting voted for more than 50% for replacement of IRP with the RP, such approval with more than 50% shall be treated as 100% on behalf of the Homebuyers to the resolution passed by the CoC as contemplated under Section 25A(3A) of the Code. No further enquiry is required, therefore we arrive to a conclusion that the resolution passed by the CoC is with more than 66% for approval of the replacement of IRP with RP, hence this application is hereby allowed for replacement of Mr. Dilip Kumar Niranjan (IRP) with Mr. Ganga Ram Agarwal as RP. Accordingly, this application is hereby allowed by appointing Mr. Ganga Ram Agarwal as RP. Appointment of RP - Insolvency professional approved as resolution professional by the CoC to replace IRP - HELD THAT - There is no application by the IRP stating that the AR has given incorrect information to the CoC as to voting of home-buyers for approval of the RP - Since these home buyers who are said to have made their claims after the CoC meeting for approval of resolution for appointment of the RP, subsequent claimants making an allegation against past action cannot invalidate the decisions taken by the CoC. Moreover, it appears all these advocates file vakalatnamas on behalf of associations without having any vakalatnama directly from the respective home buyers. The IRP who is supposed to remain neutral, has come against the CoC as if he has personal interest in the affairs of the CD. It is evident on record that if any allegation is there against the proposed RP, if at all they have any strength for change of the RP, they can place their proposal before the CoC with 33 per cent to pass a resolution for replacement of the RP but not by making bald allegation and not allowing this bench to pass orders for more than 6 months. By this litigation, for the last six months there is no progress in CIRP, in view thereof this application is hereby dismissed as misconceived.

Summary

Issues:
1. Correction of voting results in violation of the Insolvency and Bankruptcy Code.
2. Appointment of a new Resolution Professional in place of the existing Insolvency Resolution Professional.
3. Interpretation of Section 25A(3A) of the Insolvency and Bankruptcy Code regarding voting by financial creditors.
4. Allegations against the proposed Resolution Professional and objections raised by the Insolvency Resolution Professional.

Issue 1: Correction of Voting Results
The Tribunal addressed an application seeking correction of voting results wrongly computed by the Insolvency Resolution Professional (IRP) in violation of Section 25A(3A) of the Insolvency and Bankruptcy Code. The delay in adjudicating the application led to the decision to allow an urgent hearing. The application aimed at replacing the IRP with a new Resolution Professional (RP) based on the voting results.

Issue 2: Appointment of a New Resolution Professional
The application for appointment of a new RP was based on the contention that a majority of the class of Allottees (Homebuyers) voted for the replacement of the IRP with the RP. The Tribunal considered the voting percentages and legal provisions to determine the validity of the voting process and approved the appointment of Mr. Ganga Ram Agarwal as the RP.

Issue 3: Interpretation of Section 25A(3A)
The Tribunal analyzed Section 25A(3A) of the Code, emphasizing that if a class of creditors represented by an Authorized Representative votes for more than 50%, such voting should be considered as 100% by the respective class of creditors. The decision highlighted the importance of authorized representatives casting votes on behalf of financial creditors in line with the Code's provisions.

Issue 4: Allegations Against the Proposed Resolution Professional
Another application raised concerns about the proposed RP, alleging reasons such as lack of 100% voting by the home-buyers, embezzlement allegations, and conflicts of interest. The Tribunal scrutinized the claims, noting the absence of proper authorization from the home-buyers and dismissed the application due to lack of merit and progress hindrance in the Corporate Insolvency Resolution Process.

This detailed analysis of the judgment provides insights into the legal intricacies surrounding the correction of voting results, appointment of Resolution Professionals, interpretation of relevant legal provisions, and the dismissal of allegations against the proposed RP.