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TMI Blog2020 (7) TMI 788X X X X Extracts X X X X X X X X Extracts X X X X ..... s per Regulation 3(1) of the CIRP Regulations, 2016 within one week of the receipt of the email copy of this order - Application allowed. - I.A. No. /KB/2020 in C.P. (I.B.) No. 980 of 2018 - - - Dated:- 3-7-2020 - Jinan K.R., Member (J) and Harish Chander Suri, Member (T) For Appellant: Jishnu Chowdhury, Adv., Kanakabha Ray, Jai Narayan Gupta, C.A., and Ramesh Ch. Prusti, Adv. ORDER Harish Chander Suri, Member (T) 1. This unnumbered application of 2020 has been filed by the Applicant herein Mr. Narayan Chandra Saha, suspended Director of Corporate Debtor M/s. PKS Limited praying for removal of the Respondent Mr. Kanakabha Ray as Resolution Professional of the Corporate Debtor M/s. PKS Limited for having failed to conduct himself in an independent manner being an erstwhile employee of the Financial Creditor and for taking biased decisions at the behest of the Financial Creditor. Having been satisfied with the grounds of the appeal and the urgency, the application is admitted and listed for hearing today. 2. The applicant states that an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 being C.P. No. 980 of 2018 had been instituted by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with legal consequences. In spite thereof documents more than 38 years are being summoned. Failure to produce such documents, for reasons stated above, have prompted an application under 19(2) of the Act, alleging non-cooperation by Corporate Debtor. It is thus clear that the financial creditor alongwith others, is using the office of the Resolution Professional to harass the Corporate Debtor. These coercive orders and/or steps go to show that the Resolution Professional is abusing its powers and/or is doing so at the instance of the creditors. Such apprehensions are substantiated further by the fact that in accordance with the provisions of the Code, the initial Corporate Insolvency Resolution Proceeding period (being 180 days) got over on February 4, 2020 from 8th August, 2019. However, the Resolution Professional having knowledge of the same never took any initiative to propose for extension as if there was no requirement for extension as the Financial Creditor had already taken and sold all the assets and/or properties including the registered office of the Corporate Debtor. 5. It is further submitted that an application was taken out for seeking exclusion of 70 days period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial Creditor under SARFAESI proceedings. 7. It is stated that at all material times, the said Resolution Professional had been intimated and/or had knowledge about Balance-Sheet and the Books of Account of the Corporate Debtor and he had at all material times knew that there are the old stocks of Iron Ore Fines which are lying at Jharkhand are under the custody of the Receiver appointed by the Hon'ble High Court at Calcutta. In spite of having such knowledge, the Resolution Professional has alleged that the Members of Board of Directors (suspended) of the Corporate Debtor are not co-operating with the Resolution Professional. 8. The Resolution Professional by electronic mail dated February 18, 2020 had ordered the Members of Board of Directors (suspended) of the Corporate Debtor to submit all the audited Balance Sheets and Books of Account of the Corporate Debtor since its inception. It is relevant to mention that the Corporate Debtor was incorporated on July 12, 1982 and therefore seeking for documents for the last 38 years is neither permissible under the Code, nor is viable for the Applicant to give such documents. It is relevant to mention herein that the Resolution P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgment of Hon'ble Appellate Tribunal. 12. The learned counsel submitted that the Corporate debtor has no asset, save stock of iron ore which is lying under custody of Receiver appointed by the High Court from 2011 and is now scrap. The stock is fully inventorized by the Receiver. Apart from this, there is no asset of the corporate debtor and corporate debtor has no business for the last nine years. CIRP will have no benefit but RP wants to continue. RP is not even taking active steps in the matter and he has only published Notice Inviting Expression of Interest in February, 2020. The whole exercise of CIRP [contrary to the object of IBC, 2016] is to persecute the suspended board by asking documents spanning over 38 years. 13. It is argued by the counsel that the RP is ineligible to be appointed since he worked with Union Bank of India for 30 years prior to retirement. RP has appointed three advisors who are de facto RP and do all the work. Two persons, Tapan Chakraborty and Sudhir Mohan Acharya are also ex-employees for a substantial time. RP and his two partners are the directors of IPE company. Union Bank of India has appointed the RP using its then 68% stake despite d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be heard in the case on merits. 16. While hearing the Resolution Professional, the learned RP Mr. Kanakabha Ray opted to make his submissions, himself and not through his Adviser/CA. He was heard at length. In his submissions, the learned RP admitted that he had served the Financial creditor for more than 34 years and was drawing his pension from the Bank. We do not have anything against the RP on this count that he has worked with the bank and has been drawing his pension, which is his right earned by him, as part of his service conditions. What is serious is the admission of the RP that while being in the service of the Financial Creditor/Bank, he had been dealing with the accounts of the Corporate Debtor as a part of his official duties with the Bank. He also admitted that in the 7th COC held on 19th June, 2020, the aforesaid remarks were written by him in a casual way just to convince the members of the COC. But he denied having extended the period of CIRP. 17. Ld. Counsel Mr. Jishnu Chaudhary argued that since he has handled the accounts of the Corporate Debtor while being in the service of the Bank, he could not be allowed to be appointed as R.P. It is submitted that wh ..... 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In these circumstances, and on the strength of the observations of the Hon'ble Appellate Tribunal in the above cited decision, we have no hesitation in granting the prayer of the applicant, upon the following directions:- i) The CoC is hereby directed to replace the Resolution Professional Mr. Kanakabha Ray, with a new Insolvency Professional who is eligible for appointment as per Regulation 3(1) of the CIRP Regulations, 2016 within one week of the receipt of the email copy of this order. ii) The CoC is directed to submit e copies of written consent of the proposed resolution professional and the newly proposed RP shall continue the CIRP in continuation of the process continued by the outgoing RP subject to the approval of the Adjudicating Authority. iii) The outgoing RP is directed to handover all the records to the incoming RP within one week of the proposal of the new RP by the CoC. iv) The CoC is directed to clear all the dues inclusive of fees and cost if any spent by the RP towards resolution cost within two weeks. v) The unnumbered I.A. of 2020 in C.P.(IB) No. 980/KB/2018 is disposed of accordingly. No order as to costs. Registry is directed to ser ..... X X X X Extracts X X X X X X X X Extracts X X X X
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