Skip to main content

Insolvency - CoC is not bound to record reason for replacing the IRP with another RP

In Power Finance Corporation Limited vs Mahendra Kumar Khandelwal, an Application was filed by the respondent IRP of the Corporate Debtor herein seeking to pass directions to the COC of the corporate debtor to reconsider their decision and to continue with the applicant as the RP.

The NCLT observed that from a plain reading of section 22 of the I & B code which has been confirmed by several judgments of the Supreme Court, is clear that the CoC is conferred with the power of replacing the IRP with another resolution professional and no reason it's to be recorded by the CoC for effecting such replacements. It is the prerogative of the CoC whether to continue with the IRP as the RP or to replace the IRP with another RP. 

The only pre-requisites to be made under section 22 of the code are as under :–

1) The CoC in its first meeting shall pass the resolution with at least 66% votes.

2) Written consent shall be obtained from the proposed RP in the specified form.

3) The CoC shall file an application before the Adjudicating Authority for appointment of the proposed RP.

4) The Adjudicating Authority shall forward the name of the proposed RP to the IBBI for its confirmation and make the appointment after the confirmation.

The NCLAT observed that as in this case the first 3 steps have been completed and the fourth step is awaited, there is no infirmity with the decision of the CoC in replacing the IRP and appointing a new RP in his place.

Comments

Post a Comment

Most viewed this month

The recovery of vehicles by the financier not an offence - SC

Special Leave Petition (Crl.) No. 8907  of 2009 Anup Sarmah (Petitioner) Vs Bhola Nath Sharma & Ors.(Respondents) The petitioner submitted that  respondents-financer had forcibly taken away the vehicle financed by them and  illegally deprived the petitioner from its lawful possession  and  thus,  committed  a crime. The complaint filed by the petitioner had been  entertained  by  the Judicial Magistrate (Ist Class), Gauhati (Assam) in Complaint Case  No.  608 of 2009, even directing the interim custody of the vehicle (Maruti  Zen)  be given to the petitioner vide order dated  17.3.2009.  The respondent on approaching the Guwahati High  Court against this order, the hon'ble court squashed the criminal  proceedings  pending   before  the  learned Magistrate. After hearing both sides, the Hon'ble Supreme Court decided on 30th...
7 comments
Read more

Valuation Report of Jewellery once made is effective for Four Assessment Years

The division Bench of the Delhi High Court in Pr.Commissioner of Wealth Tax vs. Raghu Hari Dalmia held that a valuation report made by a registered valuer once adopted shall be in effect for four assessment years unless an event has occurred whereby the value is increased or decreased. The High Court made it clear that the event of “search” under Section 132 of the Income Tax Act, 1961 cannot compel the assessee to undertake a fresh valuation.
2 comments
Read more

Mere Agreement To Sell The Leased Property To Tenant Would Not Terminate Landlord-Tenant Relationship

In CIVIL APPEAL Nos. 1237­1238 OF 2019, Dr. H.K. Sharma vs Shri Ram Lal, the tenant had objected against the eviction suit filed by the landlord, claiming that the landlord-tenant relationship between them had ceased to exist by virtue of an agreement for sale entered between them and that he has already paid some money in advance based on the agreement. The tenant contented as the landlord-tenant relationship did not exist, the landlord cannot evict him. The matter went through various forums and finally landed before the Supreme Court in appeal. The Supreme Court referring to the judgment in Shah Mathuradas Maganlal & Co. vs. Nagappa Shankarappa Malage & Ors., held that in the instant case the lease agreement included no clauses on the fate of the tenancy. A fortiori, the parties did not intend to surrender the tenancy rights despite entering into an agreement of sale of the tenanted property. In other words, if the parties really intended to surrender their tenancy ...
2 comments
Read more