A Disciplinary Committee (DC) of Insolvency and Bankruptcy Board of India (IBBI) comprising Whole Time Member Jayanti Prasad has recently imposed penalty on Resolution Professional (RP) Sanjeev Ahuja for lapses in following procedures about appointing non-Registered Valuers (RVs), not sending notice of the meeting of Committee of Creditors (CoC) to Operational Creditors (OCs) and not seeking approval from CoC regarding insurance cost.
The DC found that Regulation 27 of Corporate Insolvency Resolution Process (CIRP) Regulations and Board circular No. IBBI/RV/019/2018 dated 17.10.2018 and clause 14 of the Code of Conduct were violated as on the date of execution of the engagement letter, 10.02.2019, both the valuers appointed were not registered valuers.
Every RP is expected to independently and objectively conduct the CIRP when he takes the assignment. It was observed by the Board that “OCs in the CIRP of the CD-1 should have been given notice to attend CoC meetings as their aggregate claim was 15% of the total claims against the CD-1.”
The conduct of not giving notice to OCs is also in contravention of clauses 1, 2 and 14 of the Code of Conduct, the Board said.
Regarding buying insurance policy and including the expenditure in CIRP cost without approval of CoC, expenses to be incurred shall be fixed by CoC and approval is required wherever necessary for inclusion in IRPC.
The RP did not bring the said expenses in the knowledge of CoC in any of its meetings. Hence the DC found that Mr. Sanjeev Ahuja has contravened section 5(13) of the Code read with regulation 31 and 34 of CIRP Regulations read with clauses 1 and 2 of the Code of Conduct.
Thus, the Insolvency Professional was imposed with a penalty of Rs. Five Lakhs and was directed to be more cautious in the future.
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