Case Note & Summary
The case involved appeals filed by Mr. S. Viswanathan, the former Resolution Professional (RP) of Maylari Agro Products Ltd., against orders of the National Company Law Tribunal (NCLT) regarding his replacement as RP. The Corporate Debtor was admitted into the Corporate Insolvency Resolution Process (CIRP) on 08.03.2021, initiated by Shree Ratna Farm Products. The Appellant convened the first meeting of the Committee of Creditors (CoC) on 09.04.2021, where Canara Bank, holding 84.6% voting share, and Karnataka Bank were present. Disputes arose when Canara Bank withdrew its consent for the Appellant's appointment, leading to the filing of I.A. No. 276 of 2021 by Canara Bank for his replacement. The NCLT allowed this application, citing procedural failures by the Appellant. The Appellant challenged this decision, arguing that the NCLT did not consider his defense and violated principles of natural justice. The Respondent contended that the Appellant failed to maintain proper voting records and that the CoC's decision to replace him was within its commercial wisdom. The Appellate Tribunal upheld the NCLT's decision, stating that the CoC's replacement of the Appellant was justified and within its rights under the IBC. The Tribunal also addressed the Appellant's claims for professional fees and expenses, allowing him to seek adjudication from the NCLT while expunging adverse remarks made against him in the NCLT's order. The Appeals were disposed of with directions for further proceedings regarding the Appellant's claims.
Headnote
A) Insolvency Law - Replacement of Resolution Professional - Justification of Replacement - Insolvency and Bankruptcy Code, 2016, Section 22 - The Committee of Creditors exercised its commercial wisdom in replacing the Appellant as Resolution Professional, which was upheld by the Adjudicating Authority. The court noted that the Appellant had no vested right to continue in the role and that the decision was in compliance with statutory requirements. Held that the replacement was justified (Paras 19-19). B) Professional Fees - Claim for Professional Fees - Insolvency and Bankruptcy Code, 2016 - The Appellant sought payment of outstanding professional fees and reimbursement of expenses, which were to be adjudicated by the NCLT. The court granted liberty to approach the NCLT for determination of claims, emphasizing the need for a hearing (Paras 19-19). C) Adverse Remarks - Expunging of Remarks - The court found that adverse observations made against the Appellant in the impugned order were not warranted and ordered their expungement to protect the Appellant's professional reputation (Paras 19-19).
Issue of Consideration
Whether the replacement of the Appellant as Resolution Professional by the Committee of Creditors was justified under the Insolvency and Bankruptcy Code, 2016.
Final Decision
The Appeals were disposed of with directions for the Appellant to approach the NCLT for adjudication of his claims for professional fees and expenses. The adverse remarks against the Appellant were expunged, and the replacement of the Appellant as RP was upheld as justified under the IBC.
Law Points
- Insolvency Resolution Process
- Commercial Wisdom of CoC
- Replacement of Resolution Professional
- Jurisdiction of Adjudicating Authority
- Professional Fees
