Liquidation-Liquidator-Removal/Replacement/Change

Whether a written consent to act as Resolution Professional (RP) or Liquidator prior to the filing of application for replacement is a mandatory requirement under IBC | Whether Proposed/Prospective Liquidator has locus to file appeal against rejection of appointment – AAA Insolvency Professionals LLP Vs. Edelweiss Asset Reconstruction Pvt. Ltd. – NCLAT New Delhi

Issues in this case:

(i) Requirement of a written consent prior to the filing of the application for replacement of the liquidator. (ii) If the written consent was not given, whether it is a curable defect and can be removed. (iii) Whether Adjudicating Authority can appoint a Liquidator though it was not approved by the SCC. (iv) Whether Proposed/Prospective Liquidator has no locus to file the appeal against rejection of appointment as RP/Liquidator.

Whether a written consent to act as Resolution Professional (RP) or Liquidator prior to the filing of application for replacement is a mandatory requirement under IBC | Whether Proposed/Prospective Liquidator has locus to file appeal against rejection of appointment – AAA Insolvency Professionals LLP Vs. Edelweiss Asset Reconstruction Pvt. Ltd. – NCLAT New Delhi Read Post »

R.Prabhu and Anr. Vs. CA.V.Venkata Sivakumar – Madras High Court

The allegations that were made against the respondent in the application filed by the petitioners became necessary in order to project the conduct/character of the respondent. If those allegations were not made in the application filed by the petitioners, there was no ground for the petitioners to seek the removal of the respondent from acting as the Liquidator. The findings rendered by the NCLT and the NCLAT would show that the respondent was, in fact, involved in certain acts, which fell within the scope of Section 276 of the Companies Act, 2013.

R.Prabhu and Anr. Vs. CA.V.Venkata Sivakumar – Madras High Court Read Post »

A Liquidator is not on the panel of the Bank is not a valid and reasonable reason to remove/replace | Wisdom/Right for change of Liquidator is not available to SCC | In Liquidation Process Regulation 31A(11), SCC has to record specific reason for replacement of the Liquidator – State Bank of India Vs. Mr. Ramakant Gupta Liquidator of Sujyot Infrastructure Pvt. Ltd. – NCLT Ahmedabad Bench

In this case, SBI has preferred an IA on behalf of SCC for replacement of the present liquidator only with the reason that the present Liquidator is not on the panel of the State Bank of India.

In this important decision on replacement of Liquidator, Hon’ble NCLT Ahmedabad Bench holds that:
(i) The IBBI (Liquidation) Regulation 31A(11) specifically states that the Liquidator can be replaced by the SCC after recording the reasons in the minutes of the SCC.
(ii) It is noticed that there exist a marked difference for change of Resolution Professional and change of Liquidator. During CIRP the COC has the wisdom to replace the RP if there is majority of more than 66% without assigning any specific reason for such replacement as such option is available as a matter of right. In the Liquidation process, the SCC has to record specific reason for replacement of the Liquidator.
(iii) Wisdom or right for change of liquidator is not available to SCC in the Liquidation process.
(iv) The applicant bank had stated only single reason to replace the present Liquidator that the Liquidator is not on the panel of the State Bank of India. In our view; it cannot be a valid and reasonable reason to change or to replace the Liquidator.

A Liquidator is not on the panel of the Bank is not a valid and reasonable reason to remove/replace | Wisdom/Right for change of Liquidator is not available to SCC | In Liquidation Process Regulation 31A(11), SCC has to record specific reason for replacement of the Liquidator – State Bank of India Vs. Mr. Ramakant Gupta Liquidator of Sujyot Infrastructure Pvt. Ltd. – NCLT Ahmedabad Bench Read Post »

Liquidator can be removed under IBC, 2016 on any of the grounds provided under Sec. 276 of the Companies Act, 2013 – State Bank of India Vs. Mr. Kari Venkateswarlu – NCLT Hyderabad Bench

NCLT Hyderabad held that:
(i) The liquidator is the appointee of this Authority. He is supposed to act as a neutral umpire vis-a-vis various stakeholders in the game.
(ii) It is for the CoC etc. but not the Resolution Professional, to take appropriate proceedings or file an appeal and the Resolution Professional should have maintained a neutral stand.
(iii) The relationship between the liquidator and the Adjudicating Authority is sort of fiduciary. Similarly, the liquidator has also to maintain highest regard to the principles of integrity and honesty in dealing with all the stakeholders.
(iv) The grounds under Sec. 276 of Companies Act, 2013 have direct link with the functioning of the liquidator and if he treads the path which clash with the interest of the stakeholders or shock the conscience of the common man, he can be removed. On the same analogy, the liquidator can also be removed under the IBC on any of the above grounds.

Liquidator can be removed under IBC, 2016 on any of the grounds provided under Sec. 276 of the Companies Act, 2013 – State Bank of India Vs. Mr. Kari Venkateswarlu – NCLT Hyderabad Bench Read Post »

Suspended Director has no vested right to recommend the removal of the liquidator – Kulwinder Singh Makhni (Ex-Director Punjab Basmati Rice Ltd.) Vs. Mr. Sanjay Kumar Aggarwal Liquidator of Punjab Basmati Rice Ltd. – NCLT Chandigarh Bench

The present application has been filed by Ex-Director of the Corporate Debtor against the Liquidator seeking direction for the removal of the Liquidator and for appointment of a new Liquidator of the corporate debtor prior to the date of sale of assets of the corporate debtor, fixed for 29.03.2023.
NCLT Chandigarh Bench held that in the case at hand, the applicant’s suspended director has made certain allegations against the liquidator. In view of the Liquidation Regulation 31A(11), the power to remove the liquidator lies squarely with the Stakeholders Consultation Committee(SCC). The Suspended Director has no vested right to recommend the removal of the liquidator. The IA filed by SCC, it nowhere recommends the removal of the liquidator and has only prayed for directions to the liquidator to immediately distribute the amount recovered by him from the sale of liquidation of assets of the corporate debtor after retaining the disputed amount with respect to his alleged liquidator fee plus liquidation expenses.

Suspended Director has no vested right to recommend the removal of the liquidator – Kulwinder Singh Makhni (Ex-Director Punjab Basmati Rice Ltd.) Vs. Mr. Sanjay Kumar Aggarwal Liquidator of Punjab Basmati Rice Ltd. – NCLT Chandigarh Bench Read Post »

Replacement of Liquidator as per Regulation 31A(11) of the Liquidation Process Regulations, 2016 – Indian Bank Vs. Anil Mehta Liquidator of Pratibha Industries Ltd. – NCLT Mumbai Bench

In this case, an application field to remove the Liquidator of the Corporate Debtor and replace. With approval of the Stakeholders Consultation Committee (SCC) voted by 85.94% in favor of removing the present Liquidator and replacing him with the new Liquidator.
Adjudicating Authority allowed the application holding that it has very limited scope of judicial review in matters wherein certain decisions are placed entirely on the commercial wisdom of the CoC or SCC as the case may be, this position is made clear by a catena of Judgements of the Hon’ble NCLAT.

Replacement of Liquidator as per Regulation 31A(11) of the Liquidation Process Regulations, 2016 – Indian Bank Vs. Anil Mehta Liquidator of Pratibha Industries Ltd. – NCLT Mumbai Bench Read Post »

There is no personal liability of the son of the deceased Liquidator to supply documents as was claimed by the Liquidator which could not be located in the papers – Mukesh Kumar Jain, Liquidator Trans Gulf Frozen Food Containers Pvt. Ltd. Vs. Divyanshu Walia – NCLAT New Delhi

The New Liquidator filed I.A. against the son of the deceased liquidator seeking direction to hand over all the documents/records pertaining to the corporate debtor. The Adjudicating Authority while passing the order has noticed the Reply given by the son of the Liquidator and in the replies, details of documents sought by the new Liquidator has been handed over to the present Liquidator.
NCLAT held that whatever the documents were asked for from the son of the deceased liquidator have been given in the Replies submitted by the son as has been noticed by the Adjudicating Authority, hence, no reason to find any fault with the order of the Adjudicating Authority disposing of the Application. It is always open for the present Liquidator to approach the ex-management of the Corporate Debtor for any documents as required and not received by the Liquidator. There is no personal liability of the son of the deceased Liquidator to supply documents as was claimed by the Liquidator which could not be located in the papers. Furthermore, whatever the documents were there with the son of the deceased liquidator has already been submitted.

There is no personal liability of the son of the deceased Liquidator to supply documents as was claimed by the Liquidator which could not be located in the papers – Mukesh Kumar Jain, Liquidator Trans Gulf Frozen Food Containers Pvt. Ltd. Vs. Divyanshu Walia – NCLAT New Delhi Read Post »

Adjudicating Authority being the appointing authority of IRP/RP was well within its jurisdiction to pass an order for removal of a Resolution Professional(RP) particularly in a situation where the RP has not taken any steps to convene a meeting of CoC for the purposes of removal of RP – Srigopal Choudary RP of Shree Ram Urban Infrastructure Ltd. Vs. SREI Equipment Finance Ltd. – NCLAT New Delhi

NCLAT held that the provision of Section 27 of the Code contemplates that the replacement of the Resolution Professional can be done by the CoC alone. But if the ingredients of Section 27 of the Code cannot be met i.e. in the event, the RP is not convening the meeting of CoC, which in turn has to decide the replacement of the RP himself, the Adjudicating Authority, in order not to delay the CIRP proceedings, on an application under Rule 11 of the NCLT Rules, 2016 has rightly invoked its inherent jurisdiction and passed the impugned order.

Adjudicating Authority being the appointing authority of IRP/RP was well within its jurisdiction to pass an order for removal of a Resolution Professional(RP) particularly in a situation where the RP has not taken any steps to convene a meeting of CoC for the purposes of removal of RP – Srigopal Choudary RP of Shree Ram Urban Infrastructure Ltd. Vs. SREI Equipment Finance Ltd. – NCLAT New Delhi Read Post »

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