The NCLAT upheld the retroactive suspension of an Interim Resolution Professional (IRP) and validated the appointment of a replacement during ongoing Corporate Insolvency Resolution Process (CIRP) proceedings.
The National Company Law Appellate Tribunal (NCLAT), Chennai Bench comprising Justice Sharad Kumar Sharma (Judicial Member) and Jatindranath Swain (Technical Member) was hearing an appeal filed by the Insolvency Professional and observed that the suspension of the Interim Resolution Professional (IRP) by the IBBI is retroactive, thereby validating the replacement of the IRP during ongoing Corporate Insolvency Resolution Process (CIRP) proceedings, even if the suspension order is issued after the commencement of the process.
The Company Appeal was filed by the Appellant challenging the Adjudicating Authority’s order dated March 11, 2024, which removed him from his role as an Interim Resolution Professional (IRP) and appointed Mr. Hari Karthik as his replacement. The Appellant, a registered Insolvency Professional with the IBBI, was initially appointed as IRP for M/s. Thirupur Suriya Textiles Pvt. Ltd. following a liquidation order dated June 14, 2019. However, he was replaced by Mr. G.V. Ravikumar on September 20, 2017, and subsequently, Mr. Ravikumar was appointed as the Liquidator on January 11, 2018.
The Appellant faced disciplinary proceedings initiated by the IBBI due to allegations of misconduct, culminating in the suspension of his license on April 12, 2023. This suspension was based on a report indicating that the Appellant had engaged in unauthorized withdrawals during the moratorium period, breaching the provisions of the Insolvency and Bankruptcy Code (IBC). The Appellant’s arguments that the suspension should have a prospective effect and not impact ongoing CIRP proceedings were rejected. The Appellate Tribunal found that the suspension, effective from April 12, 2023, was retroactive, rendering the Appellant ineligible to act as an IRP in any proceedings, including those initiated before the suspension date.
The NCLAT concluded that the removal of the Appellant and appointment of Mr. Hari Karthik as IRP was justified and did not warrant interference. Consequently, the appeal was dismissed for lack of merit.
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