Liquidator has no vested right to continue in office or locus to challenge replacement by stakeholders.

The Corporate Debtor (CD), Tecpro Systems Limited, entered liquidation on 16.01.2020, and the Appellant was appointed as Liquidator.

Respondent No. 2 (EARCL) held an 84.82% voting share in the Stakeholders’ Consultation Committee (SCC) after acquiring debt from SBI in 2015.

Following instances of alleged unauthorized payments by the Appellant to HSIIDC, the SCC voted with a 92.25% majority to replace him.

The Appellant filed I.A. 4269/2024 seeking to declare EARCL a "related party" under Section 5(24) of the IBC, alleging EARCL exercised managerial control via pledged shares and the engagement of Ernst & Young (EY) prior to CIRP.

On 09.01.2026, the NCLT dismissed the Appellant's application and allowed his replacement with Respondent No. 1.

The Appellant challenged this removal, asserting that without EARCL’s "invalid" vote, the 66% threshold for replacement under Regulation 31A(11) was not met.

Whether a Liquidator has the *locus standi* or a vested legal right to challenge his replacement by the Adjudicating Authority.

Whether Respondent No. 2 (EARCL) qualifies as a "related party" under Section 5(24) of the IBC, thereby disqualifying its vote in the SCC.

The court primarily applied Section 5(24) of the IBC defining "related party" and Section 21(2) regarding the disqualification of related parties, noting the second proviso which exempts regulated financial entities (like ARCs) that become related parties solely due to debt-to-equity conversion prior to CIRP.

It relied on Regulation 31A(11) of the IBBI (Liquidation Process) Regulations, 2016, which empowers the SCC to propose replacement by a 66% vote.

The court further applied the principles from *Ranjeet Kumar Verma v. CoC of Straight Edge Contract Pvt. Ltd.* establishing that an Insolvency Professional has no vested right to continue in a process and is not an "aggrieved person" for the purpose of challenging replacement.

The court further applied the principles from *V. Venkata Sivakumar v. IDBI Bank Limited* establishing that an Insolvency Professional has no vested right to continue in a process and is not an "aggrieved person" for the purpose of challenging replacement.

The Tribunal found that the Appellant lacked *locus standi* because a Liquidator is a process officer, not a stakeholder, and removal does not infringe upon any personal or proprietary legal right.

Regarding the "related party" status, the Tribunal observed that EARCL's 30% shareholding stemmed from non-invoked pledged shares and debt assignment, which does not constitute ownership or managerial control.

The court noted that standard lender protection measures—such as appointing observers, escrow mechanisms for monitoring cash flows, and advisory services (EY)—do not equate to "policy control" under Section 5(24).

Crucially, the Tribunal held that even if EARCL were deemed a related party due to shareholding, it would be protected by the second proviso of Section 21(2) as a regulated financial sector entity.

The court characterized the Appellant's application as a belated "afterthought" to resist replacement, noting he had accepted his appointment from the same CoC composition without objection for four years.

The Tribunal affirmed that EARCL is not a "related party" under Section 5(24) and its vote was valid.

The Adjudicating Authority’s order replacing the Liquidator was upheld as a valid exercise of supervisory power.

No costs were awarded.