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TMI Blog2024 (10) TMI 834X X X X Extracts X X X X X X X X Extracts X X X X ..... ss wherein an award was passed in favour of KCIL. It found that it was not open for the SRA to term the award as void ab initio or unlawful. In spite of receiving the legal opinion dated 13th July 2020 wherein it was stated that such comments by the SRA ought not to have been made, the petitioner as RP failed to take cognizance of the same. This conduct of the RP has thus been found to be in contravention of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. As regards inaction on the part of the petitioner as RP to indicate the precise amount of claim admitted by him, the observations of the NCLAT in paragraph 20 form the basis for holding that the petitioner failed to act in accordance with Regulation 13 (2) (a) and (d) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - the Disciplinary Committee has proceeded to take necessary action based on the observations of the NCLAT, which the petitioner did not challenge. The finding recorded by the NCLAT was that the petitioner had failed in his duty as RP and hence there was substantial material to proceed against the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmissions dated 11th May 2023 and 19th May 2023 replied to the same. The IA submitted its investigation report to the IBBI and on that basis, the aforesaid show cause notice was issued alleging contravention of the provisions of Section 30 (2) (b) and (e), 208 (2) (a) and (e) of the Code as well as the Regulations framed in that regard. 3. The petitioner on 24th July 2023 submitted his reply to the show cause notice and denied the assertions made therein. Virtual hearing took place on 31st January 2024 and thereafter the Disciplinary Committee of the IBBI through two Whole Time Members on 12th August 2024 passed an order stating therein that as the petitioner had failed to perform his duties under the Code read with the relevant Regulations made thereunder, the petitioner s registration as RP was suspended for a period of one year. The said order was to come in effect after expiry of thirty days from the date of its issue. Being aggrieved by the order of suspension, the petitioner has filed this writ petition raising a challenge to the same. 4. Mr. Gaurav Joshi, the learned Senior Advocate for the petitioner submitted that there was no basis whatsoever for the Disciplinary Committe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Union of India and Ors.) decided on 7th August 2023 and Writ Petition (Lodging) No.28206 of 2023 (Partha Sarathy Sarkar Vs. Insolvency Bankruptcy Board of India (IBBI) Ors.), decided on 17th October 2023. It was thus submitted that taking an overall view of the matter, there was no case made out to suspend the registration of the petitioner as RP. Hence, the order passed by the Disciplinary Committee on 12th August 2024 was liable to be set aside. 5. Mr. Pankaj Vijayan, the learned counsel appearing for the IBBI supported the impugned order. According to him, there was sufficient reason for the Disciplinary Committee to suspend the registration of the petitioner for a period of one year. The observations made by the NCLAT in its order dated 11th April 2023 were against the petitioner. Various shortcomings in the discharge of duties by the petitioner as RP were noted in the said order. The petitioner accepted the said order and did not challenge the same though he was a respondent in the said proceedings. The IBBI first obtained an investigation report and on that basis thereafter issued the show cause notice to the petitioner. The IBBI was justified in acting against the petitione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d its order on 12th August 2024 suspending the petitioner s registration with the IBBI for a period of one year. We may note that there is no challenge raised by the petitioner as regards non-compliance of the principles of natural justice while adjudicating the show cause notice. Due notice along with all relevant material was given to him and after the petitioner submitted his reply, he was heard before the impugned order of suspension was passed. We would therefore proceed on the basis that after due compliance of the principles of natural justice, the impugned order of suspension has been passed by the whole-time Members of the Disciplinary Committee constituted by the IBBI. 7. Before proceeding to consider the challenge to the order of suspension of the petitioner, it would be necessary to refer to the orders passed by the NCLT and thereafter the NCLAT that led to issuance of show cause notice. The NCLT considered an application filed under Section 30(6) of the Code by the petitioner in his capacity as Resolution Professional seeking approval of the Resolution Plan. It allowed the said application and the Resolution Plan submitted by Mr. Ashok Atre came to be approved. KCIL be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ard was passed in favour of the KCIL. The SRA proceeded to comment on the arbitration award as being void ab initio and the entire process of making the award being defective and unlawful. It was found that the petitioner as RP ought to have taken note of these comments while examining the Resolution Plan. By failing to point out such objections and comments when the Resolution Plan was placed for consideration before the Committee of Creditors and the Adjudicating Authority, the petitioner in his capacity as RP had failed in his duty. Thus after considering the matter in detail, the NCLAT concluded by observing in paragraph (iv) as under : (iv) The Resolution Professional Shri Vijendra Kumar Jain should have been more dutiful and alert in responding to various e-mails of the Appellant regarding admitted amount of his claim, and further he should have brought the objectionable comments made by the Successful Resolution Applicant regarding the arbitration award in the arbitration process which was included in the resolution plan to the notice of Committee of Creditors as also the Adjudicating Authority, which he failed to do so, and therefore he is reprimanded regarding this failure ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he observations of the NCLAT in paragraph 20 form the basis for holding that the petitioner failed to act in accordance with Regulation 13 (2) (a) and (d) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. In our view, the Disciplinary Committee has proceeded to take necessary action based on the observations of the NCLAT, which the petitioner did not challenge. The finding recorded by the NCLAT was that the petitioner had failed in his duty as RP and hence there was substantial material to proceed against the petitioner. The Disciplinary Committee was cognizant of the fact that some time was spent on account of outbreak of Covid-19 but despite that the conduct of the petitioner as RP in discharge of duties was found to be highly deficient. It is therefore clear that in the light of the material available with the Disciplinary Committee and especially the judgment dated 11th April 2023 passed by the NCLAT, the action of suspending the registration of the petitioner as RP is justified. The exercise undertaken by IBBI is within its jurisdiction and powers conferred by Section 218 of the Code. It has acted on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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