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Madras High Court Explores the Boundaries of Valuation Report Sharing by Resolution Professionals


In the case, Ad. (CA) V. Venkata Siva Kumar v. Insolvency and Bankruptcy Board of India & Ors.[i] involves, the petitioner, a resolution professional (‘RP’) facing a show-cause notice (‘SCN’) from the Insolvency and Bankruptcy Board of India (‘IBBI’) alleging unauthorized sharing of valuation reports (‘VRs’) during the liquidation. The petitioner filed the writ petition (‘WP’) under a. 226 of the Constitution of India, 1949 (‘Constitution’) before the High Court of Madras (‘HC’), which affirmed the suspension of the RP’s authorization during the pendency of disciplinary investigations, albeit allowing him an opportunity to defend himself during the inquiry.

Brief Facts

  • The petitioner faced the SCN from the IBBI under s. 219 of the IBC read with reg. 11 and 12 of the IBBI (Inspection and Investigation) Regulations, 2017. The allegation was that the petitioner, in his capacity as the liquidator for M/s Jeypore Sugar Limited, improperly shared VRs with potential scheme proponents, leading to uniform pricing submissions.

  • The SCN resulted in the automatic suspension of the Authorization for Assignment (‘AFA’) of the RP under reg. 23A of the Model Byelaws and Governing Board of Insolvency Professional Agencies Regulations, 2016. The petitioner challenged the SCN.

  • The petitioner contended that the IBBI lacked authority over a liquidator appointed by the National Company Law Tribunal (‘NCLT’) and challenged the SCN’s validity on multiple grounds, including mala fide intent, dismissal of the complainant’s case, and ongoing proceedings before the National Company Law Appellate Tribunal (‘NCLAT’).

  • The petitioner argued that sharing pertinent information with stakeholders is a liquidator’s duty, as per s. 230 of the Companies Act, 2013. The petitioner also questioned the suspension of the AFA without a hearing.

  • The respondent argued that the IBBI has the authority under s. 218 of the IBC to initiate action based on information from any source, not limited to complaints under s. 217 of the IBC. They contended that the petitioner’s defence, raised prematurely, should be presented before the IBBI, challenging the jurisdiction to issue the SCN. The petitioner’s reliance on s. 217 of the IBC was countered, stating that s. 218 of the IBC operated independently and is not bound by decisions under s. 204 of the IBC. The HC, invoking a. 226 of the Constitution, could not examine the defence to the SCN, as the IBBI was the proper forum to consider materials and defences raised by the petitioner. 


  • The HC upheld the automatic suspension during disciplinary proceedings, thus, dismissing the WP. The HC primarily focused on the legal merits of the case rather than personal animosities between the parties. It highlighted the IBC’s scheme, emphasizing that sharing the VRs of a corporate debtor (‘CD’) is not explicitly authorized, especially during liquidation.

  • The HC also highlighted that prima facie, the petitioner admitted to sharing the VRs gave grounds for the IBBI to issue the SCN. The sequence of events was also taken into consideration starting from the appointment of the petitioner as RP, the failure of the corporate insolvency resolution process, leading to the liquidation proceedings, followed by the complaints against the petitioner. The HC further concluded that, once the petitioner becomes a liquidator, the role of the Indian Institute of Insolvency Professionals of the Institute of Chartered Accountants of India (‘IIIP/ICAI’) ceases. However, the HC lastly observed that the petitioner retained the liberty to present his defence during the disciplinary inquiry.


The HC, in its decision, emphasizes the critical framework within the IBC regarding the lack of explicit authorization for sharing a CD’s VRs during the liquidation phase. It notes that upon assuming the role of a liquidator, the petitioner is primarily governed by the IBBI regulations, signifying a significant shift in regulatory focus from the IIIP/ICAI guidelines. This change reflects the HC’s dedication to clearly delineating the roles and responsibilities in insolvency proceedings, thereby ensuring a precise and unambiguous framework.

This decision also clarifies the overlap between the IBC and the Companies Act, 2013 in liquidation proceedings and upholds the IBBI’s authority to initiate disciplinary action despite IIIP/ICAI’s rejection of the complaint.

End Note

[i] [2024] 158 217 (Madras) dated 22.12.2023.

Authored by Shivam Mishra, Advocate at Metalegal Advocates. The views expressed are personal and do not constitute legal opinion.


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