2024 (9) TMI 414 - HC - Insolvency and Bankruptcy

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 ... Interpretation of statute - Section 220 of IBC - Order passed by the Disciplinary Committee consisting of a whole-time member of the Insolvency and Bankruptcy Board of India - suspension of petitioner’s registration for a period of one year from the date of the order - whether the Disciplinary Committee constituted under Section 220 of the Code can consist of a single whole-time member? - HELD THAT:- What is relevant to note is that though the words in singular would include the plural and vice-a-versa, the same is subject to there being nothing repugnant in the subject or context of the matter. In other words, it is not that in all situations a word in the singular can mean to include the plural and vice-a-versa. The context in which such expression has been used would govern the matter. If the subject or context indicates otherwise, it would not be permissible to interpret a singular word to include the plural and vice-a-versa. Reference in this regard can be made to the decisions in The Newspapers Ltd. Vs. The State Industrial Tribunal [1957 (3) TMI 55 - SUPREME COURT] and Dhandhania Kedia & Co. Vs. The Commissioner of Income Tax [1958 (10) TMI 11 - SUPREME COURT] wherein it has been held that the principle underlying Section 13 of the Act of 1897 does not have universal application and that the said principle can apply only when no contrary intention is deducible from the scheme or the language used in the statute. The issue with regard to the requisite number of members of the Disciplinary Committee has to be answered by referring to Clause 2 (1) (c) of the Regulations of the 2017 and not on the basis of the proviso to Section 220 (1) of the Code. There is nothing repugnant either in the subject or context of Chapter VI of the Code or the Regulations of 2017 to construe and restrict the sweep of the expression “members” occurring in the proviso to Section 220 (1) of the Code only to the plural. Rather, the expression “member(s)” in Clause 2 (1) (c) of the Regulations of 2017 is a clear indicator of the intention of the rule-makers that a Disciplinary Committee envisaged under Section 220 (1) of the Code could be either a single member committee or may comprise of members more than one. In the present case, Clause 2 (1) (c) of the Regulations of 2017 seeks to indicate the manner in which a Disciplinary Committee can be constituted. It could comprise of either a whole-time member or wholetime members. It therefore cannot be said that this clause travels beyond what has been provided by Section 220 (1) since the latter provision merely requires the members of the Disciplinary Committee to be wholetime members of the IBBI. For the very same reason, the ratio of the decision in Bharathidasan University and Anr. [2001 (9) TMI 1126 - SUPREME COURT] cannot be applied to the case in hand. The interim order passed by the Gujarat High Court merely expresses a prima-facie view which cannot be treated as a precedent. The objection raised by the petitioner to the constitution of the Disciplinary Committee on the ground that it consists only of a single whole-time member of the IBBI cannot be accepted. It would be permissible to constitute a Disciplinary Committee consisting of either a single whole-time member or more than one whole-time member of the IBBI. The challenge as raised therefore fails. Rule stands discharged with no order as to costs. 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.