The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) has issued a warning to an Interim Professional for alleged bribery demands and non-cooperation with the inspecting authority.
The National Company Law Tribunal (NCLT), Mumbai Bench (AA), admitted an application under section 7 of the Code to initiate the Corporate Insolvency Resolution Process (CIRP) of Shree Ram Urban Infrastructure Limited (CD). Insolvency Professional (IP) Srigopal Choudhary was appointed as the Interim Resolution Professional (IRP).
After reviewing the available material, including the Inspection Report, the Board issued a Show Cause Notice to the IP. The IP responded to the notice and appeared for a personal hearing.
Srigopal Choudhary explained that the CIRP had faced significant delays due to ongoing litigation and injunction orders issued by various forums such as NCLAT and the Supreme Court.
The Disciplinary Committee emphasized that the IP is duty-bound to provide all relevant documents to the inspecting authority. During the CIRP, it is the IP’s responsibility to conduct the process transparently by promptly submitting complete copies of records to the Board. The Committee noted that Civil Appeal nos. 3422-3424/2020 were dismissed as withdrawn by the Supreme Court on 09.02.2021. Despite this, the IRP conducted the 1st CoC meeting on 19.04.2021 and the 4th CoC meeting on 29.09.2021, while the inspection notice from the inspecting authority was sent on 23.11.2021. These actions indicate that some activities were undertaken in the CIRP before the inspection commenced.
Therefore, the Committee concluded that Srigopal Choudhary’s failure to provide the necessary information and documents constituted deliberate and willful non-cooperation with the inspecting authority. The IP possessed the requested information/documents, which were not under the custody of the Official Liquidator, and there were no court orders preventing their submission.
Additionally, the IP was accused of demanding a bribe for accepting the claim of UPPL Projects Private Limited, which violates Clause 26 of the Code of Conduct. The Disciplinary Committee observed that Srigopal Choudhary did not provide comprehensive information because he did not have custody of the assets and documents of the CD.
However, it was clarified that the inspecting authority required documents related not only to the CD’s documents but also to the CIRP of the CD. These documents included the issuance of a public announcement, claim forms, claim verification and collation documents, filings before the AA regarding the composition of the CoC, applications filed under section 19(2) of the Code, notices and agendas of CoC meetings, voting sheets on resolutions, appointment of registered valuers, valuation reports, information memorandum, disclosures filed before the Board and IPA, and details regarding CIRP costs. Srigopal Choudhary simply claimed non-receipt of documents from the Official Liquidator and did not make an effort to attend the checklist where specific documents were requested along with the applicable provisions of the Code and underlying regulations.
The Disciplinary Committee noted that the required information/documents were in the possession of Mr. Choudhary and not the Official Liquidator. There were no court orders preventing the submission of such information/documents.
Hence, the Disciplinary Committee found Srigopal Choudhary in violation of Section 208(2)(e) of the Insolvency and Bankruptcy Code, Regulations 4(4) and 4(7) of the Inspection Regulations, Regulation 7(2)(h) of the Insolvency Professionals Regulations, and Clauses 18 and 19 of the Code of Conduct.
The Board noted from the IP’s reply to DIR that although he denied the allegations, he failed to provide the necessary documents to enable the Board to verify the veracity of the allegations. Srigopal Choudhary’s conduct of merely denying the allegations without substantiating his contention is not in accordance with the requirement of being straightforward and forthright in a professional relationship.
Regarding the alleged bribery demand, the benefit of doubt was given to Mr. Srigopal Choudhary. The transcript of the recording indicated a leak of vital information regarding claims. However, the available corroborative evidence, in the form of admitted claims, did not align with what was mentioned in the alleged conversation.
Due to the non-cooperation contravention described, the Disciplinary Committee warned Mr. Srigopal Choudhary to be extremely careful and ensure compliance with the provisions of the Code and its underlying regulations when performing his duties as an IP. The Adjudication Division of the Board was instructed to keep this Order on active record as negative points against him, warranting continuous vigilance. The Board will also monitor other cases handled by him to deter him from repeating such mistakes.
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