TEAM: Vineet Priyadarshi-1324

Tejanshu Vashitha-1322

IBC CRE, 2025

Before

THE NATIONAL COMPANY LAW APPELLATE TRIBUNAL

(UNDER SECTION 61 OF THE INSOLVENCY AND BANKRUPTCY CODE,

2016) APPEAL NO. ___ OF 2025

COC OF XANADU INDUSTRIES PVT. LTD

APPELLANT

V.

MR. ADITYA VERMA

RESPONDENT

MEMORIAL FOR RESPONDENT

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TABLE OF CONTENTS

TABLE OF ABBREVIATION.................................................................................................ii

INDEX OF AUTHORITIES...................................................................................................iii

STATEMENT OF JURISDICTION.......................................................................................iv

STATEMENT OF FACTS........................................................................................................v

ISSUES RAISED.....................................................................................................................vi

SUMMARY OF ARGUMENTS.............................................................................................vii

ARGUMENTS ADVANCED....................................................................................................1

1. WHETHER THE COMMITTEE OF CREDITORS (COC) IS REQUIRED TO

PROVIDE REASONS AND ADHERE TO PRINCIPLES OF NATURAL JUSTICE
BEFORE SEEKING REPLACEMENT OF THE INTERIM RESOLUTION
PROFESSIONAL UNDER SECTION 27 OF THE IBC.?...............................................1
1.1. Non Adherence of legal framework under 27(2)...............................................1
1.2. Substantive and jurisdictional of the voting trend............................................2
1.3. Principles of Natural Justice Must Be Read into Section 27 Where
Allegations Affect the IRP’s Reputation and Integrity.................................................2
1.4. Principles of natural justice and the right to be heard.....................................3
1.5. The CoC decision to replace the irp violates the code of conduct and the
Wednesbury principles of fairness and proportionality...............................................4

2. Whether the NCLT was correct in exercising judicial review over the CoC
decision when there no valid procedural compliance under IBC?..................................5
2.1. Principle of commercial wisdom under the IBC and the statutory
framework shall be on the same pedestal......................................................................6

3. Whether dissatisfaction or allegations without substantiation are sufficient

grounds for replacement of the IRP under Section 27 of the IBC...................................7
3.1. The principle of “Audit- audi alteram partem” is being violated by the
COC. 7

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PRAYER..................................................................................................................................10

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TABLE OF ABBREVIATION

ABBREVIATION FULL FORM

IBC Insolvency and Bankruptcy Code,
2016
s. Section
SC Supreme Court
RP Resolution Professional
u/a under article
Pvt. Private
CoC Committee of creditors
Ltd. Limited
Ors. Others
v. Versus
CIRP Corporate Insolvency Resolution
Process
NCLT National Company Law Tribunal
IRP Interim Resolution Professional
COC Committee of Creditor
HC High court

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INDEX OF AUTHORITIES

CASES

1. Bank of India v Nithin Nutritions Pvt Ltd [2020] ibclaw.in 123 (NCLAT)...........1, 2
2. Indra Sawhney v. Union of India, 1992 Supp (3) SCC 217.........................................9
3. K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150.......................................5
4. Katra Realtors Pvt. Ltd. v. Mr. Rajesh Ramnani, RP of Ansal Urban
Condominiums Pvt. Ltd. & Anr , Company Appeal (AT) (Insolvency) No. 382 of
2024..................................................................................................................................8
5. Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, [2010] 9 SCC 496...................3
6. Maneka Gandhi v Union of India AIR 1978 SC 597...................................................7
7. MCL Global Steel Private Limited and Another v. Essar Projects India Limited and
Another, Company Appeal (AT) (Ins.) No. 29 of 2017.................................................7
8. Mr. Kunwer Sachdev v. IDBI Bank and Ors, 2024:DHC:1042..................................4
9. Ms. Ramsubramaniam v. Sixth Dimensions Project solution ltd, 2019(4) TMI 1191
NCLT, Mumbai...............................................................................................................8
10. S. 424, Companies Act, 2013..........................................................................................3
11. Sree Metaliks Ltd. v. Union of India, LAWS (CAL)- 2107-4-2024.............................3
12. Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17........................................6

STATUTES

13. S. 217, Insolvency and Bankruptcy Code, 2016...........................................................v

14. S. 27(2), Insolvency and Bankruptcy Code, 2016........................................................1
15. S. 27, Insolvency and Bankruptcy Code, 2016.............................................................5

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STATEMENT OF JURISDICTION

It is respectfully submitted that the Insolvency and Bankruptcy Board of India (IBBI) is
the appropriate authority vested with jurisdiction in matters concerning the conduct or
functioning of insolvency professionals, insolvency professional agencies, or information
utilities. The Hon’ble NCLAT lacks the requisite jurisdiction to adjudicate complaints
arising from such issues. As per the statutory framework, any person aggrieved by the
conduct of an insolvency professional, professional agency, or information utility is
required to file a complaint directly before the IBBI, in the prescribed form, manner, and
within the stipulated timeframe. Therefore, such matters fall exclusively within the
regulatory domain of the Board, and not within the appellate jurisdiction of the NCLAT1.

1
S. 217, Insolvency and Bankruptcy Code, 2016
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STATEMENT OF FACTS

1. Xanadu Industries Pvt. Ltd., a manufacturing entity based in Bengaluru, defaulted on

its financial obligations, prompting State Mercantile Bank, a financial creditor, to
initiate corporate insolvency resolution proceedings under Section 7 of the Insolvency
and Bankruptcy Code, 2016.
2. The Hon’ble NCLT, Bengaluru Bench, admitted the application and, in accordance
with Section 16 of the IBC, appointed Mr. Aditya Verma, the Respondent herein, as
the Interim Resolution Professional (IRP).
3. Upon constitution of the Committee of Creditors (CoC), the first CoC meeting was
convened. During this meeting, certain members raised concerns relating to:

 An alleged lack of transparency,

 Perceived delay in finalization of documents, and

 A supposed potential conflict of interest.

4. Acting on these concerns, 65% of the CoC passed a resolution proposing to replace
Mr. Verma with Ms. Sneha Kapoor as the Resolution Professional (RP). No
documentary evidence or formal show-cause notice was issued to the IRP regarding
these allegations.
5. Mr. Verma was neither given an opportunity to respond to the allegations nor formally
heard before the CoC resolved to replace him.
6. The NCLT, Bengaluru, upon examining the matter under Section 27 of the IBC,
rightly held that mere dissatisfaction or unsubstantiated allegations cannot justify the
replacement of the IRP, and emphasized that natural justice requires a fair opportunity
to be heard.
7. The CoC, aggrieved by the decision, has preferred an appeal before the Hon’ble
National Company Law Appellate Tribunal (NCLAT).

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ISSUES RAISED

ISSUE: 1
WHETHER THE COMMITTEE OF CREDITORS (COC) IS REQUIRED TO PROVIDE REASONS
AND ADHERE TO PRINCIPLES OF NATURAL JUSTICE BEFORE SEEKING REPLACEMENT OF

THE INTERIM RESOLUTION PROFESSIONAL UNDER SECTION 27 OF THE IBC.?

ISSUE: 2
WHETHER THE NCLT WAS CORRECT IN EXERCISING JUDICIAL REVIEW OVER THE

COC’S DECISION WHEN THERE WAS NO VALID PROCEDURAL COMPLIANCE UNDER THE

IBC.?

ISSUE: 3
WHETHER DISSATISFACTION OR ALLEGATIONS WITHOUT SUBSTANTIATION ARE

SUFFICIENT GROUNDS FOR REPLACEMENT OF THE IRP UNDER SECTION 27 OF THE

IBC?

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SUMMARY OF ARGUMENTS

ISSUE-1: WHETHER THE COMMITTEE OF CREDITORS (COC) IS REQUIRED

TO PROVIDE REASONS AND ADHERE TO PRINCIPLES OF NATURAL
JUSTICE BEFORE SEEKING REPLACEMENT OF THE INTERIM
RESOLUTION PROFESSIONAL UNDER SECTION 27 OF THE IBC.?

It is respectfully submitted that Committee of Creditors’ (CoC) decision to replace Mr.

Aditya Verma as the Interim Resolution Professional (IRP) fails to meet the mandatory
voting threshold of 66% under Section 27(2) of the Insolvency and Bankruptcy Code
(IBC), as it was passed with only 65% voting share. This non-compliance renders the
resolution invalid and non-est in law, as held in Various Judgements of Apex Court.
Furthermore, the CoC’s action in replacing Mr. Verma, based on allegations of
misconduct, conflict of interest, and inefficiency, violated the principles of natural justice.
The right to be heard, as established natural justice principle, must be afforded to any
individual whose professional reputation is at stake. In this case, the CoC failed to give
Mr. Verma an opportunity to respond to the allegations, undermining procedural fairness.
Therefore, the NCLT’s decision to invalidate the CoC's resolution was correct, ensuring
adherence to the statutory framework and safeguarding the integrity of the insolvency
process

ISSUE 2: WHETHER THE NCLT WAS CORRECT IN EXERCISING JUDICIAL REVIEW

OVER THE COC’S DECISION WHEN THERE WAS NO VALID PROCEDURAL COMPLIANCE

UNDER THE IBC?

It is respectfully submitted the Hon'ble NCLT was justified in exercising judicial review
over the Committee of Creditors' (CoC) decision to replace Mr. Aditya Verma as the
Resolution Professional (RP), as the decision failed to meet the mandatory statutory
requirements outlined under Section 27 of the Insolvency and Bankruptcy Code, 2016
(IBC). Specifically, the CoC’s resolution did not secure the required 66% voting share, nor
did it adhere to the necessary procedural steps, such as obtaining written consent from the
proposed RP and forwarding the name to the Adjudicating Authority for confirmation by
the Insolvency and Bankruptcy Board of India (IBBI). These deficiencies rendered the
CoC’s resolution legally invalid.

While the commercial wisdom of the CoC is generally respected, it is not absolute.
Judicial intervention is warranted when decisions are in violation of statutory requirements
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or procedural fairness. Various judgments by the apex court have clarified that the NCLT’s
role is to ensure compliance with the law and safeguard the integrity of the insolvency
process. In this case, the CoC’s failure to comply with the statutory threshold and its lack
of procedural fairness justified the NCLT’s intervention. The NCLT’s action in
invalidating the replacement decision was not an overreach but a necessary step to
preserve the integrity of the Corporate Insolvency Resolution Process (CIRP), in line with
the legislative intent behind the IBC.

ISSUE-3: WHETHER DISSATISFACTION OR ALLEGATIONS WITHOUT SUBSTANTIATION

ARE SUFFICIENT GROUNDS FOR REPLACEMENT OF THE IRP UNDER SECTION 27 OF THE
IBC?

It is respectfully submitted that mere dissatisfaction or unsubstantiated allegations are not

sufficient grounds for replacing an Interim Resolution Professional (IRP) under Section 27
of the IBC. The Code lays down a clear procedure for such replacement but remains silent
on the right to be heard. However, the principle of natural justice requires that no
individual be condemned unheard. Removing the IRP without providing an opportunity to
respond to the allegations violates the fundamental requirement of fair play and due
process. Silence of the statute does not imply the exclusion of fairness; rather, it calls for
its inclusion through reasonable interpretation. In the present case, the Committee of
Creditors (CoC) has alleged lack of transparency, delay in procedures, and potential
conflict of interest but has failed to provide any substantiating evidence or official report.
Such vague and unverified claims reflect arbitrariness and undermine the credibility of the
resolution process. Moreover, no communication or notice was issued to the IRP regarding
the allegations, nor was he given any opportunity to present his side. This one-sided
approach disregards basic procedural fairness. The intent of Section 27 is to provide a
mechanism to ensure efficient resolution not to enable CoC members to exercise power
arbitrarily or vindictively. The provision was designed to protect the process, not to
weaken the position of the IRP without justification. Even Parliamentary discussions have
emphasized the need to uphold the IRP’s independence and ensure that any removal is
based on objective and transparent grounds, not mere dissatisfaction or unproven claims.

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ARGUMENTS ADVANCED

1. WHETHER THE COMMITTEE OF CREDITORS (COC) IS REQUIRED TO

PROVIDE REASONS AND ADHERE TO PRINCIPLES OF NATURAL JUSTICE
BEFORE SEEKING REPLACEMENT OF THE INTERIM RESOLUTION
PROFESSIONAL UNDER SECTION 27 OF THE IBC.?
It is respectfully submitted that the resolution passed by the Committee of Creditors
(CoC) to replace Mr. Aditya Verma as the Interim Resolution Professional (IRP) is
legally untenable as it fails to satisfy the mandatory voting threshold prescribed under
Section 27(2) of the Insolvency and Bankruptcy Code, 2016 (IBC). This provision
clearly mandates that any decision to replace a resolution professional must be approved
by a vote of at least 66% of the voting share of the financial creditors.
In the present case, the resolution seeking Mr. Verma’s removal was passed with only 65%
of the voting share in favor. This falls short of the statutory requirement, rendering the
decision invalid and non-est in the eyes of the law. As established by judicial precedent,
notably in the case of Bank of India v. Nithin Nutritions Pvt. Ltd 2., compliance with the
voting threshold under Section 27(2)3 is not a mere procedural requirement but a
substantive and jurisdictional one. The IBC provides a strict framework for the
replacement of resolution professionals, and any deviation from this framework
compromises the legitimacy of the decision made by the CoC.

1.1. NON ADHERENCE OF LEGAL FRAMEWORK UNDER 27(2)

Section 27(2) of the Insolvency and Bankruptcy Code, 2016 explicitly sets the statutory
threshold for the replacement of a resolution professional by requiring a resolution to be
passed with at least 66% of the voting share of the CoC members. The exact wording of
Section 27(2) mandates:
"The committee of creditors may, at a meeting, by a vote of sixty-six percent. of voting
shares, resolve to replace the resolution professional appointed under section 22 with
another resolution professional, subject to a written consent from the proposed
resolution professional in the specified form. “This provision, by virtue of its language
and legislative intent, imposes an absolute and mandatory requirement for the voting
threshold to be met. The IBC, being a beneficial legislation designed to ensure the
timely, transparent, and efficient resolution of corporate insolvencies, relies heavily on
2
Bank of India v Nithin Nutritions Pvt Ltd [2020] ibclaw.in 123 (NCLAT)
3
S. 27(2), Insolvency and Bankruptcy Code, 2016

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strict adherence to its procedural mandates. The importance of adhering to such

procedural requirements cannot be overstated, as failure to do so undermines the
integrity and objectives of the entire resolution process.

1.2. SUBSTANTIVE AND JURISDICTIONAL OF THE VOTING TREND

The requirement of a 66% majority vote is not merely a procedural formality, but a
substantive and jurisdictional requirement that ensures that the decision to replace a
resolution professional is made with broad consensus and approval from the CoC
members. The IBC contemplates a debtor-creditor balanced approach, recognizing the
need for a broad consensus to ensure that the insolvency resolution process is handled
efficiently and in a manner that protects the interests of creditors. Therefore, any action
that falls short of meeting the statutory threshold fails to achieve this consensus and
disrupts the process. In the case of Bank of India v. Nithin Nutritions Pvt. Ltd. 4, the
Court emphasized that the voting threshold prescribed under Section 27(2) is
jurisdictional in nature, meaning that failure to meet the required voting threshold
renders the resolution null and void. As the CoC’s resolution in the present case was
passed with only 65% of the voting share, which is below the statutory minimum, it is
invalid and does not have the legal effect of replacing Mr. Verma as the Resolution
Professional.

1.3. PRINCIPLES OF NATURAL JUSTICE MUST BE READ INTO SECTION 27 WHERE

ALLEGATIONS AFFECT THE IRP’S REPUTATION AND INTEGRITY
It is humbly Submitted that even assuming arguendo that the Committee of Creditors
(CoC) had met the required voting threshold to replace Mr. Aditya Verma as the Interim
Resolution Professional (IRP), the decision to replace him based on serious allegations
of misconduct, conflict of interest, and inefficiency necessitated the observance of
natural justice. It is an established principle of Indian constitutional and administrative
law that a person must not be condemned unheard, especially when the allegations
impugn their professional conduct and reputation. The principle of audi alteram partem,
which ensures that both sides are heard before a decision is made, applies universally in
matters that affect an individual’s rights, reputation, or standing.

4
Bank of India v Nithin Nutritions Pvt Ltd [2020] ibclaw.in 123 (NCLAT)

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The Supreme Court in Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan 5 and the
Calcutta High Court in Sree Metaliks Ltd. v. Union of India 6 have emphasized that even
when a statute is silent on hearing rights, the principles of natural justice, particularly the
right to be heard, must be read into the provision unless expressly excluded. The case
before us involves allegations that directly impugn Mr. Verma’s professional conduct and
integrity, which are not only serious but also affect his standing and reputation within the
insolvency resolution process.

1.4. PRINCIPLES OF NATURAL JUSTICE AND THE RIGHT TO BE HEARD

The principle of natural justice mandates that before any decision affecting a party’s rights
or interests is made, the affected party must be given an opportunity to present their case.
This principle has been enshrined in Indian law as a fundamental safeguard to ensure
fairness and transparency in administrative and quasi-judicial proceedings. In the present
case, the CoC, in seeking to replace Mr. Verma based on allegations of misconduct and
inefficiency, acted unilaterally and without providing Mr. Verma the opportunity to respond
to these serious charges. The failure to issue notice or afford an opportunity for Mr. Verma
to defend himself against the allegations clearly violates the foundational principles of fair
play. Additionally, this omission contravenes the spirit of Section 424 of the Companies
Act, 20137, which applies to proceedings before the National Company Law Tribunal
(NCLT) and the National Company Law Appellate Tribunal (NCLAT). Section 424
mandates the application of natural justice in all proceedings before these tribunals,
ensuring that individuals are afforded a fair hearing before adverse decisions are made.
The importance of this principle cannot be overstated, especially when the allegations are of
such magnitude that they potentially affect the professional reputation and integrity of a
resolution professional like Mr. Verma. The CoC’s decision, which could significantly alter
his professional standing, cannot be seen as legitimate without adhering to procedural
safeguards that reflect natural justice.

5
Kranti Associates Pvt. Ltd. v. Masood Ahmed Khan, [2010] 9 SCC 496
6
Sree Metaliks Ltd. v. Union of India, LAWS (CAL)- 2107-4-2024
7
S. 424, Companies Act, 2013

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1.5. THE COC DECISION TO REPLACE THE IRP VIOLATES THE CODE OF CONDUCT AND

THE WEDNESBURY PRINCIPLES OF FAIRNESS AND PROPORTIONALITY

It is respectfully submitted that the decision of the CoC to seek the replacement of Mr.
Aditya Verma as the IRP not only failed to comply with the mandatory voting threshold
under Section 27(2) of the IBC but also falls afoul of the standards of fairness,
proportionality, and reasonableness that govern the actions of decision-making bodies
under the Wednesbury principles, as well as the Code of Conduct for Insolvency
Professionals. In Mr. Kunwer Sachdev v. IDBI Bank and Ors8., the National Company
Law Appellate Tribunal (NCLAT) underscored that the conduct of the CoC must be fair,
non-arbitrary, and proportionate, and its actions must respect the principles of natural
justice, particularly when the rights or reputation of a stakeholder, including the
resolution professional, are at stake.
The tribunal in that case emphasized that procedural safeguards are not a mere
formality, but a fundamental requirement of lawful decision-making, especially when
such decisions have reputational, professional, or legal consequences. The IRP is a
regulated professional under the IBC, held to a high standard of integrity, objectivity,
and due care. Therefore, when serious allegations—such as lack of transparency and
conflict of interest—are made, even implicitly, the CoC cannot act in an opaque or
arbitrary manner. It must ensure that such decisions are taken only after affording an
opportunity to the IRP to respond, particularly when the move to replace him is not a
mere administrative change but one arising from concerns over his conduct.
Further, as per the IBBI (Insolvency Professionals) Regulations, 2016, the IRP is bound
by a Code of Conduct, and any perceived breach should be dealt with through a fair
process, not unilateral action. By bypassing this and proceeding with a vote (which in
any case did not meet the statutory threshold), the CoC acted in a manner that was
Wednesbury unreasonable—i.e., so irrational that no reasonable body acting with due
care could have taken such a decision.

8
Mr. Kunwer Sachdev v. IDBI Bank and Ors, 2024:DHC:1042

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2. WHETHER THE NCLT WAS CORRECT IN EXERCISING JUDICIAL REVIEW OVER THE
COC DECISION WHEN THERE NO VALID PROCEDURAL COMPLIANCE UNDER IBC?

The Hon’ble Tribunal was justified in exercising judicial review over the Committee of
Creditors’ (CoC) decision to replace Mr. Aditya Verma as the Resolution Professional
(RP) due to the lack of compliance with mandatory statutory provisions laid down under
Section 279 of the Insolvency and Bankruptcy Code, 2016 (IBC). While the principle of
minimal judicial interference in commercial decisions of the CoC is well-established
and has been consistently upheld by the Hon’ble Supreme Court and NCLAT, such
autonomy is not absolute. It is subject to compliance with the IBC and the broader
principles of procedural fairness and natural justice.
Section 27 of the IBC expressly mandates that for an RP to be replaced during the CIRP,
a resolution must be passed by the CoC with at least 66% of the voting share. It further
requires that the proposed RP provide written consent and that the name be forwarded to
the Adjudicating Authority, which in turn must seek confirmation from the Insolvency
and Bankruptcy Board of India (IBBI). In the present matter, the CoC failed to meet the
mandatory voting threshold required for removal, as the resolution for replacement did
not garner the support of 66% of the financial creditors by voting share. This procedural
lapse renders the resolution legally unsustainable and nonest in the eyes of the law.
The Hon’ble NCLT’s intervention in such circumstances does not constitute an
unwarranted substitution of its own commercial judgment over that of the CoC but is
rather a necessary exercise of its statutory duty to ensure procedural compliance. As
held in K. Sashidhar v. Indian Overseas Bank10, the NCLT is permitted to interfere only
when the decision of the CoC is contrary to law, arbitrary, or lacking in procedural
fairness. A resolution passed without meeting the statutory voting requirement is ultra
vires and incapable of legal enforcement. Therefore, the NCLT’s review in this instance
was squarely within the scope of its jurisdiction.

2.1. PRINCIPLE OF COMMERCIAL WISDOM UNDER THE IBC AND THE STATUTORY

FRAMEWORK SHALL BE ON THE SAME PEDESTAL

It is humbly Submitted that the commercial wisdom of the Committee of Creditors

(CoC) is typically respected under the Insolvency and Bankruptcy Code (IBC).

9
S. 27, Insolvency and Bankruptcy Code, 2016
10
K. Sashidhar v. Indian Overseas Bank, (2019) 12 SCC 150

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However, such deference is only afforded when the decisions made by the CoC are
within the confines of the law. The NCLT, as a judicial body, is tasked not merely with
approving resolutions but with ensuring that the statutory framework is adhered to.
While, as established in Essar Steel and Swiss Ribbons11, the NCLT is generally
prohibited from interfering with the economic merits of CoC decisions, it retains the
right to intervene when there is procedural impropriety, illegality, or abuse of power.
In the present case, the CoC’s decision to remove Mr. Aditya Verma as RP lacked the
requisite voting strength, and further suffered from procedural irregularities due to the
absence of adequate fairness in the decision-making process. As such, the NCLT
exercised its powers appropriately by invalidating the attempted removal, thereby
preserving the sanctity of the Corporate Insolvency Resolution Process (CIRP).
The judicial intervention by the NCLT in this instance does not undermine the
legislative intent of the IBC but rather ensures that the procedural integrity of the
insolvency resolution process is upheld.

11
Swiss Ribbons (P) Ltd. v. Union of India, (2019) 4 SCC 17

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3. WHETHER DISSATISFACTION OR ALLEGATIONS WITHOUT SUBSTANTIATION ARE

SUFFICIENT GROUNDS FOR REPLACEMENT OF THE IRP UNDER

SECTION 27 OF THE IBC.

It has been humbly submitted that mere dissatisfaction or allegation without substantiation
are not sufficient grounds for the replacement of the IRP. The procedure and grounds to
replace the IRP has been rightly mentioned in the S. 27 12 of code and the code is silent on the
issue of right of being heard. The Adjudicating Authority was right in holding that when the
allegations are not supported by the proof, then the IRP cannot be removed. This issue shall
be substantiated in the following sub-issues.

3.1. THE PRINCIPLE OF “AUDIT- AUDI ALTERAM PARTEM” IS BEING VIOLATED BY THE

COC.

It has been humbly submitted to the Adjudicating authority that if Mr. Kapoor is removed
from the position of IRP, then the principle of Audit- audi alteram partem will be violated
which is the one of the foundation of principle of natural justice. No recognised body can
take any action on the based of allegation which are not followed by the principle of Natural
Justice. In the case of MCL Global Steel Private Limited and Another v. Essar Projects
India Limited and Another13 hon’ble HC Kolkata held that a person cannot be condemned
unheard and that where a statute is silent on the right of hearing and it does not in express
terms oust the principles of natural justice, the same can and should be read into. When the
Adjudicating Authority receives an application under Section 7 (Initiation of corporate
insolvency resolution process by financial creditor) of the IBC, it must afford a reasonable
opportunity of hearing to the party. The code is silent on the issue of principle of natural
justice hence it s. 27 of the IBC should be read in good faith and a fair opportunity of being
heard have to be given to Mr. Kapoor. The decision of the COC is in the direct contradiction
of the principle of constitutionalism as the case of Maneka Gnadhi v. Union of India14, the
supreme court rightly applying it wisdom held that the essential feature of Natural justice is
“Audi Alteram Partem” and it has to be applied even if the statue is silent on it. Further the
hon’ble court held that the basic fundamental rights not mutually exclusive and any law
depriving a person from the fundamental rights has to stand a test of one or more fundamental

12
S. 27, Insolvency and Bankruptcy Code, 2016
13
MCL Global Steel Private Limited and Another v. Essar Projects India Limited and Another, Company Appeal
(AT) (Ins.) No. 29 of 2017
14
Maneka Gandhi v Union of India AIR 1978 SC 597

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right confereef under Article 19. When reffering to article 14 ex hypothesis must be tested.
The concept of reasonableness must be projected into procedure. That means even if a law
follows “procedure established by law” (under Article 21), that procedure must also
satisfy the tests of reasonableness and non-arbitrary (under Article 14) and freedom
(under Article 19). Thus, the CoC's decision, taken without notice or hearing to Mr. Kapoor,
violates the constitutional mandate of fair procedure, rendering such replacement legally
unsustainable.

3.2 Mere allegation are not sufficient to remove and IRP.

It has been humbly submitted to the hon’ble court the COC has pleaded to remove Mr.
Kapoor on allegation of Lack of transparency, Delay in finalizing the documents and
Potential conflict of interest with some financial creditors but these allegation have been not
been supported by any evidence of report by the COC. In the most recent judgment till the
date of today’s hearing the bench of NCLAT, DELHI comprising of Justice Ashok
Bhushan in the case of Katra Realtors Pvt. Ltd. v. Mr. Rajesh Ramnani, RP of Ansal Urban
Condominiums Pvt. Ltd. & Anr.15 held that “Any application for replacement dehorse s. 27
process can be entertained only when there are findings on conduct of the Resolution
Professional by the Adjudicating Authority or some proved fact, merely on allegation as has
sought to be made by the Applicant, the Adjudicating Authority shall not enter into enquiry
and decide the allegations for the purpose of deciding the application filed by the Appellant.”
Hence a heavy reliance is placed on this judgment to support the argument that the all the
allegation against Mr. Kapoor is vague and not supported by any evidence. Further in the case
of Ms. Ramsubramaniam v. Sixth Dimensions Project solution ltd. 16 there was a similar
situation where an IRP was removed by the COC on the same grounds of this case and
similarly there was no opportunity of being heard was granted to the IRP by the COC. The
AA held that when the IRP has not been given the opportunity of being heard and the COC
has failed to submit the evidence of the allegation, the IRP could not be removed from the
position as it be unreasonable and arbitrariness on the part of the COC. The bench also held
that the frivolous allegation has arose as the part of illegal plan of one the creditor to appoint
its own person. Its been humbly prayed to the bench to kindly look if the same is the reason
arbitrary removal of Mr. Kapoor.

15
Katra Realtors Pvt. Ltd. v. Mr. Rajesh Ramnani, RP of Ansal Urban Condominiums Pvt. Ltd. & Anr ,
Company Appeal (AT) (Insolvency) No. 382 of 2024
16
Ms. Ramsubramaniam v. Sixth Dimensions Project solution ltd, 2019(4) TMI 1191 NCLT, Mumbai

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The valuable precedent laid by the AA in the case makes is abundantly clear that unless there
is substantial proof of misconduct or inefficiency, and unless the IRP is given an opportunity
to defend themselves, the decision of the COC to seek replacement cannot be allowed to
stand.

3.3 legislative intent of S. 27 is not meant for Arbitrary Replacement

It has been humbly submitted to the hon’ble bench that the intent behind bringing s. 27 has to
be seen. The intent was not to arbitrarily remove the RP but to empower the COC to ensure
efficiency in the resolution process. The appellant should not be given the opportunity to
exploit a party and use this power arbitrarily. The parliament standing committee in 2017 has
also observed that the autonomy of resolution professionals must be preserved and any power
to remove them should be based on objective criteria and transparency. It has been time to
time held by the supreme court that the object and intent behind the legislation should be seen
while applying and interpreting it17

17
Indra Sawhney v. Union of India, 1992 Supp (3) SCC 217

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PRAYER

In light of the facts and submissions made, the Respondent most respectfully prays that
this Hon’ble Tribunal may be pleased to:

1. Dismiss the appeal filed by the Committee of Creditors as being devoid of merit;

2. Uphold the order of the Hon’ble NCLT and affirm the continuance of Mr. Aditya
Verma as the Interim Resolution Professional in accordance with law;

3. Declare that mere dissatisfaction or unsubstantiated allegations are insufficient

grounds for replacement of the IRP under Section 27 of the IBC;

4. Pass any other order(s) as this Hon’ble Tribunal may deem fit in the interest of justice
and equity.

Respectfully submitted by the Counsels for the RESPONDENT

Mr. Aditya Verma

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