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TMI Blog2022 (12) TMI 149X X X X Extracts X X X X X X X X Extracts X X X X ..... of the powers and functions of the Board shows that the overall supervision and functions under the IBC are to be carried out by the Board. Section 196(2) of the IBC also vests with the Board, the power to make model bylaws to be adopted by the insolvency professional agencies. The Board s power to issue Regulations are recognized in Section 240 of the IBC. Insofar as the present case is concerned, there was no challenge to Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 before the NCLT. Therefore, in an application seeking extension of time to complete the CIRP process, the NCLT has gone ahead and declared the Regulation 36A as ultra vires. In the present case, a conjoint reading of the provisions of the IBC clearly shows that the NCLT is the adjudicating authority under the IBC. Under Section 60(5) the categories of cases which can be adjudicated have been clearly enumerated. The jurisdiction to deal with the validity and legality of the Regulations framed under the IBC is not conferred upon the NCLT. The NCLT being a creature of the IBC, cannot assume to itself the power of declaring any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b regulation (1) or sub regulation (2), as the case may be. (4) The timelines specified under this regulation shall not apply to an ongoing corporate insolvency resolution process- (a) where a period of less than thirty-seven days is left for submission of resolution plans under sub-regulation (1); (b) where a period of less than eighteen days is left for submission of resolution plans under sub-regulation (2). (5) The resolution professional shall publish brief particulars of the invitation in Form G of the Schedule: (a) on the website, if any, of the corporate debtor; and (b) on the website, if any, designated by the Board for the purpose. Section 25(2)h of the IBC, 2016 25.(2) For the purposes of sub-section (1), the resolution professional shall undertake the following actions, namely:- (a) to (g) (h) invite prospective lenders, investors, and any other persons to put forward resolution plans; 3. The matter came to the NCLT by way of an application filed under Section 12(2) of the IBC by the Respondent No. 1 - State Bank of India (SBI) where extension was sought for the completion of the Corporate Insolvency Resolutio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is essence of the IBC, 2016, therefore, we have no other option except to declare Regulation 36A as ultra-vires of Section 240(1) of IBC, 2016. The IBBI is directed to frame Regulation according to its competence and the source of power as given to it by the Code. We do not say anything more on this aspect. 5. The Petitioner has challenged the said impugned order before this Court on several grounds including on the ground that the NCLT does not have the jurisdiction and power to decide upon the validity and legality of Regulations. 6. Vide previous order dated 26th September, 2018, this court directed that the impugned order passed by the NCLT shall not come in the way of the matters where Expression of Interest has already been issued. The relevant part of the said order is as follows: 4. The question involved in the present petition is whether the National Company Law Tribunal (hereafter the NCLT ) could strike down the provisions of Section 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations 2016. The NCLT has held that the procedure for calling for 'Expression of Interest' is ultra-vires ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., W.P.(C) No. 10189/2018 is pending adjudication before the learned single judge. 3. Furthermore, the record also shows that the predecessor Bench in the instant appeal vide order dated 05.10.2018, has stayed the operation of the order dated 05.09.2018 passed by the NCLT. 3.1. In effect, Regulation 36A of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 continues to operate. 4. Given this position, in our view, the writ petition needs to be heard and a final decision is required to be rendered in the said writ petition. 5. Accordingly, the appeal is disposed of, with a request to the learned single judge to take up the writ petition for hearing and final disposal. 6. It is further directed that pending the disposal of the writ petition, interim order dated 05.10.2018 passed by the Division Bench will continue to operate. 7. Consequently, pending application shall stand closed. 9. As on date, the aforementioned order dated 4th May, 2022 passed in the LPA No.566/2018 continues and in effect therefore, Regulation 36A continues to operate. 10. Today, Mr. Vikas Mehta, ld. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 196(1)(u) of the IBC is a broad provision which stipulates that the IBBI can perform such other functions as may be prescribed. The relevant provisions of the IBC are set out below: Section 3 of the IBC, 2016 3. In this Code, unless the context otherwise requires, (1) Board means the Insolvency and Bankruptcy Board of India established under sub-section (1) of section 188 Section 188 of the IBC, 2016 188. (1) With effect from such date as the Central Government may, by notification, appoint, there shall be established, for the purposes of this Code, a Board by the name of the Insolvency and Bankruptcy Board of India. (2) The Board shall be a body corporate by the name aforesaid, having perpetual succession and a common seal, with power, subject to the provisions of this Code, to acquire, hold and dispose of property, both movable and immovable, and to contract, and shall, by the said name, sue or be sued. (3) The head office of the Board shall be at such place in the National Capital Region, as the Central Government may, by notification, specify. Explanation .-For the purposes of this section, the expression National Capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y dealing with insolvency resolution process or liquidation proceeding of such corporate debtor. (4) The National Company Law Tribunal shall be vested with all the powers of the Debt Recovery Tribunal as contemplated under Part III of this Code for the purpose of sub-section (2). (5) Notwithstanding anything to the contrary contained in any other law for the time being in force, the National Company Law Tribunal shall have jurisdiction to entertain or dispose of- (a) any application or proceeding by or against the corporate debtor or corporate person; (b) any claim made by or against the corporate debtor or corporate person, including claims by or against any of its subsidiaries situated in India; and (c) any question of priorities or any question of law or facts, arising out of or in relation to the insolvency resolution or liquidation proceedings of the corporate debtor or corporate person under this Code. (6) .. 15. A perusal of the powers of the NCLT shows that, broadly the NCLT is vested with the power of adjudicating any application or proceeding before it and adjudicating any claims and also deciding on questions of law or fact arisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Hon ble Apex Court while discussing the issue, whether in a liquidation proceeding under the Code, a person ineligible under Section 29 A of the Code, is permitted to propose a scheme for revival under Section 230 of the Companies Act, 2013, has noted in the epilogue that the need for judicial intervention or innovation from the NCLT NCLAT should be kept as its bare minimum and should not disturb the foundational principles of the IBC . 28. Keeping in view the scope and spirit of the Code, read with Section 54 of the Code, Regulation 39C of CIRP Regulations, Regulations 32 (e) (f), 32A and 45 (3) of the Liquidation Process Regulations, we are of the view that the sale of the Corporate Debtor Company was carried out by the liquidator in accordance with the Regulations and we are constrained to observe that the Adjudicating Authority, has, apart from travelling beyond its jurisdiction in making observation regarding the power and functions of framing of Regulations by IBBI, has also not appreciated the ratio laid down by the Hon ble Supreme Court in a catena of Judgements that the Liquidation of the Company is to be seen only as a last resort and every attempt sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed entities inasmuch as it casts a statutory obligation on the regulated entities to align their existing and future contracts with the said regulations. (iii) A regulations under Section 178 is made under the authority of delegated legislation and consequently its validity can be tested only in judicial review proceedings before the courts and not by way of appeal before the Appellate Tribunal for Electricity under Section 111 of the said Act. (iv) Section 121 of the 2003 Act does not confer power of judicial review on the Appellate Tribunal. The words 'orders', instructions' or 'directions' in Section 121 do not confer power of judicial review on the Appellate Tribunal for Electricity. In this judgment, we do not wish to analyse the English authorities as we find from those authorities that in certain cases in England the power of judicial review is expressly conferred on the tribunals constituted under the Act. In the present 2003 Act, the power of judicial review of the validity of the regulations made under Section 178 is not conferred on the Appellate Tribunal for Electricity. (v) If a dispute arises in adjudication on interpretation of a re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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