The Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI) suspended the registration of the Insolvency Professionals (IP) for Six Months as he suppressed the fact already entered in the memorandum of understanding (MoU) with the Committee of Creditors (CoC).
A Show Cause Notice (SCN) was issued to Mr Kairav Anil Trivedi who is a Professional Member of the ICSI Institute of Insolvency Professionals and an Insolvency Professional registered with the Insolvency and Bankruptcy Board of India (IBBI/Board).
The National Company Law Tribunal, Mumbai Bench (AA) admitted the application under Section 9 of the Code for corporate insolvency resolution process (CIRP) of the M/s. Prince MFG Industries Private Limited (Corporate Debtor/CD). Mr Kairav Anil Trivedi was appointed as Interim Resolution Professional vide the above-said Order and was later also confirmed as Resolution Professional for the CD.
The IBBI appointed an Investigating Authority (IA) to investigate the CIRP of the CD. Based on the investigation, the IBBI issued the SCN which was later referred to the Disciplinary Committee (DC) for disposal of the SCN.
It was observed that Mr Trivedi had conducted the 1st meeting of the Committee of Creditors (CoC) on 10.11.2021 wherein the agenda regarding confirmation of IRP as RP was discussed. The CoC had confirmed the appointment of IRP as RP.
It was noted that a resolution for the appointment of Mr Pradeep Kabra as resolution professional in place of Mr Trivedi was approved by 100% voting of CoC after which an application for the replacement of RP under section 27 of the Code was filed before the AA.
It was evident that the CoC in the 1st CoC meeting had voted against the agenda for the appointment of IRP as RP. Mr Trivedi had incorrectly recorded in the minutes that his appointment as RP was confirmed by CoC in the 1st meeting.
It was argued that during the meeting of the COC, one of the banks namely Canara Bank having a 67% voting share informed the IRP that as per their internal policy guidelines framed by the bank for the CIRP process, they need to nominate an Insolvency Professional who is empanelled only with them in their list. Mr Trivedi clarified to the Canara bank that in case the COC wants to replace the IRP then the provision of section 22 applies wherein to replace the IRP in the 1st CoC meeting, the CoC needs to ensure compliance with mandatory requirements mentioned therein.
The IP must be upright in his conduct which is independent of any act of the CoC member and accurately record the discussion of the CoC meetings, motions proposed or voted on, and activities to be undertaken without any scope of further disputes or misrepresentation of the situation.
It was evident that Mr Trivedi has not recorded the minutes of the 1st CoC meeting accurately and had not disclosed to CoC the factual status of the MoU for Contract Manufacturing Activity, the Disciplinary Committee noted. The draft MoU was shared with CoC on 30.12.2021 for vetting and a second opinion was being considered.
The Disciplinary Committee (DC) comprising Ravi Mital, (Chairperson) observed that Mr Trivedi has suppressed the fact of already entering an MoU with the CoC. The DC suspended the registration of Mr Kairav Anil Trivedi for a period of six months.
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