9911796707
TMI Blog2024 (9) TMI 510X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clearl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has come to an end and also the Resolution Applicant has withdrawn his offer and therefore the only option left was to proceed towards Liquidation. The Liquidation process against the Corporate Debtor was initiated. d) On 16.10.2019, Mr. Ramit Rastogi was appointed as the Liquidator and the Petitioner herein was discharged from this case. e) The Liquidator filed an application being IA/3719/2020 before the Adjudicating Authority seeking directions to the suspended ex-Directors of the Corporate Debtor to furnish the information and documents as prayed by him in the application. However, the said application was withdrawn by the Liquidator vide Order dated 01.10.2021 stating that the suspended ex-Directors of the Corporate Debtor have furnished the information as required by him and have been cooperating in the process. f) IA No. 2276/2021 was filed by the Liquidator for dissolution of the assets of the Corporate Debtor. The NCLT in IA-2276/2021 vide Order dated 19.04.2022 passed the following directions:- Ld. Counsel for the Applicant presents his case and as per the Form H, liquidation value of the Corporate Debtor indicated at serial no. 22 on page no. 88 of the application is Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed inform all of them. List on 05.09.2022. i) In compliance with the aforesaid order, the Petitioner filed his reply dated 29.10.2022 to the queries sought for by the Adjudicating Authority. The Adjudicating Authority Vide Order dated 17.01.2023 also sought a report from the IBBI regarding the doubts as raised in the order dated 15.07.2022. j) Thereafter, on 25.04.2023, a notice of investigation under Regulation 8 (1) of the Insolvency Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 (hereinafter referred to as the 'Inspection Regulations') was issued to the Petitioner. In the said notice, the Petitioner was asked to reply/clarify on the doubts raised by the Adjudicating Authority in Order dated 15.07.2022 with supportive documents within 10 days. k) Vide e-mail dated 25.04.2023, the Petitioner replied to the investigation notice stating that it was the Liquidator who had reported the wrong Liquidation Value by filing the application for dissolution and the Petitioner has already furnished a detailed reply to the Adjudicating Authority in compliance of the Order dated 15.07.2022. l) The Petitioner, through another e-mail dated 25.04.2023, replying ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I wherein it was stated that AGM(MM) was directed to conduct investigation in the matter of GTHS Retails Pvt. Limited and accordingly a notice under Section 8 (1) of the Inspection Regulations was issued to the Petitioner as well as the Liquidator. The Investigating Authority after considering the submissions made by the Petitioner observed as under:- iii) IA's Observation It has been observed that as per balance sheet for the year 2017-2018, security deposits as on 31.03.2018 amounted to Rs. 53,43,668. However, the same reduced to Rs. 15,000/- as per the balance sheet of 31.03.2019. This security deposit stemmed from the business model of the CD wherein the CD did interiors on the rented premises of franchise and paid security for taking the premises on rent. Details of same is as under:- Particulars 31/03/17 31/03/18 31/03/19 16/10/19 Security deposits 1,77,01,489 53,43,668 15,000 - Trade receivables 7,44,99,123 2,17,56,189 1,67,99,372 1,32,268 Supporting documents for the same are annexed hereto as Annexure VII. Further, the book value of the CD as on ICD was as under:- S. No. Particulars Book Value (Rs in Lakhs) 1 Next Fixed Assets 12.14 2. Net Intangible Assets 6.83 3. Sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rkers. However, RP failed to take any steps towards realization of the said security deposits paid to various franchise. Further, Mr. Ramit Rastogi was appointed as liquidator vide order dated 16.10.2019. In the preliminary report filed with AA and the 3rd progress report was well as in his reply liquidator mentioned that Mr. Harsh Manchanda (suspended ex director) transferred amounts of Rs.50,480 and Rs. 61,104 aggregating to Rs.1.11 lacs to his personal SBI account from the CD's account. A copy of the bank statement for the transactions has been annexed hereto as Annexure IX. Copy of the preliminary report and the progress report annexed hereto as Annexure X. Liquidator mentioned that he also filed a non-cooperation application before the AA against the ex-directors/promoters to provide the requisite documents / information /records since he did not obtain the full documents from RP. Further, AA vide order dated 12.10.2020, directed the ex-director to provide all documents and date along with return of monies within a period of 10 days. Copy of the Hon'ble NCLT order dated 12.10.2020 has been annexed hereto as Annexure XI. It has been observed that RP failed to preserve a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of CIRPs conducted by him, by the timelines as specified in the Table under Para 7 above. iv) In view of the above, Mr. Sandeep Kumar Bhatt, RP violated Section 25 (1), 25 (2) (a), 25 (2) (b), 208 (2) (a), 208 (2) (e) of the Code, Reg. 7 (2) (h) of the IP Regulations read with Clause 14 of the Code of Conduct and the circular issued by the IBBI on 14th August 2019. q) The Investigating Authority after going through the reply, submissions and the documents as produced by the Petitioner observed that- i. As per the balance sheet of 2017-18, the security deposits as on 31.03.2018 amounted to Rs. 53,43,668/- and the same was reduced to Rs.15,000/- as per the balance sheet of 31.03.2019. ii. The Petitioner failed to realize the WIP amounting to Rs.79.54 lakhs lying with petty job workers as mentioned in the books of the Corporate Debtor as on 03.08.2017 (insolvency commencement date) and failed to perform his duties as per Section 25 (2) (b) of the IBC. iii. The Petitioner failed to preserve and protect the assets of the Corporate Debtor and also failed to handover certain records of the Corporate Debtor to the Liquidator. iv. The Petitioner failed to take control and custody of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5 with delay of 11 days and prayed for condonation of such delay as it was the early era of IBC and there were several doubts about the procedure. The Petitioner also stated in his reply that he has maintained the integrity of his position by being honest, straight forward and forthright in his work and he is not involved in any action that would bring disrepute to the profession. The Petitioner also filed a written submission with additional documents before the Board further clarifying his points as mentioned in the initial reply to the Show Cause Notice. t) After due consideration of the investigation report and the reply to the show cause notice, the Disciplinary Committee of the IBBI vide Order dated 01.11.2023, in exercise of the powers conferred under Section 220 IBC read with Regulation 13 of the Investigation Regulations passed an Order suspending the registration of the Petitioner for a period of two years. Relevant portion of the said Order reads as under: 4.1. In view of the submission made by Mr. Sandeep Bhatt, and materials available on record, DC notes that Mr. Sandeep Bhatt has contravened the provisions of the Code and Regulations made thereunder, specially, sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whether the Investigating Authority was duly appointed to conduct an investigation on the Petitioner. It is also stated that only one-member Disciplinary Committee passed the impugned Order against the Petitioner and a perusal of Section 220(1) of the IBC shows that the Disciplinary Committee shall comprise of at least two members and one of such members must be a whole time member. Hence it is a cardinal principle of having at least two members in a coram because a single member may be biased or incompetent to hear and adjudicate upon the issues in front of him. 5. Per contra, Learned Counsel for the Respondents states that the scope of judicial review in matters of disciplinary proceedings is very limited and it is a settled law that judicial review under Article 226 of the Constitution of India is confined to the decision making process and is not analogous to the adjudication of the case on merits. It is stated that in the present case, the investigation and the Disciplinary proceedings were conducted as per the procedure and there is no perversity or arbitrariness in the impugned Order. It is further stated that the averment made by the Petitioner that the physical hearing was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of the loss caused, or likely to have been caused, to persons concerned on account of such contravention; or (ii) three times the amount of the unlawful gain made on account of such contravention, whichever is higher: Provided that where such loss or unlawful gain is not quantifiable, the total amount of the penalty imposed shall not exceed more than one crore rupees. (4) Notwithstanding anything contained in sub-section (3), the Board may direct any person who has made unlawful gain or averted loss by indulging in any activity in contravention of this Code, or the rules or regulations made thereunder, to disgorge an amount equivalent to such unlawful gain or aversion of loss. (5) The Board may take such action as may be required to provide restitution to the person who suffered loss on account of any contravention from the amount so disgorged, if the person who suffered such loss is identifiable and the loss so suffered is directly attributable to such person. (6) The Board may make regulations to specify (a) the procedure for claiming restitution under sub-section (5); (b) the period within which such restitution may be claimed; and (c) the manner in which restitution of am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,52,20,146/- and Rs. 18,28,668/- as rent payable against the security deposit on 03.08.2017, 31.03.2018 and 31.03.2019 respectively. However, such adjustments were not shown transparently in the yearly financial account. 13. 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. 14. At the outset it is pertinent to mention that this Court while exercising its jurisdiction under Article 226 of the Constitution of India does not sit as an Appellate Authority. A writ court exercising its jurisdiction under Article 226 of the Constitution of India does not substitute its own conclusion to the one arrived at by any authority unless the decision is so perverse that no authority can come to such a conclusion or that the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts extraordinary jurisdiction. Any other approach would render the High Court a normal court of appeal which it is not. 53. The essential features of a writ of certiorari, including a brief history, have been very exhaustively explained by B.K. Mukherjea, J. in T.C. Basappa v. T. Nagappa, AIR 1954 SC 440 . The Court held that a writ in the nature of certiorari could be issued in all appropriate cases and in appropriate manner so long as the broad and fundamental principles were kept in mind. Those principles were delineated as follows: 7. In granting a writ of certiorari , the superior court does not exercise the powers of an appellate tribunal. It does not review or reweigh the evidence upon which the determination of the inferior tribunal purports to be based. It demolishes the order which it considers to be without jurisdiction or palpably erroneous, but does not substitute its own views for those of the inferior tribunal .. 8. The supervision of the superior court exercised through writs of certiorari goes on two points, as has been expressed by Lord Summer in King v. Nat Bell Liquors Limited [[1922] 2 A.C. 128, 156]. One is the area of inferior jurisdiction and the qualificati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red on it, the Court or Tribunal acts illegally or improperly, as for instance, it decides a question without giving an opportunity to be heard to the party affected by the order, or where the procedure adopted in dealing with the dispute is opposed to principles of natural justice. There is, however, no doubt that the jurisdiction to issue a writ of certiorari is a supervisory jurisdiction and the Court exercising it is not entitled to act as an appellate Court. This limitation necessarily means that findings of fact reached by the inferior Court or Tribunal as result of the appreciation of evidence cannot be reopened or questioned in writ proceedings. An error of law which is apparent on the face of the record can be corrected by a writ, but not an error of fact, however grave it may appear to be. In regard to a finding of fact recorded by the Tribunal, a writ of certiorari can be issued if it is shown that in recording the said finding, the Tribunal had erroneously refused to admit admissible and material evidence, or had erroneously admitted inadmissible evidence which has influenced the impugned finding. Similarly, if a finding of fact is based on no evidence, that would be re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... review. Government is the guardian of the finances of the State. It is expected to protect the financial interest of the State. The right to refuse the lowest or any other tender is always available to the Government. But, the principles laid down in Article 14 of the Constitution have to be kept in view while accepting or refusing a tender. There can be no question of infringement of Article 14 if the Government tries to get the best person or the best quotation. The right to choose cannot be considered to be an arbitrary power. Of course, if the said power is exercised for any collateral purpose the exercise of that power will be struck down. 17. Summing up the principles laid down in Tata Cellular (supra), Jagdish Mandal v. State of Orissa, (2007) 14 SCC 517, Dwarkadas Marfatia and Sons v. Board of Trustees of the Port of Bombay, (1989) 3 SCC 293, and Central Coalfields Ltd. v. SLL-SML (Joint Venture Consortium), (2016) 8 SCC 622, the Hon ble Supreme Court in Afcons Infrastructure Ltd. v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818, stated: 13. In other words, a mere disagreement with the decision-making process or the decision of the administrative authority is no reason f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss to the public exchequer. (emphasis supplied) 19. From the aforestated judgments, it is clear that 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. 20. Applying the law laid down by the Apex Court to the facts of the present case, this Court is of the opinion that the IBBI has not contravened any of the procedural requirements mandated under the IBC or the Inspection Regulations. Apart from making bald allegations, the Petitioner has not been able to pin point as to which of the regulations have been violated by the Respondents. The contention of the Petitioner has mainly been that the assessment or the conclusion arrived by the Disciplinary Committee is not correct and as stated by the Apex Court, this Court does not sit over the conclusions arrived at by the expert bodies in its jurisdiction under Article 226 of the Constitution of India. This Court only has to see as to w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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