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2022 (9) TMI 803 - Tri - Insolvency and BankruptcySeeking replacement of IRP appointing another professional as the RP - Section 22 of the IBC - HELD THAT - It is seen from the material on record that the CoC in its second meeting held on 15.07.2022 decided to replace IRP. In fact, there is no much difference in between provisions of Section 22 of IBC and Section 27 of IBC except that the Section 22 of IBC to be invoked for replacement of IRP to the RP and Section 27 of IBC to be invoked in case of replacement of RP during the CIRP of Corporate Debtor. However, both the provisions mandates that the CoC to pass such resolution by not less than 66% of votes. The Adjudicating Authority, in general to accept such recommendation and forward the same to IBBI for confirmation. In short the CoC has power to replace IRP by invoking Section 22 of IBC. In this case, it is not done in the first CoC meeting but it has been in 2nd CoC meeting. The resolution to replace IRP passed by 92.76% votes. Appointment of Mr. Ashish Chhawchharia is objected on the ground that he is not independent qua Corporate Debtor. There is no law imposing such restrictions on appointment of the RP. In the case which is relied on by the learned counsel for the Suspended Management, the facts were quite different. CIRP in that case was almost at concluding stage. The RP in that case had worked a lot and this Adjudicating Authority found that RP sought to be replaced by the CoC was without disclosing any reasons. In this case, the CIRP of the Corporate Debtor is just commenced. The objection raised by the Suspended Management of the Corporate Debtor are not sustainable. The Suspended Management appears to raise objection only to protract the CIRP of the Corporate Debtor. Appeal allowed.
Issues:
1. Replacement of IRP with another professional as RP under Section 22 of IBC. 2. Opposition by Suspended Management on grounds of application under Section 27, location of RP, independence of RP, and alleged defaulter status of RP's firm. 3. CoC's power to replace IRP, appointment of Mr. Ashish Chhawchharia, objections raised by Suspended Management, and considerations for RP appointment. 4. Allegations of defaulter status of RP's firm, RP not being a local professional, and international presence of RP's firm. Issue 1: Replacement of IRP with another professional as RP under Section 22 of IBC The CoC filed IA 624 of 2022 seeking to replace the IRP with Mr. Ashish Chhawchharia as the RP. The CoC passed a resolution with 92.76% votes in favor of the appointment, which was duly consented to by Mr. Chhawchharia. The Tribunal accepted and approved the appointment, citing the provisions of Section 22 of IBC allowing such replacement. Issue 2: Opposition by Suspended Management on various grounds The Suspended Management filed IA 650 of 2022 opposing Mr. Chhawchharia's appointment as RP. Their objections included the application being under Section 27 instead of Section 22, the RP's location, lack of independence, and alleged defaulter status of the RP's firm. The Tribunal rejected these objections, emphasizing the CoC's authority to replace the IRP under Section 22 and the lack of substantial evidence supporting the objections raised. Issue 3: CoC's power to replace IRP and considerations for RP appointment The Tribunal analyzed the CoC's decision to replace the IRP, highlighting the requirements of Section 22 of IBC for passing such resolutions. It noted the absence of material supporting the Suspended Management's objections regarding the independence of Mr. Chhawchharia and upheld the CoC's decision to appoint him as the RP based on the available information. Issue 4: Allegations of defaulter status and RP's firm not being a local professional Allegations of the RP's firm being a defaulter as per the MCA website and Mr. Chhawchharia not being a local professional were raised. The CoC denied these allegations, explaining that any technical issues on the MCA website did not impact the RP's appointment. The Tribunal dismissed these allegations, emphasizing the RP's international presence and expertise in handling stress assets as justifying factors for his appointment. In conclusion, the Tribunal rejected the objections raised by the Suspended Management, finding them unsubstantiated and aimed at delaying the CIRP process. It allowed the CoC's application to appoint Mr. Ashish Chhawchharia as the RP, directing the IRP to hand over documents and assets for the CIRP to proceed promptly. The Registry was instructed to inform the IBBI about Mr. Chhawchharia's appointment as per Section 22(5) of IBC.
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