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The counsel for the banker argued that the petitioner had subsequently paid the penalty and had earned a good reputation in the banking sector. Furthermore, he claimed that the proceedings initiated by SEBI for the recovery of the penalty were civil in nature and not criminal, and they occurred 11 years ago
The Delhi High Court has recently rejected a petition filed by a banker who challenged the denial of registration by the Insolvency and Bankruptcy Board of India to be registered as an insolvency professional, observing that good character and reputation are important qualifications for being an insolvency professional.
“Discretion has been given to the Board to ensure that the corporate insolvency process is clean and free. Good reputation and character of a person is very important for appointment as an Insolvency Professional. The decision to determine as to whether a person is fit and proper to be appointed as Insolvency Professional is based on the subjective satisfaction of the Board,” the order reads.
The single-judge bench of the high court presided over by Justice Subramanium Prasad, considered the plea of a banker who was denied registration by IBBI.
The denial was based on the banker's penalty by SEBI for violating Insider Trading Regulations, leading to an order to pay Rs. 1 crore. The banker had appealed this decision to the Securities Appellate Tribunal and the Supreme Court, but both appeals were rejected.
The IBBI cited this penalty as a reason for rejecting the banker's application for registration as an insolvency professional.
The banker, in addition to being penalized by SEBI, had defaulted in paying the specified amount, leading to the initiation of criminal proceedings against him. The banker challenged these criminal proceedings before the Calcutta High Court and the Supreme Court, but both challenges were dismissed.
The counsel for the banker argued that the petitioner had subsequently paid the penalty and had earned a good reputation in the banking sector. Furthermore, he claimed that the proceedings initiated by SEBI for the recovery of the penalty were civil in nature and not criminal, and they occurred 11 years ago.
However, the counsel for the board emphasized the crucial role of insolvency professionals under the Insolvency and Bankruptcy Code (IBC) and argued that only individuals with an unblemished reputation should be appointed as Insolvency Professionals.
The high court, in dismissing the appeal, stated that the decision of the Board not to permit the petitioner to function as an Insolvency Professional cannot be considered arbitrary.
“The fact that the financial irregularity occurred 11 years ago and that the Petitioner has already paid the penalty for the same. Though the Petitioner might be eligible to be considered to be appointed as an Insolvency Resolution Professional but the decision of the Board not to permit the Petitioner to function as an Insolvency Professional cannot be said to be arbitrary. The allegations against the Petitioner were serious,” the order reads.
The bench also said that it is for the experts to decide as to who is best and most qualified for a particular job
“The question of adjudging as to whether a person is suitable for a particular job or not should be left to the appointing authority and more particularly when the appointing authority consists of experts. It is for the experts to decide as to who is best and most qualified for a particular job. The antecedents of a person is an important criterion to decide as to whether the said person is suitable for the post or not,” the order states.
Senior Advocates Viraj R. Datar along with Advocates Saurav Joon, Natasha Gupta, Vishal Ganda, Akanksah Mathur, and Rahul Narula appeared for the petitioner.
Asheesh Jain, CGSC with Keshav Sehgal, GP and Gaurav Kumar, Ankita Kedia & Ria Khanna appeared for the respondents.
Case title: Pooja Meghani vs IBBI
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