The High Court upheld the suspension of the Insolvency Professional, affirming the validity of the single-member Disciplinary Committee.
The Bombay High Court Division Bench of Justice A.S. Chandurkar and Justice Rajesh S. Patil reviewed a petition filed by a suspended Resolution Professional, challenging the order of the IBBI Disciplinary Committee and observed that the Disciplinary Committee under Section 220 of the Insolvency and Bankruptcy Code, 2016, may be constituted with either a single whole-time member or multiple whole-time members, as the term "members" in the proviso does not limit the composition to more than one and aligns with the 2017 Regulations; thus, the challenge to the order's validity based on the committee's composition was rejected, affirming the legality of a single-member committee.
In the judgment delivered by the High Court concerning the challenge to an order issued by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI), the Court considered a writ petition filed under Article 226 of the Constitution. The petitioner sought to contest the order dated July 3, 2023, which suspended their registration as an Insolvency Professional for a period of one year. This suspension followed a show cause notice issued under Section 220 of the Insolvency and Bankruptcy Code, 2016, based on an investigation report that prompted the IBBI to take action against the petitioner.
The petitioner argued that the adjudication of the show cause notice by a single member of the Disciplinary Committee violated the provisions of the Code, which stipulates that the committee must consist of whole-time members. The learned counsel for the petitioner, Mr. Pratik Sarkar, contended that the language of Section 220(1) implied that a Disciplinary Committee should have more than one member, thus rendering the order invalid. He referred to various legal precedents and provisions to substantiate his claim that the Regulations could not override the primary statute, which established the need for a multi-member committee.
Conversely, Mr. Pankaj Vijayan, representing the IBBI, contended that the language used in the relevant provisions permitted the constitution of a Disciplinary Committee with a single whole-time member. He argued that the plural expression “members” in the Code encompassed both singular and plural interpretations, supported by Section 13 of the General Clauses Act, 1897. He maintained that the Regulations did not contravene the Code but rather provided clarity on the composition of the committee.
Upon reviewing the arguments and statutory provisions, the Court observed that the Disciplinary Committee's constitution was not strictly defined in terms of the number of members. The Court interpreted the proviso to Section 220(1) of the Code and Clause 2(1)(c) of the Regulations of 2017, ultimately concluding that the IBBI was indeed authorized to form a Disciplinary Committee consisting of either a single member or multiple members. It emphasized that while the intent of the Regulations was to ensure that members of the committee be whole-time members, the specific number was not limited by the Code.
Consequently, the Court found no merit in the petitioner's challenge regarding the composition of the Disciplinary Committee. It ruled that the order dated July 3, 2023, was valid, and the appeal was dismissed. The Court clarified that its observations were strictly confined to the constitution of the Disciplinary Committee, allowing the ongoing proceedings to continue on their merits without prejudice. The rule was discharged with no order as to costs.
Mr. Pratik Sarkar, the Advocate, i/by Vidhi Legal represented the Petitioner While Mr. Pankaj Vijayan with Mr. Ameya Bandivadekar, Advocates appeared for the Respondent.
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