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TMI Blog2024 (11) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... mplying 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. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 passed an order for liquidation of CJL and therefore appointed the petitioner as Liquidator in the said matter. An another application under Section 9 of the Code of 2016 was filed by M/s. Central Investigation and Security Services Ltd. seeking initiation of CIRP of M/s. Dhanlaxmi Electricals Pvt. Ltd. - DEPL . The NCLT by the order dated 6th September 2021 appointed the petitioner as Interim Resolution Professional IRP . 4. The Insolvency and Bankruptcy Board of India IBBI in exercise of powers under Section 218 of the Code of 2016 appointed an Investigating Authority to conduct an investigation into the liquidation proceedings of CJL as well as an investigation in the CIRP proceedings of DEPL. A notice of investigation was sent to the petitioner on 22nd June 2022 and 22nd July 2022. The petitioner replied to the same on 23rd June 2022 and 27th July 2022. The Investigating Authority submitted its report to the IBBI on 15th July 2022 as regards the petitioner s role as Liquidator in CJL and on 3rd August 2022 with respect to his role as IRP in the CIRP of DEPL. On the basis of the findings recorded, a show cause notice dated 14th February 2023 came to be issued by the IBBI to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Petition (Lodging) No.34701 of 2023, decided on 4th April 2024). It was also urged that the DC comprised of only one Whole-Time member and not two Whole-Time members as required by the Code. The action of suspending the petitioner s registration in these facts would amount to double jeopardy since the petitioner had borne the expenses for the auction as directed. It was thus submitted that taking an overall view of the matter, the penalty of suspension as imposed was liable to be set aside. In any event, the said penalty was excessive in nature without indicating the requirement of suspending the petitioner for a period of two years. It was thus prayed that the reliefs prayed for in the writ petition be granted. 6. Mr. Pankaj Vijayan, learned counsel for the IBBI opposed the writ petition and supported the order passed by the DC. He submitted that the report of the Investigating Authority was duly served on the petitioner and reference to the same could be found in the show cause notice dated 14th February 2023. Referring to the reply filed by the petitioner to the show cause notice, it was pointed out that no protest whatsoever was raised by the petitioner in that regard. After co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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. We may also note that insofar as the conduct of the petitioner as Liquidator is concerned, the show cause notice proceeds on the basis of the order passed by the NCLT in Interim Application No.947 of 2022 in C.P.(IB)-297/(MB)/2018 (Sunrise Industries Vs. Naren Seth in the matter of Vijisan Exports Pvt. Ltd. Vs. Ciemme Jewels Ltd.), dated 2nd March 2023, which order was subsequently upheld by the NCLAT in Company Appeal (AT) (Insolvency) No.401 of 2023 (Naren Seth Vs. Sunrise Industries and Ors.) vide or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2022 conducted by the petitioner as Liquidator and directed him to conduct a fresh auction by maintaining thirty days time between the paper publication and the e-auction to enable more bidders to participate in the auction. The petitioner was directed to bear all expenses incurred for the auction. 10. The petitioner filed an appeal before the NCLAT challenging the said order. While dismissing the said appeal, the NCLAT observed that the correct procedure for conducting e-auction had not been followed. The conflicting dates mentioned in the notice were sufficient to cause confusion and therefore could not be treated as mere typographical errors as claimed by the petitioner. It further held that it was not in a position to appreciate any grounds for such hurry on the part of the Liquidator. The entire liquidation process was sought to be completed within a period of one week. Issuance of the Corrigendum was after the sale having been taken place. It therefore recorded a finding that considering the various material irregularities, there was no error in the order passed by the NCLT and accordingly dismissed the appeal. The aforesaid adjudication has attained finality. The IBBI there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s regards the last date for submission of claims. It was thus concluded by the DC that the petitioner had shown carelessness and negligence in that regard. We again do not find any reason to take a different view from the conclusion recorded by the DC. In absence of any specific reply or explanation by the petitioner for such discrepancy, the finding recorded by the DC would have to be accepted. It is thus found that in the matter of DEPL, the contraventions at the behest of the petitioner is a reason for taking action against the petitioner. It cannot be said that such action as taken by the DC was on any unfounded basis. The action with regard to CJL was in view of the orders passed by the NCLT and thereafter the NCLAT. The action taken in the matter of DEPL was on the basis of admitted material on record. It is therefore held that the DC was justified in proceeding against the petitioner. 13. 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. In our view, it cannot be said that the suspension of the petitioner s registration for a period of two years in the facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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