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Judgment
ORDER
The case is fixed for pronouncement of the order. The order is pronounced in open Court vide separate sheet.
The present Application has been filed on 08.09.2025 by Mr. Kuldeep Verma, Liquidator of M/s K.S Oils Limited (Corporate Debtor) under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, read with Rule 11 of the NCLT Rules, 2016, against the Respondent/Financial Creditor State Bank of India which is one of the SCC member, seeking direction to replace Applicant/Liquidator from the empanelment of this Adjudicating Authority.
Relevant facts of the case:
It is the case where the Applicant, acting as RP and later Liquidator, seeks to replace the Liquidator to ensure the continuity and effective administration of the liquidation process, as the current Liquidator expressed his desire to step down on 10.04.2025. The SCC did not propose an alternative Insolvency Professional for over four months, which has hindered the progress of ongoing cases. Consequently, the Applicant is filing for the appointment of a Liquidator from the Adjudicating Authority's empaneled list to replace the current Liquidator.
The Applicant submits that Hon’ble NCLT Ahmedabad Bench vide order dated 21.07.2017 admitted K.S. Oils Limited (Corporate Debtor) into CIRP under Section 7 in C.P.(IB)/32/7/NCLT/AHM of 2017. The Applicant was appointed as the Interim Resolution Professional (IRP) and later confirmed as the Resolution Professional (RP).
The Applicant submits that due to the non-availability of a resolution plan at the end of the CIRP period. Applicant filed an application for liquidation of the Corporate Debtor in IA No.165 of 2018 on 23.04.2018/26.04.2018. But Hon’ble NCLT Ahmedabad Bench dismissed the application as not maintainable and being infructuous in order dated 01.01.2021.
The Applicant then submits that an Appeal against impugned order was filed before the Appellate Authority and Hon’ble NCLAT vide order dated 16.03.2021 admitted K.S. Oils Limited (Corporate Debtor) into Liquidation in Company Appeal (AT) (Insolvency) No. 98 of 2021, and the Applicant was appointed as the Liquidator.
The Applicant submits that, auction and sale of the Corporate Debtor's tangible assets was done successfully and possession handed over to the successful purchaser. The distribution of sale proceeds to all the creditors is also made according to the waterfall mechanism under Section 53 of the IBC 2016. The Liquidator has filed 18 quarterly progress reports. The Liquidator has time & again sought extension and the extended liquidation period will expire on 15.12.2025.
The Applicant submits that the IBBI Disciplinary Committee, in exercise of the powers conferred under Section 220(2) of the IBC 2016, read with Regulation 13 of the IBBI (Inspection and Investigation) Regulations 2017, suspended the Applicant's registration for two years on 07.04.2025, effective from 06.05.2025. In its order, the Disciplinary Committee believes that Mr. Kuldeep Verma violated the following provisions of the Code and its implementing regulations which are as follows:
Failure to preserve and protect the assets of the corporate debtor.
Non-determination of Avoidance transactions.
Diversion of funds of the corporate debtor.
Adjudication of the claim.
Issue of overcharging of fees.
The Applicant submits that Phoenix ARC Private Limited, a member of the SCC representing Secured Financial creditors, requested the State Bank of India vide email on 05.05.2025 to hold a Joint Lenders Meeting to discuss the issue regarding appointment of a new liquidator and to take necessary actions for the same.
The Applicant submits that on 13.05.2025, the applicant requested the SCC members to submit names for a new liquidator by 26.05.2025 in compliance with Regulation 31A (11) of the IBBI (Liquidation Process) Regulations. Additionally, a notice for the 30th SCC meeting held on 30.05.2025 was issued on the same day, inviting members to propose and decide on the replacement of the present liquidator with a new one by voting and to submit the required documentation in advance. But no conclusion was reached in that meeting.
The Applicant submits that during the 31st meeting on 24.06.2025, all SCC members except for Phoenix ARC Private Limited requested the current Liquidator to continue. As no alternative names were put forward, voting could not occur. The Liquidator planned to consult with a legal advisor before making a final decision regarding to continue as a liquidator.
The Applicant submits that on the above two occasions, the liquidator attempted to convene a meeting of SCC to replace the current liquidator. However, no resolution could be voted on due to no name being proposed to appoint a new liquidator as per Regulation 31A (11) of IBBI (Liquidation Process) Regulations, 2016.
The Applicant additionally submits that, IA 163 of 2018 under Section 66 for appropriate directions regarding fraudulent trading or wrongful trading heard and reserved for order on 29.07.2025 and IA 164 of 2018 under Section 19(2) ,19(3), 14(1)(b) & Section 74 regarding non-cooperation and violation of the moratorium, filed by the applicant which was pending before the this Adjudicating Authority.
The Applicant points out that the NCLAT order dated 20.03.2025 in Company Appeal (AT)(Insolvency) No. 592 of 2024 upheld the order dated 28.03.2024 passed by the Adjudicating Authority in which Liquidator take a decision to include the assets of the Haldia unit in the liquidation estate. But Phoenix ARC Pvt. Ltd. member of SCC challenged the order in Civil Appeal No. 5653 of 2025 before the Supreme Court of India and the case will now be heard in the upcoming month.
The Applicant submits that without a replacement being appointed, the present Liquidator cannot step down and leave the situation unattended. In the circumstances, the Applicant has therefore rightly moved the present application before this Hon’ble Tribunal seeking appropriate directions.
Findings:
We have heard the learned counsel and have perused the records available.
The Applicant/Liquidator filed this Application to replace the present Liquidator due to suspension of registration for two years by IBBI DC on 07.04.2025. However, the SCC members have not yet passed a resolution requiring the replacement of the liquidator.
The Adjudicating Authority noted that the respondent neither submitted a reply nor objected to the application for the replacement of the liquidator.
The Ld. Counsel appearing for the Applicant submitted that in terms of the Order No. IBBI/DC/282/2025 dated 07.04.2025, Mr. Kuldeep Verma, Liquidator, has been placed under suspension for two years, thus he needs to be replaced. The relevant excerpt of the suspension order, a copy of which has been placed on record as Annexure A to the petition reads thus:
3. Order.
3.1.In view of the foregoing discussions, the DC is of the view that Mr. Kuldeep Verma made the following contraventions of the Code, and the Regulations made thereunder: -
3.1.1.Failure to preserve and protect the assets of CD (Transactions done during the CIRP Period) in the matter of M/s. K.S. Oils Limited (CD-2).
3.1.2.Failure to preserve and protect the assets of CD (Transactions done during the CIRP Period) in the matter of M/s. Jalan Intercontinental Hotels Private Limited. (CD-3).
3.1.3.Non-determination of Avoidance transactions in the matter of M/s. Intercontinental Hotels Private Limited. (CD-3). Jalan
3.1.4.Diversion of funds of the CD in the matter of M/s. Hindustan Paper Corporation Limited (CD-5)
3.1.5.Adjudication of claim of M/s Prashant Paper Mart in the matter of M/s. Hindustan Paper Corporation Limited (CD-5)
3.1.6.Issue of overcharging of fees as AR in the matter of M/s. Jaypee Infratech Limited (CD-6) 3.2.
3.2.Therefore, the DC, in exercise of the powers conferred under Section 220(2) of the Code read with Regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 hereby suspends the registration of Mr. Kuldeep Verma (Registration No. IBBI/IPA-001/IP00014/2016-2017/10038) for a period of two years.
3.3.This Order shall come into force on expiry of 30 days from date of its issue.
3.4.A copy of this order shall be sent to the CoC/ Stakeholders Consultation Committee of all the Corporate Debtors in which Mr. Kuldeep Verma is providing his services, if any and the CoC/SCC may decide on the continuation of services of Mr. Kuldeep Verma.
3.5.A copy of this order shall be forwarded to the Indian Institute of Insolvency Professionals of ICAI where Mr. Kuldeep Verma is enrolled as a member for their further necessary action.
3.6.A copy of this Order shall also be forwarded to the Registrar of the Principal Bench of the National Company Law Tribunal, New Delhi, for information.
3.7.Accordingly, the show cause notice is disposed of.
We order for change of liquidator in the best interests of all stakeholders and select an Insolvency Professional from panel to ensure that the liquidation process is completed efficiently and quickly.
We hereby appoint Mr. Navin Khandelwal, having Registration No. IBBI/IPA-001/IP-P00703/2017-2018/11301 and Email ID: [email protected], from the panel for 01.07.2025 to 31.12.2025 provided by the IBBI, as new liquidator for the Corporate Debtor in place of existing liquidator, Mr. Kuldeep Verma. We further direct as under :
Existing liquidator Mr. Kuldeep Verma is directed to handover all the documents, papers and details pertaining to Corporate Debtor and liquidation process to the new liquidator immediately after he takes over charge as liquidator of the CD.
The new liquidator is directed to submit his consent in appropriate form in the registry within 3 days of receipt of the order and take charge of liquidation process within a week from the receipt of the order.
All other members of SCC are directed to provide active and full support to the new liquidator in discharging his duties effectively in a time bound manner.
In view of the above terms, IA No. 440 of 2025 stands allowed and disposed of.