NCLT appointed a new resolution professional as present Resolution professional failed to carry Insolvency Process

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  • Last Updated on 23 August, 2021

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Corporate Insolvency Resolution Process

Case details: Ram Niwas & Sons v. Palm Developers (P.) Ltd. - [2021] 129 taxmann.com 181 (NCLT - New Delhi)

Judiciary and Counsel Details

    • Abni Ranjan Kumar Sinha, Judicial Member and L.N. Gupta, Technical Member. 
    • Abhishek Kumar, Adv. for the Applicant.
    • Barun Kumar Sinha, Adv. for the Respondent.

Facts of the Case

In the instant case, the Adjudicating Authority had initiated the Corporate Insolvency Resolution Process (CIRP) against the corporate debtor and appointed the one ‘MKS’ as Interim Resolution Process (IRP) of the corporate debtor.

The main grievance of the Applicant/IBBI was that said IRP had neither made efforts in managing the operations of the corporate debtor as a going concern nor performed the duties cast upon him under the Code to complete the CIRP, nor complied with the directions of the Adjudicating Authority.

NCLT Held

The NCLT, Delhi Bench found that IRP had not been able to give any cogent reasons for not being able to carry forward the CIRP and as to why no meeting of CoC with Financial Creditors could be convened. In addition, the CIRP is a time-bound process involving certain common steps those need to be performed by every IRP/RP like Appointment of valuers, Evaluating and placing Resolution Plan before CoC, etc. and for performing such mandated tasks, the CoC must be in operation. The non-performance of the aforesaid steps within the prescribed timelines will make the entire CIR Process infructuous, which will drive the corporate debtor into Liquidation eventually.

Given the above and in an extraordinary situation, the IRP had neither conducted any meeting of CoC nor taken concrete steps for carrying forward the CIR Process under the provisions of the IBC through a period of 309 days have elapsed in the meantime against the statutory initial timeline of 180 days, this a case of abuse of the process of the IBC/Tribunal.

In order to protect the interest of the corporate debtor and its stakeholders, and for the furtherance of the CIR Process, ‘MKS’ was to be replaced and a new IRP was to be appointed. Accordingly, show cause notice was to be issued to ‘MKS’ as to why the contempt proceedings would not be initiated against him.

List of Cases Referred to

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