9911796707
TMI Blog2024 (11) TMI 735X X X X Extracts X X X X X X X X Extracts X X X X ..... APPL. 47677 (seeking stay of the impugned order dated 30th July, 2024) 6. Mr. Dayan Krishnan, Senior Counsel for Petitioner, presses for stay of the impugned order dated 30th July, 2024 passed in Complaint No. COMP11011/43/2023/IBBI, whereby the Disciplinary Committee of Insolvency and Bankruptcy Board of India "IBBI" , while exercising powers under Section 220(2) of the Insolvency and Bankruptcy Code, 2016 "IBC" read with Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016 "IBBI IP Regulations" , have suspended the registration of the Petitioner as an insolvency professional for the period of one year. FACTS AND CONTENTIONS OF THE PETITIONER: 7. Mr. Krishnan has raised three primary jurisdictional objections in support of his request for grant of interim relief. He puts forth the following facts and contentions: 7.1. The impugned order fails to adequately consider the preliminary objections raised by the Petitioner concerning the maintainability of the Show Cause Notice "SCN" dated 2nd April, 2024. These objections were summarily dismissed without a substantive examination of the merits of the case. Such omission reflects a failure to engage with the foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause of action within the prescribed timeframe, and secondly, they have been unable to pinpoint a precise date of the purported cause of action from which the limitation period could be accurately calculated. This dual failure renders the complaint fatally flawed from a procedural standpoint. 7.6. This objection was specifically raised in the reply; however, the impugned order reflects no application of mind on the same and the said objection has been rejected summarily without giving any reasoning. 7.7. The Disciplinary Committee comprising of only one member Mr. Sudhaker Shukla, Whole Time Member, IBBI does not have the jurisdiction to pass the impugned order. Section 220(1) of the IBC explicitly stipulates that the Disciplinary Committee shall consist of "whole time members" (plural). Thus, undeniably the legislative intent of the IBC contemplates that the Disciplinary Committee should comprise of at least two whole-time members. ANALYSIS AND FINDINGS: 8. The Court has carefully considered the contentions presented by the parties. It is important to note that the amended writ petition is exhaustive and voluminous, raising numerous grounds of challenge. Given the breadth an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ually arose. In this regard, Mr. Krishnan has argued that the cause of action against the Petitioner as an insolvency professional could not extend beyond the date of approval of the Resolution Plan on 16th January 2021. However, the Court is not convinced by this argument. 12. It has been pointed out that the first alleged contravention against the Petitioner pertains to the malafide constitution of the CoC. This raises a significant question regarding the timeline of the cause of action; whether it is tied solely to the date of the Resolution Plan's approval, or whether subsequent events or discoveries could have given rise to a new cause of action. The resolution of this issue is crucial, as it impacts the applicability of the limitation period under Regulation 3(4). 13. In the instant case, the allegations against the Petitioner in the Show Cause Notice dated 2 nd April, 2024 are serious and revolve around the improper constitution and functioning of the CoC. Specifically, it is alleged that Axis Bank, a Financial Creditor of the corporate debtor, had not filed its claim at the time, yet the Petitioner proceeded to form a CoC comprising only the sole operational creditor. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpact the subsequent steps in the CIRP, including the implementation of the Resolution Plan. Hence, the cause of action may indeed arise or continue after the approval of the Resolution Plan by CoC, until the process is fully and finally completed. 15. It must also be noted that the regulation in question, i.e., Regulation 3(4) of the IBBI (Grievance and Complaint Handling Procedure) Regulations, 2017, does not refer to the date of approval of the resolution plan by the CoC, but is instead linked to the occurrence of the cause of action, allowing for flexibility regarding determination of the limitation period. 16. Given that the CIRP proceedings are ongoing and the complaint against the Petitioner relates to a fundamental aspect of the process - the constitution of the CoC - the Court is of the view that the complaint cannot be dismissed as time-barred. It would be contrary to the objectives of the IBC to disregard serious allegations of procedural misconduct simply because they were raised after the approval of the Resolution Plan by CoC, especially when the CIRP itself has not yet reached its finality. 17. As regards the Petitioner's contention that the complainant did not me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aptability in the application of the law, ensuring that the legislative intent is not frustrated by a narrow or literal interpretation. Applying this principle to the present case, on a prima facie view of Section 220(1) of the IBC, it is noted that the term "whole-time members" can reasonably be understood to also include a scenario where there is only a singular "member" of the committee. This interpretation is in consonance with the functional necessity of ensuring that the disciplinary committee can be constituted and can operate effectively, even if there is only one whole-time member available. 22. In light of the above, the Court finds no ground to grant any interim stay on the impugned order dated 30th July, 2024, at the present stage. 23. Accordingly, the present application is dismissed. W.P.(C) 11483/2024 24. The Petitioner has filed the amended writ petition which is taken on record. 25. Issue notice. Mr. Vikas Mehta, counsel for Respondent No. 1 and counsel for Complainant, accept notice. 26. Counter affidavit be filed within a period of four weeks from today. Rejoinder thereto, if any, be filed within a period of two weeks thereafter. 27. Issue notice to Respond ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
