IBC Section 22: Appointment of resolution professional

Section 22 of Insolvency and Bankruptcy Code, 2016: Appointment of resolution professional

Official Bare Act Text

Override / Mandate Mens Rea (Intent) Actus Reus (Conduct) Punishment Limitation Monetary

(1) The first meeting of the committee of creditors shall be held within seven days of the constitution of the committee of creditors.

(2) The committee of creditors, may, in the first meeting, by a majority vote of not less than sixtysix per cent. of the voting share of the financial creditors, either resolve to appoint the interim resolution professional as a resolution professional or to replace the interim resolution professional by another resolution professional.

(3) Where the committee of creditors resolves under sub-section (2)-

(a) to continue the interim resolution professional as resolution professional subject to a written consent from the interim resolution professional in the specified form it shall communicate its decision to the interim resolution professional, the corporate debtor and the Adjudicating Authority; or

(b) to replace the interim resolution professional, it shall file an application before the Adjudicating Authority for the appointment of the proposed resolution professional along with a written consent from the proposed resolution professional in the specified form.

(4) The Adjudicating Authority shall forward the name of the resolution professional proposed under clause (b) of sub-section (3) to the Board for its confirmation and shall make such appointment after confirmation by the Board.

(5) Where the Board does not confirm the name of the proposed resolution professional within ten days of the receipt of the name of the proposed resolution professional, the Adjudicating Authority shall, by order, direct the interim resolution professional to continue to function as the resolution professional until such time as the Board confirms the appointment of the proposed resolution professional.

1. Subs. by Act 26 of 2018, s. 15, for sub-sections (7) and (8) (w.e.f. 6-6-2018).

2. Subs. by s. 16, ibid., for "seventy-five" (w.e.f. 6-6-2018).

3. Ins. by s. 16, ibid. (w.e.f. 6-6-2018).

Legal Commentary & Landmark Judgments: Section 22

Section 22 governs the appointment of the Resolution Professional by the Committee of Creditors at their first meeting, empowering the CoC to resolve by a 66% majority to retain the IRP or replace him with another IP.

First CoC Meeting Mandate: The Committee of Creditors in their first meeting held within seven days of constitution shall resolve whether to appoint the IRP as RP or replace the IRP.
66% Voting Majority Standard: The resolution to confirm the IRP as RP or replace him with another RP requires a majority vote of not less than sixty-six percent of voting shares of financial creditors.
Application to NCLT: The CoC files an application before the NCLT for appointment of the proposed RP, or NCLT refers to IBBI if no name is agreed upon.
Tenure of RP: The RP manages the CIRP until the approval of a resolution plan by the NCLT or the passing of a liquidation order.

Key Landmark Precedents:

Committee of Creditors of Essar Steel India Ltd. v. Satish Kumar Gupta (2020) 8 SCC 531: The Supreme Court held that the commercial wisdom of the Committee of Creditors is supreme in selecting and replacing the Resolution Professional under Section 22; courts will not interfere with CoC voting decisions.
Swiss Ribbons Pvt. Ltd. v. Union of India (2019) 4 SCC 17: Noted that Section 22 ensures that the person driving the resolution process enjoys the confidence of the financial creditors holding at least 66% of the debt.

Courtroom Practice & Strategic Litigation Guidance:

In the first CoC meeting agenda, strictly incorporate the statutory item for confirming the IRP as RP or voting on replacement under Section 22. Ensure electronic voting records reflect that the 66% voting share threshold has been accurately calculated.