TaxTMI 
TaxTMI 
2024 (1) TMI 93
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....Regulations, 2016. 1.2. The pointed allegation made against the petitioner in the show cause notice is that the petitioner was appointed as the liquidator for M/s.Jeypore Sugar Limited (under liquidation), and while discharging his responsibilities under Sec.230 of the Companies Act, he shared the details of the valuation report of the assets of the company with all the scheme proponents, as a result of which all of them quoted the same price. 1.3.The petitioner has given his reply to the show-cause notice and it is under enquiry. In this petition, the petitioner challenges the show-cause notice. 2.1 The case of the petitioner is that : a) On 25.02.2019, a Corporate Insolvency Resolution Process (CIRP) of Jeypore Sugar Company Ltd. commenced, and the petitioner was appointed as the Resolution Professional by the Adjudicating Authority, which by definition is the NCLT. b) On 29.05.2020, the Adjudicating Authority decided that CIRP has failed, and initiated the liquidation process of the corporate-debtor, and the petitioner was appointed as the liquidator. c) Subsequently, IDBI bank, one of the financial creditors of the corporate debtor, had moved IA 815/IB/2020 in CP 1307/....
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.... the petitioner was also suspended. 2.2 Alleging that the show cause notice was issued with malafides, the petitioner challenges it broadly on the following grounds: a) That at the time when the show cause notice was issued on him, the petitioner was functioning only as a liquidator appointed by the NCLT, and that he was under a direction from the NCLT to explore the possibility of a compromise under Sec.230 of the Companies Act, 2013. When the petitioner was functioning as the liquidator under the Companies Act, IBBI cannot invoke the provisions of the IBC to examine the conduct of the petitioner. In other words, the IBBI is incompetent to invoke IBC against liquidator appointed by the NCLT and not in its authority as the Adjudicating Authority under the IBC. b) Even if it is presumed that IBBI can invoke IBC, still the show cause notice cannot be sustained on the ground that the petitioner had shared the information regarding the value of the company under liquidation, since a liquidator is expected to share vital information with the stake holders, more so, when he is discharging his responsibility under Sec.230 of the Companies Act, 2013. 3. This plea was resisted by by t....
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....ibunal. d) The 1st Respondent has authorised the investigating authority to investigate into the complaint preferred by the 3rd respondent. But it failed to note that the allegation relates to a matter pending before the NCLT, and hence IBC will not apply. That precisely was the reason why the second respondent chose to dismiss the complaint preferred by the 3rd respondent. ➢ The very allegation is that the petitioner has shared the valuation report with his prospective resolution applicants / stakeholders. This allegation however, is contrary to the authority of the Hon'ble Supreme Court in Vijay Kumar Vs Standard Chartered Bank [Order dated 31.01.2019 in W.P.(C) No.1266 of 2018] and also the Bankruptcy Law Committee Report dated November, 2015, and the IBBI's own guidelines. e) The AFA of the Petitioner was suspended without giving an opportunity of hearing to the Petitioner. Arguments of the Respondent: 5.1 Mr. A.R.L. Sundaresan, the learned Additional Solicitor General essentially contended that the this petition should not be entertained as it is premature. He would submit: a) The IBBI is empowered under Sec. 218 to initiate an action based on any inf....
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....eedings under Sec. 204. ➢ Secondly, if the Board has to ignore the decision under Sec. 204, then it ought to record the reasons, and this was not done. The Discussion : 7. The narration of the petitioner's case and arguments above, in essence is a filtered version of his allegations directed against the 3rd respondent. There appears to be a certain animosity which both the petitioner and the 3rd petitioner appear to have shared, but this Court is least inclined to probe into, what it considers as non-issues, and chooses to stick to the basics. It revolves around testing the merit of the petitioner's case on a legal plane. 8. The issue which triggered the controversy is the decision of the petitioner, while functioning as the liquidator of the corporate debtor to share the valuation of the company under liquidation with the potential purchasers, as a result of which they all quoted the identical value. The petitioner does not deny that he shared the valuation report, but defends it on the ground that he was under an order of the NCLT to try for a compromise under Sec.230 of the Companies Act and backs it up with the ratio of the Hon'ble Supreme Court in Vija....
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....over. b) The IBC authorises the Resolution Professional to share certain information and these are listed in Regulation 36 of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. The the objective of the Resolution Professional at this point is to explore the possibility of evolving a resolution-scheme for the CD facing insolvency. It includes sharing inter alia information on the assets and liabilities of the CD, financial statements of corporate debtors, but it nowhere has included the sharing of the valuation of the CD. c) If however, the resolution plan fails, or does not evolve within the statutory time stipulated for the same, then under Sec.33 of IBC the Adjudicating Authority (NCLT) is required to proceed for liquidation of the CD. In the instant case, a the resolution has failed and the liquidation proceedings of the CD was taken by the NCLT. The NCLT would now appoint a liquidator, and so far as the present case is concerned, it chose to appoint the Resolution Professional himself as the liquidator. It is how, the petitioner appears to have become the liquidator. Therefore, the process and the procedure for liquidation of a CD is not exclusive....