IBBI cancels registration of an IP; debars him from seeking any fresh registration for failing to act in best interest of corporate debtor

Case Details: Vimal Kumar Grover, In re - [2022] 135 taxmann.com 66 (IBBI)

Judiciary and Counsel Details

• • Dr. Mukulita Vijayawargiya, Whole Time Member, IBBI

Facts of the Case

In the instant case Insolvency and Bankruptcy Board of India (IBBI) issued the Show Cause Notice (SCN) to Mr. Vimal Kumar Grover, an Insolvency Professional (IP) registered with the Insolvency and Bankruptcy Board of India (IBBI) with Registration No. IBBI/IPA-001/IP-P00940/2017-2018/11544.

Mr. Vimal Kumar Grover was appointed as an Interim Resolution Professional (IRP) in respect of Corporate Insolvency Resolution Process (CIRP) of M/s. Hacxad Infotech Private Limited, the Corporate Debtor (CD) commenced under section 9 of the Insolvency and Bankruptcy Code, 2016 (Code) vide order dated 10th April, 2019 passed by Hon’ble National Company Law Tribunal, New Delhi Bench-III, the Adjudicating Authority (AA).

IBBI appointed an Inspecting Authority (IA) vide order dated 23rd April, 2020 to conduct an inspection of Mr. Grover pertaining to CIRP of aforesaid CD, as IBBI had the reasonable grounds to believe that Mr. Grover had contravened the provisions of the Code and the regulations made thereunder.

The IA, in its report dated 29th July, 2020 observed that Mr. Grover has violated the provisions of the code like Non-Compliance of moratorium during CIRP, Mr. Grover has not submitted documents with respect to the following

(a) Self-declaration by him being independent of the CD as per regulation 3(1) of CIRP regulations and clauses 6, 7 and 8 of Code of Conduct of IP Regulations.

(b) Disclosures to IPAs as per the IBBI Circular No. IP/005/2018 dated 16-1-18.

Mr. Grover also failed to verify the claims and file a progress report within the time limit as prescribed under the code.

He also failed to constitute the Committee of the Creditors (CoC). He plead that as only one claim was received from the Operational Creditor (OC) therefore, he did not constitute the CoC.

Mr. Grover should have constituted CoC with the OC as a member as per the provisions under regulation 16 of CIRP Regulations. He failed to constitute CoC with only one operational creditor (OC) who filed its claim and thus, deprived CoC of its right to decide fate of the corporate debtor.

IBBI Held

The IBBI noticed that Mr. Grover failed miserably to perform his duties as an IRP.

In exercise of the powers conferred under section 220 of the Code read with regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016 and regulation 13 of IBBI (Inspection and Investigation) Regulations, 2017, the IBBI ordered the cancellation of the registration of Mr. Vimal Kumar Grover as an insolvency professional, having Registration Number IBBI/IPA-001/IP-P00940/2017-2018/11544 and also debarred him from seeking fresh registration as an insolvency professional or providing any service under the Code for a period of one year from the date of the Order.

List of Cases Referred to

• • Jotun India (P.) Ltd. v. PSL Ltd. [2018] 89 taxmann.com 58/145 SCL 601 (Bom.) (para 4.3).