Resolution Professionals must ensure strict compliance with the Insolvency and Bankruptcy Code, as failure to do so justifies suspension of their registration.

JUDGMENT

TEJAS KARIA, J

1. The present Appeal challenges the judgment dated 07.08.2024 passed in W.P.(C) 2894/2024 (“Writ Petition”) and order dated 07.10.2024 passed in Review Petition No. 370/2024 (“Review Petition”) (collectively “Impugned Judgment”).

2. The Writ Petition was filed by the Appellant for quashing and setting aside the order dated 12.01.2024 (“Order”) passed by the Respondent, whereby the Appellant’s registration to practice as Insolvency Professional has been suspended for a period of two years effective 12.02.2024.

3. 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 Appellant.

6. On 20.07.2023, the Respondent issued another show cause notice (“Second SCN”), which was adjudicated by the Respondent vide the Order, wherein it was found that the Appellant had contravened the provisions of the Code and the Regulations made thereunder, because of the following violations:

i. Ineligibility of Mr. Sushant Chhabra as a Joint Resolution Applicant along with M/s Conquerent Control Systems Pvt.

Limited (“Conquerent”);

ii. Suppression of relevant facts from the CoC;

iii. Discrepancy in examining financial capability of Mr. Sushant Chhabra;

iv. Disposal of the assets of the Corporate Debtor without the approval of the CoC; and v. Executing Lease Agreement with the Prospective Resolution Applicants with respect to assets of the Corporate Debtor without the approval of the CoC.

7. In view of the above, in exercise of powers conferred under Section 220(2) of the Code and the Regulations made thereunder, the registration of the Appellant as Insolvency Professional was suspended for a period of two years with effect from 12.02.2024.

SUBMISSIONS ON BEHALF OF THE APPELLANT

8. Mr. Ashish Dholakia, learned Senior Counsel for the Appellant submitted that:

8.1. The Order passed by the Respondent has found that the Appellant has committed five violations of the Code and the Regulations made thereunder, however, the Impugned Judgment does not appreciate that the Appellant had provided valid justifications for each of the violations alleged by the Respondent, which have not been considered in the Order passed by the Respondent.

1^st Allegation:

8.2. As regards the first allegation of ineligibility of Mr. Sushant Chhabra as a Joint Resolution Applicant along with Conquerent, it was submitted that as per Section 29A(g) of the Code, the promoter of the Corporate Debtor was not eligible to be a Resolution Applicant. However, as per Section 240A of the Code, the prohibition under Section 29A of the Code will not be applicable to t