No Appellate Role for Courts Over Govt-Appointed Experts in Board Decisions unless there is Gross Miscarriage of Justice: Delhi HC dismisses Writ Petition against IBBI [Read Order]

The writ petition filed against the Insolvency and Bankruptcy Board of India (IBBI) has been dismissed by a Single bench, Justice Subramonium Prasad of the Delhi High Court. The court's decision rested on the absence of any evident miscarriage of justice and a lack of fault found in the board's decision-making process. The bench observed that “Respondent No.1/Board is the authority to regulate the functioning of the Insolvency Professionals and the Board comprises of experts in the field who have been appointed by the Central Government to carry out the functions specified under Part IV of the IBC. It is well settled that Courts do not sit as an Appellate Authority over the decisions taken by the experts.” The case revolves around a series of alleged irregularities and deviations from the Insolvency and Bankruptcy Code, 2016 (IBC), during the CIRP process of the Corporate Debtor. The petitioner contended that Respondent No.2 / Insolvency Professional (IP) failed to adhere to the regulations outlined in the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations). Specifically, they argue that Respondent No.2 did not publish the public announcement in widely circulated newspapers within the stipulated three-day window following their appointment as an Interim Resolution Professional. It was also alleged that the IP uploaded an incomplete Information Memorandum of the Corporate Debtor on their website, which is said to be in violation of the IBC. Further, the petitioner filed a complaint against IP with 'the Board' in March 2019, citing irregularities in the CIRP process. The Board acknowledged the merit of these allegations but did not take any action against the IP. A subsequent addendum to the complaint in September 2019 went unanswered. In response, counsel for Respondent No.1, representing 'the Board,' referred to various provisions within the CIRP Regulations and the Insolvency And Bankruptcy Board Of India (Grievance And Complaint Handling Procedure) Regulations, 2017. These regulations outline a procedure for addressing grievances and complaints against service providers, including Resolution Professionals. Further stated that the Board, upon receiving a complaint, seeks information from both the complainant and the service provider. After conducting an investigation, if the Board finds merit in the complaint, it can issue a show cause notice or order an investigation. The defence contended that, while preliminary reports raised concerns about Respondent No.2's conduct, the final report ultimately cleared Respondent No.2 of most allegations, and the complaint was closed. The court emphasized its role, emphasizing that it should not interfere with decisions made by experts unless they are arbitrary, unreasonable, or against public interest. The Board is composed of experts appointed by the Central Government to regulate the functioning of Insolvency Professionals. The High Court finally observed that “this Court does not find that the decision making process adopted by the Board or the decision based on the final report is perverse or is contrary to law or against public interest, which would warrant interference from this Court under Article 226 of the Constitution of India. Court while exercising its jurisdiction under Article 226 of the Constitution of India while examining any enquiry report does not go into excruciating detailed facts nor does it substitute its conclusion to the one arrived at by the fact finding body. If the process adopted in the enquiry is fair, reasonable and transparent then the Writ Court does not interfere with the findings to substitute its own conclusion to the one arrived at by the authority simply because another view is possible.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

No Appellate Role for Courts Over Govt-Appointed Experts in Board Decisions unless there is Gross Miscarriage of Justice: Delhi HC dismisses Writ Petition against IBBI [Read Order]

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