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2018 (4) TMI 1439 - Board - Insolvency and BankruptcyCorporate insolvency process - Insolvency Professional appointment - Held that - Given the responsibilities of an insolvency professional, it is necessary to take urgent action to contain further damage, pending completion of inspection. Therefore, in exercise of the powers conferred under section 220 (2) of the Code read with sub-regulation (4) of regulation (5) of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017, issue directions for Insolvency Professional as debarred from undertaking any new assignment, either as an Interim Resolution Professional, Resolution Professional, Liquidator or otherwise, under the Code; The direction as above shall come into force with immediate effect and shall cease to have effect on expiry of 90 days from the date of the order and the Inspecting Authority shall complete the inspection and submit inspection report by 15th April, 2018, as specified in the order dated 04.01.2018 of the Board.
Issues Involved
1. Compliance with Insolvency and Bankruptcy Code, 2016 and related regulations. 2. Approval and issuance of Expression of Interest (EoI). 3. Misleading information and misrepresentation. 4. Outsourcing responsibilities and acting beyond authority. 5. Non-compliance with directions from the Insolvency and Bankruptcy Board of India (IBBI). Detailed Analysis Compliance with Insolvency and Bankruptcy Code, 2016 and Related Regulations The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) found that Mr. Mukesh Mohan, an Insolvency Professional, had contravened several provisions of the Insolvency and Bankruptcy Code, 2016 (Code) and related regulations. Specifically, Mr. Mohan failed to quote his registration number, email, and address in the advertisement for Expression of Interest (EoI) dated 26.12.2017, despite being directed to do so by the Board on 06.03.2017. This non-compliance violated clause (i) of sub-regulation (2) of regulation 7 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. Approval and Issuance of Expression of Interest (EoI) Mr. Mohan inserted the requirement of a CA certificate in the EoI issued on 26th December 2017 without the approval of the Committee of Creditors (CoC). He claimed that the CoC confirmed that the published EoI was in accordance with section 25(2)(h) of the Code during a meeting on January 05, 2018. However, the agenda and minutes of the CoC meeting did not reflect this requirement, indicating that the insertion was not approved by the CoC. Additionally, Mr. Mohan sought approval of the EoI from only one creditor, Punjab National Bank (PNB), which was not a CoC meeting, thereby violating section 21(8) of the Code. Misleading Information and Misrepresentation Mr. Mohan attempted to mislead the Board and the Adjudicating Authority (AA) by stating that the advertisement for EoI was in accordance with the best market practice and approved by the CoC. However, the fact was that the advertisement did not require a CA certificate, as claimed. This misrepresentation contravened clauses 1, 2, 3, 12, and 14 of the Code of Conduct under the first schedule of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulation, 2016. Outsourcing Responsibilities and Acting Beyond Authority Mr. Mohan outsourced his responsibility of certifying the eligibility of resolution applicants to a third person (CA engaged by the resolution applicant), which is not envisaged under the Code. This action compromised the integrity of the resolution process and contravened sections 23(1) and 30(2)(I) of the Code. Furthermore, Mr. Mohan acted beyond his authority by incorporating the requirement of a CA certificate without CoC approval and sought approval of the EoI from a single creditor, violating sections 21(8) and 25(2)(h) of the Code. Non-compliance with Directions from the Insolvency and Bankruptcy Board of India (IBBI) The Board directed Mr. Mohan to withdraw the deficient advertisement and issue a fresh one, excluding the cost from the insolvency resolution process cost. Mr. Mohan did not comply with these directions and attempted to mislead the Board and AA by stating that the fresh advertisement would impose a burden on the corporate debtor. This non-compliance violated clauses 1, 2, 9, 12, and 14 of the Code of Conduct. Conclusion The Disciplinary Committee found that Mr. Mohan's actions justified the continuation of the directions passed in the ex-parte interim order dated 8th March 2018. Consequently, the directions were confirmed, debarring Mr. Mohan from undertaking any new assignments under the Code. The order was forwarded to relevant authorities for information and compliance.
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