IBC Section 89: Replacement of resolution professional

Section 89 of Insolvency and Bankruptcy Code, 2016: Replacement of resolution professional

Official Bare Act Text

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

(1) Where the debtor or the creditor is of the opinion that the resolution professional appointed under section 82 is required to be replaced, he may apply to the Adjudicating Authority for the replacement of such resolution professional.

(2) The Adjudicating Authority shall within seven days of the receipt of the application under sub-section (1) make a reference to the Board for replacement of the resolution professional.

(3) The Board shall, within ten days of the receipt of a reference from the Adjudicating Authority under sub-section (2), recommend the name of an insolvency professional to the Adjudicating Authority against whom no disciplinary proceedings are pending.

(4) The Adjudicating Authority shall appoint another resolution professional for the purposes of the fresh start process on the basis of the recommendation by the Board.

(5) The Adjudicating Authority may give directions to the resolution professional replaced under sub-section (4)

(a) to share all information with the new resolution professional in respect of the fresh start process; and

(b) to co-operate with the new resolution professional as may be required.

Legal Commentary & Landmark Judgments: Section 89

Section 89 provides a statutory appeal remedy to any creditor aggrieved by the decision of the Resolution Professional on objections raised under Section 88.

Appeal to Adjudicating Authority: Any creditor may, within ten days of the decision of the resolution professional under Section 88, apply to the Adjudicating Authority for directions.
Tribunal Review: The NCLT/DRT may summon the RP, examine documents, and reverse or modify the RP's decision.
Exclusion of Non-Qualifying Debts: The court may order the exclusion of a disputed debt from the fresh start list or revoke the admission order entirely.

Key Landmark Precedents:

Dilip B. Jiwrajka v. Union of India (2024) 5 SCC 436: The Supreme Court affirmed that Section 89 provides a direct judicial review mechanism over the RP's determinations, ensuring that no creditor is denied their legal remedy arbitrarily.
Lalit Kumar Jain v. Union of India (2021) 9 SCC 321: Noted that judicial oversight under Section 89 guarantees due process across all stages of individual insolvency.

Courtroom Practice & Strategic Litigation Guidance:

If the RP erroneously dismisses a creditor's objection, file a miscellaneous application under Section 89 before the DRT within 10 days. Attach documentary proof showing that the debt is an excluded debt (e.g., court fine or maintenance).