2019 (8) TMI 1033 - Board - Insolvency and Bankruptcy

Disciplinary proceedings against professional member of the ICSI Institute of Insolvency Professionals and an insolvency professional - regulation 11(6) of the IBBI (Insolvency Professionals) Regulations, 2016 - principles of natural justice - HELD THAT - DC finds that Mr. Vats misrepresented certain facts to mislead the Board, as explained in Para 5.1 above, which has serious bearing on a time bound CIRP, displayed utter contempt of law, authority and discipline, took shelter under a typographical error, when the corporate debtor and the stakeholders were suffering, and moratorium had come into force in a time bound CIRP. In view of his conduct as explained in Para 5.1 above, the Disciplinary Committee, in exercise of the powers conferred under section 220 (2) of the Code read with sub-regulations (7) and (8) of regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, hereby directs as under Mr. Vats shall work for at least six months as an intern with a senior insolvency professional, to improve his knowledge and understanding of the Code and the regulations made thereunder to appreciate the importance of time in a CIRP and Mr. Vats shall not seek or accept any assignment or render any services under the Code till he complies with the direction as at (i) above. He shall, however, continue to conduct and complete the assignments / processes he has in hand as on date of this order.

Summary

Issues Involved:
1. Delay in commencement of CIRP by the IRP due to typographical error.
2. Misrepresentation of facts by the IRP to the Board.
3. Conduct of the IRP in disciplinary proceedings.
4. Jurisdiction and authority of the Adjudicating Authority (AA) and the Insolvency and Bankruptcy Board of India (IBBI) in disciplinary proceedings.

Detailed Analysis:

1. Delay in commencement of CIRP by the IRP due to typographical error:
The Hon’ble Adjudicating Authority (AA) appointed Mr. Rishi Prakash Vats as the Interim Resolution Professional (IRP) for the CIRP of M/s. Rana Global Limited on 23rd March 2018. However, Mr. Vats did not commence the CIRP due to a typographical error in his name in the order. The AA found this attitude inexplicable and noted the correct address and registration number were provided. The AA directed the matter to the IBBI for appropriate action.

2. Misrepresentation of facts by the IRP to the Board:
Mr. Vats claimed he received the AA’s order on 16th April 2018, which delayed the commencement of CIRP. However, evidence showed he received the order on 5th April 2018 via WhatsApp from the financial creditor. This misrepresentation was found to be an attempt to mislead the Board. The DC found Mr. Vats in contravention of regulation 7(2)(a) and (h) of the IBBI (Insolvency Professional) Regulations, 2016, and clauses 1, 2, 12, 14, 16, and 19 of the Code of Conduct.

3. Conduct of the IRP in disciplinary proceedings:
Mr. Vats filed applications before the AA seeking expunction of the adverse observations made against him. The AA expunged the observations and directed the Board not to proceed against him. Despite this, the Board continued with the disciplinary proceedings. Mr. Vats did not appear for personal hearings and refused to make submissions on merits, displaying non-cooperation and contempt for the disciplinary process.

4. Jurisdiction and authority of the AA and the IBBI in disciplinary proceedings:
The AA directed the quashing of all disciplinary proceedings initiated by the IBBI against Mr. Vats. However, the Appellate Authority held that the IBBI has the exclusive power to close disciplinary proceedings or pass orders in accordance with the law. The AA does not have the jurisdiction to quash such proceedings. The matter was remitted to the IBBI to pass an appropriate order.

Conclusion and Order:
The Disciplinary Committee (DC) found that Mr. Vats misrepresented facts to mislead the Board, displayed contempt for the law and authority, and failed to commence the CIRP due to a typographical error. The DC directed Mr. Vats to work as an intern with a senior insolvency professional for six months and barred him from accepting new assignments until compliance. The order will come into force 30 days from issuance, and copies were forwarded to relevant authorities for monitoring and information.