IBBI suspends IP for Non-Submission of Supporting Documents with CoC meeting Notices and Failure to Verify Claims of Homebuyers [Read Order]

The Insolvency Board of India (IBBI) has suspended the Insolvency Professional (IP) for 2 years for non-submission of supporting documents with the CoC meeting notices. Also, the IP has failed to verify the claims of the homebuyers. The application made by M/s Wadhwa Buildcon LLP (CD I) under section 7 of the Code for Corporate Insolvency Resolution Process (CIRP) was approved by the National Company Law Tribunal (NCLAT) bench in Chennai (AA). The first Code of Conduct (CoC) meeting recommended Mr. Vishal Ghisulal Jain was appointed as an RP, and the NCLAT bench approved the appointment. The IBBI has conducted the investigation by appointing the Inspecting Authority (IA-1) and Inspecting Authority (IA-2) to conduct the inspection of Corporate Insolvency Resolution Process (CIRP). The major allegation raised against the RP was the non-submission of the supporting documents with the CoC meeting notices. The RP has submitted that it has been alleged that he has failed to provide supporting documents along with the notices of the CoC meetings, but it is not mentioned which supporting documents and serial number of meetings the documents have not been provided. According to RP, it was a baseless and unsubstantiated allegation by the Bank of India. The Disciplinary Committee (DC) analysed the submissions of the RP and noted that if there was any confusion in the mind of RP as to which document IA is asking, he should have contacted IA and sought clarification instead of not submitting reply on the ground that it was not clear which documents are sought. Another allegation was the failure to verify the claims of the home buyers. The Board has observed that the claims of Rs. 219.72 crores, i.e., the claim of 152 homebuyers has been admitted by the RP without verification. The Board held the prima facie view that the RP has inter alia contravened section 25(2)(e) of the Insolvency and Bankruptcy Code, regulation 13(1) of the CIRP Regulations read with clauses 1 and 14 of the Code of Conduct. In response to the allegation, the RP submitted that there is no basis to state that the claim of 152 Home Buyers has been admitted by him without verification. The RP has not been required to check if the proceeds received from Home Buyers are routed through the escrow account. According to the RP, it is to be checked by the Bank of India after disbursing the loan. The Bank is the FC of the CD, it is on them to cross-tally with their escrow account and raise any red flags, which they have failed to do. The RP has to only collate the claims as per the proof and the books of account, which he has diligently done. However, the DC observed that as a part of due diligence, RP should have cross checked the claim received from Home Buyers. The plea taken by RP that he is not required to check whether or not the proceeds received from Home Buyers are routed through the escrow account, cannot be accepted. Along With other allegations against the RP, the DC observed that Mr. Vishal Ghisulal Jain has contravened provisions of the Code and Regulations made thereunder with respect to verification of claim with supporting documents, constitution of CoC, giving notice for CoC meeting with minimum time, and enclosing supporting documents while sending notice for CoC meetings. Thus, suspended for 2 years. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

IBBI suspends IP for Non-Submission of Supporting Documents with CoC meeting Notices and Failure to Verify Claims of Homebuyers [Read Order]

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IBBI suspends IP for Non-Submission of Supporting Documents with CoC meeting Notices and Failure to Verify Claims of Homebuyers [Read Order]

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