Metenere insolvency: NCLAT upholds NCLT order directing substitution of resolution professional

The National Company Law Appellate Tribunal (NCLAT) has upheld the NCLT order directing State Bank of India to substitute its nominee, an ex-employee, to act as the Interim Resolution Professional (IRP) in the Metenere insolvency matter.

A three-member bench of the appellate tribunal said that apprehension of bias expressed by Metenere Ltd -- the corporate debtor against whom insolvency was filed -- cannot be dismissed offhand and the National Company Law Tribunal (NCLT) was right in asking for substitution for the IRP.

The appellate tribunal also rejected the claims of SBI that the Insolvency and Bankruptcy Code does not prohibit an ex-employee of the financial creditor to be appointed as an IRP and said the NCLT was justified in seeking substitution so that process conducted in a "fair and unbiased" manner.

The NCLAT observed Shailesh Verma, whose name was proposed as IRP has worked with SBI for 39 years and had retired as chief general manager.

"In the given set of circumstances, we are of the considered opinion that the apprehension of bias expressed by the 'corporate debtor' qua the appointment of Verma as proposed IRP at the instance of the appellant - financial creditor cannot be dismissed offhand," it said.

The NCLT was perfectly justified in seeking substitution to ensure that the 'Corporate Insolvency Resolution Process' was conducted in a fair and unbiased manner, said the NCLAT.

It further said: We find no legal flaw in the impugned order which is free from any legal infirmity and has to be upheld. It goes without saying that the appellant - financial creditor should not have been aggrieved of the impugned order as the same did not cause any prejudice to it."