9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (9) TMI 510 - HC - IBCSuspension of registration of the Petitioner as an Insolvency Professional for a period of two years - Constitution and composition of the Disciplinary Committee - HELD THAT - The contention of the Petitioner that the Oder of the IBBI suffers from corum non-judice inasmuch as it was only a single member committee which passed the impugned Order, is not tenable in law. The contention of the learned Counsel for the Petitioner that the IBBI ought to have awaited the proceedings before the Adjudicating Authority instead of rushing with enquiry awarding punishment, cannot be accepted. Both the proceedings are entirely distinct from each other. IBBI has been constituted to oversee the conduct of the IRPs and the Liquidators and to see as to whether the IRPs and Liquidators are acting in compliance with the mandate of the IBC. The IBBI can proceed ahead to investigate into the conduct of the IRPs and the Liquidators even if on getting information that the IRP has committed a misconduct. Material on record shows that the Petitioner has failed to preserve the assets of the Corporate Debtor. He has not handed over the complete record of the Corporate Debtor to the Liquidator. The Petitioner has allowed suspended ex-Directors to transfer money from the Corporate Debtor's account to his account and has therefore failed to take control and custody of the Corporate Debtor and business records. Material on record discloses that the Petitioner has violated several provisions of the IBC and the Regulations. In Silppi Constructions Contractors v. Union of India 2019 (6) TMI 1449 - SUPREME COURT , the Hon ble Supreme Court has followed the aforesaid judgments and reiterated the principle that Courts should exercise a lot of restraint while exercising powers of judicial review in respect of matters pertaining to technical issues as the Courts lack the expertise to adjudicate upon technical issues. The scope of interference by way of judicial review in commercial matters is extremely limited and can only be justified when a case of arbitrariness, unreasonableness, mala fide, bias, or irrationality is clearly made out. Further, the Courts lack the requisite expertise to adjudicate upon technical issues which are often involved in commercial matters. The Order of the Disciplinary Committee shows that the reply given by the Petitioner has been considered and all the aspects have been taken care of by the Board and the decision has been taken by the Board after following the due procedure. This Court has gone through the Orders of the Board and the material on record and is of the opinion that the procedure has been followed by the Board before passing the Order suspending the Petitioner herein. The attempt of the Petitioner has been to persuade this Court to substitute its conclusion to the one arrived at by the Board, which is outside the scope of Article 226 of the Constitution of India. This Court, therefore, does not find any reason to interfere with the Order passed by the Respondents - Petition dismissed.
Issues Involved:
1. Legality of the Disciplinary Committee's order suspending the Petitioner's registration. 2. Compliance with procedural requirements and principles of natural justice. 3. Constitution and composition of the Disciplinary Committee. 4. Petitioner's failure to preserve and protect the assets of the Corporate Debtor. 5. Delay in submission of CIRP Forms. 6. Scope of judicial review under Article 226 of the Constitution of India. Detailed Analysis: 1. Legality of the Disciplinary Committee's Order: The Petitioner challenged the Order dated 01.11.2023, passed by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI), which suspended the Petitioner's registration as an Insolvency Professional for two years. The Order was based on findings that the Petitioner violated several provisions of the Insolvency and Bankruptcy Code (IBC) and related regulations. 2. Compliance with Procedural Requirements and Principles of Natural Justice: The Petitioner argued that the Order was passed without considering the facts and evidence placed by him and that the principles of natural justice were not followed, as he was not informed about incriminating documents relied upon by the Disciplinary Committee. The Court found that the investigation and disciplinary proceedings were conducted as per the procedure, and there was no perversity or arbitrariness in the impugned Order. 3. Constitution and Composition of the Disciplinary Committee: The Petitioner contended that the Disciplinary Committee was improperly constituted, as it comprised only one member, contrary to Section 220(1) of the IBC, which mandates at least two members. The Court held that Section 220 only requires the Committee to consist of whole-time members of the Board and does not mandate a minimum of two members. The Court applied Section 13(2) of the General Clauses Act, 1987, which allows singular words to include the plural and vice versa, thereby validating the one-member Committee. 4. Petitioner's Failure to Preserve and Protect the Assets of the Corporate Debtor: The investigation report highlighted multiple failures by the Petitioner, including: - Failure to realize Work-in-Progress (WIP) amounting to Rs. 79.54 lakhs. - Allowing the suspended ex-director to transfer Rs. 1.11 lakhs from the Corporate Debtor's account. - Not taking control and custody of the Corporate Debtor's assets and business records. - Failure to hand over complete records to the Liquidator. The Court found substantial deficiencies in the Petitioner's performance and upheld the Disciplinary Committee's findings. 5. Delay in Submission of CIRP Forms: The Petitioner admitted to delays in submitting CIRP Forms 1, 3, and 5, which were required under the circular issued by the IBBI on 14th August 2019. The Court noted that there was a delay of 414 days for Form 1 and 11 days each for Forms 3 and 5. The Petitioner sought condonation of the delay, citing the early era of IBC and procedural doubts, but the Court found this insufficient to overturn the Disciplinary Committee's decision. 6. Scope of Judicial Review under Article 226 of the Constitution of India: The Court reiterated that its jurisdiction under Article 226 is supervisory and not appellate. It does not substitute its own conclusions for those of the expert bodies unless the decision is perverse or in contravention of the law. The Court emphasized that the role of the Resolution Professional is critical to the IBC's purpose, requiring high standards of professional ethics. The Court found no procedural violations by the IBBI and upheld the Disciplinary Committee's decision, dismissing the Petition. Conclusion: The Petition was dismissed, and the Order of the Disciplinary Committee suspending the Petitioner's registration for two years was upheld. The Court found that the Petitioner failed to preserve and protect the assets of the Corporate Debtor, delayed the submission of required forms, and violated several provisions of the IBC and related regulations. The Court also confirmed the legality of the one-member Disciplinary Committee and the compliance with procedural requirements.
|
