TaxTMI 
TaxTMI 
2023 (11) TMI 909
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....is not a fit and proper person to be appointed as an Insolvency Professional. At this juncture, it is necessary to dwell into the facts of the case which are necessary for adjudication of the present Writ Petition. a) Material on record discloses that there were allegations against the Petitioner for violation of Regulation 3 (a), 3 (b), 3 (c), 3 (d) and 4(1) of the SEBI (Prohibition of Fraudulent and Unfair Trade Practices relating to Securities Market) Regulations, 2003 (hereinafter referred to as 'the 2003 Regulations'). It is stated that an enquiry was conducted and it was found that the Petitioner had bought and sold equal quantities of shares in large volume in four scrips, namely, Amtek Auto Ltd, Amtek India Ltd, Monnet Ispat Ltd and Ahmednagar Forgings Limited through Religare Securities Limited, ISF Securities Limited, India Infoline Securities Limited and Narayan Securities Private Limited with prior knowledge that certain entities have already placed buy orders for the abovementioned scrips and thereby the Petitioner has done front running in the said scrips and has thereby violated Regulation 3 (a), 3 (b), 3 (c), 3 (d) and 4(1) of the 2003 Regulations. ....
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....t deposited the penalty amount, recovery proceedings were initiated by the SEBI. It is stated that vide Order dated 28.12.2018 the Recovery Officer directed the Petitioner herein to pay a sum of Rs. 1,77,83,047/- in 36 equated monthly instalments each amounting to Rs. 4,93,973.5/-. f) Failure on the part of the Petitioner to make the payments led to initiation of criminal proceedings against the Petitioner before the Sessions Court of Kolkata under Section 24 of the SEBI Act. It is stated that Arrest Warrants were issued against the Petitioner by the Sessions Court. It is stated that the Warrants of arrest of the Petitioner was challenged by the Petitioner in the High Court of Calcutta by filing CRR No. 2005/2019 which was dismissed by the Calcutta High Court vide Order dated 22.08.2019. Order dated 22.08.2019 was challenged by the Petitioner before the Apex Court by filing SLP (Crl.) No. 8887/2019 which was disposed of by the Apex Court. 3. In view of the above mentioned facts, the Board rejected the application of the Petitioner herein for grant of certificate of registration as an Insolvency Professional on the ground that the Petitioner is not fit and eligible for g....
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....en found guilty of violating Regulation 3 (a), 3 (b), 3 (c), 3 (d) and 4(1) of the 2003 Regulations, the decision of the Board in finding the Petitioner not a fit person to be appointed as an Insolvency Resolution Professional does not need interference. 7. Heard the Counsel for the parties and perused the material on record. 8. Chapter IV of the IBC deals with the Insolvency Professionals. Section 206 of the IBC provides that no person shall render his services as insolvency professional without being enrolled as a member of an insolvency professional agency and registered with the Board. Section 208 stipulates the functions and obligations of insolvency professionals which are as under: "Section 208. Functions and obligations of insolvency professionals. (1) Where any insolvency resolution, fresh start, liquidation or bankruptcy process has been initiated, it shall be the function of an insolvency professional to take such actions as may be necessary, in the following matters, namely: (a) a fresh start order process under Chapter II of Part III; (b) individual insolvency resolution process under Chapter III of Part III; (c) corpo....
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....lating to the corporate debtor available with them to the interim resolution professional. Section 18 of the IBC list out the duties of the interim resolution professional and the same reads as under: "Section 18. Duties of interim resolution professional. The interim resolution professional shall perform the following duties, namely:- (a) collect all information relating to the assets, finances and operations of the corporate debtor for determining the financial position of the corporate debtor, including information relating to- (i) business operations for the previous two years; (ii) financial and operational payments for the previous two years; (iii) list of assets and liabilities as on the initiation date; and (iv) such other matters as may be specified; (b) receive and collate all the claims submitted by creditors to him, pursuant to the public announcement made under sections 13 and 15; (c) constitute a committee of creditors; (d) monitor the assets of the corporate debtor and manage its operations until a resolution professional is appointed by the committee of creditors; (e) ....
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.... corporate debtor with third parties, exercise rights for the benefit of the corporate debtor in judicial, quasi-judicial or arbitration proceedings; (c) raise interim finances subject to the approval of the committee of creditors under section 28; (d) appoint accountants, legal or other professionals in the manner as specified by Board; (e) maintain an updated list of claims; (f) convene and attend all meetings of the committee of creditors; (g) prepare the information memorandum in accordance with section 29; (h) invite prospective resolution applicants, who fulfil such criteria as may be laid down by him with the approval of committee of creditors, having regard to the complexity and scale of operations of the business of the corporate debtor and such other conditions as may be specified by the Board, to submit a resolution plan or plans.]. (i) present all resolution plans at the meetings of the committee of creditors; (j) file application for avoidance of transactions in accordance with Chapter III, if any; and (k) such other actions as may be specified by the Board." 11. A perusal of the abovem....
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....igible to be registered as an insolvency professional, if the entity and/or any of its partner or director, as the case may be, is not fit and proper person under clause (g) of sub-regulation (1).]" 12. A perusal of the explanation of Regulation 4 gives the power to the Board to take account of any consideration as it deems fit in selecting a candidate. 13. Keeping in mind the functions and obligations of an Insolvency Professional, the Board has taken a decision that the Petitioner is not eligible to be registered as an Insolvency Professional because she is not a fit and proper person to be appointed as Insolvency Professional. As rightly contended by the learned Counsel for the Board, an Insolvency Professional is vested with the responsibility of managing the operations of the company undergoing the insolvency resolution process and all the assets of such a company are looked after by the Insolvency Professional. 14. A reading of the Regulations indicates that the Board can take a decision that a person who has been involved in any kind of financial irregularity cannot be appointed as an Insolvency Professional. The fact that the financial irregularity occurred 11 year....
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.... discretionary remedy under Article 226 of the Constitution is requested to be issued, inter alia, to compel performance of public duties which may be administrative, ministerial or statutory in nature. Statutory duty may be either directory or mandatory. Statutory duties, if they are intended to be mandatory in character, are indicated by the use of the words "shall" or "must". But this is not conclusive as "shall" and "must" have, sometimes, been interpreted as "may". What is determinative of the nature of duty, whether it is obligatory, mandatory or directory, is the scheme of the statute in which the "duty" has been set out. Even if the "duty" is not set out clearly and specifically in the statute, it may be implied as correlative to a "right". 23. In the performance of this duty, if the authority in whom the discretion is vested under the statute, does not act independently and passes an order under the instructions and orders of another authority, the Court would intervene in the matter, quash the order and issue a mandamus to that authority to exercise its own discretion. 24. In Vice-Chancellor, Utkal University v. S.K. Ghosh [AIR 1954 SC 217 : 1954 SCR 883....
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....a decision-making authority exceeded its powers?; 2. committed an error of law; 3. committed a breach of the rules of natural justice; 4. reached a decision which no reasonable tribunal would have reached; or 5. abused its powers. 26. In this case, Lord Denning was quoted as saying: (SCC pp. 681-82, para 83) "Parliament often entrusts the decision of a matter to a specified person or body, without providing for any appeal. It may be a judicial decision, or a quasi-judicial decision, or an administrative decision. Sometimes 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 interfer....