Conviction And Bar Suspension Disqualify Counsel From Appearance In Liquidation Matters: NCLAT Chennai

The Chennai Bench of the National Company Law Appellate Tribunal (NCLAT) on 24 April held that R. Subramaniam, who had long represented the Liquidator of Cethar Ltd., could not continue as counsel in view of conflict of interest concerns, non-disclosure obligations under the Insolvency framework, suspension of his licence, and subsequent criminal conviction.

A Bench of Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain dismissed the appeal filed by V. Nagarajan, Resolution Professional and Liquidator of Cethar Ltd. It observed:

“If this be the intention of law, where induction of a Law Graduate or an Individual as a Professional is being held to be disqualified because of his conviction, in that eventuality, a Professional who after his Registration is determined as to be a convict in a criminal offence, as the case at hand, that he would be disentitled to represent the cause of the Appellant and this will apply in full in the instant case.”

Since 2018, Subramaniam had been engaged by the Liquidator to represent him in proceedings against ICICI Bank. Questions over his eligibility arose after it was revealed that he was himself a judgment debtor with liabilities towards multiple banks.

The Liquidator had filed multiple applications through Subramaniam, who continued to act as counsel in the proceedings. One of the key issues before the Tribunal was his failure to disclose material relationships as required under Regulation 7(3) of the Insolvency and Bankruptcy Board of India (IBBI) Liquidation Process Regulations, 2016.

The regulation mandates disclosure of any pecuniary or personal relationship with stakeholders or the corporate debtor by professionals assisting a liquidator. The Tribunal found that Subramaniam did not comply with this requirement, which went to the root of his engagement.

Subsequently, the Liquidator filed another application seeking continuation of Subramaniam as counsel after disclosure of his relationship with ICICI Bank. However, affidavits on record showed that he had long-standing liabilities to around 12 banks arising from his role as guarantor and managing director of companies during 2008–2009.

The NCLT had earlier held that Subramaniam was not competent to act as a professional under Regulation 7(3). It also noted that valid representation in judicial proceedings requires proper enrolment with the Bar Council, which itself became contentious in the case.

The issue was further compounded when Subramaniam's licence to practise as an advocate was suspended by the Bar Council. He was also subsequently convicted in criminal proceedings before the Special Judge, Chennai.

In view of the conviction, the Tribunal noted that he stood legally disentitled to act as an advocate. It referred to Section 24A of the Advocates Act, 1971, which disqualifies a person convicted of an offence from enrolment as an advocate, and held that continued professional engagement after conviction was impermissible.

Accordingly, the NCLAT dismissed the appeal as being without merit.

For Appellants: Advocate Santosh

For Respondents: Senior Advocate E Om Prakash