The referral of a Resolution Professional for disciplinary action to the IBBI does not equate to a conclusive finding of misconduct, rendering the appeal not maintainable.

O R D E R

(Hybrid Mode)

09.12.2024:

A very interesting issue, which will be dealt with by us, in the instant Company appeal which emanates from the challenge given to the Impugned Order, which has been rendered by the Ld. Adjudicating Authority. While exercising its powers under Section 60 (5) of the I & B Code, to be read with Rule 11 of the NCLT Rules, being the Impugned Order dated 14.10.2024, as rendered in IA (IBC)/2329/2023, in CP. (IBA)/1099/CHE/2019. Precisely, the Appellant is aggrieved against, the directions which have been issued by the Ld. Adjudicating Authority, particularly, that as contained in para 4.15 of the Impugned Order, which is extracted hereunder: -

“4.15 We find that the appointed RP Ms. Renuka Devi has not followed and complied the order of Hon'ble NCLAT and this Tribunal and violated the extant Orders. We therefore order that the matter be referred to IBBI against RP Renuka Devi for appropriate and necessary action.”

2. The basic argument of the Ld. Counsel for the appellant would be confined to the directives, which have been given by the Ld. Adjudicating Authority by referring the matter to the Insolvency and Bankruptcy Board of India, (IBBI) as against the present appellant for seeking an appropriate and necessary action.

3. One of the issues which will be involved consideration and would be answered by us too is, “whether it is a conclusive direction containing a positive direction, or not as it has been portrayed by the Ld. Counsel for the Appellant”. To be precise, the Resolution Professional has been defined under Section 5 (27) of I & B Code, 2016 which is extracted hereunder: -

“5(27) "resolution professional", for the purposes of this Part, means an insolvency professional appointed to conduct the corporate insolvency resolution process [or the pre-packaged insolvency resolution process, [or the pre- packaged insolvency resolution process, as the case may be,] and includes an interim resolution professional;”

4. If the dichotomy of the definition of the resolution professional given under the code is concerned, it means that it is to conduct of the corporate insolvency resolution processes, which is to be performed by a person who is appointed by a body which has been constituted by Insolvency and Bankruptcy Board of India Regulations, 2016 (IBBI) and its powers to regulate the functioning of the Resolution Professional. Thus, appointment has been envisaged under Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. Having reference to that, the said body happens to be the registered body of the resolution professionals, granting them the authority to exercise their powers for the purposes of conducting the resolution process, only upon the grant of the certificate of registration as provided under the Regulations of 2016, as contained in its Regulation 7.

5. When a body is statutorily created, and particularly when the powers of formulating its regulation are being derived from powers given under Sections 196 , 208, and 207 of the I & B Code, a reference to the aforesaid sections are relevant for the purposes of answering the argument extended by the Ld. Counsel for the Appellant, while putting a challenge to the Impugned Order. Section 196 of the I & B Code, provides for the powers and functions of the board and the bifurcation of the powers which has been contained therein in Part IV Chapter 2 of the I & B Code, it is inclusive within itself for holding of an action against the erring registered resolution professional or any authority has registered under Reg