Mere Conferment of Authority on IBBI and IPA for Supervision Control u/s 204 Can’t be Held as Conferring Excessive Power | HC

Case Details: V Venkata Sivakumar v. Insolvency and Bankruptcy Board of India - [2024] 160 taxmann.com 502 (HC-Madras)

Judiciary and Counsel Details

• • Sanjay V. Gangapurwala, CJ. & D. Bharatha Chakravarthy, J.
  • V. Venkata Sivakumar, CA for the Petitioner. & Others.
  • Sankaranarayanan, C.V. Ramachandramurthy, Rajesh Vivekanandan & K. Subburanga Bharathi for the Respondent. & Others.

Facts of the Case

In the instant case, the petitioner was a member of both the Institute of Chartered Accountants of India (ICAI) and the IBBI. The petitioner made an application under Regulation 7A of the IBBI regulations to the Institute of Insolvency Professionals of ICAI (IPA), however, the IPA rejected the said application.

Consequently, the petitioner filed an appeal before the membership committee, and a show cause notice was issued by the IBBI, calling upon the petitioner to show cause as to why suitable disciplinary action was not to be taken against him for contravention of section 208 of the IBC.

In addition to this, the petitioner also received a show cause from IPA, proposing to take disciplinary action for the violations mentioned. The petitioner filed instant writ petitions praying for the issuance of a writ of declaration that section 204 is ultra vires, Articles 14, 19 (1)(g) and 21 of the Constitution on the ground that the said regulation granted uncontrolled powers to the Board and the Agency.

Further, the petitioner submitted that the IBBI as well as the IPAs initiated parallel proceedings in respect of the same action and if punishment was imposed twice, the same would constitute double jeopardy.

High Court Held

The High Court noted that, if for a particular act of delinquency, for the very same charge, any individual is punished twice or second proceedings are initiated, then such second punishment or proceedings alone can be challenged. However, on that ground, the provision of law itself cannot be challenged.

The High Court held that the mere conferment of authority on the IBBI and IPAs for supervision control and disciplinary proceedings by itself cannot be held to be conferring of unbridled power as section 204 cannot be said to be a confirmation of excessive or unbridled power.

Further, the High Court held that since, section 204 is only an enabling provision, there is no constitutional infirmity in any of the provisions under section 204 (a) (b) (c) (d) and (e) of the IBC. Therefore, the instant petition was to be dismissed.