The High Court declined to grant interim relief, emphasizing ...

Insolvency regulator denies interim relief, cites complex grounds and procedural irregularity allegations.

Case Laws     IBC

November 16, 2024

The High Court declined to grant interim relief, emphasizing that the amended writ petition raised numerous complex grounds which cannot be adjudicated fully at the interim stage. The Court clarified that a detailed examination of substantive grounds on merits would not be undertaken, and the assessment of contentions, particularly regarding merits, must necessarily be prima facie at this interim stage. Regarding the time limitation under Regulation 3(4) of the IBBI Regulations, the Court held that while the Regulation stipulates a strict time limit for filing a complaint, the critical issue is determining when the cause of action arose. In the present case, the allegations against the Petitioner in the Show Cause Notice dated 2nd April 2024 revolve around improper constitution and functioning of the Committee of Creditors (CoC), raising concerns about procedural irregularities and potential breaches of duty. The Court applied the principle of statutory interpretation u/s 13(2) of the General Clauses Act, 1897, to prima facie interpret the term "whole-time members" in Section 220(1) of the IBC to include a scenario with only one member, ensuring the disciplinary committee's effective operation. Ultimately, the Court found no ground to grant an interim stay on the impugned order and dismissed the present application.

View Source