Sashi Agarwal Vs Union of India & Ors. (Calcutta High Court)
IBBI Disciplinary Order Set Aside as Chairperson Could Not Act as Disciplinary Committee; Show Cause Notice Against Insolvency Professional Set Aside for Failure to Follow IBC Procedure: Calcutta HC
Issue: Whether the IBBI can cancel the registration of an Insolvency Professional without following the mandatory procedure under Sections 218, 219 and 220 of the Insolvency and Bankruptcy Code, and whether the Chairperson alone can act as the Disciplinary Committee?
Brief facts: The petitioner, an Insolvency Professional (IP), was appointed as the Interim Resolution Professional (IRP) of INCAB Industries Ltd. During the CIRP, he constituted the Committee of Creditors (CoC), admitted certain financial creditors, and eventually placed before the NCLT the CoC’s resolution recommending liquidation. Subsequently, the NCLAT, while setting aside the liquidation order, made adverse observations against the petitioner and directed the Insolvency and Bankruptcy Board of India (IBBI) to take appropriate action. Based on these observations, IBBI issued a show-cause notice alleging that the petitioner had failed to verify claims before constituting the CoC, wrongly permitted related parties to participate in the CoC, failed to prepare the Information Memorandum, failed to appoint registered valuers and hastily pushed the corporate debtor into liquidation. The Chairperson of the IBBI, acting as the Disciplinary Committee, cancelled the petitioner’s registration as an Insolvency Professional. The petitioner challenged the order before the Calcutta High Court.
