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TMI Blog2022 (7) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... section 7 of the Code seeking initiation of Corporate Insolvency Resolution Process ('CIRP') against Jaipur Metals & Electricals Limited (JMEL/Corporate Debtor) which came to be admitted vide order dated 13.04.2018. However, the Hon'ble High Court of Rajasthan vide its order dated 26.04.2018 stayed the implementation of the admission order dated 13.04.2018 and later vide order dated 01.06.2018 declared the admission order as non-est in law. The order dated 01.06.2018 was challenged by a group of employees of the Corporate Debtor before the Hon'ble Supreme Court, whereby vide order dated 12.12.2018, the Hon'ble Apex Court set aside the order of the High Court of Rajasthan. 3. Presently, this application has been filed by the Applicant under Section 60(5)(c) of the Code read with Rule 11 of NCLT Rules, 2016 seeking substitution/change of the present Resolution Professional, Mr. Arunava Sikdar bearing Registration No. IBBI/IPA-001/IP-P00022/2016-17/10047 on the following grounds. a. The Applicant stated that as per Section 24(3)(b) of the Insolvency and Bankruptcy Code, 2016, the Resolution Professional is mandatorily obligated to give notice of each meeting of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such meetings has not been issued to majority of the Directors as mandated under Section 24(3)(b) of the Code, 2016. It is worthwhile to mention here that the respective addresses of the suspended board of directors are very well available on the website of Ministry of Corporate Affairs being public record. Despite that, the Resolution Professional In his notices of meeting mentions the factory address of the Corporate Debtor being aware of the fact that the premises are closed down since more than 2 decades now. d. The Applicant has submitted that there has been misrepresentation before the CoC by the Resolution Professional in the minutes drawn for the meeting of the 3rd CoC. It has been recorded that the Resolution Professional denied Mr. Sanjeev Saxena's (Erstwhile Nominee Director on behalf of the State) request to postpone the meeting on the ground that notices to other erstwhile directors have been issued. However, as brought out above, no such notices have been received by any directors namely Mr. Shrimat Pandey, Mr. L.C. Jain, Mr. Yogesh Kumar Kamani, Mr. Rajeev Shrivastav, Mr. Kanhaiya Lal Sharma of the erstwhile board. This is in direct contravention of Section 24( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied under the First Schedule of Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016 and acted in direct contravention to entry 2, 3, 5, 8 and 15. h. The Applicant has submitted that as on date the Resolution Professional has spent around Rs. 45 Lacs towards the CIRP of an entity which is closed from almost two decades. The aim of the IBC has never been to have an expensive Resolution process of an entity which is already debt ridden. 4. The Respondent No. 1/Resolution Professional has filed reply vide Diary No. 2458/2019 dated 22.10.2019 stating as follows: a. It is submitted that the captioned Application is not maintainable as it is not in consonance with the provision of Section 27(2) of the Code. As per the said provision, CoC at a meeting, by a vote of sixty-six per cent of voting shares has to resolve to replace the Resolution Professional with another Resolution Professional, subject to a written consent from the proposed Resolution Professional in the specified form. However, in the instant application under reply, the CoC in any of the meeting conducted till date has neither resolved nor carried out or passed any Resolution for change ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CoC meeting of the Corporate Debtor, which was scheduled to be held on 28.01.2019. The said notice and agenda was shared with all the members of CoC including the Applicant. Thus, the very core of the allegation raised against the Respondent i.e., failure to abide by in accordance with Section 24 of the Code has proven to be invalid and concocted. d. The Respondent No. 1 contended that the maxim Nullus Commodum Capere Potest De Injuria Sua Propria stands applicable in the matter as it implies that no man can take advantage of his own wrong. Therefore, the Applicant cannot raise such false pleas and allegations, when it itself had purportedly not attended the COC meeting, despite the issuance of notice by the answering Respondent. On the contrary, it is the Applicant who has failed to act in accordance with the due provisions of the Code, i.e. handing over the possession, control and custody of the assets and records of the Corporate Debtor. It is also submitted that the answering Respondent had duly issued notice of the COC meeting to the Suspended Directors, at the registered address, which was however returned as un-served. e. It is submitted that the Respondent had visited t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssed from the Respondent. h. Respondent No. 1 has stated that when the issuance of letters by the Chairman and the Managing Director was brought before this Adjudicating Authority, it was orally observed and directed to the said officials of the Applicant to withdraw the said letters/communications. The said Applicant, acting in contravention and in complete disobedience of the oral directions passed by this Adjudicating Authority vide its letter dated 07.08.2019 informed that in view of the order dated 07.08.2019 passed by this Adjudicating Authority letter dated 18.07.2019 and reminder letter dated 30.07.2019 is withdrawn. Therefore, the officials of the Applicant only withdrew the two letters out of the several letters it had issued top various authorities which clearly shows that the Applicant is trying to manipulate the record even after the CIRP is in process. 5. Even though Alchemist Asset Reconstruction Company ('AARC') was not impleaded as a party in the present application however, it was permitted to file reply. The following reply has been filed in compliance of the directions passed by this Adjudicating Authority vide Diary No. 2789/2019 dated 28.11.2019. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ist is also established from the following facts: a. A total of six Prospective Resolution Applicants (PRAs) have been identified by the Resolution Professional as eligible PRAs which are as follows: i. Genus Power Infrastructures Limited ii. CMI Limited iii. Alchemist Asset Reconstruction Company Limited iv. Shiva Consultants Private Limited v. JFC Finance (India) Limited vi. Triton Hotels & Resorts Private Limited b. It is submitted that first and foremost illegality on part of Resolution Professional is to allow Alchemist Asset Reconstruction Company Limited as a PRA, despite the clear restriction imposed by RBI in terms of the Securitization and Reconstruction of Financial Assets Act, 2002 (SARFAESI Act) that an ARC can only engage in the business of securitization and asset reconstruction and no other business. Accordingly, an ARC cannot be a Resolution Applicant for a Corporate Debtor undergoing CIRP. Reserve Bank of India in past has rejected bids of UV Asset Reconstruction Company Limited another ARC on this count. Despite the same, the Resolution Professional being in collusion with Alchemist has even allowed Alchemist to participate as a PRA. c. It is co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In Company Appeal (AT) (CH) (INC) No. 98 of 2022" decided on 28.03.2022, it was categorically held that when there is an explicit section for Replacement of Resolution Professional the same should only be followed/adhered to by the Litigant/Stakeholder and other connected. The Hon'ble Tribunal in para 25 at page 14 of the said judgment has also held that the ingredients of Section 27(1) of the Code are 'self-explanatory' and admits of no exception. b. It is submitted that purported allegation for non-adherence of Section 24(3)(b) of the IBC, 2016 by not sending notice of CoC to the Suspended Directors are totally baseless and misconceived. All the notices were sent to the address which was available with the Resolution Professional. It will not be out of place to mention herein that when the Resolution Professional was informed that the Managing Director of Corporate Debtor has changed and also was provided with his email address. The notices of the CoC Meetings were sent to the given email id and that Managing Director (Powers Suspended) attended the meeting on behalf of the Suspended Board which can be clearly seen from the attendance sheet of the CoC Meetings. c. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on all loans till 25.01.2019 instead of CIRP commencement date on 13.04.2018, another request was made to file a rectified claim. The rectified Form 'C' dated 20.08.2019 was received finally on 27.08.2019 and the claim for Rs. 39.14 Crores was provisionally admitted or 04.09.2019. It is pertinent to mention that no loan agreement between the State of Rajasthan and the Corporate Debtor was ever produced and only letters sanctioning the loans were enclosed along with the claim form. The Resolution Professional has admitted the claim was admitted as the loan was appearing in the Balance Sheet of the Corporate Debtor. Similarly, the claim of RIICO as Financial Creditor was admitted on the basis of Balance Sheet of the Corporate Debtor, g. The Resolution Professional further submitted that the duty of the Resolution Professional for including the name of any entity/party in the list of PRA, is to ensure the followings:- i. Fulfillment of conditions of eligibility criteria as fixed by the CoC. ii. Compliances of Section 29A by the PRA. Further reference may be made to proviso to clause (5) of section 30 which states as under: "Provided that the Resolution applicant shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 28.11.2019. The Respondent No. 1 has contended that the present application is nothing but a feeble attempt at the behest of the applicant to stole the CIRP of JMEL. The Respondent has also based his contention on section 27(2) of the Code by virtue of which the CoC has to resolve to replace the RP with the consent of more than 66% members. Further, the RP has stated that the name of the RP was suggested by Asset Reconstruction Company (India) Ltd. and not by AARC in the first CoC held on 26.12.2018 and the same was approved by 100% votes. Application placed before this Adjudicating Authority regarding the same was allowed vide Order dated 11.01.2019. 13. Respondent No. 2 i.e., the Resolution Professional filed reply to the captioned application vide Diary No. 737/2019 dated 25.04.2019. It is submitted by the RP that he is no longer an IRP of Affinity Beauty Salons Pvt. Ltd. and the matter of Shivam Fragrances Pvt. Ltd. the Resolution Plan has already been submitted before NCLT, New Delhi Bench and with respect to Chempharm Industries Pvt. Ltd. the Order of admission was recalled and thus the appointment of RP was set aside. The RP also submitted that he has been carrying out hi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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