The court upheld the suspension of a Resolution Professional for one year due to lack of due diligence and failure to communicate claims, affirming the Disciplinary Committee's authority under the Insolvency and Bankruptcy Code.

JUDGMENT :

(A.S. Chandurkar, J.)

1. Rule. Rule made returnable forthwith and heard learned counsel for the parties.

2. Pursuant to initiation of Corporate Insolvency Resolution Process – “CIRP” of M/s. Transparent Energy System Private Limited – Corporate Debtor – “CD”, the petitioner came to be appointed as Resolution Professional – “RP” by the National Company Law Tribunal - “NCLT” by its order dated 21st February 2020. The Insolvency and Bankruptcy Board of India – “IBBI” , in exercise of powers conferred under Section 218 of the Insolvency and Bankruptcy Code, 2016 - “the Code”, appointed an Investigating Authority - “IA” to conduct investigation in the matter of the CD. After receipt of the Investigation Report, the IBBI on 11th July 2023 issued a show cause notice to the petitioner raising two grounds, namely, lack of due diligence while verifying the Resolution Plan of the CD and non-intimation of the claim of Kanoria Chemicals & Industries Limited – “KCIL” despite being aware of the partial admission of its claim. It was stated in the show cause notice that the IA had issued a notice of investigation to the petitioner on 29th April 2023 seeking his response. The petitioner through his written submissions dated 11th May 2023 and 19th May 2023 replied to the same. The IA submitted its investigation report to the IBBI and on that basis, the aforesaid show cause notice was issued alleging contravention of the provisions of Section 30(2)(b) and (e), 208(2)(a) and (e) of the Code as well as the Regulations framed in that regard.

3. The petitioner on 24th July 2023 submitted his reply to the show cause notice and denied the assertions made therein. Virtual hearing took place on 31st January 2024 and thereafter the Disciplinary Committee of the IBBI through two Whole Time Members on 12th August 2024 passed an order stating therein that as the petitioner had failed to perform his duties under the Code read with the relevant Regulations made thereunder, the petitioner’s registration as RP was suspended for a period of one year. The said order was to come in effect after expiry of thirty days from the date of its issue. Being aggrieved by the order of suspension, the petitioner has filed this writ petition raising a challenge to the same.

4. Mr. Gaurav Joshi, the learned Senior Advocate for the petitioner submitted that there was no basis whatsoever for the Disciplinary Committee of the IBBI to have suspended the petitioner’s registration as IP for a period of one year. Referring to the order passed by the National Company Law Appellate Tribunal – “NCLAT” dated 11th April 2023 in the proceedings initiated by KCIL, it was submitted that the petitioner was merely reprimanded on account of lack of showing due diligence. It observed that the petitioner should have been more dutiful and alert in responding to the e-mails sent by KCIL. These observations made by NCLAT could not have been the basis for the Disciplinary Committee to hold that the petitioner had failed to perform his duties under the Code and the Regulations made thereunder. Referring to the Regulations of 2017 and especially Clause 13(3)(b), it was submitted that the suspension of the registration for a duration of one year was disproportionate to the conduct of the petitioner. The petitioner in reply to the show cause notice had explained in clear terms the steps taken by him during the course of the proceedings. The fact that there was some delay in responding to the e-mails sent by KCIL on account of outbreak of Covid-19 was acknowledged by the Disciplinary Committee. Despite aforesaid, the petitioner was faulted for the failure in updating the status of KCIL’s claim. Reference was made to the provisions of Section 30 of the Code to urge that it was not necessary for a Resolution Professional to comment on each and every aspect of the Resolution Plan. There was no finding recorded that any loss was suffered by any person so as to require action being taken against the peti