Plea Challenging Constitutional Validity of Provisions on Resolution Professional: Bombay HC issues Notice to Attorney General of India [Read Order]

Plea – Challenging – Constitutional – Validity – Provisions – Resolution Professional – Bombay HC – issues Notice – Attorney – General of India – taxscan
Plea – Challenging – Constitutional – Validity – Provisions – Resolution Professional – Bombay HC – issues Notice – Attorney – General of India – taxscan
A Division Bench of the Bombay High Court issued notice to the Attorney General of India, R. Venkataramani, in a plea challenging the constitutional validity of provision on Resolution Professional.
The Writ Petition was filed challenging the Order passed by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (for short “IBBI”). There is also a constitutional challenge to Sections 7(5), 9(5) and other provisions of the Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”), as more particularly mentioned in ground ‘uuuu’ of the petition as being arbitrary, illegal and ultra vires the Constitution of India. The petitioner in the present matter is Poonam Basak.
The Senior Counsel, Sharan Jagtiani, who appeared on behalf of the Petitioner, apart from attacking the impugned order on merits, took a strong objection to the jurisdiction of the Authority passing the impugned order and it was submitted that under the Provisions of Section 220 of the IBC, 2016 it is the IBBI which constitutes a Disciplinary Committee to consider the reports of the investigating Authority submitted under sub-Section (6) of Section 218.
It was further submitted that in the facts of the present case, the impugned order is not passed by any Whole Time Member but in fact by the Chairperson of IBBI. In support of this argument the counsel drew attention to the website of IBBI in which it is clearly stated that Ravi Mital is the Chairperson of the IBBI and Sudhakar Shukla and Jayanti Prasad are its Whole Time Members. He submitted that in the present case, the impugned order is passed by Ravi Mital who is the Chairperson and not a Whole Time Member. Therefore it was submitted that the Order impugned in the present Petition, is thus without jurisdiction.
Pankaj Vijayan, the Counsel who appeared on behalf of the Respondent submitted that in fact the Chairperson is a de-facto Whole Time Member of the IBBI. To buttress this argument, the counsel relied upon Section 189 of the IBC, 2016. He submitted that Section 189 has two categories of Members, namely, Whole Time Members and Part Time Members. He submitted that when one reads Section 189 as a whole, it is clear that other than Whole Time Members and Part Time Members there can be no other Members.
The Court of Justice MM R. Venkataramani and Justice BP Colabawalla observed that “Once this is the case, we are of the view, at least prima facie, that the ‘Chairperson’ is a separate and distinct category from a ‘Whole-Time Member’. Admittedly the present impugned order has not been passed by a Whole-Time Member but by the Chairperson.” “Since the constitutional validity of Sections 7(5) and 9(5) of the IBC, 2016 are also challenged in the present Petition, notice is issued to the Attorney General of India returnable on 27th September, 2023” the Bench noted.
To Read the full text of the Order CLICK HERE
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