NCLAT is of the opinion that Insolvency and Bankrupt Code, 2016 (‘Code’) doesn’t empower NCLT to suggest or appoint any Interim Resolution Professional/ Resolution Professional of its own choice. Then main reason to set aside NCLT order was because the application filed u/s 9 of the Code was not maintainable as there was an existence dispute between the parties prior to the issuance of demand notice u/s 8 (1) of the Code. Later, NCLAT had left the question open about the power of NCLT for appointing any person of its own choice or not.
In matter of Sandeep Reddy & Anr. Vs. Jaycon Infrastructure Ltd., Sandeep Reddy (Appellant) had appealed against the NCLT, Hyderabad order wherein the Tribunal had admitted the application filed by Jaycon Infrastructure Ltd. (Respondent/ Operational creditor) u/s 9 of the Code. Petitioner had raised the issue before NCLAT about the jurisdiction of NCLT for appointing Interim Resolution Professional/ Resolution Professional. In the present case, NCLT had appointed the Interim Resolution Professional without calling the name from the IBBI or taking the suggestion from Operational Creditor.
NCLAT held that there was already a dispute in existence prior to the issuance of demand notice u/s 8 (1) hence application u/s 9 was not maintainable. Moreover, NCLAT noted that the both the parties had already reach the settlement.
Hence, NCLAT declared that the Interim Resolution Professional appointed by NCLT would not function and released the appellant company to function independently through its Board of Directors.