IRP acting as RP under deeming fiction validates actions before CoC confirmation.

The appellant, IDBI Bank Ltd., challenged an order dated 29.05.2025 passed by the Ld. NCLT, Mumbai, in Interlocutory Application No. 817/2025.

The core contention was that the Interim Resolution Professional (IRP), Mr. Ravindra Kumar Goyal, was not appointed as the Resolution Professional (RP) in the first meeting of the Committee of Creditors (CoC), as allegedly required by Section 22(2) of the IBC, but continued in office until his appointment in the 12th CoC Meeting.

The respondent continued to discharge functions as RP prior to 17.02.2025, and was confirmed as RP by the CoC on 17.02.2025 with 78.43% votes.

After the appellant filed the present appeal on 09.06.2025, a resolution plan for the corporate debtor was approved on 13.08.2025 by a majority of 75.37% votes, with the appellant voting against it.

The respondent subsequently filed IA/Plan/103/2025 for final approval of the resolution plan before the Ld. NCLT, Mumbai, on 03.09.2025, which was pending, and the appellant had filed IA 3746/2025 challenging the plan.

1. Whether the Interim Resolution Professional, who was not appointed as the Resolution Professional in the first meeting of the Committee of Creditors, could lawfully continue to hold office and discharge the functions of the Resolution Professional until such appointment later.

2. Whether the acts undertaken by the 'deemed' Resolution Professional prior to formal appointment by the CoC are valid and in consonance with Section 16(5) of the IBC read with Regulation 17(3) of the IBBI (CIRP) Regulations, 2016.

The court primarily applied Section 22(2) of the Insolvency and Bankruptcy Code, 2016 (IBC), which grants discretion to the Committee of Creditors (CoC) to appoint or replace the IRP as the RP in its first meeting.

It also applied Section 16(5) of the IBC, which stipulates that the term of the IRP shall continue until the appointment of the RP under Section 22.

Further, the court relied on Regulation 17(3) of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which states that if the appointment of the RP is delayed, the IRP shall perform the functions of the RP from the 40th day of insolvency commencement until the RP is appointed under Section 22.

The Court acknowledged the appellant's contention regarding Section 22(2) IBC, but found that the word "may" in the subsection indicates a discretion, not a mandatory requirement, for the CoC to appoint or replace the IRP in the first meeting.

The Court emphasized that Section 16(5) of the IBC explicitly provides for the continuation of the IRP's term until an RP is appointed, and Regulation 17(3) of the CIRP Regulations directs the IRP to perform RP functions if the appointment is delayed, specifically from the 40th day.

This legal framework aims to prevent delays in the Corporate Insolvency Resolution Process (CIRP) and uphold the time-bound objective of the IBC.

Consequently, the Court found that the IRP effectively acts as a 'deemed' Resolution Professional when formal appointment is delayed, and all acts undertaken in this capacity are valid by operation of law.

The Court observed that accepting the appellant's argument would "turn back the clock" and contravene the objective of time-bound resolution, especially given the appellant's minor voting share.

Furthermore, a resolution plan had already been approved by a significant majority of the CoC and was pending approval before the NCLT, rendering the current issue largely academic.

It held that the respondent, as the 'deemed' Resolution Professional, validly performed functions prior to 17.02.2025, and all acts undertaken were valid by operation of law.

The appeal was disposed of, with liberty granted to the appellant to raise their contentions regarding the resolution plan before the Ld. Adjudicating Authority, where the plan is already pending for approval and the appellant has filed objections.