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TMI Blog2024 (12) TMI 1202X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction, the same must be done with the prior approval of the CoC. In the present case, while the CoC approved the appointment of M/s Ibay Capital in its 13th Meeting, the CoC was not made aware of the fact that M/s Ibay Capital was a related party of the Petitioner. Thus, prior approval required under Section 28 (1) (f) of the IBC Code has not been complied with. As regards, compliance with para 3 of the Circular dated 16th January, 2018, the Court has perused the nature of services for which M/s Ibay Capital was hired, as detailed in minutes of the 13th CoC meeting. These services fall within the definition of professional rather than mere clerical or logistical support. The Petitioner s interpretation that no disclosure was necessary is thus off the mark. Thus, in the opinion of the Court, the Petitioner has violated clauses 1,2,5,9,12,13, 14 and 23B of the Code of Conduct, Section 28 (1) (f) of the IBC Code and Circular dated 16th January, 2018. While the Petitioner has relied on the case of Mr. Anil Goel to claim parity it must be noted each case has to be decided on its own merit. Wile the Court acknowledges that the Impugned order does not indicate any concrete financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te of the same. In light of the aforenoted, it cannot be said that the Petitioner failed to take appropriate action against the Gravity Facility Management Solutions Pvt. Ltd. Accordingly, the contravention, arising from alleged inaction on the part of the Petitioner, is not made out. Conclusion - The one-year suspension, therefore, stands supported by at least two valid grounds, while the third ground is found lacking. Accordingly, the Petitioner s plea to set aside the suspension order, in its entirety, cannot be granted - application disposed off. - HON'BLE MR. JUSTICE SANJEEV NARULA For the Petitioner Through: Mr. Ramesh Singh, Sr. Advocate with Mr. Chandra Bhushan Prasad, Mr. Kripa Shankar Prasad, Mr. Bikas Kar Gupta, Advocates Mr. Manish K. Bishnoi, Mr. Khubaib Shakeel, Advocates For the Respondent Through: Ms. Madhavi Divan, Senior Advocate with Mr. Sahil Monga, Ms. Alekhya Sattigeri, Advocates for IBBI JUDGMENT SANJEEV NARULA, J. (ORAL): 1. The Petitioner, through the instant petition, inter-alia seeks setting aside of the order dated 11th October, 2022, [ Impugned Order ] whereby the Disciplinary Committee of the Respondent, Insolvency and Bankruptcy Board of India [ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CoC; and third, his purported failure to take timely and appropriate action against Gravity Facility Management Solutions Pvt. Ltd. [ Gravity ] for non-payment of water charges. The operative portion of the said order reads as follows: 8. Order 8.1 On the basis of aforesaid analysis, it is found that Mr. Prakash had neither disclosed the appointment of his brother through M/s Ibay Capital before the CoC nor made relationship disclosure of engagement of M/s Ibay Capital on the website of the IPA. Further, the valuation report was submitted by M/s iVas Partners whose appointment or fee was not approved/ratified by the CoC. Mr. Parkash has also failed to take appropriate action against the Gravity for its inaction in terms of payment of dues of water charges. 8.2 In view of the above, the DC, in exercise of the powers conferred under section 220 (2) of the Code read with regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 hereby suspends the registration of Mr. Chandra Prakash having Registration No. IBBI/IPA-002/IP-N00660/2018-19/12023 for a period of one year. 8.3 This Order shall come into force on expiry of 30 days from the date of its issue. 8.4 A copy of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, not professional services per se, no disclosure was mandated. He asserts that Section 28 (1) (f) of the IBC, 2016 permits the Resolution Professional to engage in related party transactions with prior approval from the CoC. In this case, the Petitioner appointed M/s Ibay Capital, to provide back-office support services, with prior approval from the CoC in its 13th meeting held on 26th December, 2019. This resolution was approved with 83.62% of the votes. The Petitioner further submits that Section 25 (1) and 28 (1) (h) of the IBC, 2016 permits the RP to undertake any related party transaction and delegate its authority to any other person except the duty to preserve the assets of the Corporate Debtor. Regarding compliance with the circular dated 16th January, 2018, the Petitioner contends that there was no obligation to disclose their relationship with M/s Ibay Capital to the IPA, as M/s Ibay was providing back-office support, not a professional service. While the IBC, 2016 does not define professional, the Petitioner refers to Section 44AA of the Income Tax Act, 1961 to support his argument. Additionally, the Petitioner relies on the order passed by the IBBI in the disciplinar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o note that the Impugned Order does not specify which expenses incurred by the Petitioner in relation to M/s Ibay Capital were deemed unreasonable. In fact, the fee paid to M/s Ibay Capital was approved by the CoC in its 13th meeting. Consequently, the Court finds that the Petitioner has not violated the circular dated 12th June 2018. 6.4. It must also be noted that Ms. Divan, Senior counsel for the Respondent, during submissions, introduced fresh allegations suggesting that the Petitioner perhaps duplicated his fees by delegating his own responsibilities to M/s Ibay Capital. However, as this allegation was neither part of the Impugned SCN nor the Impugned Order, the Court cannot lend any credence to it. In conclusion, while the Court acknowledges that the Impugned order does not indicate any concrete financial irregularity on the Petitioner s part, it nonetheless remains evident that the Petitioner failed to fully adhere to the requirements of disclosure provided under IBC, 2016 and the regulations framed thereunder. Considering the Petitioner s role as an Insolvency Professional, entrusted with fiduciary duties and the responsibility to act in the best interests of the stakeholde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Petitioner explains the background in which M/s iVAS Partners was appointed. He submits that M/s iVAS Partners was appointed for valuation of a specific portion of a project, namely iRing Commercial Complex, for filing of avoidance application amounting to more than 100 crores. CBRE South Asia Pvt. Limited, a real estate consultancy firm, had quoted an amount of Rs. 11.75 lakhs for both cost to complete and valuation of iRing Project. The Petitioner negotiated and brought down the fee for both these activities to Rs. 7 Lacs and Rs. 1.3 Lacs respectively. Petitioner submits that it was the same CBRE South Asia Pvt. Limited which, in turn, suggested and got the valuation done by M/s iVAS Partners. In this background it must be noted that the fees of iVAS Partners was in fact sought in the 13th CoC meeting for Rs.7 lakhs and the same was approved with 83.62% votes for the appointment of CBRE South Asia Pvt. Limited. Furthermore, the Petitioner had disclosed regarding appointment of iVAS Partners in the 17th CoC meeting stating that final valuation report from CBRE of iRing Commercial Complex was received. Thus, the Petitioner has taken the approval for the appointment of the iVAS p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns. 8. Contravention III: The Petitioner failed to take appropriate action against the Gravity Facility Management Solutions Pvt. Ltd. 8.1 The Respondent contends that the erstwhile IRP of the Corporate Debtor entered into an agreement with Gravity Facility Management Solutions Pvt. Ltd for maintenance of the entire resident side of the project as well as for payment of electricity and water charges. The residents of Lotus Panche project (corporate Debtor s project) submitted a grievance before the IBBI that an amount of around Rs 2 Crores out of the money collected by Gravity Facility Management Solutions Pvt. Ltd. for maintenance, electricity and water charges has been invested in some under-construction project. The Petitioner despite being aware of the diversion of money, chose not to take any action such as filing a complaint or proceeding before the appropriate authorities against the defaulter for recovery of the diverted funds. 8.2. In response, Petitioner argues that the complaint of inaction is merely a grievance. The applicable Regulation mandates that the concerned Resolution Professional be directed to address the grievance, rather than imposing a severe penalty such a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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