The NCLAT New Delhi held that the Removal of a Resolution Professional by the Adjudicating Authority cannot be challenged.
The National Company Law Appellate Tribunal (NCLAT), New Delhi Bench comprising Justice Rakesh Kumar, Judicial Member and Ms. Shreesha Merla, Technical Member were hearing today, an Appeal of the Resolution Professional who was replaced by the Adjudicating Authority and held that the Removal of a Resolution Professional by the Adjudicating Authority cannot be challenged. The Appellate Tribunal noted that the Adjudicating Authority has rightly exercised its inherent jurisdiction.
In the present case, the RP who was expected to convene the CoC Meeting was avoiding convening the ‘Meeting’ despite a request made by the applicant/respondent herein vide email dated 06.10.2021 for convening the ‘Meeting’ with the agenda to remove the RP. The applicant was left with no option but to approach the Adjudicating Authority and the Adjudicating Authority has rightly exercised its inherent jurisdiction. Moreover, it is a settled law that one who appoints can also remove/dismiss the appointee. This position is further clarified on examination of Section 16 of The General Clauses Act, 1897.
The Appellate authority noted that the Hon’ble Supreme Court in M/s. Heckett Engineering Co. v. Their Workmen, reported in (1977) 4 SCC 377 has held that the Appointing Authority can also dismiss the appointee. Thus, the Appellate Tribunal were of the opinion that the Adjudicating Authority being the appointing authority of IRP/RP was well within its jurisdiction to pass an order for the removal of the RP particularly in a situation where the RP had not taken any steps to convene a meeting of the CoC for the purposes of removal of RP.
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 Appellate Authority were of the considered view that 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.
The Appellate Authority further clarified, "Needless to add, this order shall not come in the way or impede any directions issued by the Hon’ble Apex Court in any connected matter and the Adjudicating Authority shall proceed in accordance with law."
"After going through the material available on record we are satisfied that the Adjudicating Authority with an object to implement the provisions of IBC in its letter and spirit has rightly exercised its inherent jurisdiction by way of passing order of removing the appellant as RP of the CD. This fact which is reflected on record is sufficient to draw an inference that the Appellant was proceeding contrary to the statutory provisions as contained in the IBC and also delaying the smooth conclusion of CIRP", the Appellate Tribunal noted.
The Appellate Authority observed, ".......the Appellant was proceeding contrary to the statutory provisions as contained in the IBC and also delaying the smooth conclusion of CIRP".
The Appeal was dismissed.
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