Insolvency and Bankruptcy Board of India (IBBI): Dr Mukulita Vijayawargiya (Whole Time Member, IBBI) disposed of a show-cause notice issued to a Professional Member of ICSI Member Institute of Insolvency Professionals (IPA) and IP registered with the Insolvency and Bankruptcy Board of India (IBBI).
IBBI had issued the show cause notice for accepting the assignment as the Interim Resolution Professional in the Corporate Insolvency Resolution Process of Coastal Energy Private Limited without holding a valid Authorisation for Assignment.
Response to the Show Cause Notice was referred to the Disciplinary Committee for disposal of the SCN in accordance with the Code and Regulations made thereunder. The IP availed an opportunity of personal hearing before the DC on 10-09-2020.
Show Cause Notice
Show Cause Notice issued by IBBI alleged contravention of Sections 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016, regulations 7(2)(a), 7(2)(h) and 7A of the IBBI Regulations, 2016 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 of the Insolvency Resolution Professional in CIRP of Coastal Energy Private Limited after 31-12-2019 for which the public announcement was made on 08-01-2020 without holding a valid AFA from the IPA.
Analysis and Findings
Disciplinary Committee noted that the provisions of the Code and regulations are spelt in plain and unambiguous language.
Regulation 7A of IP Regulations requires for any IP to have AFA before undertaking any assignment after 31-12-2019.
One of the essential conditions for undertaking any assignment by an IP is that he should have a valid Authorisation for Assignment which is issued by the IPA with which he is enrolled.
“Without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof.”
Section 208 of the Code casts an obligation to abide by the code of conduct and comply with all requirements and terms and conditions specified in the bye-laws of the insolvency professional agency of which he is a member.
Certificate of Registration
DC added to its observations 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.
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.
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 instant matter, it was observed that an insolvency professional shall not accept or undertake an assignment after 31-12-2019 unless he holds a valid AFA.
An order against S. Rajagopal was passed by the DC on 07-09-2020 for accepting the assignment as IRP after 31-12-2019 without holding a valid AFA in the matter of Coastal Energy (P) Ltd. and warned him to be extremely careful, diligent, strictly act as per law and similar action should not be repeated.
Concluding the present matter, it was observed that since ICSI Institue of Insolvency Professionals has already taken disciplinary action against S. Rajagopal, for accepting an assignment as IRP after 31-12-2019 without holding a valid AFA, show cause notice disposes of the SCN without any direction against S. Rajagopal. [S. Rajagopal, In Re., Insolvency Professional (IP) under Regulation 11 of the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016; No. IBBI/DC/43/2020, decided on 13-11-2020]
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.”