Insolvency Professionals

High Court upholds the Constitutional Validity of Section 204 of IBC and Regulation 23A of IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 | Section 204 of IBC is only an enabling provision | Both IBBI and IPAs can initiate parallel proceedings – CA V.Venkata Sivakumar Vs. Insolvency and Bankruptcy Board of India and Ors. – Madras High Court

Hon’ble High Court holds that:
(i) There is no discretion vested with the IPAs and the suspension is automatic, once the disciplinary proceedings are initiated. Therefore, it can neither be termed as manifestly arbitrary nor be challenged on the ground of any confirmation of unguided/unbridled power.
(ii) The requirement of issuance of show cause notice cannot be read into a provision of ad-interim suspension.
(iii) Only to avoid hardships, normally swift and prompt completion of the process of disciplinary proceedings is insisted upon. Therefore, the petitioner or any other aggrieved professional can only insist upon prompt completion of the proceedings and the hardship cannot be a ground for challenging the very regulation itself.
(iv) Accordingly, finding no infirmity, we uphold the constitutional validity of the Regulation 23A of the IBBI (Model Bye-Laws and Governing Board of IPAs) Regulations, 2016.
(v) The very provision of the twin tire control will not give rise to illegality or the presumption of double jeopardy.
(vi) Further, in a given case, for the very same action, it may be possible that both IBBI and IPAs can initiate action. Even under Criminal Law, there can be prosecution and punishment by different agencies or more than one penal provision of law, if the gravamen of the charge differs. If only gravamen of the charge is self same, double jeopardy arises.
(vii) The Regulations and Bye-laws which are framed under Section 204 of the IBC clearly provide checks and balances. The procedure for taking disciplinary action and the appellate remedies are provided. Therefore, it cannot be said to be confirmation of excessive or unbridled power. Section 204 of IBC is only an enabling provision and therefore, we see no constitutional infirmity in any of the provisions under Section 204 (a) (b) (c) (d) and (e) of IBC.

High Court upholds the Constitutional Validity of Section 204 of IBC and Regulation 23A of IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 | Section 204 of IBC is only an enabling provision | Both IBBI and IPAs can initiate parallel proceedings – CA V.Venkata Sivakumar Vs. Insolvency and Bankruptcy Board of India and Ors. – Madras High Court Read Post »

An Insolvency Professional becomes heart and brain of Company under Insolvency, Good reputation and character of a person is very important for appointment as an Insolvency Professional and the decision to determine as to whether a person is fit and proper to be appointed as Insolvency Professional is based on the subjective satisfaction of IBBI – Pooja Menghani Vs. Insolvency and Bankruptcy Board of India & Anr. – Delhi High Court

In this important judgment on registration of Insolvency Professional, Hon’ble High Court held that:
(i) An Insolvency Professional performs very important functions in the insolvency resolution process of a company. An Insolvency Professional in fact becomes the heart and brain of the company under the insolvency resolution process.
(ii) Discretion has been given to IBBI to ensure that the corporate insolvency process is clean and free.
(iii) Good reputation and character of a person is very important for appointment as an Insolvency Professional.
(iv) The decision to determine as to whether a person is fit and proper to be appointed as Insolvency Professional is based on the subjective satisfaction of the Board.
(v) While judging as to whether a person is fit and proper to be appointed as an Insolvency Professional his past actions and conduct cannot be ignored and the fact that immediate past was clean does not give a clean chit to the person that his candidature will be considered.

An Insolvency Professional becomes heart and brain of Company under Insolvency, Good reputation and character of a person is very important for appointment as an Insolvency Professional and the decision to determine as to whether a person is fit and proper to be appointed as Insolvency Professional is based on the subjective satisfaction of IBBI – Pooja Menghani Vs. Insolvency and Bankruptcy Board of India & Anr. – Delhi High Court Read Post »

Bombay High Court sets aside order of IBBI Disciplinary Committee passed against Mr. Partha Sarathy Sarkar, Insolvency Professional – Partha Sarathy Sarkar Vs. Insolvency & Bankrupcy Board of India (IBBI) & Ors. – Bombay High Court

Vide the impugned order, IBBI Disciplinary Committee suspended the registration of Mr. Partha Sarathy Sarkar as Insolvency Professional for a period of three years.
In this case, the main grievance against the impugned order was that there was violation of principles of natural justice as well as a complete non application of mind on the part of the Disciplinary Committee in passing the impugned order.
Hon’ble High Court, after going through the impugned order, found that there is much substance in the contentions canvassed by Mr. Pratik Sarkar. The Court, considering the stand taken by the IBBI, has directed that the impugned order is hereby quashed and set aside. The Disciplinary Committee of the IBBI shall give a fresh notice for hearing to the Petitioner. Once the notice is given, the Disciplinary Committee shall hear the Petitioner and thereafter pass an appropriate order.

Bombay High Court sets aside order of IBBI Disciplinary Committee passed against Mr. Partha Sarathy Sarkar, Insolvency Professional – Partha Sarathy Sarkar Vs. Insolvency & Bankrupcy Board of India (IBBI) & Ors. – Bombay High Court Read Post »

Whether Adjudicating Authority(NCLT) can remove a Liquidator? – CA V. Venkata Sivakumar Vs. IDBI Bank Ltd. – NCLAT Chennai

NCLAT held that the Code, 2016 does not explicitly state the grounds for removing the liquidator. In the absence of specific provisions, we may resort to Section 33 & 34 of the Code, 2016 and Section 276 of the Companies Act, 2013, which provides for the removal and replacement of liquidators on various grounds. No Liquidator, has any personal rights, to continue in Liquidation and the Adjudicating Authority, can order for replacement of the Liquidator, recording sufficient reasons, as per law. Combined reading of above Case Laws and provisions along with Section 33 and Section 34 of the Code, 2016, would make it clear that the Adjudicating Authority, which had the powers, to appoint the Liquidator, will also have the powers, to remove the Liquidator for reasons, the Adjudicating Authority, may find fit, just, valid and proper.

Whether Adjudicating Authority(NCLT) can remove a Liquidator? – CA V. Venkata Sivakumar Vs. IDBI Bank Ltd. – NCLAT Chennai Read Post »

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