Partha Sarathy Sarkar Vs Specified Undertaking of Unit Trust of India Ltd. (NCLAT Delhi)
Introduction: The National Company Law Appellate Tribunal (NCLAT) in Delhi recently rendered a decision in the matter of Partha Sarathy Sarkar vs. Specified Undertaking of Unit Trust of India Ltd. The case revolves around the replacement of the Resolution Professional and the challenges raised against this decision by Partha Sarathy Sarkar. The Adjudicating Authority had approved the replacement, and this decision was brought to the NCLAT for review.
Detailed Analysis: The crux of the dispute lies in the CoC’s decision to replace Partha Sarathy Sarkar, who was serving as the Resolution Professional in the insolvency proceedings related to M/s. Modern Syntex India Limited. The CoC’s primary reasons for replacement included Sarkar’s refusal to reduce his fee and his insistence on legal action against the stripping off of the Corporate Debtor’s assets in June 2018. The CoC, in a meeting held on 01st September 2023, passed a resolution to replace Sarkar with Ankit Goel.
Partha Sarathy Sarkar contested this decision, arguing that he was not given an opportunity to present all relevant facts before the Adjudicating Authority. He claimed that his replacement was unjustified and that the CoC relied on a Joint Lenders Meeting dated 28th August 2023, overlooking the minutes of the CoC Meeting on 01st September 2023.
The NCLAT carefully examined the sequence of events, noting that the CoC had the authority, under Section 27 of the Insolvency and Bankruptcy Code, to replace a Resolution Professional. The tribunal emphasized that the Resolution Professional cannot question the reasons behind the CoC’s decision. It cited a recent judgment in a similar case, Kairav Anil Trivedi vs. State Bank of India, where the tribunal upheld the CoC’s decision to replace the Resolution Professional without providing an opportunity for a hearing.
Addressing Sarkar’s claim regarding the replacement resolution, the NCLAT clarified that the discrepancy in mentioning Anil Goel instead of Ankit Goel in the minutes did not affect the validity of the resolution. The CoC had correctly followed the provisions of the Code, and the NCLAT found no grounds to interfere with the Adjudicating Authority’s decision.
Conclusion: In conclusion, the NCLAT dismissed the appeal, affirming the Adjudicating Authority’s approval of the CoC’s decision to replace Partha Sarathy Sarkar with Ankit Goel. The case reinforces the authority of the CoC in making such decisions under the Insolvency and Bankruptcy Code, emphasizing the efficiency of the process and the limited scope for challenging such replacements by Resolution Professionals.
FULL TEXT OF THE NCLAT JUDGMENT/ORDER
1. This Appeal has been filed against the Order dated 27th September, 2023 passed by National Company Law Tribunal, Jaipur Bench (hereinafter referred to as “The Adjudicating Authority”) by which order the Adjudicating Authority has allowed the Application filed under Section 27 of the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as “The Code”) for replacement of the Appellant with another Resolution Professional-Mr. Ankit Goel.
2. When this Appeal was taken by this Tribunal on 01st November, 2023, liberty was granted to the Appellant to delete the Respondent-NCLT which was impleaded as Respondent No. 1. An I.A. No. 5629 of 2023 has been filed by the Appellant praying for deletion of Respondent No. 1 and Impleadment of Respondents No. 1 to 8 in the Appeal. An amended Memo of Parties filed along with I.A. No. 5629 of 2023 is taken on record and the array of parties are permitted to be amended as prayed.
3. An I.A. No. 5665 of 2023 has also been filed by the Appellant for carrying out consequential amendment in pursuance of the liberty granted on 01st November, 2023 which I.A. is also allowed.
4. Brief facts, sequence and events of the case necessary to be noticed for deciding this Appeal are:-
i. By order dated 28th February, 2022, CIRP commenced against the Corporate Debtor-M/s. Modern Syntex India Limited. The Appellant was appointed as the IRP who was also confirmed as Resolution Professional. The CoC consist of Respondent Nos 1 to 3 (newly impleaded) in which Specified Undertaking of Unit Trust of India Ltd. (SUUTI in short) have 74.64% vote share.
ii. On 19th July, 2023, an Email was sent by SUUTI asking the Resolution Professional to reduce his fee as well as CIRP Cost. Appellant by its email informed the SUUTI on same date i.e. 19th July, 2023 that he shall not be able to reduce his fee. The CoC made a request to Resolution Professional to convene a meeting of the CoC for 25th July, 2023. A meeting of CoC was convened for 25th July, 2023 which was held on 26th July, 2023 (18th CoC Meeting). One of the Agenda Item No. 7 was “to consider, approve and vote on agenda of Resolution Professional”.
iii. The meeting dated 26th July, 2023 was held as 18th CoC Meeting in which Agenda Item No. 7 was taken. On the said agenda, the Resolution Professional recorded in the minutes that Agenda Item No. 7 shall be taken in the next CoC Meeting i.e. 19th CoC Meeting since the emails were received after circulation of the notice. Chairman also expressed his inability to continue rendering the service. Subsequent to 18th CoC Meeting, a Lenders Meeting was held on 28th August, 2023 which was attended by all the three members of the CoC where Resolution was passed to replace the Appellant by Mr. Ankit Goel who quoted minimum fee of Rs. 2 Lakh per month. After the aforesaid Joint Lenders Meeting, a request was made by Members of the CoC to convene the meeting on 30th August, 2023 however meeting could be convened on 01st September, 2023 in which resolution to replace the Appellant with Mr. Ankit Goel was passed with 100% vote share.
iv. Application was filed before the Adjudicating Authority being I.A. No. 510/JPR/2023 for approving replacement of Appellant with Mr. Ankit Goel which application has been allowed by the Impugned Order dated 27th September, 2023. Aggrieved by the said order, this Appeal has been filed.
5. We have heard Mr. Adish Agarwalla, Sr. Advocate appearing for the Appellant as well as Learned Counsel appearing for the Respondents.
6. Learned Sr. Counsel for the Appellant in support of the Appeal submits that Resolution Professional has been replaced due to reason that Appellant refused to reduce his fee. It is further submitted that Appellant has written to the SUUTI to lodge an FIR with regard to stripping off of the assets of the Corporate Debtor in June, 2018 which request was not accepted by the Member of the CoC hence the SUUTI decided to replace the Appellant. The Appellant visited the factory premises and found stripping off of the assets in June, 2018 for which Appellant requested to take appropriate action including lodging an FIR which was not acceded to by the CoC which was reason for replacement of the Appellant. It is further submitted that Appellant was not given an opportunity to place all relevant facts before the Adjudicating Authority when the Order was passed. It is further submitted that the Adjudicating Authority has relied on Joint Lenders Meeting dated 28th August, 2023 whereas it has not taken note of minutes of the COC Meeting dated 01st September, 2023 where the agenda for replacement was considered along with all other relevant materials. It is submitted that in the agenda for replacement of the Appellant by substituting another Insolvency Resolution Professional name of Anil Goel was mentioned whereas the Adjudicating Authority approved the name of Ankit Goel.
7. Learned Counsel for the Respondents refuting the submissions of Learned Sr. Counsel for the Appellant submits that Appellant has rightly been replaced in accordance with provisions of the Code. There was proposal for replacement by Ankit Goel whose registration number was mentioned whereas it was the Appellant who in the minutes of the meeting mentioned the name of Ankit Goel as Anil Goel. It is submitted that Appellant’s replacement being in accordance with the provisions of the IBC, appellant has no right to challenge the order of the Adjudicating Authority.
8. We have considered the submissions of Learned Counsel for the parties and have perused the record.
9. As noted above, on 19th July, 2023, Member of CoC, SUUTI has written an email to the Appellant to reduce his fee and CIRP Cost which was declined by the Appellant thereafter there was request made to convene a meeting including agenda for replacement of the Resolution Professional. Notice for agenda was issued for 18th CoC meeting to be held on 25th July, 2023 which actually was held on 26th July, 2023 in which meeting one of the agenda which was Agenda Item No. 7 was to the following effect:
“Item No. 7. To consider, approve and vote on change of resolution professional”
10. The Agenda and other materials have been brought on record by the Appellant itself along with I.A. No. 5665 of 2023. In the meeting dated 26th July, 2023 of the CoC, Agenda Item No. 7 came for consideration and the Appellant being Chairman informed that since the emails were received after circulation of the notice of the 18th CoC meeting, request for replacement shall be considered in the next CoC Meeting i.e. 19th CoC meeting. Chairman further expressed his inability to continue rendering his services as Resolution Professional. It is useful to extract following from the minutes of the Agenda No. 7:
“Chairman informed that since such emails was received after circulation of notice of 18th CoC meeting therefore such request will be considered by the RP in subsequent COC meeting whilst issuance of fresh notice of 19th CoC meeting.
Chairman again expressed his inability to continue rendering the services as resolution professional in the matte at the reduced remuneration as per the proposition by the lead COC member. Accordingly, the only option left in the matter is changing the present resolution professina. The following resolutions are proposed:”
11. After the aforesaid 18th CoC meeting when Agenda for Replacement was not considered, Joint Lenders Meeting took place on 28th August, 2023 which was attended by all the three members of the CoC where following resolution was passed:
“MODERN SYNTEX (INDIA) LTD. (MSIL)
NCLT Case no. (IB)-39(PB)/2018-CIRP as per NCLT Order
dated 28.03.2022
Minutes of the Joint Lenders Meeting held on 28.08.2023 28.08.2023 Modern Syntex (India) Ltd. (MSIL) is in NCLT. The present RP Shri Partha Sarthy Sarkar in the Agenda of the COC meeting held on 26.07.2023 requested for change in Resolution Professionals. Therefore, it is decided in the Joint Lenders meeting of SUUTI, UTI (MF) and IIBI held on 28.08.2023 at 2:30 p.m. that the present Resolution Professional (RP)Mr. Partha Sarthy Sarkar is t obe replaced by a new RP.
We have asked quotations from four RPs. And we have received quotations from following four RPS.
1. Mohinder Singh, Stellar Insolvency Professionals LLP
2. Ankit Goel, AAA Insolvency Professionals LLP
3. Divyesh Desai, Moore Singhi Advisors LLP
4. Chirag Shah, C.R. Shah & Associates.
