A petition has been filed before the NCLT, Chennai bench, by a Resolution Professional (petitioner) over his arbitrary removal by bankers for trying to conduct an audit of a corporate debtor (CD) to whom Rs 400 crores were given by five banks, led by the Indian Overseas Bank.
The petition has been filed by CA Venkatasivakumar and is likely to come up for hearing at the National Company Law Tribunal on February 20.
The issue in question is whether bankers having 75% majority voting can remove a Resolution Professional who is doing his work as per the Insolvency and Bankruptcy Board of India (IBBI) code, without assigning any reasons thereof.
There are 13 respondents that have been named including: Subramaniakumar, Chairman and MD, IOB; S Kedarnath, GM, IOB; P Madasamy, AGM, Central Bank of India; Ministry of Finance; RBI; State Bank of India; IDBI Bank.
The petitioner says he took over as the Resolution Professional on January 2, 2018 and in a matter of 30 days, he completed all the work from scratch and was working towards a resolution, with many companies showing expression of interest (EoI). For four months, it was under the charge of another Interim Resolution Professional.
He emphasised the need for a forensic audit, as the stock audit report allegedly revealed that Rs 180 crores worth of goods were not there. In addition, working capital funds were given on such a huge stock for Rs 250 crores as against the requirement of just Rs 80 crores, thereby raising red flags, he alleges.
The petitioner believes that if the corporate debtor is pushed to liquidation, it will result in wiping out more than Rs 300 crores, in addition to loss of jobs for hundreds of families as well as loss of foreign exchange earnings.
Opposing this stance of the petitioner, Subramanyakumar, the Chairman and MD of IOB, allegedly instructed his GM to remove him from the Committee of Creditors (CoC) meeting held on February 9.
The petitioner claims he was asked to go out as the lenders wanted to discuss and later during the meeting, they proposed his removal without giving any reasons.
He further alleges that the Central Bank AGM along with the IOB GM Kedarnath, ridiculed and abused him.
During the five months of resolution period, the banks didn't cooperate for finding a suitable way out, the petitioner claims.
The petitioner believes that the removal of the Resolution Professional appointed by NCLT, in an arbitrary manner by financial creditors, is tantamount to open disregard for legislation.
Such sweeping powers to PSU bank officials, who in most cases are responsible for huge loans turning bad (non-performing assets), will sooner than later kill this most important economic legislation, the petitioner believes.
Resolution Professionals are being ill-treated and are slowly becoming recovery agents of PSU banks, he alleges.
The petitioner says that till now, not a single case that was admitted before NCLT Chennai bench for resolution process has got resolution and all have gone in for liquidation.
The single most important reason why no resolution is found is because the petitioner believes that the bankers are either not well-versed with the laws or donâ€™t want revival of the corporate debtor.
With PSU banks forming a cartel for deciding on 75% voting power, it's time that the government steps in immediately and prevents this legislation from failing, the petitioner urges.
While TNM reached out to IOB to get a reaction, an indpendent director and a general manager (GM) of the bank said they were not aware of the petition while another GM refused to comment saying the matter is sub-judice.