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2024 (11) TMI 133 - HC - IBCSuspension of petitioner s registration as an Insolvency Professional for a period of two years - procedural irregularities in the conduct of the e-auction by the petitioner as a Liquidator - HELD THAT - There is no serious grievance raised in the challenge to the order passed by the DC on the premise that the principles of natural justice had been breached. After the show cause notice was issued to the petitioner, he was granted due opportunity to reply and after granting him an opportunity of oral hearing which the petitioner availed, the impugned order came to be passed. The investigation reports that were called by the IBBI have been referred to in paragraph 2 of the show cause notice and the said reports were annexed as Annexures A and B thereto. Once it is found that the impugned action has been taken after duly complying with the principles of natural justice, the limited scope available for examining the impugned order would be on the touchstone of perversity and irrationality. Since the show cause notice is based principally on the order passed by the NCLT on 2nd March 2023 as upheld by the NCLAT vide order dated 4th July 2023, it would be necessary to refer to the said orders. Before the NCLT, Interim Application No.927 of 2022 came to be filed by a bidder praying that the notice of sale of assets dated 2nd April 2022 be set aside. A grievance was raised that while the notice of sale of assets was dated 2nd April 2022, the e-auction was scheduled on 8th April 2022. In the light of the short time-frame fixed for conducting the e-auction, the bidder challenged the same. The reply filed by the petitioner in his capacity as Liquidator was considered. On the aspect of proportionality, it was urged on behalf of the petitioner that the suspension of registration for a period of two years was excessive and unwarranted. It cannot be said that the suspension of the petitioner s registration for a period of two years in the facts of the present case is in any manner excessive or disproportionate. The basis on which the action of suspension has been taken being the adjudication undertaken by the NCLT and thereafter the order passed by the NCLAT which has attained finality, the DC was within its jurisdiction in prescribing the requisite penalty. The conduct of the petitioner has been found to be questionable and hence his registration has been suspended. It may be noted that despite such suspension of registration, the petitioner is not completely barred from continuing his ongoing assignments. The DC has left it to the discretion of the Committee of the Creditors / Stake-holders Consultation Committee to take a call as to whether the existing assignments of the petitioner can be continued - It is not that the suspension of the petitioner s registration for a period of two years is disproportionate, warranting interference. There are no scope whatsoever to interfere with the impugned order dated 30th January 2024 suspending the registration of the petitioner for a period of two years. The impugned order does not suffer from any perversity whatsoever nor is it irrational or disproportionate. There are no merit in the challenge as raised to the order dated 30th January 2024 passed by the DC - The writ petition stands dismissed.
Issues Involved:
1. Legality of the suspension of the petitioner's registration as an Insolvency Professional by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI). 2. Alleged procedural irregularities in the conduct of the e-auction by the petitioner as a Liquidator. 3. Alleged delays and inconsistencies in public announcements by the petitioner as Interim Resolution Professional (IRP). 4. Allegation of double jeopardy in penalizing the petitioner. 5. Proportionality of the penalty imposed. Issue-wise Detailed Analysis: 1. Legality of Suspension: The petitioner challenged the order dated 30th January 2024 by the Disciplinary Committee (DC) of IBBI, which suspended his registration as an Insolvency Professional for two years. The court examined whether the principles of natural justice were adhered to, noting that the petitioner was given a show cause notice, an opportunity to reply, and a personal hearing. The court found no breach of natural justice, and thus, the scope for challenging the order was limited to examining perversity and irrationality. The court concluded that the DC's decision was justified and legally sound. 2. Procedural Irregularities in E-auction: The petitioner, as a Liquidator, conducted an e-auction on 8th April 2022, which was set aside by the NCLT due to procedural irregularities. The NCLT found that the petitioner did not maintain the required thirty-day period between the auction notice publication and the e-auction. The petitioner had also incorrectly mentioned dates in the auction notice, leading to confusion. The NCLAT upheld the NCLT's decision, and these findings formed the basis for the DC's action against the petitioner. The court found no error in the DC's reliance on these adjudications to proceed against the petitioner. 3. Delays and Inconsistencies in Public Announcements: In the matter of DEPL, the petitioner, as IRP, delayed the public announcement by twenty-nine days after the NCLT's admission order. The DC found no satisfactory explanation for this delay. Additionally, discrepancies in the public announcement regarding the last date for claim submissions were noted. The court found the DC's conclusions regarding the petitioner's negligence and carelessness to be justified and supported by the material on record. 4. Allegation of Double Jeopardy: The petitioner argued that being directed to bear the auction expenses and facing suspension constituted double jeopardy. The court rejected this argument, stating that bearing auction expenses did not absolve the petitioner of his conduct as Liquidator, which had been questioned by both the NCLT and NCLAT. The court held that the suspension was not a second punishment for the same event but a consequence of breaching the Code of Conduct. 5. Proportionality of Penalty: The petitioner contended that the two-year suspension was excessive. The court disagreed, noting that the suspension was based on adjudications by the NCLT and NCLAT, which had attained finality. The DC's decision was within its jurisdiction, and the suspension was not disproportionate. Furthermore, the petitioner was not completely barred from ongoing assignments, as the CoC/SCC could decide on the continuation of his services. Conclusion: The court found no merit in the petitioner's challenge to the DC's order. The suspension was neither irrational nor disproportionate, and the petition was dismissed with no order as to costs.
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