Allowed

In the matter of Vallabh Textiles Company Limited Ia No.682 of 2022 In Cp(Ib) No.391-Chd-Pb-2018

NCLT11 Jul 2022

Case brief

AI extract

What is this about?

The NCLT allowed an application by the Committee of Creditors to replace the suspended Resolution Professional under Section 27 of the IBC. The Tribunal relied on the Committee's 93.80% voting resolution and the credentials of the new applicant, directing immediate handover.

What did the court decide?

Direction to the new Resolution Professional to immediately take over charge and handover records from the outgoing Resolution Professional within ten days.

In the matter of Vallabh Textiles Company Limited Ia… — Insolvency and Bankruptcy | NCLT (2022)

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THE NATIONAL COMPANY LAW TRIBUNAL CHANDIGARH BENCH (through web-based vide conferencing platform)

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IA No.682 of 2022 In

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CP(IB) No.391/Chd/Pb/2018 (Admitted)

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Under Section 27of the Insolvency and Bankruptcy Code, 2016

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In the matter of :- Punjab National Bank …Financial Creditor Versus Vallabh Textiles Company Limited …Corporate Debtor

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And in the matter of :-

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Committee of Creditors through Punjab National Bank

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…Applicant Order delivered on 11 .07.2022

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Coram: HON’BLE SHRI HARNAM SINGH THAKUR, MEMBER (JUDICIAL) HON’BLE SHRI SUBRATA KUMAR DASH, MEMBER (TECHNICAL)

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Present through Video Conferencing :-

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For the Applicant :- Mr. Abhishek Anand, Advocate Mr. Viren Sharma, Advocate

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PER: HARNAM SINGH THAKUR, MEMBER (JUDICIAL)

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ORDER

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IA No.682/2022

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The present application has been filed by Punjab National Bank, through its Authorized Representative, for and on behalf of the members of the Committee of Creditors of the corporate debtor seeking replacement of Resolution Professional under Section 27 of the Insolvency and Bankruptcy Code, 2016, (hereinafter referred to as the ‘ Code ’).

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IA No.682 of 2022 In CP(IB) No.391/Chd/Pb/2018 (Admitted)

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Page 2 of 5

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It is stated that this Tribunal vide order dated 12.04.2019 admitted the petition under Section 7 of the Code for initiation of the CIRP of the corporate debtor and appointed Mr. Sumat Kumar Gupta as the Interim Resolution Professional, who was subsequently confirmed as the Resolution Professional by the Committee of Creditors.

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It is further stated that the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (hereinafter referred to as the ‘IBBI’) vide its order dated 06.05.2022 (Annexure A-3) suspended Mr. Sumat Kumar Gupta, as Insolvency Professional for a period of one year and further directed the Committee of Creditors wherein Mr. Sumat Kumar Gupta is providing his services to decide whether they want to continue his services or not.

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After hearing the application relating to the resolution plan and other connected application, this Tribunal vide order dated 24.05.2022 (Annexure A-4) held the Resolution Applicant to be ineligible in view of Section 29A of the Code for submitting the resolution plan and further directions were given for extension of the CIRP period by 90 days and reinstatement of Committee of Creditors for completion of CIRP of the corporate debtor.

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It is further stated that in pursuance of order dated 24.05.2022, 22^nd Meeting of the Committee of Creditors was convened on 31.05.2022 (which was subsequently adjourned to 04.06.2022), wherein the members of the Committee of Creditors requested the Resolution Professional to place the agenda for replacing the Resolution Professional. The Resolution Professional informed the members of the Committee of Creditors that he has obtained a stay on order dated 06.05.2022 passed by the IBBI from the Hon’ble Punjab and Haryana High Court, however, the

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IA No.682 of 2022 In CP(IB) No.391/Chd/Pb/2018 (Admitted)

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Page 3 of 5

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members of the Committee of Creditors in terms of the provisions of Section 27 of the Code, requested to place the agenda for replacing the Resolution Professional. Thereafter, the Committee of Creditors with more than requisite voting of 93.80% resolved and approved the agenda for replacement of Mr. Sumat Kumar Gupta with Mr. Rajiv Khurana, having registration No.IBBI/IPA-001/IP-P00126/2017-18/10268 in accordance with the provisions of Section 27(1) of the Code. Copy of minutes of 22^nd Meeting of the Committee of Creditors dated 04.06.2022 along with voting results have been annexed as Annexure A-5 (Colly).

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It is contended by learned counsel for the applicant that no reason has been assigned by the Committee of Creditors for replacement of Resolution Professional and it is the prerogative of the Committee of Creditors to change the Resolution Professional. In support of his contentions, learned counsel for the applicant has placed reliance on an order dated 16.07.2018 passed by the Hon’ble National Company Law Appellate Tribunal, New Delhi, in Company Appeal (AT) (Insolvency) No.302 of 2018 in State Bank of India versus Ram Dev International Ltd. (through Resolution Professional) , wherein the Hon’ble NCLAT has held as under:-

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“10. From the aforesaid provision it is clear that during the Corporate Insolvency Resolution Process, at any time, if the Committee of Creditors 'is of opinion' that the Resolution Professional appointed under Section 22 is required to be replaced, it may replace him with another Resolution Professional in the manner provided under said section. In terms of Section 27(2), the Committee of Creditors at a meeting by vote of 75% of voting share (as per un-amended provision) can propose to replace the Resolution Professional appointed under Section 22 with another Resolution Professional.”

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Further, it has been held by the Hon’ble NCLAT as under:

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IA No.682 of 2022 In CP(IB) No.391/Chd/Pb/2018 (Admitted)

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Page 4 of 5

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“14. We are of the view, it is not desirable for a Committee of Creditors to record its opinion in view of the following reasons:

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(i) If the Committee of Creditors record any adverse opinion for replacement of Resolution Professional, it will not only harm him for the present but will also affect him in future during appointment as Resolution Professional in another proceeding. In such case, the Committee of Creditor will have to refer the matter to IBBI for initiation of departmental proceeding, which is also not desirable in all the cases.

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(ii) If the Committee of Creditors forms opinion on the basis of performance of the Resolution Professional and not because of allegation, it will also go against the Resolution Professional in interest of the Resolution Process.”

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In this case, no ground or opinion has been assigned by the Committee of Creditors for replacement of Resolution Professional while resolving and approving the agenda for replacement of Mr. Sumat Kumar Gupta with Mr. Rajiv Khurana. A perusal of the instant application shows that proposed Resolution Professional, Mr. Rajiv Khurana, has submitted his written consent alongwtih Certificate of Registration with the IBBI. Copy of the same have been annexed as Annexure A-6 (Colly). The Law Research Associate of this Tribunal has checked the credentials of Mr. Rajiv Khurana and nothing adverse has been found against him.

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Keeping in view the facts and circumstances and grounds mentioned in the application and in view of the fact that committee of creditors in its 22^nd Meeting dated 04.06.2022 with 93.80% voting share has resolved and approved the replacement of Mr. Sumat Kumar Gupta with as the resolution professional, we pass the following directions in IA No.682/2022.

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(i) Mr. Rajiv Khurana, bearing Registration No.IBBI/IPA-001/IPP00126/2017-18/10268 will immediately take over the charge from the outgoing Resolution Professional, Mr. Sumat Kumar Gupta, who shall forthwith hand over all the records and all the

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IA No.682 of 2022 In CP(IB) No.391/Chd/Pb/2018 (Admitted)

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Page 5 of 5

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documents, records and statements pertaining to the Corporate Debtor to the newly appointed Resolution Professional- Mr. Rajiv Khurana.

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(ii) Mr. Rajiv Khurana, the newly appointed Resolution Professional, upon taking charge shall discharge the functions in accordance with the provisions of the Code and the Regulations of IBBI.

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(iii) Compliance report of handing/taking over charge, besides all the necessary records shall be submitted to the Tribunal by within ten days from the receipt of copy of this order.

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Thus, IA No.682/2022 is allowed and disposed of. Registry is directed to immediately supply a copy of this order to the learned counsel for the applicant.

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Sd/(Subrata Kumar Dash) Member (Technical) July 11, 2022 MK

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Sd/(Harnam Singh Thakur) Member (Judicial)

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IA No.682 of 2022 In CP(IB) No.391/Chd/Pb/2018 (Admitted)

In the matter of Vallabh Textiles Company Limited Ia No.682 of 2022 In Cp(Ib) No.391-Chd-Pb-2018

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In the matter of Vallabh Textiles Company Limited Ia No.682 of 2022 In Cp(Ib) No.391-Chd-Pb-2018

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