Analysis of NCLT Delhi-II Judgment in Worldwide Metals (P) Ltd Vs JP Engineers (P) Ltd. dated 7th October, 2020
Case: Worldwide Metals (P) Ltd Vs JP Engineers (P) Ltd.
in IA/4208/2020 & 2 other IAs’ in (IB) – 1048  (ND)/2019 Decided on 7th  October, 2020
CORAM: Sh. CH. Mohd.  Sharief Tariq & Sh. L.N. Gupta
Ruling analysed By: Adv. Partho Sarkar
Case Citation  :  (2020) 129 NCLT

In case the CoC/ Financial  Creditor has to replace the RP with their empanelled Insolvency Professional, IBBI being arrayed as a party to seek their response as to the stand of Financial Creditor (A per incuriam judgement explained in the Epilogue)

Back Ground Facts/Rival Submissions:

CoC sought  a  change  in Resolution  Professional/RP  (though  were  satisfied  of the  incumbent   RP’s professional  discharge  of functions) on the  ground  that  the
‘Financial Creditor – Bank’ has a policy, that CIRP needs  to be handled  by an empanelled RP of theirs,  and that  the  present/incumbent RP is already handling  eight assignments & won’t be able to do justice.

Observation by the Court:

IBBI has provided a list of Insolvency Professionals to the NCLT, out of which NCLT has to appoint  one of them;  factual  ground  reality  suggests,  that  Financial
Creditors  are  proposing  the  name  of Insolvency Professionals empanelled with them  for discharging  of CIRP functions,  which results  in delaying  the CIRP. The Court/Tribunal  goes on to observe that such Insolvency Professionals aren’t independent persons.

(Nowhere the captioned order states, that the application for change of RP has been backed by a resolution of minimum of 66% of voting as mandated U/s 27 of the I & B Code – however going by the recital of the order, that in the third CoC meeting held on 26th  Aug, 2020, a resolution was passed to replace the incumbent  RP – it is presumed that the change of RP was resolved by way of minimum 66% of voting).


In view of the conflicting  situation,  it is necessary  to array IBBI as a party and seek response of theirs, qua the stand of Financial Creditors.


  1. Bland observation by the Ld. Bench Members – ‘that financial institution empanelled insolvency professional being assigned of the job, results in CIRP delaysAnd ‘such insolvency professionals aren’t independent’. The two sweeping  observations hasn’t been  disclosed  or backed  of any source  (basis which the observations been made), ex-facie it appears  to be out of personal  information/ perception, rendering  the Ld. Bench Members liable to be examined  as witnesses;  the said assertion is within the ambit of the ruling of Murat Lal V/s Emperor MANU/BH/0305/1917 and the ruling of Hon’ble Privy Council in Hurpurshad V/s Sheo Dayal LR.31.A.259; having imported personal information into the case, the judge has rendered themselves to give evidence as witness. That a judge can’t indulge in extra legal perception was also ruled by Kerala High Court in the matter  of State of Kerala V/s Aboobacker, 2006 SCC OnLine Ker 666; which also relied on the ruling of Hurpurshad  supra & Mihian Bibi V/s Basher Khan, 11 Moo I.A. 213  (PC). The extralegal perception of the  Bench members,  can’t be construed as innocuous observation(s)  – (a judicial observation can’t be ever be speculative/presumptive; in fact has to flow out of deeply thought out judicial reasoning), since formed the basis of the operative  order.


  2. As regards appointment of RP, the same is guided by Section 22 of I & B Code, replacement of RP is guided by Section  27 of the  Code, which envisages  that  minimum  of 66% of voting  is required  to replace the RP. Apparently, the CoC has misdirected themselves in arguing that it’s the Bank’s policy to engage  empanelled Insolvency Professional  – an outright  uncalled  for /misdirected argument on the part of CoC, in the teeth  of the mandate of the law that once CoC has armed itself with 66% voting in favour of replacement, no further justification  was required. Further, since the CIRP has to be completed in time bound manner, the CoC is expected to take steps diligently and not in perfunctory or casual manner; the CoC to have meandered the argument in causing reference to IBBI was an irrelevant exercise causing further delay/confusion.

  3. The law concerning replacement of RP is fairly settled in terms of the ruling of NCLAT in the matter of Punjab  National  Bank V/s. Mr. Kirah Shah IRP of ORG Informatics  Ltd  [2019] 05 NCLAT wherein  it was held  that  the  Committee  of Creditors (CoC) is not required  to record any reason  or ground  for replacing  the  ‘Resolution Professional’. The CoC having decided  to remove  the  RP with more than  the  threshold/minimum voting share  of 66% in favour of the  same, it was not open  for NCLT to interfere  with such decision, till it is shown that the decision of the CoC is perverse  or without jurisdiction.  Another important observation was made  by NCLAT in the  matter  of Kirah Shah supra,which gets underscored vis-à-vis the intent  of the Code – ‘For the purpose of proceedings reported to the ‘Insolvency and Bankruptcy Board of India’ (for short, ‘the IBBI’), the ‘Committee of Creditors’ cannot await the decision of the IBBI for the purpose of replacement’.
  1. In view of the settled position of law, NCLT in passing an order arraying IBBI as a party in the matter of the captioned proceedings conflicts with the settled position of law – ‘a per incuriam ruling’.