Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Tribunal, New Delhi Bench, New Delhi –The Coram of P.S.N Prasad, Judicial Member and Narender Kumar Bhola,  Technical Member were inclined to allow the process of CIRP, considering the debt acknowledged by the corporate debtor.

In the pertinent matter the corporate debtor approached the operational creditor for supply of image scanner manufactured by the operational creditor. It was alleged that the operational creditor had to send various reminders through emails, text messages and phones for the payment of the goods purchased by the corporate debtor. Pursuant to which even a demand notice was duly served upon.The petitioner thus submitted that since corporate debtor has acknowledged the debt, therefore the petition under Section 9 of IBC, 2016 should be allowed and the CIR process to be initiated against the corporate debtor.

The Tribunal after perusing the written submissions and arguments advanced by the operational creditor was of the opinion that the corporate debtor through emails has acknowledged the debt. Resultantly, the Tribunal was inclined to admit the application to initiate the process of CIRP of the corporate debtor. And further declared moratorium, and appointed an Insolvency Resolution Professional to take charge of the respondent corporate debtor.

It further stated that the supply of essential goods or services of the corporate debtor shall not be terminated, suspended or interrupted during moratorium period.[CSII India Pvt. Ltd. v. Telexcell Information Systems Limited, IB-411/ND/2020, 05-10-2021]


Agatha Shukla, Editorial Assistant has reported this brief.


Counsel for the Parties:

Operational Creditor:

Kshitiz Karjee & Mrinal Agarwal (Advocates)

Case BriefsTribunals/Commissions/Regulatory Bodies

National Company Law Appellate Tribunal (NCLAT): The Coram of Justice Jarat Kumar Jain, Judicial Member and Dr Ashok Kumar Mishra, Technical Member while dismissing as appeal released the Corporate Debtor Company from the rigours of CIRP, and allowed the Board to function through its Board of Directors from immediate effect. The Appellate Tribunal also remitted back the matter to the Adjudicating Authority to decide the fees and costs of CIRP payable to IRP, to be borne by the Corporate Debtor.

In the instant matter, K. Srinivas Krishna, the Suspended Director of Corporate Debtor, filed an appeal against the order passed by the Adjudicating Authority before the Appellate Tribunal. Further, a civil appeal was filed before the Supreme Court challenging the Appellate Tribunal’s impugned order. The appeal was dismissed on the ground that the claim of the Operational Creditor for Rs, 50,32,028 was not tenable and other claim was paid. Further, the interim stay passed by the Tribunal was vacated and IRP was directed to take further action against the CIRP. Further, the objections raised by the Operational Creditor were rejected by the adjudicating authority on the grounds of material error, where the form FA (application for withdrawal of CIRP) was not signed by the Operational Creditor (applicant) on whose application CIRP was initiated. Therefore, the application was dismissed for not being maintainable.  Being aggrieved by the order, the Suspended Director of the Company filed an appeal where the impugned order was challenged.

The Tribunal was of the opinion that, to prevent abuse of process, setting aside the impugned order and the order of initiating CIRP against the Corporate Debtor was more conducive. Therefore, the Corporate Debtor Company was released from the rigours of the CIRP and was allowed to function through its Board of Directors from immediate effect.

Further, the Tribunal remitted back the matter to the Adjudicating Authority to decide the fees and costs of CIRP payable to IRP which shall be borne by the Corporate Debtor.[K. Srinivas Krishna v. Shyam Arora, Company Appeal (AT) (Insolvency) No. 221 of 2021, decided on 02-09-2021]


Agatha Shukla, Editorial Assistant has reported this brief.


Counsel for the Parties:

For Appellant :

Mr. P Nagesh, Sr. Advocate with Mr. Srinivas Kotni, Mr. Shantam Gorwara, Advocates and Mr. Srinivas Krishna, in person.

For Respondents :

Mr. Shyam Arora, Respondent No. 1 in person, Mr. Sharad Tyagi, Mr. K. Gayatri, Advocates for Respondent No. 1. 2

Mr. Sanjay Kapur, Mr. V M Kannan, Ms. Shubhra Kapur, and Mr. Arjun Bhatia, Advocates for Respondent No. 2.

Dr. Laxhmi Narashimha, Advocate for RP.

Case BriefsTribunals/Commissions/Regulatory Bodies

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]


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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.”