IRP seeking discharge after appointment fined by NCLT. IBBI directed to take action under IBC-2016 Regulations for unprofessional attitude of IRP
ABCAUS Case Law Citation:
ABCAUS 2339 (2018) (05) IBBI
An application had been filed by the Insolvency Resolution Professional (IRP) seeking for discharge from the Corporate Insolvency Resolution Process (CIRP) under the provisions of Insolvency and Bankruptcy Code, 2016 (IBC 2016) which was initiated by the Tribunal on a Company Petition filed by the Operational Creditor (OC) in view of defaults committed by the Corporate Debtor (CD) in relation to the operational debt owed to it.
As per the application, it was contended by the IRP that the order of the Tribunal dated 28-02-2018 appointing IRP was not received by him either by way of email or by way of post till 14.3.2018 and since the order was also not uploaded on time, the parties were not in a position to provide the order dated 28.2.2018. It was further stated that a representative was sent by the IRP to the Registry of the Tribunal for obtaining a free copy and that the free copy was given to the representative of IRP on 15.3.2018. It was further stated that on receipt of the copy of order the applicant had sent an email on 17.3.2018 addressed both to the advocate for the OC as well as to the Registrar of this Tribunal, expressing the inability of IRP-Applicant to continue as IRP and that the consent given in Form-2 be treated as withdrawn in the matter due to unavoidable circumstances.
The Tribunal, in view of the fact that the Insolvency Professionals are basically empanelled and regulated by IBBI and the list of names of empanelled IPs is also forwarded by it to the Tribunal, issued notice to IBBI and also make IBBI as a party to the Application.
The IBBI, in its detailed reply stated thar the application filed by the Applicant IRP was not justified as lacking merit since the issue raised was based upon an incorrect understanding of law. In accordance with the guidelines of December, 2017, it was stated that the Board prepares a panel of IPs for appointment as IRP or liquidator and has shared the said panel with this Tribunal and that the said panel has a validity of 6 months and that a new panel replaces the earlier panel every 6 months. It is further pointed out in the affidavit that based on the expression of interest to be included in the panel for the relevant period by the IRP who is Applicant herein, his name has been included in the panel which had been forwarded to this Tribunal and in view of the same the prayer as sought for by the IRP in the Application cannot be encouraged particularly having come to know that he has been appointed as an IRP. It was stated that even though in the present Application, the grounds of unavoidable circumstances had been cited seeking for the discharge, however as per email sent the reasons given was on the grounds of inability to devote adequate time to the subject assignment and in view of the same, the reasons for discharge advanced by he IRP were contradictory and non maintainable.
It was also pointed out that every assignment under the Code irrespective of its size and stake has the same importance under the law and is required to be seen with the same importance by the IRP.It was stated that the IRP had given his consent to act as a Resolution Professional or Liquidator for a period of 6 months ending on 30.06.2018, he should not be discharged from his duties to act as an IRP in relation to the CD as the functions of IRP being of serious nature and in the nature of public functions, the casual attitude should not be entertained.
The Tribunal observed that from the representations of the OC, CD and financial creditors that there was a prime need for the CIRP Process to commence, as envisaged under IBC-2016. Also the management of the CD was willing to act in accordance with IBC,2016 and cooperate with the IRP. However, the unprofessional action of IRP had virtually abcaus.in made the CIRP process non starter. It was also conceded that the IRP was put on notice through telephone about the order of appointment which showed that there was a delay on the part of the IRP who failed to recognize the importance of his unique position in the entire scheme of IBC, 2016, particularly in relation to CIRP of the CD.
The Tribunal observed that the reasons given of unavoidable circumstances without even specifying what was the nature of personal inconvenience and which was being touted about for seeking discharge to act as an IRP however on the other hand making a representation before the IBBI that too subsequent to his appointment giving contradictory and paradoxical reasons does not in any way advance the cause of the Applicant before this Tribunal, and also pointed out to the sheer unprofessional attitude of the Applicant/IRP . It is also pertinent to note
The Tribunal also rejected the contention that declaration in Form 2 had not been filed the same being a pre-condition and subject to which the IRP assumes charge as per the orders of the Tribunal as too technical and could not be accepted. The Tribunal opined that filing Form-2 is only a mere formality and that cannot be made a ground that his appointment has not been accepted and he is not an IRP, more so when consent to act as an IRP has already been given to IBBI based on which panel list has been forwarded and from which it is sought to be withdrawn.
The Tribunal observed that such practice of IRP’s appointed by NCLTs based on panel list provided by IBBI and subsequently trying to resile from their consent earlier given and that too upon appointment by Adjudicating Authority (AA) is strongly required to be eschewed and is to be nipped in the bud at the earliest opportunity.
The Tribunal rejected the application of IRP seeking for his discharge with costs of Rs. 50000/-. Further the IRP was directed to commence the performance of his duties forth with not later than 3 days from the date of this order in the interest of all the stakeholders concerned and facilitate the convening of the 1st Committee of Creditors meeting.
Further, in view of the unprofessional attitude of IRP, the Board was also directed to initiate suitable actions as per Regulations.
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