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Delhi HC stays Imposition of Penalty on Insolvency Professionals alleged to have violated terms of Memorandum against provision of IBC

By Taxscan Team -

The High Court of Delhi stayed the imposition of penalty on Insolvency Professionals alleged to have violated terms of Memorandum against the provision of the Insolvency and Bankruptcy Code (IBC). The stay was subjected to a sum of Rs.25 lacs with the respondent, Insolvency and Bankruptcy Board of India.

The petitioner, Mohan Lal Jain was appointed Insolvency Professional (IP) of Mack Soft Tech Private Limited against which the Corporate Insolvency Resolution Process (CIRP) was initiated and an Insolvency Resolution Professional (IRP) appointed.

As for the petitioner, he is said to have taken over as the IP only on January 31, 2018. The petitioner is alleged to have violated the terms of moratorium inasmuch as he is stated to have allowed some amounts to flow out to a debtor in violation of the provisions of IBC.

According to the petitioner, there was no violation of any term of Moratorium inasmuch as the monies were remitted from the escrow account maintained by HDFC Bank and that, the monies lying in the escrow account could not be under the control of the IP.

In addition, thereto, the petitioner pleaded that he did not take any decision of his own but only followed the past decisions taken by the previous IP and CoC.

The petitioner highlighted three of the orders passed by the same Authority- which passed the impugned order and which form part of the compilation filed, to show that in quite similar circumstances of a misunderstanding of the provisions of the IBC Code, the Insolvency Professionals (IPs) were let off with warnings but the petitioner has come to be imposed disproportionate penalty in the face of the given facts and circumstances.

The Single Judge Bench of Justice A.K. Chawla stayed the imposition of penalty on Insolvency Professionals alleged to have violated terms of Memorandum against the provision of the Insolvency and Bankruptcy Code (IBC). The stay was subjected to a sum of Rs.25 lacs with the respondent, Insolvency and Bankruptcy Board of India. The case is listed on September 04, 2020.

To Read the full text of the Order CLICK HERE