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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 ..... he suspension period has already run its course, the Petitioner seeks to have the Impugned Order set aside, as it leaves a permanent blemish on his professional record. Brief Background 3. The NCLT, Principal Bench, New Delhi vide order dated 10th January, 2019 admitted the application under section 7 of the Insolvency and Bankruptcy Code, 20163 for initiating Corporate Insolvency Resolution Process ["CIRP"] of Granite Gate Properties Private Limited (Corporate Debtor). On 27th November, 2019, the NCLT, appointed Mr. Chandra Prakash, the Petitioner herein, as Resolution Professional replacing Mr. Prabhjot Singh Soni. Subsequently, on 20th May, 2021, a complaint by Shomit Finance Limited prompted IBBI to initiate an inspection under the IBBI (Inspection and Investigation) Regulations, 2017. After receiving all the information and documents required, the Respondent circulated Draft Inspection Report vide e-mail dated 27th July, 2021, wherein several allegations were raised against the Petitioner. In response to the draft Inspection Report, on 12th August, 2021, the Petitioner submitted a detailed written rebuttal, contesting and refuting each of the allegations set forth therein. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te application before AA. 8.5 A copy of this order shall be forwarded to the ICSI Institute of Insolvency Professionals where he is enrolled as a member. 8.6 A copy of this Order shall also be forwarded to the Registrar of the Principal Bench of the National Company Law Tribunal, for information. 8.7 Accordingly, the show cause notice is disposed of." 4. Aggrieved by the same, the Petitioner has filed the instant petition, seeking setting aside of the Impugned order as well as the Impugned SCN. Analysis and Findings 5. The Court has heard Mr. Ramesh Singh, Senior counsel for the Petitioner as well as Ms. Madhavi Divan, Senior counsel for the Respondent. 6. Contravention I: Non-disclosure of Related Party Transaction pertaining to M/s Ibay Capital. 6.1. The Respondent alleges that the appointment of M/s Ibay Capital, a firm owned by Petitioner's brother, to provide professional support services, is in contravention of section 23B of the Code of Conduct specified in the first schedule of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016. ["Code of Conduct"] Section 23B of the Code of Conduct prohibits the Insolvency Professional ["IP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that disclosure under paragraph 3 of the circular dated 16th January, 2018 was not required, as the services provided did not fall within the category of "professionals." The Petitioner thus submits that para 3 of the circular dated 16th January, 2018 requires the Resolution Professional to disclose his relationship with "professionals" and not with back office support. The Petitioner, while invoking the Doctrine of Equality and fair play, contends that in Mr. Anil Goel's case, the IBBI exonerated him for not disclosing the related party to the IPA stating that the circular did not apply in this context, yet the IBBI seems to have interpreted the circular differently in the Petitioner's case. 6.3. The Court has considered the aforenoted contentions. While Section 28 (1) (f) of the IBC Code, relied upon by the Petitioner, permits the Resolution Professional to undertake Related Party Transaction, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as submitted by M/s iVAS Partners whose appointment or fee was not approved/ ratified by the CoC. 7.1 Respondent Submits that the Petitioner enagaged the services of M/s iVAS Partners as valuer for ascertaining fair value and liquidation value of an asset of the Corporate Debtor (iRing Commercial Complex) and paid fees to iVAS, without the approval of the CoC. This amounts to a breach of regulation 34 of the Insolvency And Bankruptcy Board Of India (Insolvency Resolution Process For Corporate Persons) Regulations, 2016 read with clauses 1, 2, 13, 14 of the Code of Conduct. Regulation 34 of the CIRP Regulations reads as follows: "The committee shall fix the expenses to be incurred on or by the resolution professional and the expenses shall constitute insolvency resolution process costs. [Explanation. - For the purposes of this regulation, "expenses" include the fee to be paid to the resolution professional, fee to be paid to insolvency professional entity, if any, and fee to be paid to professionals, if any, and other expenses to be incurred by the resolution professional.]" 7.2. Contrarily, Petitioner submits that as per Regulation 27 of CIRP Regulations, appointment of profe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... him by virtue of engagement of M/s iVAS Partners does not form part of the resolution professional costs. Thus, there was no requirement to get the same approved by the CoC. 7.3. Even if the approval for appointment of M/s iVAS was not required, their fee would need to be ratified by the CoC as per regulation 34 of the CIRP Regulations. On perusal of the minutes of 13th CoC meeting, it is clear that CBRE South Asia Pvt. Limited was appointed to determine the cost of completion of the projects. Further, in the minutes of 17th CoC meeting, it was recorded that the cost of completion report and final valuation report of 'iRing' commercial complex were submitted by CBRE. However, there is no mention of any discussion with the CoC regarding the engagement of M/s iVAS Partners, nor was any fee related to them approved by the CoC. Even if the valuation of the iRing Complex was delegated to M/s iVAS, by CBRE, the Petitioner has not placed anything on record to show that the fee paid to M/s iVAS was approved by the CoC. Based on the available documents, it can be concluded that neither the appointment of M/s iVAS Partners nor the fees paid to them were approved by the CoC. Further, with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs.60,06,143/-, which is pending before the Mediator, Surajpur Court, Gautam Budh Nagar, U.P., in terms of Section 12A of the Commercial Courts Act, 2015. He further asserts that the efforts undertaken by the Petitioner in filing the suit against Gravity facility management, resulted in a settlement between the Corporate Debtor and Gravity Facility Management Solutions Pvt. Ltd where the Corporate Debtor received 60 Lakhs. 8.3 The documents placed on record discloses that the Petitioner had infact initiated necessary action against Gravity Facility Management Solutions Pvt. Ltd. A civil suit for recovery of Rs. 64,20,813/- had been intiated by the Petitioner before the Civil Commercial Court, Guatam Budh Nagar, Uttar Pradesh. The Impugned order fails to take note 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 9. In light of the above, the Court finds that Mr. Prakash neither disclosed the appointment of his brother through M/s Ibay Capi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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