IBBI ought to have passed a reasoned order before rejecting complaint in respect of IRP’s conduct

Case details: PM Cold Storage (P.) Ltd. v. Insolvency & Bankruptcy Board of India - [2021] 129 taxmann.com 86 (Delhi)

Judiciary and Counsel Details

• • Prathiba M. Singh, J.
  • Chayan Gupta and Priyanshu Upadhyay, Advs for the Petitioner.
  • Vikas Mehta, Aproov Khatar and Ms. Soumya Dutta, Advs. for the Respondent.

Facts of the Case

The Petitioner filed a petition against one M/s Goouksheer Farm Fresh Private Limited before the NCLT, Kolkata Bench, under section 7 of the Insolvency and Bankruptcy Code, 2016. The petition was granted by the said Bench, and Respondent No. 2 Mr. Sanjeev Jhunjhunwala was designated as the Interim Resolution Professional to begin the corporate insolvency resolution procedure.

The Petitioner possessed 100 percent voting rights in the Committee of Creditors, but due to the exorbitant price levied by the IRP, the Petitioner was forced to move for a change of IRP.

Further, the IRP had also inducted another Financial Creditor, namely, M/s New Hind Silk House Pvt. Ltd, by allowing 75% voting rights. There were various allegations which were made by the Petitioner against the IRP and it was the case of the Petitioner that the IRP was not acting in accordance with the provisions of the IBC and the regulations thereto.

The NCLT, on the other hand, denied the Petitioner’s request to have the IRP removed. The order in question was appealed to the NCLAT. Meanwhile, the Petitioner tried to safeguard the company’s fixed deposit by filing a complaint with the IBBI over the IRP’s actions. The Petitioner’s issue was that the IBBI had rejected the complaint without giving any justification.

High Court Held

On behalf of the IRP, ld. Counsel submitted that there was a detailed reply to the application filed by the Petitioner, however, the same was not contained the order. Ld. Counsel further submitted that the allegations did not have any basis and the IRP has acted in accordance with law. It was sufficient to indicate that the IBBI should have given a reasoned ruling without delving into the matter of whether the IRP was guilty of misconduct or not.