Poonam Basak v. Union of India & Ors.

The principal issue revolved around the determination of whether the IBBI Chairperson could be considered a de-facto Whole Time Member, thus conferring the necessary jurisdiction to pass the impugned order.

Summary:

In the Writ Petition (L) No. 23016 of 2023, Poonam Basak challenged the Order dated 11th August 2023, emanating from the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI). The core contention pertained to the jurisdictional authority of the body that rendered the impugned decision. The petitioner contended that the said order, along with specific provisions of the Insolvency and Bankruptcy Code, 2016 (IBC, 2016), specifically Sections 7(5) and 9(5), transgressed constitutional boundaries, alleging arbitrariness, illegality, and violation of the Constitution of India.

Facts of the Case:

At the heart of the matter was the interpretation of Section 220(1) of the IBC, 2016. This section unequivocally mandates that the Disciplinary Committee should exclusively comprise Whole Time Members of the IBBI. Poonam Basak contended that the impugned order was issued by the IBBI Chairperson, Mr. Ravi Mital, who, according to the petitioner, lacked the status of a Whole Time Member, thereby challenging the order’s legitimacy.

Issues Raised:

The principal issue revolved around the determination of whether the IBBI Chairperson could be considered a de-facto Whole Time Member, thus conferring the necessary jurisdiction to pass the impugned order.

Legal Analysis:

A meticulous analysis of Section 189 of the IBC, 2016 was pivotal. This provision outlines the composition of the IBBI, categorically demarcating various members, including the Chairperson and Whole Time Members. The petitioner’s argument that the Chairperson could be construed as a de-facto Whole Time Member was meticulously examined.

However, the Court, upon scrutiny, rejected this assertion. Section 189 clearly delineates distinct categories, emphasizing the separation between the Chairperson and Whole Time Members. Notably, the nomination of Whole Time Members by the Central Government, as stipulated in Section 189(1)(d), distinctly separates them from the Chairperson’s appointment under Section 189(1)(a). The Court’s opinion, prima facie, established that the Chairperson did not possess the jurisdiction to issue the impugned order, rendering it legally questionable.

Conclusion and Court Order:

Given the apparent lack of jurisdiction, the Court granted ad-interim relief, thereby restraining the respondents from executing the impugned order. Furthermore, due to the constitutional challenge posed against Sections 7(5) and 9(5) of the IBC, 2016, the Court issued a notice to the Attorney General of India. The case has been scheduled for Admission on 27th September 2023, signifying a pivotal legal development in this matter.

[1] https://ksandk.com/wp-content/uploads/2023/10/Judgement-1.pdf