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2023 (11) TMI 223 - HC - Insolvency and BankruptcyCIRP - Liquidation proceedings initiated - Right of the Operational Creditor (Petitioner) - Petitioner alleged Misconduct in the performance as an Insolvency Resolution Professional - seeking appropriate direction restraining Respondent No. 3 (now Respondent No. 2) from functioning as a Liquidator of the Corporate Debtor - HELD THAT - Respondent No. 1/Board is the authority to regulate the functioning of the Insolvency Professionals and the Board comprises of experts in the field who have been appointed by the Central Government to carry out the functions specified under Part IV of the IBC. It is well settled that Courts do not sit as an Appellate Authority over the decisions taken by the experts. The Apex Court in MANSUKHLAL VITHALDAS CHAUHAN VERSUS STATE OF GUJARAT 1997 (9) TMI 618 - SUPREME COURT has observed that The Court cannot substitute its judgment for the judgment of administrative authorities in such cases. Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene. This Court does not find that the decision making process adopted by the Board or the decision based on the final report is perverse or is contrary to law or against public interest, which would warrant interference from this Court under Article 226 of the Constitution of India. Court while exercising its jurisdiction under Article 226 of the Constitution of India while examining any enquiry report does not go into excruciating detailed facts nor does it substitute its conclusion to the one arrived at by the fact finding body. If the process adopted in the enquiry is fair, reasonable and transparent then the Writ Court does not interfere with the findings to substitute its own conclusion to the one arrived at by the authority simply because another view is possible. Petition dismissed.
Issues Involved:
1. Misconduct by the Insolvency Resolution Professional (IRP). 2. Failure to publish public announcements as per CIRP Regulations. 3. Incomplete Information Memorandum (IM) uploaded by the IRP. 4. Inaction by the Board on the complaint against the IRP. 5. Jurisdiction and scope of judicial review under Article 226 of the Constitution of India. Summary: 1. Misconduct by the Insolvency Resolution Professional (IRP): The Petitioner alleged that Respondent No. 2, appointed as the Insolvency Resolution Professional, did not perform his duties diligently and in accordance with the Insolvency and Bankruptcy Code, 2016 (IBC). The Petitioner sought a writ of mandamus directing the Board to take action against Respondent No. 2 for misconduct and to restrain him from functioning as a Liquidator during the pendency of the writ petition. 2. Failure to publish public announcements as per CIRP Regulations: The Petitioner contended that Respondent No. 2 failed to publish the public announcement in two widely circulated newspapers within three days of his appointment, as mandated by Regulations 6(1) and (2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations). The announcements were published late and in newspapers with very limited circulation in the concerned area. 3. Incomplete Information Memorandum (IM) uploaded by the IRP: The Petitioner claimed that Respondent No. 2 uploaded an incomplete Information Memorandum (IM) of the Corporate Debtor on its website, making it a public document, which was in contravention of the provisions of the IBC. 4. Inaction by the Board on the complaint against the IRP: The Petitioner filed a complaint against Respondent No. 2 with the Board, highlighting the irregularities committed during the CIRP process. Despite a preliminary report finding some merit in the allegations, the Board did not take any action against Respondent No. 2. The Petitioner filed multiple RTI applications to inquire about the status of the complaint, and eventually, the Board informed that the complaint had been disposed of. 5. Jurisdiction and scope of judicial review under Article 226 of the Constitution of India: The Court emphasized that under Article 226, it only looks into the decision-making process and does not interfere unless the process is contrary to law or tailored to help a particular party. The Court found no material to substantiate that the Board acted in favor of Respondent No. 2 or shielded his misdeeds. The Court noted that the final report recorded certain irregularities, which the Board would consider before appointing Respondent No. 2 in future cases. The Court reiterated that it does not substitute its conclusion for that of the experts unless there is a gross miscarriage of justice. The decision-making process by the Board was found to be fair, reasonable, and transparent. Conclusion: The writ petition was dismissed along with pending applications, as the Court found no infirmity in the decision-making process adopted by the Board.
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