IBBI debars an IP from accepting any new assignment for failing to perform duties

Case Details: Rohit Aggarwal, In re - [2022] 143 taxmann.com 99 (IBBI)

Judiciary and Counsel Details

• • Ravi Mital, Chairperson

Facts of the Case

In the instant case, an insolvency professional (IP) was appointed as a Resolution Professional (RP) in respect of the CIRP of the corporate debtor u/s 7 of the IBC. The IBBI appointed an Inspecting Authority (IA) to conduct an inspection of the IP on the ground that the IP had contravened provisions of the Code, Regulations, and directions.

Thereafter, the IA requested IP to provide copies of documents/clarifications. It was observed that despite repeated reminders, additional documents/clarifications asked by the Authority were not provided by the IP. Further, it was observed that corporate debtor had given huge advances without any agreement and without any return on investment but no steps were taken by IP.

As per Regulation 4(4) of the Inspection Regulations, it shall be the duty of the service provider to produce before the IA documents, record, or information in his custody or control and furnish to the IA such statements and information relating to its activities within such time as the IA may require.

Another contravention was that CoC in its meeting decided to appoint two registered valuers to value the financial assets of the corporate debtor and also ratified the fees to be paid to the valuers so appointed. Even when the appointment of the registered valuers as well as fees to be paid to such valuers was approved by the CoC, valuers were not appointed by IP which was in violation of Regulation 27 of CIRP Regulations.

Also, the Board Circular No. IP/005/2018 dated 16-1-2018, mandated IP to disclose his relationship, if any, with the corporate debtor, and with other professional(s) engaged by him to Insolvency Professional Agency of which he is a member, within 3 days of his appointment. However, it was observed from the website of the Indian Institute of Insolvency Professionals of ICAI with which IP enrolled, that disclosures were made with a substantial delay.

IBBI Held

IBBI held that IP failed to understand provisions of the Code and Regulations in letter and spirit as statutory duties had not been performed meticulously and carefully by IP. Therefore, IP was directed to not accept any new assignment till successful completion of the pre-registration educational course of IBBI (Insolvency Professional) Regulations, 2016 from IPA and work for at least three months as an intern with a senior IP.