The National Company Law Appellate Tribunal (NCLAT) has ruled that an interim resolution professional (IRP) can neither be appointed as the resolution professional (RP) nor replaced without 75% of the creditors approving it. The appellate authority was hearing an appeal by ICICI Bank against Oceanic Tropical Fruits, State Bank of India (SBI), Central Bank of India and others.
The corporate insolvency resolution process (CIRP) for Oceanic Tropical Fruits was initiated in September last year following an application by ICICI Bank at the Chennai bench of the National Company Law Tribunal (NCLT). The company owes ICICI Bank Rs 100 crore.
ICICI Bank had suggested the name of C Ramasubramaniam as the IRP and the tribunal accepted it. However, on completion of term of the IRP, the committee of creditors (CoC) in their meeting on November 14, 2017 appointed V Nagarajan as the new resolution professional (RP).
The CoC’s choice was affirmed by the NCLT and the Insolvency and Bankruptcy Board of India (IBBI). ICICI Bank has argued that SBI and Central Bank of India, with 73.62% voting right, proposed appointment of the new RP.
“…We find that the interim resolution professional cannot be appointed as resolution professional, except by a majority vote of not less than 75% of voting share of the Committee of Creditors. Similarly, to replace the interim resolution professional by another resolution professional, a majority vote of not less than 75% of voting share of the Committee of Creditors is required,” the NCLAT order said.
The order said that while ICICI Bank wanted to allow the IRP to continue as RP as per Section 22(2), SBI and Central Bank of India that have 73.62% of voting share wanted to appoint another person as RP.
“We do not agree with the submissions made by the learned counsel for the respondent that the interim resolution professional can be replaced even by less than 75% of voting share of the financial creditors,” the order said.
The order added that the NCLT order appointing V Nagarajan as RP cannot be upheld. “However, V Nagarajan, resolution professional having proposed in the meeting of Committee of Creditors’ on 14th November, 2017 and the IBBI having already confirmed his appointment after more than 90 days of his appointment, we are not going to interfere with the order of appointment,” the appellate tribunal said