IBBI Imposes Penalty on IP for his Negligence to Take Ordinary Due Care and Caution in Selling Asset Corporate Debtor [Read Order]
IBBI – Penalty – IP – Negligence – Ordinary Due Care and Caution – Caution – Selling Asset Corporate Debtor – Corporate Debtor – IBBI Imposes Penalty – taxscan
IBBI – Penalty – IP – Negligence – Ordinary Due Care and Caution – Caution – Selling Asset Corporate Debtor – Corporate Debtor – IBBI Imposes Penalty – taxscan
The Insolvency and Bankruptcy Board of India (IBBI) imposed a penalty on Insolvency Professional for his negligence of ordinary due care and caution in selling assets corporate debtor
Mr Sai Ramesh Kanuparthi, Insolvency Professional (IP) submitted contraventions before the IBBI. The National Company Law Tribunal, Hyderabad, (AA) had admitted the application under section 7 of the Code for Corporate Insolvency Resolution Process (CIRP) of M/s Konaseema Gas Power Limited (CD) vide order dated 18.12.2018 and Mr Kambhammettu Sri Vamsi was appointed as Interim Resolution Professional (IRP) vide the same order. Mr Kambhammettu Sri Vamsi was appointed as the RP (Resolution Professional) in the Committee of Creditors (CoC) meeting held on 24.01.2019.
However, due to the failure of CIRP, the liquidation process was initiated vide order dated 20.02.2020 by the AA, and vide the same order, the IP was appointed as the Liquidator. The liquidation process has not attained finality thus far.
The IBBI appointed an Investigating Authority (IA) to investigate the observations in the matter of the liquidation process of the CD. The IBBI issued the SCN to the IP based on findings in the Investigation Report in respect of his role as Liquidator of the CD.
The NCLT observed that in the process of the sale of assets of the CD during the liquidation process, one of the assets of the CD was sold by the IP for Rs.48.84 lakh (plus GST) at the rate of 0.051 USD/ VCU to M/s EKI Energy Services Pvt Ltd. in June 2021 through the mode of the private sale.
Further, it was observed that none of the conditions for selling the assets of the CD using private sale prescribed under Regulation 33(2) of the Liquidation Regulations has been fulfilled.
The Board viewed that Mr Sai Ramesh Kanuparthi has contravened provisions of Section 35(1)(d) & (o) and 208(2)(a) & (e) of the Code, Regulation 33(2) of the Liquidation Regulations and Regulation 7(2)(h) of IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 13 and 14 of the Code of Conduct for IPs provided under First Schedule of IP Regulations (Code of Conduct).
The Board has further observed that on the perusal of the Asset Memorandum dated 04.09.2020 and the Valuation Report, the VCUs were not valued by the registered valuers and that they were even sold without such valuation.
It was evident that the IP failed to observe ordinary due care and caution in selling the asset of the CD and the relevant provisions of Liquidation Regulations for the sale of the asset of CD were not followed.
The IBBI imposed a penalty of Rs. 2,00,000/- (Rs. Two Lakh only) on Mr Sai Ramesh Kanuparthi and directed Mr Kanuparthi to work as a probationer for four months with other experienced IP so nominated by her IPA under which he is registered.
To Read the full text of the Order CLICK HERE
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