TMI Blog2020 (8) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... between the IRP/RP and the COC is that of confidence. If there is loss of confidence and combination is continued, the Corporate Debtor would be put to loss because of the bad relationship between IRP/RP with COC. The learned Counsel for the Appellant is rightly pointing out that initially Section 16 of IBC which deals with appointment and tenure of Interim Resolution Professional had provision which stated that The term of Interim Resolution Professional shall not exceed 30 days from date of his appointment. This could have caused vacuum and confusion in case of default. This provision was substituted with effect from 6th June, 2018 and now the provision in Section 16(5) provides The term of the Interim Resolution Professional shall continue till the date of appointment of the Resolution Professional under Section 22. Thus, the COC has the requisite powers to propose change of the Interim Resolution Professional even in meeting/s subsequent to the first meeting mentioned in Section 22(2) of IBC. There is no requirement that they should give particular reasons for the change. The Respondents in the Appeals are only the Corporate Debtors who are represented through t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such applications were filed in the other four matters also. Counsel states that in spite of law being clear on this count that COC has a right with regard to the continuation/change of the IRP/RP, the Adjudicating Authority wrongly rejected the Applications in all the five matters with similar orders giving rise to these five Appeals. Counsel states that facts on this count are common in all the five matters and according to him, the IRP initially appointed, was required to be replaced immediately in the interest of the Corporate Debtors themselves. 2. We have heard the learned Counsel for the Appellants in these Appeals. The Impugned Orders are similar and for the sake of convenience, it would be appropriate to reproduce the Order from the record of Company Appeal (AT) (Ins) No.497 of 2020:- ORDER This is an application filed by the sole Financial Creditor seeking replacement of IRP. 2. The brief facts that led to the Application are as follows. The Authority by an order dated 15.11.2019 admitted the Company Petition and directed initiation of the Corporate Insolvency Resolution Process (CIRP) of the respondent corporate debtor. It appointed Mr. PavanKankani ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l (AT) (Ins) 749 of 2019 (in para 2) which was pronounced on 6th August, 2019 and in the matter of Axis Bank Ltd. vs. Sixth Dimension Project Solution Ltd. Company Appeal (AT) (Ins) No.356 of 2019 dated 16th August, 2019 held that when it relates to matter of replacing the IRP, reading Section 22 with Section 27 of IBC, it is not necessary for COC to record reasons for replacing the IRP/RP and it is not necessary for the Adjudicating Authority to call for reasons or decide whether there are sufficient reasons. 5. Having gone through the Impugned Order, what appears is that the Adjudicating Authority has proceeded on the basis that if in the first meeting of COC, the COC does not replace the IRP with another RP, the COC cannot do so subsequently. Like statement of question of law is stated by the Adjudicating Authority that The COC having not resolved to replace IRP in its first meeting could not be allowed to replace him by a resolution in any of its subsequent meetings . It appears to us that this is clearly a wrong legal proposition considering the provisions of IBC. There is not merely Section 22 Sub-Section (2) which is relevant but also Section 27. Section 22(1) and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h deals with appointment and tenure of Interim Resolution Professional had provision which stated that The term of Interim Resolution Professional shall not exceed 30 days from date of his appointment. This could have caused vacuum and confusion in case of default. This provision was substituted with effect from 6th June, 2018 and now the provision in Section 16(5) provides The term of the Interim Resolution Professional shall continue till the date of appointment of the Resolution Professional under Section 22. It is rightly submitted by the learned Counsel that the earlier provision created serious difficulty if for any reason in the first meeting, the RP was not appointed and thus the law recognised that there could be situations where this may have to be done on a subsequent occasion. The learned Counsel for the Appellant has rightly referred also to Regulation 17 of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 where Regulation 17(3) reads as under:- 17. Constitution of committee.- (1) . (2) . (3) Where the appointment of resolution professional is delayed, the interim reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts as Financial Creditors although the 90 days period as laid down in Regulation 12(2) was over. It is stated that such action was done by the said RP Pavan Kankani much after the Impugned Order was passed calling a fourth COC meeting. The Counsel states that the fact remains that when third meeting was held and resolution passed, the Appellant was the only Member of COC with 100% voting rights. The learned Counsel states that the present Appeals may be dealt with on the basis of facts as prevalent at the time of third meeting and passing of Impugned Orders. We will leave, such subsequent developments to be looked into by RP approved in third meeting, referred above. 12. For the above reasons, we pass following Orders in these Appeals:- ORDER The Appeals are allowed. Impugned Orders in these Appeals are set aside. We allow the Committee of Creditors in each of these matters to engage Shri B. Naga Bhushan as Resolution Professional in each of the matters, if there is no proceeding pending against him. In so far as fees and costs incurred by IRP, Pavan Kankani in each of these matters, he will place the evidence in support of the fees and costs incurred by him and COC ..... X X X X Extracts X X X X X X X X Extracts X X X X
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