The NCLAT, Chennai Bench held that the invocation of Rule 11 of the NCLAT Rules, 2016 cannot be pressed into service, in the teeth of the I&B Code, 2016, showering Powers only on the CoC, to replace the IRP.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice M. Venugopal, Judicial Member and Shreesha Merla, Technical Member was hearing an appeal on Monday and held that the invocation of Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 cannot be pressed into service, in the teeth of the I&B Code, 2016, showering Powers only on the Committee of Creditors, to replace the Interim Resolution Professional.
The present appeal was filed by the Appellant/ Corporate Debtor against the order of the Adjudicating Authority. The Appellant claimed that the order of the AA was to be set aside because it was incorrect to observe that the Application for removal of the Interim Resolution Professional was not filed by the Committee of Creditors. Furthermore, the Members of the Committee of Creditors were Related Parties of the Corporate Debtor.
Appellant’s Submission:
The Learned Counsel for the Appellant submitted that after the Appointment of the Interim Resolution Professional, it was found by the Appellant that the IRP, was not acting independently and acting against the interest of the Other Creditors of the Corporate Debtor. The real grievance of the Learned Counsel for the Appellant was that in the instant Company Appeal, the Appellant prayed for replacing the Interim Resolution Professional on the ground that the IRP, was working under the influence of the Suspended Board of Directors and further that, he did not have bonafide intention. He was acting under the Directions and in the interest of the Suspended Board of Directors.
NCLAT’s Analysis:
The Appellate Tribunal observed that the ingredients of Section 22(3) of the Insolvency and Bankruptcy Code, 2016 very clearly confers power on the Committee of Creditors to replace the Interim Resolution Professional, by preferring an Application before the Adjudicating Authority, for the Appointment of the Proposed Resolution Professional. When the ingredients of Section 22(3)(b) of the Code explicitly ‘spells out’ for the Appointment of the proposed Resolution Professional, the Appellate Tribunal was of the considered opinion that the invocation of Rule 11 of the National Company Law Appellate Tribunal Rules, 2016 cannot be pressed into service, in the teeth of the I&B Code, 2016, showering Powers only on the Committee of Creditors, to replace the Interim Resolution Professional.
In view of the light of deliberations above, the Appellate Tribunal held that the conclusion, arrived at by the Adjudicating Authority, observing that the said Interlocutory Application was not maintainable, for the Replacement of the Interim Resolution Professional, was free from any Legal Flaw. The instant Company Appeal was dismissed.