Insolvency Professional punished for Authorizing Firm to raise Invoices for his Professional Fee [Read Order]

The disciplinary committee of the Insolvency and Bankruptcy Board of India (IBBI) has imposed a penalty of one lakh rupees on an Insolvency Professional, Dinkar T. Venkatasubramanian of Ersnt & Young LLP, Gurugram, as he authorized payment of his professional fee to Ernst & Young LLP. The Payment was released to EY LLP based on IRP instruction to bank.

In the instant case, Mr. Mukesh Mohan (replaced RP) made a complaint against Mr. Venkatasubramanian that the professional fee of Mr. Venkatasubramanian was illegally paid to M/s E & Y LLP thereby escaping his personal income tax liability by making the payment of his professional fee in the name of third party and requested the Board for taking necessary disciplinary action against Mr. Venkatasubramanian.

The disciplinary committee noted that the Insolvency professionals play a vital role in the resolution process and forms a crucial pillar upon which rests the effective, timely functioning as well as credibility of the entire edifice of the resolution process.

“An insolvency professional must maintain complete independence in his professional relationships and should conduct the insolvency resolution, liquidation or bankruptcy process, as the case may be, independent of external influences. An insolvency professional shall not influence the decision or the work of the committee of creditors or debtor, or other stakeholders under the Code, so as to make any undue or unlawful gains for himself or his related parties, or cause any undue preference for any other persons for undue or unlawful gains and shall not adopt any illegal or improper means,” the DC observed.

After analyzing the facts in deep, the disciplinary committee found that Mr. Venkatasubramanian had authorised Ernst & Young LLP to raise invoices for his “fees and other out of pocket expenses for work undertaken by him in connection with Corporate Insolvency Resolution Process (CIRP)” in respect of JEKPL Private Limited which is a violation of section 5(13) of the Code.

It was also found that Mr. Venkatasubramanian himself directed for the settlement of the bills so raised by Ernst and Young LLP as being the IRP/RP of JEKPL Private Limited thus contravened item 9 and 25 of the Code of Conduct for Insolvency Professionals. Also, he allowed Ernst and Young LLP to raise invoices for his professional fee, thereby, treating the profession of Insolvency Professionals as employment under an entity which is a contravention of section 208 of the Code.