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2019 (8) TMI 629 - AT - Insolvency and BankruptcyDisciplinary proceedings initiated by IBBI - Jurisdiction - power of Adjudicating Authority/ National Company Law Tribunal has jurisdiction to quash the disciplinary proceedings once initiated by the IBBI - HELD THAT - Once a disciplinary proceeding is initiated by the IBBI on the basis of evidence on record, it is for the Disciplinary Authority, i.e., IBBI to close the proceeding or pass appropriate orders in accordance with law. Such power having been vested with IBBI and in absence of any power with the Adjudicating Authority/ (National Company Law Tribunal), the Adjudicating Authority cannot quash the proceeding, even if proceeding is initiated at the instance and recommendation made by the Adjudicating Authority/ National Company Law Tribunal. We set aside the last portion of the impugned order dated 5th February, 2019 relating to quashing of all disciplinary proceedings - The matter is remitted to the IBBI to pass appropriate order taking into consideration the reference of initiation of proceeding by the Adjudicating Authority as made on 26th April, 2018 and later acceptance of explanation - appeal disposed off.
Issues:
1. Jurisdiction of the Adjudicating Authority to quash disciplinary proceedings initiated by IBBI. Analysis: The appeal was filed by the Insolvency and Bankruptcy Board of India (IBBI) against the order of the Adjudicating Authority (National Company Law Tribunal) quashing disciplinary proceedings initiated by IBBI. The central issue in this case was whether the Adjudicating Authority had the jurisdiction to quash disciplinary proceedings once initiated by IBBI. The Appellate Tribunal, after hearing the arguments, concluded that the power to close the disciplinary proceedings or pass appropriate orders lies with the Disciplinary Authority, which is the IBBI. The Adjudicating Authority does not possess the power to quash the proceedings, even if they were initiated based on the recommendation of the Adjudicating Authority itself. The case involved the initiation of the 'Corporate Insolvency Resolution Process' against a Corporate Debtor, where Mr. Rishi Prakash Vats was appointed as the Resolution Professional. Due to a typographical error in Mr. Vats' name, the process was delayed, leading to an order by the Adjudicating Authority highlighting the lackadaisical attitude in the proceedings and recommending appropriate action by the IBBI. Subsequently, a disciplinary proceeding was initiated against Mr. Vats. However, upon providing a proper explanation for the delay, the Adjudicating Authority expunged its earlier observation and informed IBBI. Despite this, the Adjudicating Authority proceeded to quash the disciplinary proceedings, which was deemed beyond its jurisdiction by the Appellate Tribunal. The Appellate Tribunal set aside the portion of the impugned order quashing the disciplinary proceedings and remitted the matter to IBBI for passing appropriate orders. The Tribunal emphasized that while expunging the earlier order could be a valid reason to close the proceedings, the power to make the final decision lies solely with IBBI. Therefore, the Adjudicating Authority cannot unilaterally quash disciplinary proceedings initiated by IBBI. The Tribunal directed IBBI to consider the reference made by the Adjudicating Authority and the subsequent acceptance of explanation, expecting a closure order to be issued promptly. The appeal was disposed of with no costs awarded.
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