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2021 (1) TMI 716 - AT - Insolvency and BankruptcyReplacement of Appellant which was based on 4th Committee of Creditors meeting - Section 22 of the Insolvency and Bankruptcy Code, 2016 - HELD THAT - The Power Department of Government of Sikkim being the major stakeholder had serious reservations about the conduct of the Appellant and disapproved of his behavior and action. The decision was taken to remove the Resolution Professional as the Committee of Creditors was not satisfied with the conduct of Corporate Insolvency Resolution Process by him. It cannot be termed to be a case of casting any stigma on the conduct of the Appellant. If the conduct of Corporate Insolvency Resolution Process was disapproved by the Committee of Creditors and he lost their confidence, the Appellant has no vested right of foisting himself on the Committee of Creditors for his continuance. The removal having the requisite majority vote shares cannot be held to be flawed in any manner. Since there are no adverse observations against the Appellant alleging or attributing any misconduct to him, there is no occasion for expunging of any such remarks. Appeal dismissed.
Issues involved: Replacement of Resolution Professional during Corporate Insolvency Resolution Process under the Insolvency and Bankruptcy Code, 2016.
Analysis: The judgment by the National Company Law Appellate Tribunal, New Delhi, dealt with the replacement of a Resolution Professional, Mr. Diwan Chand Arya, by Mr. Debrath Rana in a case involving 'Sikkim Hydro Venture Limited' as the Corporate Debtor. The impugned order, based on an application under Section 22 of the Insolvency and Bankruptcy Code, 2016, stemmed from the 4th Committee of Creditors meeting. The Appellant declined to put his replacement for voting before the Committee of Creditors, leading to his replacement with 97.98% voting shares in favor of Mr. Debrath Rana. During the hearing, the Appellant's representative contended that the impugned order did not align with the provisions of the Insolvency and Bankruptcy Code, 2016, and tarnished the Appellant's reputation as a Resolution Professional. The Power Department of the Government of Sikkim, a major stakeholder, expressed serious reservations about the Appellant's conduct and actions, leading to the Committee of Creditors' decision to remove him due to dissatisfaction with his handling of the Corporate Insolvency Resolution Process. The Tribunal emphasized that the removal of the Resolution Professional was not a reflection of misconduct but a result of the Committee of Creditors' lack of confidence in his ability to carry out the resolution process effectively. The Appellant had no inherent right to continue if the majority of the Committee did not support him. As there were no allegations of misconduct against the Appellant, the Tribunal found no grounds to expunge any remarks against him. Ultimately, the appeal was dismissed as lacking merit, with no costs imposed. In conclusion, the judgment underscores the importance of the Committee of Creditors' confidence in the Resolution Professional's ability to conduct the Corporate Insolvency Resolution Process effectively. The decision to replace the Appellant was deemed valid, given the majority vote shares in favor of the new Resolution Professional, Mr. Debrath Rana, highlighting the significance of stakeholder satisfaction and adherence to the provisions of the Insolvency and Bankruptcy Code, 2016 in such proceedings.
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