Case Note & Summary
The petitioner, Rohit J. Vora, an Insolvency Professional registered with the Insolvency and Bankruptcy Board of India (IBBI), challenged an order dated 3 July 2023 passed by the Disciplinary Committee of the IBBI, which suspended his registration for one year. The show cause notice was issued under Section 220 of the Insolvency and Bankruptcy Code, 2016 (IBC), read with Regulation 13 of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017. The petitioner contended that the Disciplinary Committee consisted of only a single whole-time member, which was contrary to the proviso to Section 220(1) of the IBC, which uses the plural expression 'members'. He argued that the Disciplinary Committee must consist of more than one whole-time member, and that the definition in the Regulations could not override the parent Act. The respondent IBBI argued that under Section 13 of the General Clauses Act, 1897, the plural includes the singular, and that the Regulations, which define 'Disciplinary Committee' as a committee of 'whole-time member(s)', are consistent with the Code. The court examined the relevant provisions, including Section 220(1) of the IBC and Regulation 2(1)(c) of the 2017 Regulations. It held that the use of the plural 'members' in the proviso includes the singular 'member' by virtue of Section 13 of the General Clauses Act, 1897, unless there is anything repugnant in the subject or context. The court found no repugnancy and concluded that a Disciplinary Committee consisting of a single whole-time member is permissible. The court also held that the Regulations are consistent with the Code and validly framed under Section 240 of the IBC. The court dismissed the writ petition, upholding the suspension order.
Headnote
A) Interpretation of Statutes - Plural includes Singular - Section 13, General Clauses Act, 1897 - Section 220(1), Insolvency and Bankruptcy Code, 2016 - The court held that the use of the plural expression 'members' in the proviso to Section 220(1) includes the singular 'member' by virtue of Section 13 of the General Clauses Act, 1897, unless there is anything repugnant in the subject or context. Therefore, a Disciplinary Committee consisting of a single whole-time member is permissible under the Code. (Paras 6-10)
B) Delegated Legislation - Consistency with Parent Act - Section 220(1), Insolvency and Bankruptcy Code, 2016 - Regulation 2(1)(c) of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 - The court held that the definition of 'Disciplinary Committee' in the Regulations, which uses the expression 'whole-time member(s)', is consistent with the proviso to Section 220(1) of the Code. The Regulations do not travel beyond the Code and are validly framed under Section 240 of the Code. (Paras 7, 11-12)
C) Jurisdiction of High Court - Article 226, Constitution of India - Challenge to Disciplinary Order - The court held that the challenge to the composition of the Disciplinary Committee raises a jurisdictional issue, which can be examined by the High Court under Article 226. However, on merits, the court found no infirmity in the order passed by a single whole-time member. (Paras 2, 13)
Issue of Consideration
Whether the Disciplinary Committee constituted under Section 220(1) of the Insolvency and Bankruptcy Code, 2016, can consist of a single whole-time member, or must it consist of more than one member?
Final Decision
The writ petition is dismissed. The order dated 3 July 2023 passed by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India, suspending the petitioner's registration for one year, is upheld. The court held that a Disciplinary Committee consisting of a single whole-time member is permissible under Section 220(1) of the Insolvency and Bankruptcy Code, 2016, read with Section 13 of the General Clauses Act, 1897, and the Regulations of 2017 are consistent with the Code.
Law Points
- Interpretation of statutes
- Plural includes singular
- General Clauses Act
- 1897
- Section 13
- Insolvency and Bankruptcy Code
- 2016
- Section 220(1)
- Disciplinary Committee
- Whole-time members
- Regulations cannot override parent Act
- Delegated legislation
- Parliamentary scrutiny
Case Details
2024 LawText (BOM) (9) 42
Writ Petition (Lodging) No.20352 of 2023
A.S. Chandurkar, Rajesh S. Patil
Mr. Pratik Sarkar, Advocate, i/by Vidhi Legal, for the Petitioner; Mr. Pankaj Vijayan with Mr. Ameya Bandivadekar, Advocates for the Respondent
Insolvency & Bankruptcy Board of India
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Nature of Litigation
Writ petition under Article 226 of the Constitution of India challenging the order of the Disciplinary Committee of the Insolvency and Bankruptcy Board of India suspending the petitioner's registration as an Insolvency Professional for one year.
Remedy Sought
The petitioner sought quashing of the order dated 3 July 2023 passed by the Disciplinary Committee, on the ground that the Committee was not validly constituted as it consisted of a single whole-time member, contrary to the proviso to Section 220(1) of the Insolvency and Bankruptcy Code, 2016.
Filing Reason
The petitioner was issued a show cause notice under Section 219 of the IBC based on an investigation report, and the Disciplinary Committee, consisting of a single whole-time member, adjudicated the notice and suspended the petitioner's registration for one year. The petitioner challenged the composition of the Committee as being ultra vires the Code.
Previous Decisions
The show cause notice was adjudicated by the Disciplinary Committee on 3 July 2023, resulting in the suspension of the petitioner's registration for one year. No prior decisions were mentioned.
Issues
Whether the Disciplinary Committee constituted under Section 220(1) of the Insolvency and Bankruptcy Code, 2016, can consist of a single whole-time member?
Whether the definition of 'Disciplinary Committee' in Regulation 2(1)(c) of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017, is consistent with the proviso to Section 220(1) of the Code?
Submissions/Arguments
Petitioner: The proviso to Section 220(1) uses the plural 'members', indicating that the Disciplinary Committee must consist of more than one whole-time member. The Regulations cannot override the parent Act, and reliance was placed on Kunj Behari Lal Butail, Kerala State Electricity Board, and Bharathidasan University. An interim order of the Gujarat High Court in Bhupendra Singh Rajput was also cited.
Respondent: Under Section 13 of the General Clauses Act, 1897, the plural includes the singular. The Regulations define 'Disciplinary Committee' as a committee of 'whole-time member(s)', which permits a single member. The Regulations are consistent with the Code and were placed before Parliament. Reliance was placed on Jagdish Singh, Premachandran Keezhoth, and Gambhirdan K. Gadhvi.
Ratio Decidendi
The proviso to Section 220(1) of the Insolvency and Bankruptcy Code, 2016, uses the plural expression 'members', but by virtue of Section 13 of the General Clauses Act, 1897, the plural includes the singular unless there is anything repugnant in the subject or context. There is no repugnancy, and therefore, a Disciplinary Committee consisting of a single whole-time member is valid. The definition of 'Disciplinary Committee' in Regulation 2(1)(c) of the 2017 Regulations, which uses 'whole-time member(s)', is consistent with the Code and does not travel beyond it.
Judgment Excerpts
Under the proviso to Section 220(1) of the Code, it has been clearly stipulated that the Disciplinary Committee would consist of 'whole-time members' which indicated that such Committee ought to comprise of more than one whole-time member.
The use of the expression 'members' and 'whole-time members' in the proviso to Section 220(1) of the Code implied that the said plural expression would also include a singular member.
On a plain reading of Section 220(1) of the Code it is clear that the IBBI is empowered to constitute a Disciplinary Committee for considering the reports of the Investigating Authority that have been submitted under Section 218(6) of the Code.
Procedural History
The petitioner, an Insolvency Professional, was issued a show cause notice under Section 219 of the IBC on 16 May 2023, based on an investigation report. The petitioner responded to the notice. The Disciplinary Committee, consisting of a single whole-time member, adjudicated the notice and passed an order on 3 July 2023, suspending the petitioner's registration for one year. The petitioner filed a writ petition under Article 226 of the Constitution of India before the Bombay High Court challenging the order. The petition was heard on 30 July 2024 and judgment was pronounced on 4 September 2024.
Acts & Sections
- Insolvency and Bankruptcy Code, 2016: Section 196, Section 218(6), Section 219, Section 220(1), Section 240, Section 241
- General Clauses Act, 1897: Section 13
- Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017: Regulation 2(1)(c), Regulation 13
- Constitution of India: Article 226
