National Company Law Tribunal, Mumbai: In an application filed under Section 22(3)(b) of the Insolvency and Bankruptcy Code, 2016 (IBC) praying for replacement of the Interim Resolution Professional (IRP) with a new Resolution Professional, a division bench of Sanjiv Dutt (Technical Member) and K. R. Saji Kumar (Judicial Member), allowed the replacement of the Interim Resolution Professional with M/s Incorp Restructuring Services LLP, a new Resolution Professional. The NCLT highlighted the necessity to adhere to the CoC’s resolution and the IBC’s timeline while recognising the regulatory framework governing Insolvency Professional Entities (IPEs).
In the instant matter, the applicant, Committee of Creditors (CoC) filed an application under Section 7 of the Insolvency and Bankruptcy Code 2016 (IBC) for the initiation of Corporate Insolvency Resolution Process (CIRP) of the Corporate Debtor, Notion Real Estate Private Limited (respondent). The Corporate Debtor was admitted into Corporate Insolvency Resolution Process (CIRP) on 09-01-2024. The applicant filed an application under Section 22(3)(b) of the IBC praying for replacement of the Interim Resolution Professional (IRP) with a new Resolution Professional, specifically M/s Incorp Restructuring Services LLP, an Insolvency Professional Entity (IPE). The CoC approved the appointment of the proposed IPE with 100% voting. On the last date of listing, the NCLT sought clarification on whether appointing IPEs as Resolution Professional is consistent with the IBC scheme.
The applicant argued that while the IBC primarily recognizes individual Insolvency Professionals, IPEs are also regulated under the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 (IP Regulations) and can be appointed as Resolution Professional. The applicant said the IBBI has the authority to regulate IPEs and issued certificates of registration to them. It was contended that the term “person” in Section 3(23)(f) of IBC includes LLPs, thus justifying the IBBI’s power to recognize and regulate IPEs. Moreover, the IBBI has the authority under Section 240(2)(zzi) of the IBC to make regulations concerning the qualifications and categories of professionals, which justifies IPEs being treated as IPs.
The NCLT noted that Sections 206 and 207 of the IBC define an insolvency professional and implies that only individuals can be insolvency professionals. The NCLT stated that Form AA which is used for obtaining consent to act as a Resolution Professional, is designed for individuals and not entities like IPEs. The NCLT noted that there is no separate form specified for an IPE to make such declarations. The NCLT opined that “the written consent of M/s Incorp Restructuring Services LLP submitted in Form AA is one that is modified by the IPE to suit its consent.”
The NCLT acknowledged that the CoC resolved to appoint M/s Incorp Restructuring Services LLP as the RP with 100% voting and recognised the practical and regulatory background supporting this decision and the necessity to adhere to the IBC timeline.
The NCLT approved the appointed M/s Incorp Restructuring Services LLP as the Resolution Professional in place of the IRP to conduct the CIRP of Corporate Debtor, subject to Regulation 34B read with Schedule II of the CIRP Regulations. The NCLT directed the IRP to hand over the CIRP of the Corporate Debtor to the IPE immediately.
[Piramal Capital & Housing Finance Ltd. v. Notion Real Estate (P) Ltd., 2024 SCC OnLine NCLT 3419, Decided on 18-07-2024]
Advocates who appeared in this case:
Nausher Kohli, Nanki Grewal, Yesha Badani and Wadia Ghandy & Co., Counsel for the FC
