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2023 (11) TMI 223
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....f the Corporate Debtor during the pendency of this Writ Petition. 2. It is pertinent to mention here that though initially Union of India was arrayed as Respondent No. 2 and the Resolution Professional, against whom the present proceedings have been initiated, was arrayed as Respondent No. 3, later on Union of India was dropped from the array of parties and the Resolution Professional has now been arrayed as Respondent No. 2. 3. The facts, in brief, leading to the present Writ Petition are as under: a. It is stated that the National Company Law Tribunal (hereinafter referred to as 'the NCLT') at Ahmadabad initiated Corporate Insolvency Resolution Process (hereinafter referred to as 'the CIRP') against the Corporate Debtor. b. It is stated that right from the beginning Respondent No. 2, who had been appointed as the Insolvency Resolution Professional had not been performing its duty diligently and in accordance with the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as 'the IBC'). c. It is stated that as mandated by Regulations 6(1) and (2) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Per....
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....urt with the following prayers: "(a) issue a writ of mandamus or an appropriate writ directing Respondent No. 1 to issue a show cause notice against the Respondent No. 3 and take appropriate action against him; (b) Issue a writ of mandamus or a writ of any other nature or any other direction / order restraining the Respondent No. 3 from functioning as the Liquidator of the Corporate Debtor during the pendency of these Writ Proceedings and staying the proceedings before the Hon'ble NCLAT during the pendency of the present Writ Proceedings; (c) Issue a writ of mandamus or a writ of any other nature or any other direction / order staying the proceedings before the Hon'ble NCLAT during the pendency of the present Writ Proceedings; (d) Issue a writ of mandamus or a writ of any other nature or any other direction/order directing the Respondent No. 1 to remove the Respondent No. 3 from the Liquidation proceedings of the Corporate Debtor; " 4. Notice was issued on 09.11.2020. Replies have been filed by Respondents No. 1 & 2. 5. Learned Counsel for the Petitioner vehemently contends that Respondent No. 2 has not performed his functions as a Reso....
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....d has come to the conclusion that no purpose would be achieved in proceeding ahead with the complaint of the Petitioner herein and the complaint was closed. 7. Heard the Counsels for the parties and perused the material on record. 8. In exercise of the powers conferred under sections 196, 217, read with section 240 of the Insolvency and Bankruptcy Code, 2016, the IBBI has brought out the 2017 Regulations. Regulation 7 of the said Regulations deals with disposal of a complaint and the same reads as under: "7. Disposal of complaint. (1) The Board may seek additional information and records from the complainant and information and records from the concerned service provider to form a prima facie view whether the contravention alleged in the complaint is correct. (2) The complainant and the service provider shall submit the information and records sought under sub-regulation (1) within [seven] days thereof. [Provided that an additional time, not exceeding seven days, may be granted by the Board on request of the service provider.] (3) [The Board shall investigate the information and records and form an opinion whether there exists a prima facie....
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....mally interfere. No material has been furnished by the Petitioner to substantiate that the Board has acted in a manner to favour Respondent No. 2 or to shield the mis-deeds of Respondent No. 2, who is Insolvency Resolution Professional. In fact the final report records certain irregularities committed by Respondent No. 2 which, this Court is sure, will be taken care of by the Board before appointing Respondent No. 2 in further cases as Insolvency Resolution Professional. 12. Under Article 226 of the Constitution of India, this Court cannot substitute its own conclusion to the one arrived at by experts until and unless there is gross miscarriage of justice which strikes at the root of the case. A team of experts have considered the case and have arrived at a conclusion and this Court cannot hazard a venture into this domain. It is well settled that the courts should give way to the opinion of the experts unless the decision is totally arbitrary or unreasonable. 13. Section 196 of the IBC delineates the powers and functions of the Board and the same reads as under: "Section 196. Powers and functions of Board. (1) The Board shall, subject to the general directi....
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.... 197; (m) promote transparency and best practices in its governance; (n) maintain websites and such other universally accessible repositories of electronic information as may be necessary; (o) enter into memorandum of understanding with any other statutory authorities; (p) issue necessary guidelines to the insolvency professional agencies, insolvency professionals and information utilities; (q) specify mechanism for redressal of grievances against insolvency professionals, insolvency professional agencies and information utilities and pass orders relating to complaints filed against the aforesaid for compliance of the provisions of this Code and the regulations issued hereunder; (r) conduct periodic study, research and audit the functioning and performance of to the insolvency professional agencies, insolvency professionals and information utilities at such intervals as may be specified by the Board; (s) specify mechanisms for issuing regulations, including the conduct of public consultation processes before notification of any regulations; (t) make regulations and guidelines on matters relating to insolvency a....
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....s Parliament says its decision is to be final. At other times it says nothing about it. In all these cases the courts will not themselves take the place of the body to whom Parliament has entrusted the decision. The courts will not themselves embark on a rehearing of the matter. See Healey v. Minister of Health [(1955) 1 QB 221 : (1954) 3 All ER 449] ." 27. Lord Denning further observed as under: (p. 682) "If the decision-making body is influenced by considerations which ought not to influence it; or fails to take into account matters which it ought to take into account, the court will interfere. See Padfield v. Minister of Agriculture, Fisheries and Food [1968 AC 997 : (1968) 1 All ER 694] ." (emphasis supplied) 28. In Sterling Computers Ltd. v. M&N Publications Ltd. [(1993) 1 SCC 445 : AIR 1996 SC 51 : (1993) 1 SCR 81] it was pointed out that while exercising the power of judicial review, the Court is concerned primarily as to whether there has been any infirmity in the decision-making process? In this case, the following passage from Professor Wade's Administrative Law was relied upon: (SCC p. 457, para 17) "The doctrine ....
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....oose between more than one possible course of action upon which there is room for reasonable people to hold differing opinions as to which is to be preferred'. (Lord Diplock in Secy. of State for Education and Science v. Tameside Metropolitan Borough Council [1977 AC 1014 : (1976) 3 All ER 665] AC at p. 1064.) The Court cannot substitute its judgment for the judgment of administrative authorities in such cases. Only when the action of the administrative authority is so unfair or unreasonable that no reasonable person would have taken that action, can the Court intervene." (emphasis supplied) 16. Similarly, the Apex Court in State of NCT of Delhi v. Sanjeev, (2005) 5 SCC 181, has held as under: "17. The court will be slow to interfere in such matters relating to administrative functions unless decision is tainted by any vulnerability enumerated above; like illegality, irrationality and procedural impropriety. Whether action falls within any of the categories has to be established. Mere assertion in that regard would not be sufficient. 18. The famous case commonly known as "the Wednesbury case [Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn., (1....
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....egard to the above principles, and must have been a bona fide one. The decision could be one of many choices open to the authority but it was for that authority to decide upon the choice and not for the court to substitute its view. 20. The principles of judicial review of administrative action were further summarised in 1985 by Lord Diplock in CCSU case [(1984) 3 All ER 935 : 1985 AC 374 : (1984) 3 WLR 1174 (HL)] as illegality, procedural impropriety and irrationality. He said more grounds could in future become available, including the doctrine of proportionality which was a principle followed by certain other members of the European Economic Community. Lord Diplock observed in that case as follows : (All ER p. 950h-j) "Judicial review has I think developed to a stage today when, without reiterating any analysis of the steps by which the development has come about, one can conveniently classify under three heads the grounds on which administrative action is subject to control by judicial review. The first ground I would call 'illegality', the second 'irrationality' and the third 'procedural impropriety'. That is not to say that further development on a case-by-c....
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....RVATIONS OF THE IA Violation of Section 29 read with The fact that IM got published IP has submitted that IM The fact that IM got published Regulation 36(4) of the IBBI (Insolvency by mistake by IP is not denied Resolution Process For Corporate and accordingly, there is Persons) Regulations, 2016 ("CIRP violation of Regulation 36 (4) REGULATIONS 2016') of the CIRP Regulations. It has come to the notice of IA that Information Memorandum (IM) was published on the website of CD by IP on 9th December 2017. erroneously by mistake and was thereafter removed does not absolve the IP from the act of omission and violation done by him. published on the website. However, once the mistake was noticed, IM was removed from the website. Accordingly, the LA notes that there is violation of section 29 of the Code read with of contained regulation 36(4) of CIRP of the Regulations. IP has further submitted that IM majority information which is otherwise available in the public domain. Moreover, it also included List of Creditors Also, IP has violated clause 21 (Confidentiality) of Code of Co....
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....nication from any creditor un- replied. Accordingly, he had no intention to hide the details of any claims. Accordingly, LA notes that IP has violated regulation 13 of CIRP Regulations which, inter alia, requires that the list of creditors shall be displayed on the website, if any, of CD and filed with AA. Issue pertaining to alleged violation of Regulation 36(1) of the CIRP Regulations The Information Memorandum (IM) is dated December 1, 2017. The IA noted that there is IP has submitted that timely delay in publication of IA's observations are IM as per Regulation 36(1) of self-explanatory and he the CIRP Regulations. has put in lot of efforts for getting information from suspended promoters. Further, IP has also filed application under section 19 of the Code to seeking necessary directions from AA. However, the IA is of the opinion that IP has made its The RP was confirmed on 13th October best efforts in obtaining 2017. It is noted by the IA that the IM does not contain certain information as listed in Regulation 36(2) of the CIRP Regulations. Issue pertaining t....
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....k the grievances of the respondents and to consider it as per its merits and in accordance with the law... Because of the difference in opinion, RP filed application bearing LA No. 375 of 2018 before Hon'ble Adjudicating Authority, Ahmedabad bench seeking adjudication on whether Anil Kumar Tandon and two others can be considered as financial creditors Anil Kumar Tandon along with two others also filed an application before Hon'ble Adjudicating Authority bearing LA. No. 327 of 2018 to consider them as financial creditors. Hon'ble Adjudicating Authority heard both the matters and reserved it for orders on 29.11.2018 and both the applications are pending before Adjudicating Authority. Therefore, such allegations that RP did not considered the claim of Anil Kumar Tandon and two others as Financial Creditors is baseless because only after 06.06.2018 amendment 'allottee' as per RERA come under the purview of financial creditors and RP reconsider their after amendment but because Anil Kumar Tandon and two others did not provide necessary documents RP did not get clarity and subsequently file applicat....
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.... Reconstruction Company Private Limited is Rs. 28,93,60,709/- (Rs. 21,34,44,661/- of HUDCO plus Rs. 7,59,16,048/- of Dena Bank). As per the Pointwise reply to Complainant in the matter of Sandhya Prakash Limited numbered as File No. IBBI/CIRP/4038 dated 11th April 2019, the IP has submitted that "the claim has been taken into account on the basis of information/documents which have been provided by JM Financial and the relevant documents are The IA is of the opinion that IP IP has submitted that Decision of IP was based on has a duty to collect, collate IA's observations and verify the claims received self-explanatory. from the creditors. The verification can be from the documents of the Corporate Debtor or from the proof submitted by the creditor with its claim. It is submitted that the claim of JM Financial Asset Reconstruction Company Limited is on the basis of the Restructuring Agreement dated 18th April 2013 and the IP has verified the claim against this Restructuring Agreement. Accordingly, in view of the IA, it cannot be said that the IP failed in its duties by admitting the claim of....
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....and is context specific. In the instant matter, based on the documents made available to the IA, no noticeable departure have been observed with respect unreasonableness of expenses incurred by the IP. to Accordingly, IA has no observation in this regard. Issue pertaining to absence of IP from In view of the submissions of IP has submitted that IA has no observation in the court proceedings An allegation has been made stating that the IP did not appear in the proceedings before the Patiala House Courts, New Delhi and that in the said case, non- bailable wanants have been issued against the officers of the Corporate Debtor. When the IP was confronted on the matter he submitted (also confirmed vide Pointwise reply to Complainant in the the IP and the fact that no IA's observations are this regard. document/notice has been self-explanatory. received by the IP requiring presence of the IP in these matters, it cannot be said that the IP is willingly not attending these court proceedings. Accordingly, in view of the IA, the said allegation cannot be accepted in light of the limited facts....