The Insolvency and Bankruptcy Board of India (IBBI) has suspended the Insolvency Professional (IP) for 1 year for filing the application for extension after 5 months of the expiry of the liquidation period without condoning delay. The board observed this act as a gross negligence from the part of the IP.
The application made by M/s Inland Facilities Management Private Limited (CD) under section 9 of the Code for initiating Corporate Insolvency Resolution Process (CIRP) was approved by the National Company Law Tribunal (NCLAT) bench in Chennai (AA). Mr. C. Ramasubramaniam has been appointed as the Resolution Professional.
The allegation against the IP was non-filing of extension application to extend the liquidation period.
It was observed that the last approved extended liquidation period in the liquidation process of the CD was up to 01.04.2022. The application for seeking further extension of the liquidation period beyond 01.04.2022 was filed by Mr. C. Ramasubramaniam, after almost six months on 30.09.2022.
It was evident that Mr. C. Ramasubramaniam failed to file an application for an extension of the liquidation period prior to the expiry of the approved extended period meaning thereby that process conducted by him during that period was without authority.
Despite being aware of the expiry of the liquidation period on 01.04.2022, the extension application was filed by Mr. C. Ramasubramaniam only on 30.09.2022 after a lapse of 182 days, and that too without any application for condonation of delay.
In response to the allegations, the IP submitted that he handed over the documents pertaining to the CD to an Advocate in March 2022 for filing a necessary application for an extension of the liquidation period and he was assured to file an application for an extension of the liquidation period. However, he came to know that the advocate had not filed the relevant application before AA lately.
The Liquidator has further submitted that the delay in filing the application for extension of liquidation is neither willful nor wanton, but due to bona fide reasons set forth herein above and there is no mens rea or any personal negligence on his part.
The Disciplinary Committee (DC) observed that “Merely handing over the requisite document for filing the extension application to the Advocate cannot be said a mere bonafide omission on the part of the Liquidator. It is the duty of the Liquidator to follow up with the Advocate for filing the extension application, but the Liquidator failed to do so.”
It was also noted that the filing of the extension application five months after the liquidation period had ended indicated gross negligence on the part of the liquidator and a failure to perform the duties required by the Code and the Regulations adopted thereunder.
The DC noted that recently on similar kind of violation, Mr. C. Ramasubramaniam was warned as he built up the case that mistake had occurred on part of delegated person and not by him as designated person could file the requisite documents with considerable delays, as a one off gesture.
The DC added that “Despite the fact reasonableness in terms of handling number of assignment has been left with the professional but surely as professional he has to be mindful about his capacity to simultaneously handle so many assignment.”
In accordance with the submissions and the findings, it was found that the IP has contravened the Sections 35 (n) and 208(2)(a) of the Insolvency and Bankruptcy Code (IBC), regulation regulation 15 and 44(2) of the Liquidation Regulations, regulation 7(2)(h) of the Insolvency Professionals Regulations read with clauses 13, 14 and 22 of the Code of Conduct. Thus, suspended for 1 year.
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