TaxTMI 
TaxTMI 
2026 (1) TMI 569
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..... Vide the Impugned Judgment, the Writ Petition was dismissed by the learned Single Judge by upholding the Order on the ground that the determination made by the Respondent that the Appellant had contravened the provisions of the Insolvency and Bankruptcy Code, 2016 ("Code") and its Regulations, and observing that as the Order was passed after due consideration of all the relevant material placed before the Respondent, no interference was required under the writ jurisdiction of Article 226 of the Constitution of India, 1950. 4. Being aggrieved by the Impugned Judgment, the Appellant has filed the present Appeal. FACTUAL MATRIX 5. The Appellant was appointed by the National Company Law Tribunal, New Delhi ("NCLT") to act as the Resolution Professional of Trading Engineers (International) Limited ("Corporate Debtor") on 04.07.2019. On 15.02.2021, the Resolution Plan vis-à-vis the Corporate Debtor was approved by the Committee of Creditors ("CoC"). The Respondent had issued a show cause notice to the Appellant on 21.10.2022 ("First SCN"), which was adjudicated by the Respondent vide order dated 17.02.2023 closing the First SCN by not issuing any directions to the Appel....
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....hota v. Pritha Srikumar Iyer, 2023 INSC 1056, which holds that: "16. Under the heading "exemption of Micro, Small and Medium Enterprises from Section 29-A" the discussion begins. It is referred to the ILC report of March, 2018 and its finding that Micro, Small and Medium Enterprises form the foundation of the economy and are key drivers of employment, production, economic growth, entrepreneurship and financial inclusion. The ILC report 2018 exempted these industries from Section 29-A (c) and (h) and the rationale for the same was contained in para 27.4 of the report which reads as under: "27.4 Regarding the first issue, the Code is clear that default of INR one lakh or above triggers the right of a financial creditor or an operational creditor to file for insolvency. Thus, the financial creditor or operational creditors of MSMEs may take it to insolvency under the Code. However, given that MSMEs are the bedrock of the Indian economy, and the intent is not to push them into liquidation and affect the livelihood of employees and workers of MSMEs, the Committee sought it fit to explicitly grant exemptions to corporate debtors which are MSMEs by permitting a promoter ....
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....However, it must not be forgotten that a Resolution Professional is only to "examine" and "confirm" that each resolution plan conforms to what is provided by Section 30(2). Under Section 25(2)(i), the Resolution Professional shall undertake to present all resolution plans at the meetings of the Committee of Creditors. This is followed by Section 30(3), which states that the Resolution Professional shall present to the Committee of Creditors, for its approval, such resolution plans which confirm the conditions referred to in sub-section (2). This provision has to be read in conjunction with Section 25(2)(i), and with the second proviso to Section 30(4), which provides that where a resolution applicant is found to be ineligible under Section 29-A(c), the resolution applicant shall be allowed by the Committee of Creditors such period, not exceeding 30 days, to make payment of overdue amounts in accordance with the proviso to Section 29-A(c). A conspectus of all these provisions would show that the Resolution Professional is required to examine that the resolution plan submitted by various applicants is complete in all respects, before submitting it to the Committee of Creditors. The R....
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.... the Ministry of MSME, it was informed that there was cancellation / marking as Z category of the MSME Registration obtained by the Corporate Debtor. Even the Appellant could get the re-registration of the Corporate Debtor as MSME on 18.10.2020, which shows that the earlier registration was not cancelled or marked as Z category. Hence, there was no reason to believe that Mr. Sushant Chhabra was not eligible to become the Joint Resolution Applicant along with Conquerent. 8.9. Further, on 21.08.2023, the Appellant had written a letter to the Office of General Manager, District Industries Centre, Haridwar ("DIC") to get a clarification on the issue of validity of the MSME certificate issued to the Corporate Debtor. In the response dated 25.08.2023, it was confirmed by the DIC that the Corporate Debtor was registered as MSME from 26.11.2007 and as per the on-site inspection carried out on 14.02.2023 by the DIC, the unit of the Corporate Debtor was found working / in production. This shows that the allegation that the registration of the Corporate Debtor as MSME was cancelled or put in Z category, does not appear to be correct. 8.10. In view of the above, the allegation that the A....
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....occasion for verifying the financial capability of Mr. Sushant Chhabra. Mr. Sushant Chhabra along with Conquerent had a combined net worth of INR 12.97 crores and Conquerent had a turnover of INR 50.84 crores, as against the requirement of INR 10 crores. Accordingly, both Mr. Sushant Chhabra and Conquerent were eligible to be the Joint Resolution Applicants in view of the net worth and turnover as approved by the CoC at the time of passing the Resolution Plan. 8.15. Hence, the finding in the Order passed by the Respondent that the Appellant accepted the net worth certificate issued by a Chartered Accountant in a mechanical way, without application of mind and without proper due diligence, was incorrect. 8.16. In view of the above there was no violation of any of the provisions of the Code or the Regulations as alleged in the Order passed by the Respondent. 4th Allegation: 8.17. As regards the fourth allegation of disposal of the assets of the Corporate Debtor without the approval of the CoC, the Appellant had sold certain items of scrap and DG sets to realise the cash for the benefit of the Corporate Debtor, as the value of such assets were declining and it was in the b....
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.... not Lease Agreements and, therefore, there was no violation of Section 28(1)(k) of the Code, as the Leave and License Agreements granted temporary occupation rights to a property without transferring the ownership rights. 8.21. Further, no physical possession pursuant to the Leave and License Agreements was ever transferred to the Prospective Resolution Applicants. Hence, no prejudice was caused to the Corporate Debtor because of the Appellant entering into the Leave and License Agreements with the Prospective Resolution Applicants. 8.22. The Impugned Judgment failed to appreciate that none of the allegations found in the Order passed by the Respondent had any merit and, therefore, the Order was liable to be quashed and set aside. The Impugned Judgment did not consider the justification given by the Appellant for non-violation of any of the provisions of the Code or the Regulations made thereunder. 8.23. The suspension of the practicing certificate of the Appellant for a period of two years has caused immense prejudice to the Appellant because of stigma on his professional career. In the facts of the present case, no case is made out for such a harsh punishment as there h....
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....the order is completely in contravention of any provision of any law be it an Act or the Regulation framed under the Act. (a) The Apex Court in Central Council for Research in Ayurvedic Sciences & Anr. v. Bikartan Das & Ors., 2023 SCC OnLine SC 996, has held as under: "50. Before we close this matter, we would like to observe something important in the aforesaid context: Two cardinal principles of law governing exercise of extraordinary jurisdiction under Article 226 of the Constitution more particularly when it comes to issue of writ of certiorari. 51. The first cardinal principle of law that governs the exercise of extraordinary jurisdiction under Article 226 of the Constitution, more particularly when it comes to the issue of a writ of certiorari is that in granting such a writ, the High Court does not exercise the powers of Appellate Tribunal. It does not review or reweigh the evidence upon which the determination of the inferior tribunal purports to be based. It demolishes the order which it considers to be without jurisdiction or palpably erroneous but does not substitute its own views for those of the inferior tribunal. The writ of certiorari can b....
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....1922] 2 A.C. 128, 156]. One is the area of inferior jurisdiction and the qualifications and conditions of its exercise, the other is the observance of law in the course of its exercise. ... 9. Certiorari may lie and is generally granted when a court has acted without or in excess of its jurisdiction." 54. Relying on T.C. Basappa (supra), the Constitution Bench of this Court in the case of Hari Vishnu Kamath (supra), laid down the following propositions as was established: "(1) Certiorari will be issued for correcting errors of jurisdiction, as when an inferior court or tribunal acts without jurisdiction or in excess of it, or fails to exercise it. (2) Certiorari will also be issued when the court or tribunal acts illegally in the exercise of its undoubted jurisdiction, as when it decides without giving an opportunity to the parties to be heard, or violates the principles of natural justice. (3) The court issuing a writ of certiorari acts in exercise of a supervisory and not appellate jurisdiction. One consequence of this is that the court will not review findings of fact reached by the inferior court or tribunal, even if they be erroneou....
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.... erroneously admitted inadmissible evidence which has influenced the impugned finding. Similarly, if a finding of fact is based on no evidence, that would be regarded as an error of law which can be corrected by a writ of certiorari. In dealing with this category of cases, however, we must always bear in mind that a finding of fact recorded by the Tribunal cannot be challenged in proceedings for a writ of certiorari on the ground that the relevant and material evidence adduced before the Tribunal was insufficient or inadequate to sustain the impugned finding. The adequacy or sufficiency of evidence led on a point and the inference of fact to be drawn from the said finding are within the exclusive jurisdiction of the Tribunal, and the said points cannot be agitated before a writ Court. It is within these limits that the jurisdiction conferred on the High Courts under Art. 226 to issue a writ of certiorari can be legitimately exercised...." 57. In Surya Dev Rai v. Ram Chandra Rai, (2003) 6 SCC 675, a Bench of two Judges held that the certiorari jurisdiction though available, should not be exercised as a matter of course. The High Court would be justified in refusing the writ....
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....the adequacy or sufficiency of the evidence led on a point as these are matters within the exclusive jurisdiction of the administrative authority. 11. In Afcons Infrastructure Limited v. Nagpur Metro Rail Corpn. Ltd., (2016) 16 SCC 818, it is held that: "13. In other words, a mere disagreement with the decision- making process or the decision of the administrative authority is no reason for a constitutional court to interfere. The threshold of mala fides, intention to favour someone or arbitrariness, irrationality or perversity must be met before the constitutional court interferes with the decision-making process or the decision." 12. In view of the above, it is clear that the scope of interference by way of a judicial review is limited under Article 226 of the Constitution of India and can only be exercised if it is found that the decision by the administrative authority was unreasonable, irrational, arbitrary or perverse. 13. The Supreme Court in W.B. Central School Service Commission v. Abdul Halim & Ors., (2019) 18 SCC 39, held that: "27. It is well settled that the High Court in exercise of jurisdiction under Article 226 of the Constitution of India....
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....e paid to such creditors in accordance with sub-section (1) of section 53 in the event of a liquidation of the corporate debtor. Explanation 1: For the removal of doubts, it is hereby clarified that a distribution in accordance with the provisions of this clause shall be fair and equitable to such creditors. Explanation 2 : For the purposes of this clause, it is hereby declared that on and from the date of commencement of the Insolvency and Bankruptcy Code (Amendment) Act, 2019, the provisions of this clause shall also apply to the corporate insolvency resolution process of a corporate debtor- (i) where a resolution plan has not been approved or rejected by the Adjudicating Authority; (ii) where an appeal has been preferred under section 61 or section 62 or such an appeal is not time barred under any provision of law for the time being in force; or (iii) where a legal proceeding has been initiated in any court against the decision of the Adjudicating Authority in respect of a resolution plan;] (c) provides for the management of the affairs of the Corporate debtor after approval of the resolution plan; (d) the implementa....
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....iting the suspended board of directors of the Corporate Debtor to submit a Resolution Plan for the Corporate Debtor, Petitioner as a Resolution Professional cannot escape the liability of failure to carry out due diligence. Therefore, Petitioner's contention before the Disciplinary Committee that due to non- availability of complete data, he was not able to ascertain MSME status of Corporate Debtor, cannot be accepted. Even in absence of such information, knowing the critical consequence of registration status of the Corporate Debtor as an MSME, Petitioner relied on the confirmation from Mr. Sushant Chabbra, who being the suspended director, had conflict of interest in determination of the Corporate Debtor as an MSME. Additionally, Petitioner did not inform the CoC that he had filed an Avoidance Application against Mr. Sushant Chabbra before the NCLT in CIRP of Unitech Machines Limited. In view of the same, Petitioner's lack of due diligence in exercising its statutory obligations ought to be dealt with in accordance with the framework provided under the law." 19. In view of the statutory scheme of the Code and the Code of Conduct for Insolvency Professionals, the Appellant was ....