Tribunal Upholds Ms. Sudha Sarma's Role, Citing Lack of Sufficient Grounds for Removal
In a significant ruling, the National Company Law Tribunal (NCLT), Guwahati Bench, has dismissed an application filed by Indian Bank seeking the replacement of Ms. Sudha Sarma as the Resolution Professional (RP) in the insolvency proceedings against Rita Mandal. The decision, delivered by Mr. Rammurti Kushawaha, Member (Judicial), and Mr. Yogendra Kumar Singh, Member (Technical), emphasized the importance of demonstrating specific and substantial grounds for the removal of a Resolution Professional under Section 98 of the Insolvency and Bankruptcy Code, 2016.
Indian Bank, represented by its legal counsel Mr. M. Sharma and Mr. K. Board, sought the removal of Ms. Sarma, alleging a conflict of interest and adversarial stance due to her role in unrelated liquidation proceedings involving Nayak Infrastructure Private Limited. The bank argued that Ms. Sarma's continued appointment as RP could compromise the fairness of the resolution process due to perceived biases stemming from prior legal disputes in which she was involved as a liquidator.
However, the NCLT found these arguments unconvincing, noting that Section 98 of the Insolvency and Bankruptcy Code does not support the removal of a Resolution Professional based on generalized dissatisfaction or adversarial positions in separate matters. The Tribunal underscored that specific, demonstrable misconduct or direct conflicts of interest within the same proceeding are necessary to justify such a replacement.
The Tribunal also criticized the bank for suppressing material facts, particularly the non-disclosure of a previous application for the same relief that was withdrawn without leave to refile. The lack of disclosure was deemed sufficient to render the current application non-maintainable.
Moreover, the NCLT addressed Indian Bank's reliance on its internal risk management policies, clarifying that such policies do not have statutory authority to override the Tribunal's decisions regarding appointments under the Insolvency and Bankruptcy Code.
In conclusion, the NCLT dismissed the application, allowing Ms. Sudha Sarma to continue her role as Resolution Professional in the ongoing proceedings. The Tribunal's decision reinforces the stability and integrity of the insolvency resolution process, emphasizing the need for concrete evidence and clear statutory grounds in matters of professional replacement.
Bottom Line :
Insolvency and Bankruptcy Code, 2016 - Replacement of Resolution Professional (RP) - Mere dissatisfaction or adversarial stance in unrelated proceedings does not justify removal of RP under Section 98 of the Code.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 98, Civil Procedure Code, 1908 Order XXIII Rule 1
Indian Bank v. Sudha Sarma, (NCLT)(Guwahati Bench) : Law Finder Doc id # 2962630
