2022 (11) TMI 957 - AT - Insolvency and Bankruptcy

Initiation of CIRP - Personal Guarantor - Appointment of RP on suggestion of Creditor instead of nomination of RP by the Board - Application for Personal Insolvency was filed by the Creditor-State Bank of India and not by the Resolution Professional - Section 95 of IBC - HELD THAT - On looking into the scheme of the IBC and Rules framed thereunder, Applications filed by Debtors and Creditors including Applications filed under Section 7, 9 and 10, the particulars of proposed Interim Resolution Professional are always provided which is apparent from Insolvency and Bankruptcy Board of India (Application to Adjudicating Authority), Rules, 2016 where Form 5 and Form 6 provides for filing of the Application by Operational Creditor where the Applicants are required to mention the proposed Insolvency Resolution Professional. Form 1 deals with an Application to be filed by Financial Creditor where also particulars of the proposed Insolvency Resolution Professional are to be given by the Applicant himself. Thus the mere fact that Applicants in Applications under Section 7, 9 and 10 as well as in Section 94 and 95 provides details of Insolvency Resolution Professional/Resolution Professional by the Applicant himself, no bias can be read into the said procedure. The Scheme of IBC is such that IRP/RP plays a pivotal role in Insolvency Resolution Process. Thus we are not satisfied that the mere fact that Resolution Professional has been recommended by the Applicant, he shall have bias in favour of the Application filed by him and he shall always submit a report of admitting the Application any bias has to be read in the scheme. The RP is to perform his function and duties as per the IBC and the Rules which castes duty on the Resolution Professional to act in accordance with Insolvency and Bankruptcy Code, 2016, Rules and Regulations framed thereunder. There are no substance in the submissions of Learned Counsel for the Appellant that Resolution Professional recommended by the Applicant is biased and appointment of Mr. Sunil Kumar Kabra is bad in law - appeal dismissed.

Issues Involved:
1. Validity of the application filed under Section 95 of the Insolvency and Bankruptcy Code, 2016.
2. Appointment and nomination of the Resolution Professional (RP).
3. Alleged procedural defects in the application.
4. Potential bias of the Resolution Professional.
5. Timeliness and delay in filing the appeal.

Issue-wise Detailed Analysis:

1. Validity of the Application Filed Under Section 95 of the Insolvency and Bankruptcy Code, 2016:
The application under Section 95 was filed by the State Bank of India (SBI) against the Personal Guarantor of a loan availed by M/s. Shirpur Power Private Limited. The appellant contended that the application was filed by the creditor and not by the Resolution Professional (RP), as required under Rule 7(2) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtors) Rules, 2019. The Tribunal found that the application was indeed filed through the RP, as evidenced by the filled Part-IV of Form C and the accompanying written communication from the RP. The Tribunal concluded that the application was valid and in compliance with the statutory requirements.

2. Appointment and Nomination of the Resolution Professional (RP):
The appellant argued that the Adjudicating Authority violated Section 97(3) of the Code by appointing the RP suggested by the creditor without confirmation from the Board. The Tribunal clarified that Section 97(1) and (2) require confirmation from the Board for applications filed through an RP, while Section 97(3) and (4) require the Board to nominate an RP for applications filed by the debtor or creditor themselves. The Tribunal held that the application was filed through the RP, and thus, the appointment process followed was correct and did not violate the Code.

3. Alleged Procedural Defects in the Application:
The appellant highlighted that the RP did not sign Part-IV of Form C, arguing this as a procedural defect. The Tribunal noted that the application included a written consent from the RP, which served the same purpose as the signature. The Tribunal deemed this a minor irregularity that did not affect the validity of the application. The Tribunal referenced the case "Pologix Infrastructure Private Limited Vs. ICICI Bank Limited," emphasizing that procedural defects are curable and do not warrant rejection of the application.

4. Potential Bias of the Resolution Professional:
The appellant expressed concerns about the potential bias of the RP, as the RP was recommended by the creditor. The Tribunal referred to its previous judgment in "Ravi Ajit Kulkarni Vs. State Bank of India," where it was held that the RP's role is to act professionally and impartially, as mandated by the IBC and its regulations. The Tribunal found no merit in the argument of bias, stating that the RP is subject to disciplinary oversight and is expected to perform duties without prejudice.

5. Timeliness and Delay in Filing the Appeal:
The respondent argued that the appeal was filed with considerable delay, as the impugned order was passed on 19th July 2021, and the appeal was filed on 15th May 2022. The Tribunal acknowledged the delay but focused on the substantive issues raised in the appeal. Ultimately, the Tribunal found no grounds to interfere with the impugned orders based on the delay argument alone.

Conclusion:
The Tribunal dismissed both appeals, affirming the validity of the application filed under Section 95, the proper appointment of the RP, and rejecting the claims of procedural defects and potential bias. The Tribunal emphasized adherence to the statutory provisions of the Insolvency and Bankruptcy Code, 2016, and the related rules and regulations.

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