2022 (10) TMI 97 - HC - Insolvency and Bankruptcy

Suspension of registration of the Resolution Professional (RP) - territorial jurisdiction to entertain the Writ Petition of this court - doctrine of forum conveniens - HELD THAT - It does not appear to be a matter of debate that show cause notice was issued to the Petitioner by the Respondent and subsequent thereto the order of suspension in respect of acts of omission and commission in respect of the proceedings against the Innovari Technologies Pvt. Ltd. at Delhi is issued. The Respondents have also not disputed that the Petitioner acts as a Resolution Professional and has work on hand at Mumbai - The power conferred upon the High Court to issue directions, orders or writs can be exercised by the High Court exercising jurisdiction in relation to the territories within which the cause of action, wholly or in part, arises for the exercise of such power. The Court exercising power under Article 226 of the Constitution can issue writs detailed under clause 1 to the person or authority situated beyond its territorial jurisdiction provided cause of action wholly or partly arises within the territorial jurisdiction of the court entertaining the Writ Petition. The Respondents have not disputed that the Petitioner acts as a Resolution Professional and has work on hand at Mumbai. He is appointed as an Insolvency Professional by the Mumbai Bench for Wholesale Foods P.Ltd. and the said proceeding is pending adjudication before NCLT, Mumbai Bench. The Petitioner is empanelled as Insolvency Professional for financial institution in Mumbai viz. 1) IDBI Bank 2) Bank of Baroda. Pursuant to the order of suspension, the Petitioner would not be in a position to work as a Resolution Professional with the assignments on hand in the State of Maharashtra - it cannot be said that only a small part of cause of action as arisen within the territorial jurisdiction of this court, the part of cause of action has arisen within the territorial jurisdiction of this court. This court has territorial jurisdiction to entertain the Writ Petition - matter shall be heard on merits.

Summary

Issues:
Challenge to suspension of registration of Insolvency Professional based on territorial jurisdiction

Analysis:
1. The Petitioner challenges the suspension of registration as an Insolvency Professional, which was ordered for three years. The Respondents raised a preliminary objection regarding the territorial jurisdiction of the court to entertain the Writ Petition. The issue of territorial jurisdiction was extensively argued, and a decision was made in the present order.

2. The Respondent's counsel argued that the cause of action primarily arose in Delhi, where the Petitioner was appointed as a Resolution Professional and where the show cause notice and suspension order were issued. They contended that since the Petitioner had already approached the NCLT in Delhi regarding the matter, the High Court in Delhi should have jurisdiction over the case.

3. The Petitioner's counsel countered by highlighting that the Petitioner also operates in Bombay, with assignments and work in Mumbai. They argued that the effect of the suspension order would impact the Petitioner's work in Maharashtra, making it a part of the cause of action within the territorial jurisdiction of the Bombay High Court.

4. The court considered both parties' submissions and emphasized that the place of work or residence of the parties is not as relevant as where the cause of action arises. The court noted that the Petitioner's work in Mumbai, including appointments as an Insolvency Professional and ongoing proceedings before the NCLT Mumbai Bench, connected the cause of action to the territorial jurisdiction of the Bombay High Court.

5. Relying on legal precedents and judgments, the court determined that the part of the cause of action related to the suspension order had indeed arisen within its territorial jurisdiction. Therefore, the court concluded that it had the jurisdiction to entertain the Writ Petition challenging the suspension of the Petitioner's registration as an Insolvency Professional.

6. The court decided that the matter would proceed to be heard on its merits, acknowledging the significance of the territorial jurisdiction in determining the validity of the challenge against the suspension order.