Case Digest on IBBI Misconduct Stories

The Insolvency and Bankruptcy Board of India ( IBBI ) is the regulator for overseeing insolvency proceedings and entities like Insolvency Professional Agencies ( IPA ), Insolvency Professionals (IP) and Information Utilities (IU) in India. It was established on 1 October 2016 and given statutory powers through the Insolvency and Bankruptcy Code, which Lok Sabha passed on 5 May 2016. The IBBI falls under Insolvency and Bankruptcy Code, 2016 and regulates the profession as well processes related to insolvency and bankruptcy. It covers Individuals, Companies, Limited Liability Partnerships and Partnership firms. IBBI will have 10 members, including representatives from the Ministries of Finance, Law and corporate affairs, and the Reserve Bank of India. It is the governing body for all Insolvency Resolution Professionals, Insolvency Professional Agencies and Information Utilities. It helps to implement the provision of the IBC and acts to amend any law under it to suite the current challenges. It works towards resolving any insolvency for corporates, individuals and partnership firms in a time bound fashion to maximize the value of insolvent entity and give back the due amount to the creditors. Every misconduct of a debtor, a creditor, a resolution applicant or any other person, as may be noticed by any Division of the IBBI in the discharge of its functions, shall be referred to the Prosecution Division. Sections 196 and 217 to 220 of the Code empower the IBBI to conduct inspection or investigation of service providers. Without the cooperation of the key stakeholders, namely, debtors, creditors and resolution applicants, it is difficult to meet the timelines provided under the Code and to complete a process successfully, particularly if any of them is mischievous. IBBI Disciplinary Committee orders Resolution Professional to disclose Voting pattern and File Relationship disclosure. The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) ordered the Resolution Professional (RP) to disclose voting patterns and file relationship disclosure. The Disciplinary Committee observes that Circular No. IP/005/2018 dated 16.01.2018 requires filing of relationship disclosures by IP. The DC notes that Mr. Pramod Kumar Sharma did not file the relationship disclosure timely with respect to one M/s BDO India LLP which was to carry out a forensic audit of the CD. The disclosure was delayed and made on 09.07.2020. Mr. Pramod Kumar Sharma has admitted that there was a delay in filing the relationship disclosure. The DC therefore, finds that Mr. Pramod Kumar Sharma complied with requirements of Circular No. IP/005/2018 dated 16.01.2018 by filing the relationship disclosure form on 09.07.2020. IBBI to conduct Disciplinary Proceedings against IPA as per IBBI (Inspection & Investigation) Regulations, 2017. The Insolvency and Bankruptcy Board of India (IBBI) notified on Tuesday that disciplinary proceedings against IPA are to be conducted as per IBBI (Inspection & Investigation) Regulations, 2017. A notification issued by the Board on 4th July stated that the IBBI (Insolvency Professional Agencies) (Amendment) Regulations, 2022 to further amend the IBBI (Insolvency Professional Agencies) Regulations, 2016. Treating all Resolutions as Approved, in Absence of Confirmation by Member of CoC is Against Spirit of IBC: IBBI Suspends Registration of IP. The Insolvency and Bankruptcy Board of India (IBBI) suspended the Registration of an Insolvency Professional (IP), Anand Chandra Swain and noted that treating all resolutions as approved, in absence of confirmation by member of Committee of Creditors (CoC) is against spirit of the Insolvency and Bankruptcy Code, 2016 (IBC). “The Disciplinary Committee (DC), in exercise of the powers conferred under section 220 (2) of the Code read with Regulation 13 of the Inspection Regulations hereby suspends the registration of Mr. Anand Chandra Swain for a period of one year” the Bench noted. IBBI punishes Insolvency Professional for violation of Code, Directs to Undergo Pre-registration Educational Course. The Insolvency and Bankruptcy Board of India ( IBBI ) has imposed a penalty equal to one hundred percent of the total fee payable to him as IRP and as RP in the CIRPs on an Insolvency Professional for the violation of the Insolvency and Bankruptcy Code. In fact, it is unimaginable that an IRP, who is in control of the CD for the last four months, suddenly finds that the CD did not co-operate and he had to resign even without using section 19 of the Code. It is preposterous that Mr. Kejriwal invited resolution plans from only one operational creditor and allowed it only four days to submit resolution plan, as against the statutory requirement of the invitation of resolution plans form prospective lenders and investors,” the order said. IBBI restores Registration of Suspended Registered Valuer Entity in view of Stay Order from Bombay HC. The Insolvency and Bankruptcy Board of India (IBBI) has recently restored the registration details of the registered valuer Entity Since the matter was sub judice t by the stay order of the Bombay High Court. The authority held that since the subject matter is sub-judice with the High Court of Bombay, it will not be appropriate to go into the merits of the suspension order of the director who is also a registered valuer or the RV-E. Considering the decision of the High Court, the Authority suspended the operation of IBBI’s Order. The registration details of the RVE shall be restored in the records of IBBI. Valuation Conducted Beyond Prescribed Timelines is violative of Insolvency Bankruptcy Code: IBBI suspends Registration of IP. The Insolvency and Bankruptcy Board of India (IBBI) has valuation conducted beyond prescribed timelines is violative of Insolvency Bankruptcy Code and suspended the registration of Insolvency Professional. Mr Sutanu Sinha is the Insolvency Professional (IP) under section 220 of the Insolvency and Bankruptcy Code, 2016 read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017. Furthermore, there is a lack of objectivity, transparency, justification and reasonableness in the fixation on the fee of IPE as support services. The Disciplinary Committee, in the exercise of the powers conferred under section 220 (2) of the Code read with Regulation 13 of the Inspection Regulations suspended the registration of Mr Sutanu Sinha having registration No. IBBI/IPA-003/IP-N00020/2017-2018/10167 for a period of one year. IBBI issues Proforma for Reporting Liquidator’s Decision Different from Advice of Stakeholders’ Consultation Committee Insolvency and Bankruptcy Board of India ( IBBI ) issued Proforma for reporting liquidator’s decision(s) different from the advice of Stakeholders’ Consultation Committee (SCC) under proviso to sub-regulation (10) of regulation 31A of IBBI (Liquidation Process) Regulations, 2016. “The insolvency professionals are directed to make use of the aforesaid proforma for reporting to the Board and Adjudicating Authority, under proviso to sub-regulation (10) of regulation 31A. 4. This Circular is issued in exercise of the powers under section 196 of the Insolvency and Bankruptcy Code, 2016,” IBBI said. RV Misconduct: IBBI warns Valuer to be Diligent for leaving important indices in Preparation of Valuation Report. The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) has recently warned a registered valuer to be diligent as he had left out some important indices in preparation of valuation report. Inter alia, the Disciplinary Committee (DC) observed “The valuation report must be transparent and complete in itself such that there is no iota of doubt in the minds of stakeholders while referring a valuation report.” The DC went on to dispose of the Show Cause Notice, with a word of caution to the RV for being careful and diligent, in future, in preparation of the valuation report in such a manner that all the material information be provided in the valuation report itself to make the document complete in itself, leaving nothing at the discretion or judgement or interpretation of the stakeholders who intend to use it during the process. IBBI clarifies Resolution Plan Implementation and Billing Compliance for IPs The Insolvency and Bankruptcy Board of India ( IBBI ) has issued clarification regarding the professional service rendered by an IP in implementation of the resolution plan approved by the Adjudicating Authority along with compliance regarding billing / invoicing for services availed by IP from professionals on 1st February 2024. The circular is being issued in exercise of the powers conferred under the provisions of section 196 of the Insolvency and Bankruptcy Code, 2016. It’s important to highlight that, as per the terms of engagement or prevailing market practices, the bill or invoice may also be issued in the name of the firm where the individual professional appointed by the IP is a partner. Therefore, it is deemed wise to clarify that issuing the bill or invoice in the name of the firm would sufficiently comply with the regulation by the IP. Failure to take Custody and Control of Assets of CD: IBBI Suspends Registration of IP Due to suspected violations of the CIRP norms and the Insolvency and Bankruptcy Code (IBC), the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) has suspended the registration of an Insolvency Professional (IP) for one year. The Board found that violated sections 18(1)(f), 25(1) and 25(2)(a) of the Code, regulation 7(2)(a) and 7(2)(h) read with clause 3, 5 and 14 of the Code of Conduct of IP Regulations. Further the exercise of the powers conferred under section 220(2) of the Code read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 suspended the registration of IP for a period of one year. IBBI Suspends Insolvency Professional for One Year for Charging Exorbitant Fee. The Insolvency and Bankruptcy Board of India ( IBBI ) has suspended an Insolvency Professional for one year on ground of charging exorbitant fee from an operational creditor for her services as IRP/RP. In the instant case, Ms. Ruia contracted a professional fee of Rs.13.75 crore comprising IRP fee of Rs.5 crore for the first one month and RP fee @ Rs.1.75 crore for five subsequent months. As per the term sheet and also the provisions of regulation 33 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, that the amount of fee ratified by the CoC shall be considered as the IRPC. The DC, accordingly, concluded that Ms. Ruia has contravened the provisions of clauses 1, 2, 5, 10, 12, 24, 25 and 27 of the Code of Conduct for Insolvency Professionals under the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 read with regulation 7(2)(b) of the said Regulations and section 20 of the Code. IBBI suspends Insolvency Professional for Non-cooperation with Inspecting Authority Insolvency and Bankruptcy Board of India ( IBBI ) suspended Insolvency Professional for non-cooperation with inspecting authorities. In the matter of Mr Ranjeet Kumar Verma, Insolvency Professional (IP) under section 220 of the Insolvency and Bankruptcy Code, 2016 read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017. Further observed that Mr Ranjeet Kumar Verma has violated sections 208(2)(a) and 218(3) of the Code, regulations 4(4) and 4(7) of the Inspection Regulations, regulation 7(2)(a) and 7(2)(h) of IP Regulations read with clauses 1, 2, 12, 13, 14, 15, 18, 19 and 20 of the Code of Conduct. The Adjudicating Authority suspended the registration of Mr Ranjeet Kumar Verma having Registration No. IBBI/IPA-002/IPN00301/2017-18/10859 for a period of one year. Professional Misconduct: IBBI warns IP for alleged Bribe Demand and Non-Cooperation with Inspecting Authority. The Disciplinary Committee of the Insolvency and Bankruptcy Board of India ( IBBI ) has issued a warning to an Interim Professional for alleged bribery demands and non-cooperation with the inspecting authority. The National Company Law Tribunal ( NCLT ), Mumbai Bench (AA), admitted an application under section 7 of the Code to initiate the Corporate Insolvency Resolution Process ( CIRP ) of Shree Ram Urban Infrastructure Limited (CD). Insolvency Professional (IP) Srigopal Choudhary was appointed as the Interim Resolution Professional ( IRP ). Due to the non-cooperation contravention described, the Disciplinary Committee warned Mr. Srigopal Choudhary to be extremely careful and ensure compliance with the provisions of the Code and its underlying regulations when performing his duties as an IP. The Adjudication Division of the Board was instructed to keep this Order on active record as negative points against him, warranting continuous vigilance. The Board will also monitor other cases handled by him to deter him from repeating such mistakes. IBBI Debars Insolvency Professional from Practice for Ninety Days The disciplinary committee of the Insolvency and Bankruptcy Board of India (IBBI), on last week, passed an interim order debarring an Insolvency Professional from practicing. The Board, in January, appointed the Inspecting Authority to conduct an inspection of Mr. Mukesh Mohan, Insolvency Professional on suspicion of violation of the provisions of the Insolvency and Bankruptcy Code. On the above charges, the disciplinary committee upheld its interim order debarring Mr. Mukesh from undertaking any new assignment, either as an Interim Resolution Professional, Resolution Professional, Liquidator or otherwise, under the Code. A copy of the order was later forwarded to the Indian Institute of Insolvency Professional of ICAI where Mr. Mukesh Mohan is enrolled as its member. Non-Counting Votes of Two Major CoC Members i.e Union Bank of India and Bajaj Finserv: IBBI suspends IP The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) suspended an Insolvency Professional (IP), Poonam Basak, on the ground of non-counting votes of two major the Committee of Creditors (CoC) members i.e. Union Bank of India and Bajaj Finserv. “In view of the above, the DC holds that Ms. Poonam Basak has grossly failed to act as per the objective and mandate of the Code i.e., resolution and CoC as decision making body. Thus, the DC, in exercise of the powers conferred under section 220(2) of the Code read with IBBI (Insolvency Professionals) Regulations, 2016 and the IBBI (Inspection and Investigation) Regulations, 2017, hereby, suspends the registration of Ms. Poonam Basak” the Board concluded. IBBI mandates Insolvency Professional to Disclose Relationship with Stakeholders within three days With a view to bringing transparency, the Insolvency and Bankruptcy Board of India (IBBI), in a circular issued on Tuesday, said that an Insolvency Professional shall, within the time stipulated, should disclose his relationship with the following persons, namely, (i) the Corporate Debtor, (ii) other Professional(s) engaged by him, (iii) Financial Creditor(s), (iv) Interim Finance Provider(s), and (v) Prospective Resolution Applicant(s) to the Insolvency Professional Agency of which he is a member. “The Insolvency Professional shall ensure timely and correct disclosures by him and the other Professionals appointed by him. Any wrong disclosure and delayed disclosure shall attract action against the Insolvency Professional and the other Professional as per the provisions of the law,” it added. Failure of IP to Represent CD for Conveying Interest is Violative of S. 25(2)(b) of IBC: IBBI The Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI) held that failure of the Insolvency Professional (IP) to represent the Corporate Debtor (CD) for conveying interest amounts to a violation of Section 25(2)(b) of the Insolvency and Bankruptcy Code (IBC). It was viewed that Section 25(2)(b) of the Code provides that the RP is to represent and act on behalf of the CD with third parties and exercise rights for the benefit of the CD in judicial, quasi-judicial or arbitration proceedings. It was the duty of the RP to represent the CD before the Courts/Tribunals and apprise the factual position of the CD. The Disciplinary Committee (DC) comprising Ravi Mital, (Chairperson) disposed of the SCN with the advice to diligently perform his functions provided under the Code. RP Misconduct: IBBI imposes Five Lakh Rupees fine for Conducting CoC Meetings without Sole Financial Creditor The Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI) has recently imposed a fine of Rupees Five Lakhs on Insolvency Professional Sonu Jain along with a probation period of four months. The Authorisation for Assignment (AFA) of the Resolution Professional (RP) was also suspended till the completion of the said probation period. The alleged contravention of the provisions of the Insolvency and Bankruptcy Code, 2016 was raised in respect of four corporate debtors. It was thus observed by the DC that, Ms. Sonu Jain was conducting CIRP and Liquidation proceedings in a very casual and careless manner which is not at all expected from an Insolvency Professional in matters of keeping records and submitting them to the Inspecting Authority. The declaration of CoC being in order with aid of operational creditors, despite the absence of the sole financial creditor, is a serious contravention, as observed by the board and was imposed with the fine and probation. IBBI Issues Circular regarding Payment of Credit fees to Board by IPs and IPEs The Insolvency and Bankruptcy Board of India ( IBBI ) has issued a circular regarding the payment of credit fees by the Insolvency professionals (IPs) and Insolvency Professional Entities (IPEs) to the Board. “The fee referred to in the annexure, for which online payment module is not yet implemented, shall be credited to bank account of the Board, as per details below:- Beneficiary Name : Insolvency and Bankruptcy Board of India Bank: Punjab National Bank A/c No. : 0128002100302250 IFSC : PUNB0112000 Branch : ECE House, Connaught Place, New Delhi-110001 GST Number:07AAAGI0193K1ZD,” the Board added. IBBI is the regulator for overseeing insolvency proceedings and entities like Insolvency Professional Agencies, Insolvency Professionals and Information Utilities in India. IBBI, SEBI sign MoU for better implementation of IBC The Insolvency and Bankruptcy Board of India (IBBI) signed a Memorandum of Understanding (MoU) today with the Securities and Exchange Board of India (SEBI). The IBBI and the SEBI seek effective implementation of the Insolvency and Bankruptcy Code, 2016 (Code) and its allied rules and regulations, which have redefined the debt-equity relationship and aims to promote entrepreneurship and debt market. They have agreed under the MoU to assist and co-operate with each other for the effective implementation of the Code, subject to limitations imposed by the applicable laws. The MoU was signed by Shri Anand Baiwar, Executive Director, SEBI, and Shri Ritesh Kavdia, Executive Director, IBBI, at Mumbai. Failure to Inform Cessation of Director / Partner of Insolvency Professional Entity would attract Penalty: IBBI The Insolvency and Bankruptcy Board of India ( IBBI ) has clarified the procedure for the compliance of regulation 13 (2) of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. The circular issued by the Board on 31st August clarified that failure on the part of an Insolvency Professional Entity to inform about the cessation of a Director/ Partner within the prescribed time would attract penalty. The above information shall be provided by the authorized signatory of the IPE in the format provided in the Annexure by an email from the email address of the IPE registered with the Board to ipe@ibbi.gov.in. “Failure to comply with the said requirement shall invite appropriate action, including withdrawal of recognition granted to an IPE,” the Board said. Misconduct: IBBI imposes Penalty of Rs. 2 Lakhs on CS/IP for non-cooperation with IA and Delay in filing Form CIRP 7. The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) comprising Whole Time Member Jayanti Prasad has imposed a fine of Rupees Two Lakhs on the Company Secretary Anuj Kumar Tiwari for the alleged non-cooperation with the Inspecting Authority (IA) and delay in filing Form CIRP 7. In light of the above observations of the contraventions of provisions and non-cooperation, the Disciplinary Committee imposed a penalty of Rupees Two Lakhs on CS Anuj Kumar Tiwari and cautioned the Insolvency Professional to be more careful in future and directs him to strictly comply with the applicable provisions of the Code and its underlying Regulations while performing his duties. IBBI Imposes Rs. 2 Lakh Penalty on IP for Compromising Independence of IRP The Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI) imposed Rs. 2 lakh penalty on Insolvency Professionals (IP) for compromising the independence of the Insolvency Resolution Process (IRP). The DC finds that Mr Kanwal Goyal has compromised the independence of IRP and surrendered the same to IPE. The DC further noted that Mr Goyal neither has a valid AFA nor he is entitled to get a fresh AFA due to his age. The DC imposed a penalty of Rupees two lakh and directed to deposit the penalty amount directly to the Consolidated Fund of India (CFI) under the head of “penalty imposed by IBBI” on https://bharatkosh.gov.in within 45 days. IBBI suspends Registration of IP for negligent Conduct of e-Auction Process and Failure to perform Beneficial Liquidation The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) has recently suspended the registration of an Insolvency Professional (IP) for the period of two years. The IBBI appointed an Investigating Authority (IA) to conduct investigation into the observations made by the AA in the matter of liquidation process of the CD. The IA served a notice of investigation to the IP on 23.06.2022. Observing the downsizing and cancellation of bids by quoting inadvertent errors, the Disciplinary Committee found that the conduct of Ramasamy Shanmuggam contravenes section 208 (2)(a) of the Code, Regulation 33 of Liquidation Regulations read with clause 1(5) of Schedule I on Mode of Sale, Regulation 7(2)(h) of the IP Regulations and Clauses 3, 5 and 14 of the Code of Conduct as specified in the First Schedule of Insolvency Professional Regulations. As a result, the DC suspended the registration of the IP Ramasamy Shanmuggam for a period of two years. Delay in Handing Over of Documents to IRP: IBBI orders probation for Professional Misconduct A Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India, ordered probation to Insolvency Resolution Professional Mr. Prateek Kathuria for delay in handing over documents to the newly appointed Insolvency Resolution Professional. He was directed to undergo a 50 hours pre-registration educational course. Additionally, direction to work as probationer for four months with other experienced IP so nominated by his IPA under which he is registered was also given. The Authorization for Assignment (AFA) was also suspended and he was also forbidden from undertaking any fresh assignment as an Insolvency Professional. The Board observed that Mr. Prabhat Ranjan Singh vide email dated 06.04.2022 followed by reminder email dated 08.04.2022 requested Mr. Prateek Kathuria to hand over the various records, information, documents as per the directions of AA’s order dated 04.04.2022. However, vide email dated 09.04.2022 Mr. Prateek Kathuria replied to him that he would not hand over the charge to him unless he will get his fees as well as the reasoning and apology letter in writing from AA for adjourning such crucial insolvency matters and not deciding his fees for such long period and also reasoning for passing two purported wrong orders. In light of above facts, the DC noted that acts of Mr. Prateek Kathuria for non-submission of documents to newly appointed IRP has caused delay in process which could have been avoided. IBBI issues meetings norms of Disciplinary Committee and Appellate Panel of RVOs The Insolvency Regulator, Insolvency and Bankruptcy Board of India (IBBI) has standardised meetings norms of the disciplinary committee (DC) and appellate panel (AP) of Registered Valuers Organisations (RVOs). The standardisation has come up with a series of directions to be followed by the DC and AP of the RVO while conducting their meetings including stipulation that meetings be held only if there is an agenda and preferably through a video conferencing facility, keeping in view the current pandemic. The tenure of IBBI’s nominee shall, in general, be for two years from the date of appointment, unless decided otherwise by the IBBI. The move of IBBI is a worthy step regarding the conduct of the meeting of DC and AP because it will be held only if there is an agenda for the meeting. It brings uniformity in the amount of sitting fees to be paid to the members of the DC and AP of the RVOs. Delay in Resolution of Corporate Debtor by Multiple Violations of Provisions of CIRP and Regulations: IBBI suspends Registration of IP for 2 Years The Disciplinary Committee of Insolvency and Bankruptcy Board of India has recently suspended the registration of an Insolvency Professional for 2 years, owing to the alleged violations of CIRP regulations and Insolvency and Bankruptcy Code. The Insolvency Professional, Mr. Manish Gupta was alleged to have acted in violation of Circular No. IBBI/IP/013/2018 dated 12th June 2018 and Circular No. IP/005/2018 dated 16.01.2018. “Repeated non-cooperation and series of non-compliances is not justifiable, whatsoever, serious nature of trauma, at personal level one may be suffering. In case, circumstances were so compelling that he was not able to discharge his duties, instead of remaining gainfully engaged on a regular basis in connection with CD, he had the option to approach CoC or AA for presenting a case for his replacement.”, the Disciplinary Committee comprising Whole Time IBBI Member Sudhaker Shukla observed. As per the said findings, the DC, in the exercise of the powers conferred under section 220 (2) of the Code read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 thereby suspended the registration of Mr. Manish Gupta for a period of two years. Insolvency Professional barred for Ten Years for blatant Violation of IBC The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) has cancelled the registration of an Insolvency professional for deliberate, blatant, orchestrated and collusive contraventions of the provisions of the Insolvency and Bankruptcy Code, 2017. The DC opined that by using the CIRP as a facade and in connivance with shareholders of the CD the IP (a) thwarted actions, liabilities and obligations under the SARFAESI and proceeding before the DRT, released the personal guarantors, and the secured properties, (b) made himself eligible to submit a resolution plan by misrepresentation, (c) passed on an OTS as resolution plan, and (d) used the resolution plan to wipe off claims of various creditors, including claim of Bank. He could not have done any of these the husband of the shareholder as an RP played by the rule book and did not “explore every possibility to address the issue (illegality)”. Insolvency Professional punished for Authorizing Firm to raise Invoices for his Professional Fee The disciplinary committee of the Insolvency and Bankruptcy Board of India (IBBI) has imposed a penalty of one lakh rupees on an Insolvency Professional, Dinkar T. Venkatasubramanian of Ersnt & Young LLP, Gurugram, as he authorized payment of his professional fee to Ernst & Young LLP. The Payment was released to EY LLP based on IRP instruction to bank. It was also found that Mr. Venkatasubramanian himself directed for the settlement of the bills so raised by Ernst and Young LLP as being the IRP/RP of JEKPL Private Limited thus contravened item 9 and 25 of the Code of Conduct for Insolvency Professionals. Also, he allowed Ernst and Young LLP to raise invoices for his professional fee, thereby, treating the profession of Insolvency Professionals as employment under an entity which is a contravention of section 208 of the Code. IP suppressed Fact, Already Entered in MoU with the CoC: IBBI Suspends Registration of IP for 6 Months The Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI) suspended the registration of the Insolvency Professionals (IP) for Six Months as he suppressed the fact already entered in the memorandum of understanding (MoU) with the Committee of Creditors (CoC). It was evident that Mr Trivedi has not recorded the minutes of the 1st CoC meeting accurately and had not disclosed to CoC the factual status of the MoU for Contract Manufacturing Activity, the Disciplinary Committee noted. The draft MoU was shared with CoC on 30.12.2021 for vetting and a second opinion was being considered. The Disciplinary Committee (DC) comprising Ravi Mital, (Chairperson) observed that Mr Trivedi has suppressed the fact of already entering an MoU with the CoC. The DC suspended the registration of Mr Kairav Anil Trivedi for a period of six months. IBBI imposes Penalty of Rs. 5 Lakhs on RP for Professional Misconduct of Non-mentioning of Clearing of Pre-CIRP dues to CoC Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) comprising Whole Time Member Sudhaker Shukla has recently imposed a monetary penalty on Insolvency/Resolution Professional(RP) Anil Mehta, a fine of Rs. 5,00,000/- for non mentioning of consideration of agenda of clearing Pre-CIRP(Corporate Insolvency Resolution Process) dues amounting to professional misconduct. It was also observed that the RP failed to obtain the Audit Report from an external agency appointed by him. The Disciplinary Committee, thereby imposed a penalty on Mr. Anil Mehta of Rs. five lakhs and directs him to deposit the penalty amount directly to the Consolidated Fund of India (CFI). Resolution Professional acted in Good faith as per the Decision approved by CoC: IBBI Disciplinary Committee quashes Notice for Misconduct. The Insolvency And Bankruptcy Board of India (IBBI) Disciplinary Committee (DC) has held that Resolution Professional acted in good faith as per the decision approved by CoC and quashes notice for misconduct. The Coram of Sri Dr. Mukulita Vijayawargiya, Whole Time Member, IBBI has held that Mr. Sripatham Venkatasubramainan Ramkumar did not contravene any of the provisions as alleged in the SCN and the DC disposes of the SCN without any directions. IP Submits Compliance Certificate Despite SRA being ‘related party’ and Ineligible under section 29A of IBC : IBBI Cancels Registration of IP The Insolvency Bankruptcy Board of India’s (IBBI) Disciplinary Committee (DC) revoked the registration of Mr. Ananda Rao Korada as an Insolvency Professional (IP) for multiple reasons, including the submission of a compliance certificate despite the fact that Regus Impex, the SRA, was a related party and ineligible under Section 29A of the Insolvency Bankruptcy Code (IBC). The other allegations against the IP were the Constitution of CoC without verification of claims, Non-compliance of AA’s order for submission of proof of claims of CoC members, Inclusion of related parties of CD into CoC, Failure to obtain claim from workers of the CD. The DC found that Despite the SRA being a ‘related party’ and ineligible under section 29A of the Code, Mr. Korada submitted a compliance certificate signed by himself, in their favour finding them eligible for submission of the resolution plan. Thus, the board cancelled the registration of the IP. IBBI reprimands RV for Illogical Assumptions w.r.t. Discounting Factors in Valuation Report The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) has recently reprimanded a Registered Valuer (RV) for the illogical assumptions drawn with regard to discounting factors in valuation report. The Issues regarding Methodology adopted for Valuation were raised against the Registered Valuer in the Show Cause Notice. “In view of the foregoing, after considering the allegations made in the SCN, the detailed reply provided by the RV and the materials available on record, the Authority therefore disposes of this SCN with the direction to the RV to be cautious, in future, in preparation of the valuation report on the basis of reliable assumptions and documentation there of”, Whole Time Member Sudhaker Shukla further stated. Misconduct of Resolution Professional: IBBI imposes Penalty for Lapses in following Procedure A Disciplinary Committee (DC) of Insolvency and Bankruptcy Board of India (IBBI) comprising Whole Time Member Jayanti Prasad has recently imposed penalty on Resolution Professional (RP) Sanjeev Ahuja for lapses in following procedures about appointing non-Registered Valuers (RVs), not sending notice of the meeting of Committee of Creditors (CoC) to Operational Creditors (OCs) and not seeking approval from CoC regarding insurance cost. Regarding buying insurance policy and including the expenditure in CIRP cost without approval of CoC, expenses to be incurred shall be fixed by CoC and approval is required wherever necessary for inclusion in IRPC. The RP did not bring the said expenses in the knowledge of CoC in any of its meetings. Hence the DC found that Mr. Sanjeev Ahuja has contravened section 5(13) of the Code read with regulation 31 and 34 of CIRP Regulations read with clauses 1 and 2 of the Code of Conduct. Thus, the Insolvency Professional was imposed with a penalty of Rs. Five Lakhs and was directed to be more cautious in the future. Professional Misconduct: DC directs IBBI to Conduct Inspection and Submit Report wrt Excess Fee Charged by ICAI Liquidator The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) has recently directed the Board to conduct inspection and submit a report with respect to the allegation of excess fee charged by the liquidator. The Insolvency and Bankruptcy Board of India (IBBI) had appointed an Investigating Authority (IA) to conduct the investigation of Mr. Amit Gupta in the liquidation process of Hindustan Dorr Oliver Limited (CD). At this instance, the DC observed that documents submitted are insufficient to conclude that the amount of excess fee charged by Mr. Amit Gupta. The Disciplinary Committee, thereby issued direction to the Board to conduct the inspection with regard to fee charged by Mr. Amit Gupta in all the liquidation process(es) handled/being handled by him as the liquidator and to submit the report within two months. IBBI disposes off 6,172 Complaints and Grievances out of 6,231 against Service Providers under IBC The Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017 enable stakeholders to file a grievance or a complaint against service providers under the IBC. This was stated by the Union Minister of State for Corporate Affairs Shri Rao Inderjit Singh in a written reply to a question in Lok Sabha today. Further, the Minister stated that as per information available, Directorate of Enforcement has received one complaint against an RP of one CIRP in which appropriate action under applicable law has been taken. Further, CBI has received one complaint regarding abuse of process in one CIRP matter which was forwarded to the Regulator and on examination, the Regulator has not found any actionable material. Delay by RP to act as per directions given by Committee of Creditors for obtaining records of CD: IBBI suspends Registration of RP The Insolvency and Bankruptcy Board of India (IBBI) suspended the registration of a Resolution Professional (RP), on the ground of delay on the side of Resolution Professional to act as per directions given by Committee of Creditors for obtaining records of Corporate Debtor (CD). “Hence the Disciplinary Committee, in exercise of the powers conferred under section 220 of the Insolvency and Bankruptcy Code read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 hereby suspends the registration of Gopal Lal Baser for a period of two years” the Board concluded. IBBI Reprimands IP for Non-Verification and checking of Appointment Communication Mail by AA The disciplinary committee of insolvency and bankruptcy board of India (IBBI) has reprimanded insolvency professional (IP) for non-verification and checking of appointment communication mail by AA. The committee disposed of the SCN cautioning Rajagurusami Maheswaran to be more careful in future and directed him to strictly comply with the applicable provisions of the Code and its underlying Regulations while performing his duties. Unresponsiveness in Corporate Insolvency Resolution Processes: IBBI cancels Registration of IP The IBBI New Delhi Bench has cancelled the registration of IP. The Disciplinary Committee (DC) notes that IP did not respond to notices from various IAs on numerous occasions. Moreover, he failed to submit any forms listed in regulation 40B of the CIRP Regulations, which are designed to aid Insolvency Professionals (IPs) in complying with statutory obligations related to the submission of records and facilitate effective monitoring by the Board. A Single Bench of the Disciplinary committee comprising Sudhaker Shukla, Whole time member, observed that If Insolvency Professional (IP), becomes unresponsive to the various authorities and stakeholders in the eco system of Insolvency Resolution Process, it will lead to derailment of the entire resolution process of the corporate debtor for which the IP is appointed. Keeping this in view, the DC in exercise of the powers conferred under section 220 of the Code read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 cancelled the registration of IP. Discrepancies and Representation Issue in Liquidation Value: IBBI Warns IP The Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India(IBBI) held that if factual discrepancies were affecting the distribution of the resolution plan, Mr Pramod Kumar Sharma should have applied the NCLAT for rectification. The Committee advised Mr Sharma to exercise caution when representing matters before AA and NCLAT. The DC held that “if there was any factual discrepancy and non-reliance on the same for distribution of the amount of the resolution plan, Mr Pramod Kumar Sharma should have applied Hon’ble NCLAT for the due rectification. Mr Sharma should have been more careful in taking up the matter before NCLAT. Given the foregoing discussion, the DC, in exercise of the powers conferred under Section 220 of the Code read with regulation 13 of the Investigation Regulations disposes of the SCN with caution to Mr. Sharma to be more careful in representing matter before AA and Hon’ble NCLAT.” Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

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