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TMI Blog2021 (1) TMI 808X X X X Extracts X X X X X X X X Extracts X X X X ..... s an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. An application for grant of AFA can be made to the IPA under para 12A of said bye-laws. The credibility of the processes under the Code depends upon the observance of the Code of conduct by the IRP/RP/Liquidator during the process. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP regulations enumerates a list of code of conduct for insolvency professionals including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with mala fide or with negligence. In the present matter, the DC notes that, Mr. Somani had given his written cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ency and Bankruptcy Code, 2016 (Code), regulations 7(2)(a) (h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct contained in the First Schedule of the IP Regulations for accepting the assignment as the Liquidator in Liquidation process of Advance Surfactants India Limited after 31st December 2019 for which public announcement was made on 21st January 2020 without holding a valid AFA from the IPA. Written and oral submissions by Mr. Kishan Gopal Somani 3. Mr. Somani's submissions made in his written reply and in the course of personal hearing are summarized as follows. 3.1 Mr. Somani has submitted that- (i) as per the decision of CoC, he had given his Written Consent' to CoC in its meeting held on 22nd November 2019 to act as Liquidator in terms of section 34(4) and accordingly the same was filed with NCLT on 28th November 2019 itself, much before the cut-off date of 31st December 2019. As per Regulation 7A of IP Regulations it is clearly mentioned that provisions of the regulation shall not apply to an assignment which an insolvency professional is undertaking as on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of IP regulations requires every IP to have AFA before undertaking any assignment after 31st December 2019. Regulation 7A reads as follows: 7A. An insolvency professional shall not accept or undertake an assignment after 31st December, 2019 unless he holds a valid authorisation for assignment on the date of such acceptance or commencement of such assignment, as the case may be: Provided that provisions of this regulation shall not apply to an assignment which an insolvency professional is undertaking as on- (a) 31st December, 2019; or (b) the date of expiry of his authorisation for assignment. 4.2 Thus, it is clear from the said Regulation that one of the essential condition for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake any assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019. 4.3 The IBBI (Model Bye-laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 provides under clause 12 A (2) (e) of its Schedule that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner and subject to such conditions as may be specified. 4.6 The DC further notes that the certificate of registration granted to an IP is subject to the condition that he should follow at all times the provisions of the Code and Regulations and the bye-laws of Insolvency Professional Agency of which the IP is a member and also follow the Code of Conduct specified in the First Schedule to the IP Regulations. In this regard, clauses(a) and (h) of regulation 7 (2) of the IP Regulations provide as follows: 7. Certificate of registration. (2) The registration shall be subject to the conditions that the insolvency professional shall - (a) at all times abide by the Code, rules, regulations, and guidelines thereunder and the bye-laws of the insolvency professional agency with which he is enrolled; (h) abide by the Code of Conduct specified in the First Schedule to these Regulations; 4.7 Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be specified. Further, the Code of Conduct specified in the First Schedule of the IP r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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