Mathioli N (RP) Vs. Reliance Asset Reconstruction Company Ltd. - Thus, the only legal lacuna, which the impugned order suffers from, though we may not basically disagree with the spirit and purpose in, which the order has been passed, is the procedural flaw of not placing the Agenda before the CoC, prior to the order of replacement of the Resolution Professional as per Section 27 of the I & B Code.

NCLAT (2025.09.18) in Mathioli N (RP) Vs. Reliance Asset Reconstruction Company Ltd.  [(2025) ibclaw.in 781 NCLAT, Company Appeal (AT) (CH) (Ins) No. 412/2025 (IA No.1172/2025)] held that;;

• Nothing under law restrained the Learned Adjudicating Authority to formulate the agenda on its own and direct the CoC to consider the same in the light of the provisions contained under Section 27 of the I & B Code, 2016.

• Thus, the only legal lacuna, which the impugned order suffers from, though we may not basically disagree with the spirit and purpose in, which the order has been passed, is the procedural flaw of not placing the Agenda before the CoC, prior to the order of replacement of the Resolution Professional as per Section 27 of the I & B Code.

Excerpts of the order;.

This Company Appeal, revolves around very peculiar facts and circumstances. Hence, while rendering Judgment in this instant Company Appeal, we are carving out an exception in order to meet the ends of Justice, which may not be taken as to be a precedent for any other matter of a similar nature. Primarily, the exception, which has been carved out is to meet out the argument extended by the Appellant in person, about his alleged plea that the entire action taken against him by virtue of the impugned order dated 07.07.2025, as it has been passed by the NCLT, Chennai Bench – II in IA(IBC)/917/CHE/2025 as rendered in CP(IB)/188/CHE/2023 is bad in the eyes of law for the following reasons: –

• (i) That the impugned order suffers from the vices of being in violation of the Principles of Natural Justice because, since the impugned order is having a civil consequence, the Appellant was required to be mandatorily heard, which has not been done prior to passing of the order.

• (ii) That the action taken by virtue of the impugned order dated 07.07.2025, is in violation of adoption of the procedure prescribed under Section 27 of the I & B Code, 2016.

# 2. Brief facts are that M/s. MQ Network Private Limited, the Corporate Debtor, that was placed under the CIRP Process, and consequent to which the Appellant, who appears in person, was appointed as a Resolution Professional. In the impugned order, the direction has been issued to replace the Appellant, from functioning as the Resolution Professional, owing to the fact that the financial creditor sought his replacement as Resolution Professional on the ground that his attitude and aptitude were found to be non-cooperative. The findings of the impugned order is that the Applicant Financial Creditor, at the stage of the 1st CoC meeting, had approved the resolutions relating to the fixation of the RP’s fee and extension of the CIRP period for a period of three months, that because of the conduct and adamant attitude of the Resolution Professional, they were constrained to file an application seeking his replacement for smooth and effective conduct of CIRP in light of his improper conduct, aggressive behaviour and obstructionist approach, and that the documents filed on record show that the CIRP Process, is not being carried in a smooth manner due to non-cooperation of Resolution Professional and difference of opinion between the CoC and the Resolution Professional and therefore there is a need for replacing the Resolution Professional with a new incumbent. Based upon the aforesaid set of findings, the Tribunal proceeded to pass the following order: – 

• “In view of above, we find present RP needs to be replaced in order to ensure effective conduct of CIRP and timely Insolvency Resolution. Therefore, Mr. Pathukasahasram Raghunathan Raman, Insolvency Professional having IBBI Registration No.IBBI/IPA-002/IP-N00295/2017-18/10896 who has been proposed by the Applicant sole Financial Creditor shall be appointed as RP in respect of Corporate Debtor”.

# 3. Under Section 22 of I & B Code, contemplates the process of appointment of a Resolution Professional, whereby the Committee of Creditors (CoC) in its first meeting to be held within 7 days of the constitution of the CoC, will resolve, by not less than 66% of the voting shares of the Financial Creditors, to appoint the IRP as RP or, to replace the IRP by another RP. Accordingly, the Appellant was appointed as a Resolution Professional to carry out the CIRP Process of the Corporate Debtor, i.e., M/s. MQ Network Private Limited. As per the provisions of I & B Code, RP is to convene and conduct the meeting of CoC, and it is his responsibility to place various Agenda, for consideration and approval, if any, by the CoC. However, the allegation of Financial Creditor/Respondent is that the Appellant herein, despite of having knowledge about the resentment over his manner of functioning as expressed by the Financial Creditor, deliberately avoided to place the Agenda for his replacement for consideration, in the 2nd CoC meetings, which was convened by him. On the other hand, the argument of the Appellant, i.e., the Resolution Professional, is that the directions issued by the Learned NCLT on the basis of the email communication of the Financial Creditor pertaining to the conduct of the Resolution Professional directing to replace the Resolution Professional, was in violation of the provisions contained under Section 27 of the I & B Code. Section 27 of the I & B Code is extracted hereunder: –

• “27. Replacement of resolution professional by committee of creditors

• (1) Where, at any time during the corporate insolvency resolution process, the committee of creditors is of the opinion that a resolution professional appointed under section 22 is required to be replaced, it may replace him with another resolution professional in the manner provided under this section.

• 1[(2) The committee of creditors may, at a meeting, by a vote of sixty-six per cent. of voting shares, resolve to replace the resolution professional appointed under section 22 with another resolution professional, subject to a written consent from the proposed resolution professional in the specified form.].

• (3) The committee of creditors shall forward the name of the insolvency professional proposed by them to the Adjudicating Authority.

• (4) The Adjudicating Authority shall forward the name of the proposed resolution professional to the Board for its confirmation and a resolution professional shall be appointed in the same manner as laid down in section 16.

• (5) where any disciplinary proceeding are pending against the proposed resolution professional under sub-section (3), the resolution professional appointed under section 22 shall continue till the appointment of another professional under the section”.

# 4. In its strict sense, Section 27 of the I & B Code, 2016, provides for the replacement of a Resolution Professional as already appointed under Section 22 of the I & B Code, could be only by way of a decision to be taken by the Committee of Creditors by a majority of at least 66% of voting share and with the prior consent of the Proposed Resolution Professional, who is supposed to substitute the existing Resolution Professional. The Appellant’s grievance is that the provisions of Section 27 of the I & B Code, 2016, was not complied with. This has been argued to the contrary by the Learned Counsel for the Respondent, contending thereof that the Respondent in the email communication dated 22.04.2025 had prayed for that owing to the improper and unparliamentary behaviour of the Resolution Professional i.e., the Appellant herein, and in view of the telephonic conversation, which was carried, he may be replaced in the light of the provision contained under Section 27 of the I & B Code, 2016, and a new Resolution Professional may be appointed in his place which is permitted under the Code and that there is no illegality about it. But, the said communication of 22.04.2025 was disregarded and was not made as part of the Agenda of the 2nd CoC meeting by the Appellant deliberately and that all other issues were included in the Agenda of the proposed 2nd CoC meeting, to be held on 23.06.2025. The Learned Counsel for the Respondent has alleged that the responsibility of formulation of Agenda for consideration by CoC is vested with the Resolution Professional, and since the draft Agenda item circulated by the Respondent on 22.04.2025 threatened the continuance of the Appellant as the Resolution Professional, he deliberately omitted it from the Agenda of the 2nd CoC meeting. One of the questions which will emerge for consideration would be that, whether the Appellant, when he himself has avoided to place the communication of 22.04.2025 proposing replacement of RP in the Agenda for the 2nd CoC meeting, thus circumventing provisions of Section 27 of the Code, can now take an advantage of the non-compliance of the said provisions contained under Section 27 of the I & B Code, 2016, to challenge the impugned order, which has been passed by the Tribunal. Apparently, the answer would be that since being the Resolution Professional, the Appellant was expected to act fairly and was also supposed to place the Agenda before the CoC, even when it contains a prayer for his replacement in the light of the provisions contained under Section 27(2) of the I & B Code, 2016. Having not done so, the Appellant may not have the liberty to argue that, the removal of his or a direction contained in the impugned order for replacement of the Resolution Professional was in violation of Section 27 of the I & B Code, 2016.

# 5. The fact remains that the Agenda formulated for the 2nd CoC meeting, did not include the issue flagged by the Respondent/Financial Creditor. Aggrieved by this, the FC filed an application in IA(IBC)/914(CHE)/2025 before the Learned NCLT on 13.06.2025. While hearing IA(IBC)/917/(CHE)/2025, praying for a change of RP, the Learned NCLT in its order dated 16.06.2025, specifically directed the RP to convene CoC meeting within a week of the order and to place the Agenda of change of RP. However 2nd CoC conducted on 23.06.2025, did not contain the Agenda of the change of RP. The Applicant/Respondent 1 herein, preferred an application under Regulation 44(2) of the Insolvency and Bankruptcy Board of India Regulations, 2016. The Applicant therein i.e., Respondent undertook to pay the dues of the Resolution Professional and the Resolution Professional was directed to convene the meeting of the CoC within a week, but that was not done, which forced the Respondent to file an application under Section 60(5) of the I & B Code, 2016, before the Learned Adjudicating Authority, wherein the Respondent had prayed for that the Resolution Professional who was expected to convene the CoC meeting, may be directed to convene the 2nd CoC, meeting at the earliest because of the fact that the earlier 2nd CoC meeting stood cancelled, which was earlier scheduled for 26.04.2025. Since the same has not been conducted, the Respondent had invoked Section 60 of the I & B Code, 2016, to file IA(IBC)/917/(CHE)/2025, wherein he prayed for the following reliefs: –

• “V. RELIEF SOUGHT:

• The Applicants therefore pray that this Hon’ble Tribunal may be pleased to; 

• a. Replace the present Resolution Professional/Respondent, in light of his improper conduct, aggressive behaviour, and obstructionist approach, with a new RP to be appointed by the Hon’ble Tribunal for the smooth and effective conduct of the Corporate Insolvency Resolution Process (CIRP) by permitting Applicant to make payment of Revised 3rd Invoice dated 22.04.2025 of Rs.3,11,498/- raised by the Respondent till April 2025; and 

• b. To pass such further or other orders as the Hon’ble Tribunal may deem fit and proper in the facts and circumstances of the present case”.

• # 6. The argument which has been extended by the Appellant in person, is to the effect that as to whether at all an application under Section 60(5) of the I & B Code, 2016, for the nature of relief prayed for could be pressed into particularly, when it related to the prayer for replacement of the Resolution Professional, which has to be resorted to in the light of the provisions contained under Section 27 of the I & B Code, 2016. But then we cannot be oblivious of the fact that, in all the earlier communications made by the Respondent, they were consistently requesting the 2nd CoC meeting be conducted to consider their proposal for replacement of RP under the provisions contained under Section 27 of the I & B Code, 2016 and that there was persistent inaction on the part of the Appellant as he was trying to take an advantage of his own inaction so as to continue to function as Resolution Professional. The filing of an application under Section 60(5) of the I & B Code, 2016, would be tenable as the statute does not contain any such contingency that, where the Financial Creditor intends to replace the Resolution Professional, owing to his misconduct or misbehaviour which disrupts the CIRP process, the motion for replacement could be placed in any other manner except for Section 27 of the I & B Code, 2016. In view of the above, the process of replacement of the Resolution Professional, at the request of the Financial Creditor, could only be possible by moving an application under Section 60(5) of the I & B Code, 2016, when Resolution Professional persists in not placing the agenda for the same before CoC for its consideration. With that intention only, the Respondent had filed the application being IA(IBC)/917/CHE/2025, on which the impugned order had been passed, and therefore, said Application under Section 60(5) of the I & B Code, 2016, would be tenable because any party aggrieved by any of the proceedings or inaction cannot be left remedy-less if the statute is silent with regard to prescribing a forum for redressal of the grievances.

# 7. Taking cognizance of the said application, the Tribunal has passed the impugned order, which is under challenge at the behest of the Resolution Professional.

# 8. We feel that when the application being IA(IBC)/917/CHE/2025, came up for consideration before the Learned Adjudicating Authority, and the Respondent (Financial Creditor) made the Tribunal conscious of the fact that the Resolution Professional is deliberately not placing the Agenda for its consideration before CoC for his replacement in the light of the provision contained under Section 27 of the I & B Code, 2016, nothing under law restrained the Learned Adjudicating Authority to formulate the agenda on its own and direct the CoC to consider the same in the light of the provisions contained under Section 27 of the I & B Code, 2016. That would have been the appropriate recourse, because the modalities laid down in the code for replacement of the Resolution Professional has had to be carried in accordance with the provisions contained under Section 27 of the I & B Code, 2016. Nothing under law holds back the Learned Adjudicating Authority on or even this Appellate Tribunal for the said purpose, to formulate an agenda for replacement of RP as raised in IA(IBC)/917/CHE/2025 in the light of the provisions contained under Section 27 of the I & B Code, 2016, and to place it before the CoC for its consideration. Thus, the only legal lacuna, which the impugned order suffers from, though we may not basically disagree with the spirit and purpose in, which the order has been passed, is the procedural flaw of not placing the Agenda before the CoC, prior to the order of replacement of the Resolution Professional as per Section 27 of the I & B Code.

# 9. We are of the view that any order, which is to be passed for either replacement or removal of the Resolution Professional as appointed under Section 22 of the I & B Code, 2016, would have a civil consequence and therefore before ousting/replacing the Resolution Professional, was at least required to be heard before the CoC.

# 10. In these peculiar facts and circumstances, without carving out as a precedent, we direct the Learned Adjudicating Authority, to discharge the onus of formulating an Agenda for consideration of replacement of Resolution Professional on its own, in the light of the allegations levelled in the application being IA(IBC)/917/CHE/2025 and to direct it to be placed before the CoC for its consideration in the light of the provisions contained under Section 27(2) of the I & B Code, 2016. It is hoped and trusted that the Learned Adjudicating Authority, will act upon the aforesaid directions while exercising its inherent powers by formulating an Agenda within a period of two weeks from the date of the uploading of this order, and within two weeks thereafter, the CoC is to meet and consider the agenda in the light of the pleadings in IA(IBC)/917/CHE/2025. Subject to the above, the impugned order dated 07.07.2025, so far it relates to the order passed on IA(IBC)/917/CHE/2025, would stand quashed, leaving all options to the Learned Adjudicating Authority to take action, as directed above to satisfy the spirit of Section 27 of the I & B Code, 2016. Subject to the above exceptions, the Company Appeal (AT) (CH) (Ins) No.412/2025 would stand allowed, limited to the restrictions observed above. All Interlocutory Applications would stand closed.

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Sandeep Kumar Gupta Resolution Professional Vs Stewarts & Lloyds of India Ltd. and Anr. - the list of ‘Resolution Professionals’ being made available by the ‘Board’ to the Adjudicating Authorities, any person is appointed out of the said list submitted by the ‘Board’, it should be treated to be an appointment of ‘Resolution Professional’/’Liquidator’ on the recommendation of the ‘Board’.

 NCLAT. (2018.02.28) in Sandeep Kumar Gupta Resolution Professional Vs Stewarts & Lloyds of India Ltd. and Anr. [(2018) ibclaw.in 131 NCLAT, Company Appeal (AT) (Insolvency) No. 263 & 303 of 2017] held that;.

• While we hold that the observations made in the impugned order should not be construed to be misconduct on the part of the Appellant, but as we find that the Adjudicating Authority was not satisfied with the performance of the ‘Resolution Professional’, 

• We hold that the Adjudicating Authority was well within its jurisdiction to engage another person as ‘Resolution Professional’ or ’Liquidator’. 

• Further, the list of ‘Resolution Professionals’ being made available by the ‘Board’ to the Adjudicating Authorities, any person is appointed out of the said list submitted by the ‘Board’, it should be treated to be an appointment of ‘Resolution Professional’/’Liquidator’ on the recommendation of the ‘Board’.

Excerpts of the Order;

These appeals have been preferred by Mr. Sandeep Kumar Gupta, the ‘Resolution Professional’ against orders dated 26th October, 2017 and 15th November, 2017 passed by the Adjudicating Authority (National Company Law Tribunal), Kolkata Bench, Kolkata, in Company Petition (IB) No. 213/KB/2017, whereby and whereunder the Adjudicating Authority decided not to appoint the ‘Resolution Professional’ (‘Appellant’ herein) as ‘Liquidator’, he having failed to take appropriate steps for completing the ‘Resolution Plan’ and appointed one Ms. Mamta Binani, as ‘Liquidator’.

# 2. Learned counsel appearing on behalf of the Appellant submitted that the observation of the Adjudicating Authority is contrary to the relevant fact which should be expunged.

# 3. It was also submitted that the Adjudicating Authority wrongly recorded that the Appellant did not issue advertisement in the newspaper for inviting ‘Resolution Plan’. In fact, the Appellant duly issued Public Announcement in ‘Business Standard’, English version in its Kolkata edition on 15th September, 2017 and ‘Ajkal’, Bangla version, in its Kolkata edition on 15th September, 2017 inviting ‘Resolution Plan’ and stating the last date for submission of ‘Resolution Plan’ is 25th September, 2017.

# 4. It was further submitted that the Adjudicating Authority failed to appreciate that the ‘Committee of Creditors’ in their meeting duly approved the appointment of the Appellant as the ‘Resolution Professional’ and the Adjudicating Authority vide its order dated 25th July, 2017 duly appointed the Appellant as ‘Resolution Professional’. Therefore, the finding of the Adjudicating Authority that ‘Resolution Professional’ was appointed on the recommendation of the ‘Corporate Debtor’ is baseless.

# 5. As regards the removal of the Appellant, it was submitted that as per sub-section (1) of Section 34 of the Insolvency and Bankruptcy Code, 2016, the ‘Resolution Professional’ can only act as ‘Liquidator’ for the purpose of liquidation and can be replaced by the Adjudicating Authority only on the ground as stipulated in sub-section (4) of Section 34. The replacement in terms of sub-section (4) of Section 34 can only take place in two eventualities i.e. in case the ‘Resolution Plan’ submitted by the ‘Resolution Professional’ under Section 30 is rejected for failure to meet the requirement in sub-section (2) of Section 30 or in case the Insolvency and Bankruptcy Board of India (hereinafter referred to as “Board”) recommends the replacement of the ‘Resolution Professional’ for reasons to be recorded in writing.

# 6. According to Appellant, in the present case the eventualities under sub-section (4) of Section 34 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as ‘I&B Code’) are not triggered as there was no ‘Resolution Plan’ for the Resolution of the ‘Corporate Debtor’. Therefore, there is no question of any contravention of requirement of sub-section (2) of Section 30 of the ‘I&B Code’. It was also submitted that there was no recommendation from the ‘Board’ for replacement of the Appellant and the Board is not empowered to propose name of ‘Insolvency Professional’ to act as ‘Liquidator’.

# 7. Learned counsel for the ‘Board’ submitted that the order dated 26th October, 2017, calling for name of a ‘Liquidator’ from the Board was forwarded by letter dated 16th November, 2017. However, before the said letter, the Adjudicating Authority had already appointed the ‘Liquidator’ on 15th November, 2017.

# 8. We have heard learned counsel for the Appellant and the Respondents-‘Board’.

# 9. Without going into the controversy, as to whether the finding of the Adjudicating Authority recorded is correct or not, from the record, we find that the ‘Resolution Professional’ filed his progress Report on 15th July, 2017 along with the Minutes of 1st Meeting of the ‘Committee of Creditors’ dated 12th June, 2017, as recorded by the Adjudicating Authority and not been disputed by the Appellant. The Adjudicating Authority also noticed that within 180 days only one meeting of the ‘Committee of Creditors’ took place on 12th June, 2017 and thereafter no progress was made as no meeting of ‘Committee of Creditors’ was held. Ultimately just before completion of 180 days, the ‘Resolution Professional’ submitted his report that no ‘Resolution Plan’ has been submitted by any ‘Resolution Applicant’.

# 10. In view of the aforesaid undisputed facts, while we hold that the observations made in the impugned order should not be construed to be misconduct on the part of the Appellant, but as we find that the Adjudicating Authority was not satisfied with the performance of the ‘Resolution Professional’, we hold that the Adjudicating Authority was well within its jurisdiction to engage another person as ‘Resolution Professional’ or ’Liquidator’. Further, the list of ‘Resolution Professionals’ being made available by the ‘Board’ to the Adjudicating Authorities, any person is appointed out of the said list submitted by the ‘Board’, it should be treated to be an appointment of ‘Resolution Professional’/’Liquidator’ on the recommendation of the ‘Board’.

# 11. For the reasons aforesaid, we are not inclined to interfere with the impugned order dated 26th October, 2017. In absence of any merit we dismiss the appeal. However, in the facts and circumstances of the case, there shall be no order as to costs.

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Bhavan Trivedi IRP vs. Sicer India Private Limited & Ors - Hence the IRP who is the applicant is eligible for his dues of IRP cost as his fee and reimbursement of CIRP cost incurred to be paid by the R1 namely Sicer India Pvt Limited who has preferred this application. However, he is not eligible to continue as RP as the COC in its 1st meeting has decided against the agenda for his nomination as RP.

NCLT Ahmedabad-2 (2024.07.25) in Bhavan Trivedi IRP vs. Sicer India Private Limited & Ors  IA/533(AHM)2024 in CP(IB)/40(AHM)2023] held that; 

• Hence the IRP who is the applicant is eligible for his dues of IRP cost as his fee and reimbursement of CIRP cost incurred to be paid by the R1 namely Sicer India Pvt Limited who has preferred this application. However, he is not eligible to continue as RP as the COC in its 1st meeting has decided against the agenda for his nomination as RP.

• The IRP to convene a meeting of COC wherein the COC members (2) will approve the reconstitution of the COC and approve a new RP in place of the IRP who is the applicant in this matter. In case the R-3 votes for the reconstitution and replacement of RP he will share the CIRP cost incurred with R-1. 

• In case R-1 and R-3 decide not to appoint another RP or reappoint the IRP to continue, they will withdraw their claims before the IRP and if such withdrawal is by more than 90% of claimants, the Tribunal will decide further in the matter. 

• IRP cannot do any other function other than convening the next meeting of COC for the matters mentioned in this order. 

Excerpts of the order;

# 1. Through IA 533 of 2024, Applicant is seeking appointment of IRP and prayed for following reliefs: 

i. Direct the Committee of Creditors(CoC) of Ramos Ceramic Private Limited to promptly initiate the necessary as per Section 22(3)(b) of the Insolvency and Bankruptcy Code, 2016 for the appointment of Resolution Professional(RP).. 

Ii. Should this Tribunal deem the transition from the existing Interim Resolution Professional (IRP) to Resolution Professional (RP) appropriate, it is humbly requested to guide the Committee of Creditors to allocate funds for RP fees and CIRP expenses, including expenses for filing and processing this application, in advance, in accordance with the provisions of the IBC.

iii. Instruct the CoC to deposit the allocated funds either with the court or directly remit them to the appointed RP in compliance with the provisions of the IBC, to ensure the effective continuation of the proceedings. 

iv. Considering the mandate of Regulation 17(3) of the IBBI Regulations, which stipulates the Interim Resolution Professional’s performance of the Resolution Professional’s functions from the 40th day of the insolvency commencement date in the event of a delay in the appointment of a resolution professional, this Tribunal is earnestly urged to direct the Committee of Creditors(CoC) of Ramos Ceramic Private Limited to allocate necessary funds for the payment of the fees and expenses incurred by the Interim Resolution Professional during the deemed RP period. 

v. To direct the Committee of Creditors (CoC) of Ramos Ceramic Private Limited to exercise its discretion in determining whether to proceed with the CIRP. Should the CoC decide not to pursue the CIRP it may kindly be allowed to withdraw the application filed under CP(IB) 40(AHM)2023, in accordance with the provisions of the IBC, 2016. 

# 2. The brief facts of the case are that the Corporate Debtor was admitted under CIRP vide order dated 14.02.2024. Mr. Bhavan Trivedi , IP is appointed as IRP. The application filed under Sec 9 of IBC 2016 was submitted by R1 and on its approval this Tribunal appointed the applicant as IRP in terms of Sec 16 of the IBC 2016 as the application was submitted by an Operational Creditor of the CD. The role of the IRP was to start the CIRP process and convene the first meeting of the CoC in terms of Sec 17 and 18 of IBC 2016. The applicant had done that and formed a committee of creditors in terms of Sec 21 of the Act comprising exclusively of Operational Creditors. It is stated that in the first meeting of the CoC, comprising Operational Creditors of the Corporate Debtor convened on 18.03.2024, the members of the CoC were unable to reach a resolution regarding the appointment of new RP, therefore, no application pursuant to the provisions of Section 22 of the IBC 2016 was made on approval of COC for appointing a new RP. 

# 3. It is to reiterate that upon public announcement of the CIRP claims were lodged with the said IRP and the CoC was constituted. Additionally an order was passed in IA 473 of 2024 filed by the IRP for placing on record the report certifying the CoC. The RP also arrived at the voting share of each of the 3 operational creditors. In the first meeting of CoC the committee, two resolutions placed by the IRP for approving the fee to be paid and his offer to continue as RP (on approval by CoC) was not approved and two out of three members submitted their votes, expressing dissent on 20.03.2024 by email. The third member of CoC i.e. R-2 Gibraltar Glass and Ceramics Private Limited, neither provided assent nor dissent within the stipulated timeline. The voting share with 86.06% comprising 2 COC members disapproved both the resolutions, for the appointment of RP and the fee and expenses was disapproved. The CoC failed to nominate any new RP to be appointed as the RP in accordance with the Section 22(2) of the IBC 2016. 

# 4. The Applicant relied upon Section 22(2) & 22(3) of the IBC 2016 and prayed this Tribunal to direct the CoC to initiate the necessary application and whether the transition from the existing IRP to RP deemed appropriate and prayed to consider guiding the CoC to allocate funds for RP fees and CIRP expenses in advance ensuring the smooth continuation of the CIRP proceedings. This may entail either depositing the funds with the Court or directly remitting them to the appointed RP as per the provisions of the IBC. 

# 5. On issuance of notice from the Registry, the Ld. Counsel for the Respondent No. 2 appeared and filed its affidavit-in-reply as well as written submissions. However, the Respondent Nos. 1 & 3 are proceeded Ex-parte. 

# 6. The Respondent No. 2 stated in its reply that he is withdrawing its claim filed before the Applicant and withdrawing itself from the CoC that has been constituted. R2 is seeking liberty to file such further detailed affidavit as and when required. It is to state that its claim of Rs. 65,96,194/- was admitted by the Applicant and he is acquired 13.94% voting share in CoC. It is also stated that owing to the expenses involved in the CIRP process, the R-2 does not want to pursue the CIRP against the Corporate Debtor as a member of CoC. 

# 7. Having heard Ld. PCS for the Applicant as well as Ld. Counsel for the R-2 and perused the material available on record the following observations are made. 

a) The IRP appointed in terms of the provisions of Section 16 of the IBC had constituted the committee of creditors in terms of Section 21 of the IBC. When there are no financial creditors, the IRP has rightly formed the committee with representation of Operational Creditors as per Regulation 16 of IBC Regulations 2016. 

b) The IRP has sought confirmation of the IRP expenses which was not ratified by 2 of the members, including the Operational Creditor who has moved the application for insolvency under Sec 9, while one of the members has not voted, and abstained. Subsequently he has withdrawn the claim and sought removal from COC. 

c) The appointment of a new RP was not suggested or the name of the same IRP who offered himself was not approved by the COC. 

d) In case the IRP cost is not approved by COC members, it is the responsibility and cost to the applicant COC member who even if has dissented has to bear the IRP expenses. This is also decided in the case of Guru Containers Vs Jitendra Palande by Hon’ble NCLAT in Company Appeal (AT) (Insolvency) No.106 of 2023 passed on 22. 02.2023. 

e) The IRP’s continuance as RP has not been approved in the first COC meeting and subsequently there are no other COC meeting which needs reconstitution and appointment of a new RP. This has also been decided in the order by Hon’ble NCLAT as the CoC can still replace the IRP under Section 22 of IBC.

f) Hence the IRP who is the applicant is eligible for his dues of IRP cost as his fee and reimbursement of CIRP cost incurred to be paid by the R1 namely Sicer India Pvt Limited who has preferred this application. However, he is not eligible to continue as RP as the COC in its 1st meeting has decided against the agenda for his nomination as RP. In view of the above we pass the following order. 

O R D E R 

i. IA No. 533 of 2024 is partially allowed. 

ii. R-1 is directed to pay the IRP cost and fee to the IRP without any further delay. 

iii. The IRP to convene a meeting of COC wherein the COC members (2) will approve the reconstitution of the COC and approve a new RP in place of the IRP who is the applicant in this matter. In case the R-3 votes for the reconstitution and replacement of RP he will share the CIRP cost incurred with R-1. 

iv. In case R-1 and R-3 decide not to appoint another RP or reappoint the IRP to continue, they will withdraw their claims before the IRP and if such withdrawal is by more than 90% of claimants, the Tribunal will decide further in the matter. 

v. IRP cannot do any other function other than convening the next meeting of COC for the matters mentioned in this order. 

# 8. With the above said observations, IA No. 533 of 2024 is stands disposed of. 

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Katra Realtors Pvt. Ltd. Vs. Mr. Rajesh Ramnani, RP and Anr - Any application for replacement dehors Section 27 process can be entertained only when there are findings on conduct of the Resolution Professional by the Adjudicating Authority or some proved fact,

 NCLAT (2024.03.04) in Katra Realtors Pvt. Ltd. Vs. Mr. Rajesh Ramnani, RP and Anr [(2024) ibclaw.in 136 NCLAT, Company Appeal (AT) (Insolvency) No. 382 of 2024] held that;

• Any application for replacement dehors Section 27 process can be entertained only when there are findings on conduct of the Resolution Professional by the Adjudicating Authority or some proved fact, merely on allegation as has sought to be made by the Applicant, the Adjudicating Authority shall not enter into enquiry and decide the allegations for the purpose of deciding the application filed by the Appellant.

Excerpts of the order;

04.03.2024: Heard Learned Counsel for the Appellant as well as Counsel appearing for the Respondents.

# 2. This Appeal has been filed against the order dated 24.01.2024 passed by the Adjudicating Authority (National Company Law Tribunal), New Delhi, Court-III by which the IA No.882 of 2023 filed by the Appellant for replacement of Resolution Professional has been rejected. The Appellant is a minority shareholder having 8.785% shareholding in the Corporate Debtor. The Adjudicating Authority has rejected the application relying on Section 27 of the IBC.

# 3. Learned Counsel for the Appellant challenging the order submits that there were allegations made against the Resolution Professional in the application questioning the various admission of claims by the Resolution Professional and other transactions which has not been examined by the Adjudicating Authority.

# 4. Learned Counsel for the Respondents refuting the submission of the Counsel for the Appellant submits that the group company of the Appellant has already filed an application before the Adjudicating Authority questioning the transactions and admission of claims which are pending consideration. It is submitted that the Appellant who is minority shareholder of the same promoter group has filed the application to create obstacles in carrying out the CIRP.

# 5. We have considered the submissions of the Counsel for the parties are perused the record.

# 6. It is not disputed that the Appellant is shareholder having 8.785% who has moved the application for replacement of the RP. It is well settled that Section 27 is enabling provision where replacement of RP can be proceeded.

# 7. Learned Counsel for the Appellant has referred to judgment of this Tribunal where this Tribunal has taken the view that the Adjudicating Authority does not lack of jurisdiction to take decision in appropriate cases for replacement of the RP. He has referred to judgment of this Tribunal in Company Appeal (AT) (Insolvency) No.947 of 2021- “Stressed Assets Stabilization Fund (SASF) vs. Piyush Periwal & Ors.” and other judgments.

# 8. Learned Counsel for the Respondents submits that the Adjudicating Authority exercised its jurisdiction in cases at the instance of the financial creditor and those who were affected and not by minority shareholders as in the present case.

# 9. In the facts of the present case, we are of the view that the Adjudicating Authority did not commit any error in rejecting the application filed by the Appellant. Any application for replacement dehors Section 27 process can be entertained only when there are findings on conduct of the Resolution Professional by the Adjudicating Authority or some proved fact, merely on allegation as has sought to be made by the Applicant, the Adjudicating Authority shall not enter into enquiry and decide the allegations for the purpose of deciding the application filed by the Appellant.

# 10. We thus, are of the view that no error has been committed by the Adjudicating Authority in rejecting the application. We only observe that in event, any finding is entered by the Adjudicating Authority, it shall be open for the Appellant to file a fresh application in accordance with the law. The Appeal is dismissed.

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