Manish Jaju Erstwhile Resolution Professional of Rajesh Landmark Projects Private Limited Vs Committee of Creditors of Rajesh Landmark Projects Private Limited (NCLAT Delhi)
NCLAT Delhi held that Insolvency and Bankruptcy Board of India [IBBI] not empowered to issue a general circular referring power conferred under section 34(4)(b) recommending that IP other than IRP/RP may be appointed as liquidator.
Facts-
This appeal has been filed by erstwhile resolution professional of the corporate debtor challenging the order dated 01.08.2025 passed by the adjudicating authority (National Company Law Tribunal (NCLT), Court V, Mumbai Bench). By the impugned order, adjudicating authority allowed the application filed by the appellant seeking liquidation of the corporate debtor, however, by allowing the liquidation application instead of appointing the appellant as liquidator has appointed R-2 Ms. Smita Gupta as the liquidator, relying on circular dated 18.07.2023 of the IBBI. Aggrieved by the said order, this appeal has been filed.
Conclusion-
In event, it is accepted that IBBI has power to issue general circular in exercise of power under Section 34(4)(b) that in all cases of liquidation IRP and RP be not appointed, this power clearly militates against the legislative scheme as contained in Section 34(1). Legislature while giving power to board under Section 34(4)(b) contemplated recommendation by board for replacement of the particular RP not the said power has to be exercised qua a particular RP in the CIRP of the corporate debtor on account of work and conduct of that particular RP and the power under Section 34(4)(b) cannot be exercised to issue a general circular as issued by the IBBI on 18.07.2023, which is contrary to scheme under Section 34(1). IBBI has misinterpreted the power given to the IBBI under Section 34(4)(b).
