Single IBBI member can constitute valid Disciplinary Committee under Section 220 of Insolvency Code

The Bombay HC upheld the constitution of a Disciplinary Committee under Section 220 of the Insolvency and Bankruptcy Code consisting of a single whole-time member of IBBI. The court ruled that the expression "members" in the statutory provision does not mandate plural membership, and Regulation 2(1)(c) of 2017 permits either single or multiple member committees. The petitioner's challenge to the one-year suspension order on grounds of improper committee constitution was rejected, with the court holding that a Disciplinary Committee may validly comprise either one or more whole-time IBBI members.

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Issues Involved:
1. Validity of the order passed by a single-member Disciplinary Committee under Section 220 of the Insolvency and Bankruptcy Code, 2016.
2. Interpretation of the term "members" in the proviso to Section 220(1) of the Insolvency and Bankruptcy Code, 2016.
3. Applicability of Clause 2(1)(c) of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017.
4. Jurisdictional challenge based on the constitution of the Disciplinary Committee.

Detailed Analysis:

1. Validity of the order passed by a single-member Disciplinary Committee:
The petitioner challenged the order dated 3rd July 2023, passed by a single-member Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI), which suspended the petitioner's registration as an Insolvency Professional for one year. The petitioner contended that the order was vitiated as it was adjudicated by a single member, contrary to the proviso to Section 220 of the Insolvency and Bankruptcy Code, 2016 (the Code), which stipulates that the Disciplinary Committee should consist of "whole-time members," implying more than one member.

2. Interpretation of the term "members" in the proviso to Section 220(1) of the Code:
The petitioner argued that the term "members" in Section 220(1) should be interpreted in its plural form, meaning the Disciplinary Committee must consist of more than one whole-time member. The petitioner relied on various judicial precedents and statutory interpretations to support this contention. Conversely, the respondent-IBBI contended that the plural term "members" includes the singular, as per Section 13 of the General Clauses Act, 1897, and thus, a single-member Disciplinary Committee is permissible.

3. Applicability of Clause 2(1)(c) of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017:
Clause 2(1)(c) of the Regulations defines the Disciplinary Committee as a committee of whole-time member(s) constituted by the Board under Section 220(1) of the Code. The respondent argued that this clause allows for a Disciplinary Committee to consist of either a single whole-time member or multiple whole-time members. The petitioner, however, contended that this clause could not override the statutory requirement of Section 220(1) of the Code.

4. Jurisdictional challenge based on the constitution of the Disciplinary Committee:
The petitioner asserted that the jurisdictional issue arises because the impugned order was passed in a manner not provided by the Code, as the Disciplinary Committee was improperly constituted. The respondent countered that the constitution of the Disciplinary Committee with a single whole-time member is valid and within the powers conferred by the Code and the Regulations.

Court's Analysis and Conclusion:

The court examined the statutory provisions and the arguments presented by both parties. It noted that Section 220(1) of the Code empowers the IBBI to constitute a Disciplinary Committee, and the proviso requires that the members be whole-time members of the IBBI. The court interpreted that the proviso does not specify the number of members required, only that they must be whole-time members.

Clause 2(1)(c) of the Regulations, framed under Sections 220 and 240 of the Code, clearly states that the Disciplinary Committee can consist of whole-time member(s), implying either a single member or multiple members. The court held that this clause supplements the Code and does not conflict with it.

The court also referred to Section 13 of the General Clauses Act, 1897, which allows singular terms to include the plural and vice versa, provided there is no repugnancy in the context. It concluded that the context of Section 220(1) does not restrict the term "members" to its plural form, and thus, a single-member Disciplinary Committee is permissible.

The court dismissed the petitioner's challenge, stating that the Disciplinary Committee can consist of either a single whole-time member or multiple whole-time members. The court clarified that its observations were limited to the issue of the constitution of the Disciplinary Committee and directed that further proceedings be adjudicated on their own merits.

Final Order:
The rule was discharged with no order as to costs. The court upheld the validity of the order passed by the single-member Disciplinary Committee and dismissed the petitioner's challenge.

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