P.K. Saikia, Member - (1.) Seen the report dated 18.12.2017, submitted by Shri V. Kothari, IPR on the meeting of Committee of Creditors held at Kolkata on 13.12.2018. The formal report with all the Annexures was received on 01.01.2018
(2.) Let an IA be registered on the same.
(3.) This Authority on 11.12.2017 passed the following order:- "Mr V.K. Kothari, Interim Resolution Professional (in short, IRP) is present before this Bench in terms of the order passed on 07.12.2017. For ready reference, said order is reproduced below: "1. Seen the Registry's note dated 30-11-2017. For ready reference Registry's note is reproduced below: - "30.11.2017 Hon'ble Member (Judicial) By E.mail letter dtd. 27.11.2017, Sri V. K Kothari (Interim Resolution Professional Assam Company India Ltd. has sent copy of the report certifying constitution of Committee of Creditors in the matter of Assam Company India Ltd. Corporate Debtor) in Dy. No.529 of 2017. Table 'A' (flag 'A') is the list of Financial Creditors as on 14.11.2017 who are 12 in total. Table 'B' (flag 'B') is the Committee of Creditors with respective voting percentage who are '12' in total as on 14.11.2017. As per S. 22 of IBC, the first meeting of the creditors shall be held within 7 days of the constitution of creditors. No further report has reached. Laid for favour of kind perusal." "2. The said note was prepared on the basis of the letter dated 27-11-2017 received from Shri V. K. Kothari, IRP. For ready reference, the letter is reproduced below: "3. Also seen Registry's note dated 05-12-2017. Registry's note dated 05-12-2017 is reproduced below: "5. In this connection, I find it necessary to visit the provision of Section 22 of Insolvency and Bankruptcy Code, 2016, which deals with the matter relating to appointment of Resolution Professional. For ready reference, the said provision is also reproduced below: - "22. (1) The first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors. (2) The committee of creditors, may, in the first meeting, by a majority vote of not less than seventy-five per cent, of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional. (3) Where the committee of creditors resolves under sub-section (2) ' (a) to continue the interim resolution professional as resolution professional, it shall communicate its decision to the interim resolution professional, the corporate debtor and the Adjudicating Authority; or (b) to replace the interim resolution professional, it shall file an application before the Adjudicating Authority for the appointment of the proposed resolution professional. (4) The Adjudicating Authority shall forward the name of the resolution professional proposed under clause (b) of sub-section (3) to the Board for its confirmation and shall make such appointment after confirmation by the Board. (5) Where the Board does not confirm the name of the proposed resolution professional within ten days of the receipt of the name of the proposed resolution professional, the Adjudicating Authority shall, by order, direct the interim resolution professional to continue to function as the resolution professional until such time as the Board confirms the appointment of the proposed resolution professional." 6. It is, thus, apparent that the Committee of Creditors (in short "COC") may, in its first meeting, by majority vote not less than 75% of voting share of the financial creditors, either resolved to appoint IRP as Resolution Professional or replace the IRP by another Resolution Professional. 7. A perusal of the Code and the Rules framed thereunder, makes it clear that the Insolvency and Bankruptcy Code, 2016, provides a mechanism for resolution of the disputes thereunder in a time bound manner. Therefore, the Committee of Creditors cannot be allowed to dilly dally in a matter as important as appointment of Resolution Professional. 8. It is seen from the report of the IPR that the Corporate Debtor, being a tea producing company, belongs to a sensitive labour sector with more than 25,000 workers in its pay roll playing extremely important in shaping the economy and economic health of a large section of the society. In such a scenario, the Registry is directed to list the matter tomorrow for necessary order. 9. The IRP be directed to remain present tomorrow for taking further necessary action. 10. Let the report of the IRP dated 04-12-2017 in Diary No.529 of 2017, be admitted as Interlocutory Application. 11. List the matter tomorrow on 08th December, 2017." 2. Mr. Vinod Kumar Kothari, IRP, submits that the Committee of Creditors in its meeting held on 28.11.2017, amongst other things, had discussed about (1) the proposal for ascertainment of voting rights of Financial Creditors, so proposed by IRP, (2) the proposal seeking ratification of expenses for the IRP process and (3) proposal for confirmation of appointment of IRP as RP. 3. While the proposal regarding the ascertainment of voting rights of Financial Creditors as submitted by the IRP was not disturbed, the proposal regarding ratification of expenses of/for the IRP was also ratified. However, the Financial Creditors could not ratify the appointment of IRP as RP. 4 . It is evident from the above that the CoC had failed to ratify the appointment of Mr. V. K. Kothari as regular RP. It also failed to replace him by appointing another RP as reguired under Section 22 of the Insolvency and Bankruptcy Code, 2016 (in short, Code of 2016) . For ready reference, said section is reproduced below: 22. Appointment of resolution professional. ' (1) The first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors." "(2) The committee of creditors, may, in the first meeting, by a majority vote of not less than seventy-five per cent of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional. (3) Where the committee of creditors resolves under sub-section (2) ' (a) to continue the interim resolution professional as resolution professional, it shall communicate its decision to the interim resolution professional, the corporate debtor and the Adjudicating Authority, or (b) to replace the interim resolution professional, it shall file an application before the Adjudicating Authority for the appointment of the proposed resolution professional. (4) The Adjudicating Authority shall forward the name of the resolution professional proposed under clause (b) of sub-section (3) to the Board for its confirmation and shall make such appointment after confirmation by the Board. (5) Where the Board does not confirm the name of the proposed resolution professional within ten days of the receipt of the name of the proposed resolution professional, the Adjudicating Authority shall, by order, direct the interim resolution professional to continue to function as the resolution professional until such time as the Board confirms the appointment of the proposed resolution professional." 5. A perusal of Section 22 reveals that one of the main functions of the committee of creditors is the appointment of the resolution professional. It further provides that at the first meeting of the committee of creditors, the committee may decide, by a majority of 75 per cent of voting share of the financial creditors to appoint the interim resolution professional as the resolution professional or propose the name of another insolvency professional to be appointed as the resolution professional. Where the committee of creditors decides to not appoint the interim resolution professional as the resolution professional it has to file an application with the adjudicating authority for the appointment of the proposed resolution professional. 6. According to Mr. Kothari, the company in question has been passing through an extremely crucial period facing numerous problems of extremely serious nature threatening to overthrow the company itself out of gear and, therefore, a regular RP needs to be appointed without any further delay. Otherwise, the very purpose of initiation of Corporate Insolvency Resolution Process (in short, CIRP) may go haywire. 7. Therefore, Mr. Kothari submits that till regular RP is appointed by the concerned authority, the present IRP may be allowed to continue discharging urgent and important functions in accordance with the requirements of law. In that connection, he has relied on several decisions to show that the IRP may be allowed to continue till the regular RP is appointed in accordance with the prescription of law. 8. In the case in hand, it is now found that the CoC failed to confirm the IRP as regular RP. Nor was it able to replace the IRP by a regular RP in its first meeting as required under Section 22 (1) of the Code of 2016. What is equally important to note is that even in the second meeting, the Board could not carry out the direction rendered in the aforesaid provisions of law. 9. Therefore, I am of the opinion that the CoC has not demonstrated enough seriousness in the matter of appointment of regular RP, one of the most essential functions of the CoC in taking the matters towards the formulation of successful resolution plan. However, considering the fact that they are the best authorities to decide as to whether to allow the present IRP to continue as RP or to appoint a new RP in his place, I find it necessary to give one more opportunity to the CoC to decide the above questions in accordance with the prescription of law. 10. In the event of their failure, this authority would be bound to request the Board to do the needful in that regard following the prescription of law. 11. Resultantly, the CoC is directed to do the needful in regard to confirmation of present IRP or his replacement by another RP and the CoC is to do so within a period of one week from the date of receipt of a copy of this order. 12. The IRP is directed to intimate this authority about the result of such an exercise soon after the meeting of CoC. 13. Registry is directed to send a copy of this order immediately to all concerned including IRP by all means including email.";