2022 (7) TMI 360 - Tri - Insolvency and Bankruptcy

Seeking stay on the operation of the Expression of Interest issued by the Resolution Professional under Regulation 36A (1) of the Insolvency and Bankruptcy (Insolvency Resolution Process for Corporate Persons) Regulation, 2016 - seeking stay on Appointment of E Y Restructuring LLP as the Support Service Partner of the Resolution Professional in view of the inherent conflict of interest - HELD THAT - It is the CoC that has eventually engaged support service provider and not the RP, therefore, contention of applicant the resolution professional appointed the support service provider (Paragraph xvii of IA) is factually in-correct - CoC has taken an informed decision by 100 % voting while appointing EY Restructuring LLP as support service provider to Resolution Professional and after taking into consideration there was no conflict of interest. We are of the considered view; it is the commercial wisdom of the CoC what to do best in the interest of the resolution process. Also, this Adjudicating Authority cannot be called to sit in appeal over decision of CoC - It is also not understood as to how the applicant who is a suspended Director of the Corporate Debtor is concerned about the fee payable as determined by the CoC for carrying out CIRP in an effective manner. Section 60 (5) of the Code, the residuary jurisdiction of the NCLT under Section 60(5) of the IBC though, provides it a wide discretion to adjudicate questions of law or fact arising from or in relation to the insolvency resolution proceedings, however, cannot be invoked or exercised to review/recall order dated 11-02-2022 of this Adjudicating Authority upon the grounds raised in this application - Suffice it to say, this application filed by a suspended Director at such a belated stage, from various angles looks to be merely an attempt to thwart what has been settled position; timely resolution of stressed assets is a prime factor in the successful working of the Code, the interest of the 'Stakeholders' including the 'Creditor(s)', effectively balancing within the four corners of 'Law', and as per 'I B' Code, 2016 and 'Regulations' without any further loss of time . Application disposed off.

Summary

Issues involved:
Challenge to the operation of Expression of Interest, Appointment of Support Service Partner, Restraining Resolution Professional, and Validity of Application under Rule 11 read with Section 60(5) of the Code.

Analysis:
1. Challenge to Expression of Interest (EOI):
The suspended Director filed an application seeking to stay the EOI issued by the Resolution Professional, citing conflicts with court directions and potential misuse of confidential information. Allegations of mala fide actions and bias were raised against the Resolution Professional. However, the Tribunal found the application untimely, attempting to rehear a finalized order, and impermissible under Section 11 of NCLT Rules. Citing precedents, the Tribunal dismissed the challenge to the EOI.

2. Appointment of Support Service Partner:
The applicant contested the appointment of E & Y Restructuring LLP as the support service provider, alleging collusion and conflict of interest. The Tribunal noted that the CoC, not the Resolution Professional, engaged the support service provider through informed decision-making. Emphasizing the commercial wisdom of the CoC and the lack of grounds for the applicant's concern, the Tribunal upheld the CoC's decision and rejected the challenge to the appointment.

3. Validity of Application under Rule 11 and Section 60(5) of the Code:
The Tribunal highlighted the belated filing of the application by the suspended Director, emphasizing the importance of timely resolution of stressed assets under the Code. Referring to the residuary jurisdiction of NCLT under Section 60(5) of the Code, the Tribunal concluded that the application aimed to disrupt settled positions and interfere minimally with resolution processes. Citing the recent judgment of the Supreme Court, the Tribunal rejected the application, emphasizing the principle of minimum judicial interference and the objective of the Code.

In conclusion, the Tribunal dismissed the application challenging the EOI and the appointment of the support service partner, emphasizing the finality of orders, the commercial decisions of the CoC, and the need for timely resolution of insolvency matters. The Tribunal highlighted the limited scope of intervention and the overarching objective of the Code in ensuring effective resolution processes.