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2024 (10) TMI 730
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....up and decide: i. IA Nos. 266/2020, 462/2020 & 466/2020, (Annexure P-4,5,6 filed in July, 2020) seeking removal of the Respondent No. 2 as a Resolution professional, for which liberty was granted to the petitioner to take appropriate steps, once the IBBI decides his complaint made against the respondent-RP in terms of the order dated 27.07.2021 is Annexure P-7. ii. And IA 892/2022 (Annexure P-18)seeking decision of IA Nos. 266/2020, 462/2020 & 466/2020, (and consequently the said IAs also) disposed of in terms of the order dated 27.07.2021 (Annexure P- 7), filed by the petitioner and pending before the Respondent No. 1 for 2.9.22. iii. And IA 890/2-22 (Annexure P-20) to provide documents and other information to enable the applicant to file objections to the Resolution plan so submitted by the Respondent No.2 and pending adjudication for 02.09.2022. iv. And MA 4/ 2022 in IA 914 of 2020 (Annexure P-21), seeking disqualification of the proposed Resolution applicant, filed by the petitioner and pending before the Respondent No. 1 for 2.9.22. v. And IA 366/2020 titled Nipan Bansal v. Vipin Kumar (u/s 66,67 of the IBC) (Annexure P-22) seeking....
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....ons read with Clause 3A, 5, 9, 12 and 13 of the Code of Conduct specified therein. Reply was filed by respondent No. 2. Disciplinary Committee was constituted as per Section 220(1) IBC by the Board to consider the report of Inspecting Authority under Section 218 IBC. The matter was finally decided by IBBI (Disciplinary Committee) vide order dated 22.08.2022. The deficiencies, as noticed and conceded by RP, were found to be technical in nature, therefore, IBBI while taking a lenient view cautioned RP to be more careful in future while handling the process under the Code. Regarding delay in filing relationship disclosure with IBA pertaining to legal counsel appointed by RP, it was observed that there was laxity in obtaining undertaking from the Advocate and filing disclosure. However, as the delay had not caused any prejudice or loss to any stakeholder or the Corporate Debtor (CD), a lenient view was taken and RP was asked to be cautious in handling assignments. In respect to allegations regarding improper procedure for appointment of IRP as RP, it was observed by IBBI (DC) that no objection had been raised in 3rd CoC meeting by any of its members and infact no objection at any point....
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....ud and manipulation of CIRP records. 16. The other allegations include alleged instances of violation of an order of admission, non-sharing of photographs in respect of all such portions of the factory, wherein the stocks, finished goods, and goods in production were stored, the doctrine of video recording of the plant and machinery, non-maintenance list of stocks and assets and the difference between valuations conducted on 19.03.2020 and on 18.03.2023, vehicles missing in valuation reports and non-availability of original bills of CIRP expenses." 9. Learned NCLT observed that role of suspended Director under IBC is to assist CoC in determining whether the Resolution Plan addresses the cause of default by the Company which is a mandatory requirement for the Resolution Plan. Thus, suspended Directors have a right to participate in the meetings of CoC and give suggestions. It was found that right of participation was not denied and in the scheme of Code, power to take decisions is of CoC. The lapses, if any, at worst it is observed were merely technical, therefore, there was no call to re- examine the allegations. Some of the other allegations raised were found to be in ....
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....ptcy Board of India (Disciplinary Committee) had also adversely commented upon the said respondent by issuing a warning to be more cautious in handling assignments under the Code. It is thus submitted that his appointment per-se was not as per the statutory provisions and would go to the root of the matter. It is also brought to our notice that after the filing of the present writ petition, further orders had also been passed by the NCLAT while deciding IAs-266, 462 & 466 of 2020 again and rejecting the objections wherein reliance has been placed upon the report of IBBI. Counsel prays for time to place on record the said orders by filing appropriate application(s). It is also the contention that the proceedings were decided by the IBBI by a single Member and not by a Committee. Notice of motion. Mr.Garg and Mr.Gosain accept notice on behalf of respondent Nos.2 & 5, respectively. Service upon the rest of the respondents is dispensed with. Counsel for the petitioners does not press for interim relief in view of the fact that CM-7375-CWP-2023 in CWP-19562-2022 has been allowed today and the stay has been extended. To be heard along....
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..... Arguments as raised before us can, thus, be summarised as under:- 1. Appointment of respondent No. 2 as RP was not valid. 2. Inter se relations by the RP with the counsel were not disclosed in terms of statutory provisions. 3. Impugned order was passed by an incorrectly constituted Disciplinary Committee (DC). 4. Petitioners were not joined with the proceedings by IBBI (DC) at any stage, therefore, principles of natural justice were violated with all aspects as raised in the complaint not being adjudicated upon. 14. Learned counsel for petitioners argued that appointment of respondent No. 2 - IRP/RP was not as per statutory provisions inasmuch as he secured 65.89% of votes only. Reference was made to e-voting result dated 18.01.2020. Respondent No. 2, it is stated, wrongly submitted that item No. 13 was carried whereas he had to secure 66% of the votes as per provisions of Section 22 of IBC. It is at subsequent point of time that one of the financial creditors namely Punjab National Bank having a share of 14.72% conveyed its approval of appointment of respondent No. 2 as RP vide mail dated 13.02.2022. Such post facto approval, it was contend....
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....lty of misconduct, proper punishment should have been imposed. In the alternate, it was argued that order dated 22.08.2022 be set aside and the matter be remanded to the Disciplinary Committee duly constituted as per provisions of law to consider and decide the matter afresh. Learned counsel for petitioners argued that till such proceedings are finalised, CIRP proceedings should be kept in abeyance. 17. Learned counsel for IBBI as well as respondent No.2- RP have opposed both the writ petitions. It was reiterated that CWP-19562-2022 is rendered infructuous in view of order dated 25.04.2023. In so far as CWP-8750- 2023 is concerned, it was contended that the only aim and objective of petitioners who are the suspended Director(s) of the corporate debtor is to stall CIRP proceedings by hook or by crook. Learned counsel for respondent No.1 submitted that IBBI is a statutory body established under Section 188 of IBC. It is responsible for implementation of the Code which consolidates and amends laws relating to reorganization and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximization of value of assets of such persons for....
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....he quantum of punishment submitted that a lenient view was correctly taken while taking into consideration the fact that CoC at no point of time has raised any objection qua appointment of respondent no.2 as RP. It is the will of CoC which is paramount in such matters. In respect to relationship between respondent no.2 and the counsel is concerned, there was no relationship on 17.12.2019 i.e. the insolvency commencement date. In respect to the information which was reflected on the website of the Board same had been updated in view of submissions made by respondent no.2 after due verification. There is no violation of any fundamental or constitutional rights of petitioners which calls for interference by this Court. All allegations as raised in the complaint were subjected to scrutiny by inspecting Authority and necessary action taken by Disciplinary Committee on the relevant aspects. 19. Learned counsel for respondent no.2 while denying all allegations as raised against said respondent reiterated that he was validly appointed as RP with 80% voting share of CoC. It was further submitted that Disciplinary Committee after thorough consideration of the facts and circumstances of th....
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....d 27.02.2021 as under:- "31. It is to be seen that now the process of CIRP against the corporate debtor has reached its finality since a resolution plan was already approved by the CoC and that an application under Section 30(6) read with Section 31 of IBC 2016 had already been filed and is pending before this Adjudicating Authority. The role of the RP, almost came to an end and that no further action is required to be taken by the RP, unless in the event of rejection of the resolution plan by this Adjudicating Authority. It is also to be seen that when allegations of mala fides or corruption or professional misconduct or any other sort are alleged against a RP, the same are to be adjudicated by the IBBI and basing on the orders passed by the IBBI, appropriate action would be taken by this Adjudicating Authority. Since, admittedly the applicant made complaint against the respondent-RP to the IBBI, at this stage, we are not inclined to adjudicate and give any finding on these IAs. 32. Accordingly, IA Nos. 265/2020, 266/2020, 462/2020 & 466/2020 are disposed of with a liberty to the applicant to take appropriate steps, once the IBBI decides his complaint made agains....
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....roceedings And, forthwith restrain RP- Nipan Bansal from acting as an RP for the CD till further orders of this tribunal/the board And, forthwith stay any consideration on any application including the resolution plan submitted under the signatures of the said RP- Nipan Bansal And, Pass such other orders as the tribunal may deem fit in the facts and circumstances of the case." 23. Learned NCLT revived the earlier applications i.e. IA No.265, 266, 462 and 466 of 2020. Statutory appeal challenging order dated 25.04.2023 dismissing the said applications stands filed by petitioners. Present writ petition was filed in April, 2023 challenging order dated 22.08.2022 passed by IBBC. 24. In our considered opinion, scope of judicial review in present proceedings wherein petitioners seek setting aside of order dated 22.08.2022 passed by IBBI, taking a lenient view qua shortcomings on the part of RP besides declaring all CIRP proceedings before learned NCLT to be illegal and non-est, is limited. Primary argument raised before us was that once RP was found guilty of the breach in question there was no occasion for the Board to have taken a lenient view especiall....
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....on 17.12.2019, ie, ICD, Mr. Bansal and Mr. Garg were not related party from the date of admission of CIRP. 4.3.2 Regarding delay in filing relationship disclosure with IPA pertaining to legal counsel appointed by Mr. Bansal, the DC observes that Mr. Bansal admitted delay. There is laxity in approach of Mr. Bansal in obtaining undertaking from Mr. Garg and filing disclosure with IPA. However, since such delays did not cause any prejudice or loss to any of the stakeholder of the CD, the DC takes a lenient view and advises Mr. Bansal to be more cautious in handling assignments." 26. In respect to the findings regarding improper procedure for appointment of IRP as RP, impugned order dated 22.08.2022 reads as under:- "4.6.1 The DC observes that the agenda for appointment of IRP as RP was first placed for voting before CoC in its 1st meeting dated 07.01.2020. The agenda was not approved as it received only 65.89% votes in its favour which fell short of mandatory 66% required for approval of resolution for appointment of IRP as RP as per section 22(2) of the Code. Later PNB who is one of the FC with voting share of 14.72% sent mail on 13.02.2022 according its approval....
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....fact that appeal filed by petitioners challenging order dated 25.04.2023 is admittedly pending adjudication before learned NCLAT after issuance of notice. It was directed by learned NCLAT on 09.08.2023 that any order passed by adjudicating authority in CIRP shall abide by result of the said appeal. The matter before learned NCLAT is pending adjudication on 17.09.2024. All allegations and averments as raised in respect to issues as raised in the applications before learned NCLT are very well within the realm of consideration by learned NCLAT. Parallel adjudication on said aspects by this Court is not called for. 29. Another aspect and argument raised by learned counsel for petitioners was that constitution of Disciplinary Committee is not in accordance with the applicable provisions inasmuch as a single member can not constitute a 'Committee'. It was argued that an objection in this regard had been raised by respondent No. 2 as well but merely because he thereafter acceded to the jurisdiction of the committee, it proceeded to decide the matter in an illegal and arbitrary manner. It is relevant to note that Disciplinary Committee has not merely proceeded on account of acce....
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....e design of the IBBI'. As per its recommendation in respect to constitution of the 'Committee', it is duly observed that once IBC neither explicitly permits nor prohibits the possibility of one member Disciplinary Committee, the word 'Committee' used in Section 220(1) IBC can be interpreted to be inclusive of one member Committee. Reference was made to judgment of the Andhra Pradesh High Court in Government of Andhra Pradesh versus K. Sethuraman AIR 1986 AP 170, wherein it was held that a person or persons appointed by the Registrars under the Andhra Pradesh Cooperative Societies, 1964 to manage affairs of the Society would constitute a 'Committee'. Reference was also made to foreign precedents including Reynell Vs. Lewis (16 LJ Ex.30) wherein it was observed that term 'Committee' means an individual or body to which others have committed or delegated a particular duty or who have taken on themselves to perform it in the expectation of their act being confirmed by the Body they profess to represent or act for. 31. In the given facts and circumstances, we do not find any infirmity or irregularity in the constitution of a single member Disciplin....