2021 (6) TMI 576 - Tri - Insolvency and Bankruptcy

Seeking for forwarding the name of the proposed Resolution Professional (RP) to IBBI for its confirmation - Section 60(5) r/w Section 22(3)(b) of the Insolvency Bankruptcy Code, 2016 (IBC, 2016) and Regulation 17(3) of the IBBI Regulations - HELD THAT - This Tribunal takes a strong exception to the attitude of Punjab National Bank Housing Finance Ltd. on the one hand abstaining from attending the meeting altogether and/or also failing to exercise its voting share at least through e-voting, but however, raising objections before this Tribunal in relation to the change of IRP to RP. We are unable to consider the objection of Punjab National Bank Housing Finance Ltd. in this regard and the same is brushed aside. On its part in relation to Dhankalash Distributors Pvt. Ltd., Ld. Senior Counsel Mr. Ganda appearing for the said Financial Creditor having a miniscule voting share of 0.31% contends that without disposing of the Applications filed by the said Financial Creditor, this Tribunal should not dispose of the present Application as in the said Applications the very constitution of the CoC having their voting share presently as disclosed by the IRP is sought to be challenged as the mode of computing the claim in relation to the Homebuyers as well as their proportionate voting share is being questioned. Repeatedly the Hon'ble Supreme Court has held that the commercial decision taken by the CoC brooks no interference by this Adjudicating Authority. Be it in the case of approval of the resolution plan or in the case of liquidation of the Corporate Debtor - Similarly, it is also required to be noted as correctly pointed out by the Ld. Counsel for the Applicant that the Hon'ble NCLAT has held in numerous decisions as rendered by it and as cited before this Tribunal that replacement of IRP to RP either under Section 22 and in relation to also Section 27 of IBC, 2016 does not call for the interference of this Adjudicating Authority and further that no reason is also required to be ascribed for such a change. Keeping in mind the decision of the CoC being a commercial decision made by more than 66% of the Homebuyers constituting the CoC having their voting share on the given date, namely 04.05.2020, this Tribunal is required to perforce allow this Application. As a consequence of allowing this Application taking into consideration Section 22(4) of IBC, 2016 the name as recommended by the CoC for appointment of Resolution Professional (RP) being Mr. Ayyagari Viswanadha Sarma, is required to be forwarded to the IBBI for its confirmation - Application disposed off.

Summary

Issues Involved:
1. Replacement of Interim Resolution Professional (IRP) with a proposed Resolution Professional (RP).
2. Voting share and decision-making within the Committee of Creditors (CoC).
3. Objections raised by financial creditors regarding the replacement of IRP.
4. Procedural aspects and maintainability of the application under Section 22 of the Insolvency & Bankruptcy Code, 2016 (IBC, 2016).

Detailed Analysis:

1. Replacement of Interim Resolution Professional (IRP) with a proposed Resolution Professional (RP):
The application was filed by a financial creditor seeking to replace the current IRP, Mr. Pawan Kumar Singal, with Mr. Ayyagari Viswanadha Sarma as the RP. The relief sought included forwarding the name of the proposed RP to the Insolvency and Bankruptcy Board of India (IBBI) for confirmation, as per Section 22(3)(b) read with Section 22(4) of the IBC, 2016. The application cited that 68.87% of the CoC members approved the replacement.

2. Voting Share and Decision-Making within the Committee of Creditors (CoC):
The CoC convened a meeting on 04.05.2021, where 68.87% of the members voted in favor of appointing Mr. Ayyagari Viswanadha Sarma as the RP. The voting shares were detailed as follows: Punjab National Bank Housing Finance Ltd. (30.82%), Dhankalash Distributors Pvt. Ltd. (0.31%), and Homebuyers (68.87%). The Homebuyers' significant voting share facilitated the approval of the proposed RP.

3. Objections Raised by Financial Creditors Regarding the Replacement of IRP:
Dhankalash Distributors Pvt. Ltd. opposed the resolution, citing procedural issues and the maintainability of the application. They argued that the application should be collectively filed by the CoC, not by an individual financial creditor. Punjab National Bank Housing Finance Ltd. abstained from voting but later sought to intervene and filed objections against the replacement. The Tribunal dismissed these objections, emphasizing the CoC's commercial decision-making authority.

4. Procedural Aspects and Maintainability of the Application under Section 22 of the IBC, 2016:
The Tribunal addressed the procedural objections, stating that the CoC's resolution authorized any financial creditor to file the application. The Tribunal highlighted that the CoC's decision, supported by more than 66% voting share, was valid and binding. The Tribunal also noted that the Supreme Court and NCLAT have consistently upheld the CoC's commercial decisions, including the replacement of IRP with RP, without requiring specific reasons.

Conclusion:
The Tribunal allowed the application, recognizing the CoC's resolution as a commercial decision. The name of Mr. Ayyagari Viswanadha Sarma was forwarded to the IBBI for confirmation, with the IBBI's counsel stating no objections. The IRP was directed to hand over all records and assets to the incoming RP. The application was disposed of with these directions.