IBBI Disciplinary Committee Suspends Insolvency Professional’s Authorization for Six Months for Acting Without Valid AFA [Read Order]

The Insolvency and Bankruptcy Board of India’s Disciplinary Committee has ordered a six‑monthsuspension of the Authorisation for Assignment (AFA) of an insolvency professional, after finding that he accepted and acted on the Corporate Insolvency Resolution Process (CIRP) of a company without holding a valid authorisation.

The matter arises from the CIRP of Suich Industries Limited, initiated by the NCLT, New Delhi Bench, on 19 November 2024. Bhim Sain Goyal was appointed as Interim Resolution Professional (IRP). At that time, his AFA had already expired on 8 November 2024. Despite the tribunal’s direction to file a valid AFA within five days, he went ahead and issued a public announcement on 22 November 2024 that he was not holding a valid AFA.

A complaint was filed, leading the Board to issue a show-cause notice. Bhim Sain Goyal admitted the lapse, calling it a bona fide mistake. He argued that he believed there was a grace period, sought clarification from his professional agency (ICSI‑IIP), and acted to avoid delay in the CIRP. He also highlighted that he received no financial benefit and even incurred costs personally.

On the other hand, the Disciplinary Committee reconstructed the sequence of events and found that Authorisation for Assignment had expired on 8 November 2024, before he was appointed as Interim Resolution Professional (IRP) on 19 November 2024.

The DisciplinaryCommittee (DC), however, noted that the law was clear that an insolvency professional cannot undertake assignments without a valid AFA. The committee observed that he failed to comply with explicit directions and continued despite being advised to withdraw.

The disciplinary committee held that he accepted the insolvency assignment and issued a public announcement on 22 November 2024 without holding a valid Authorisation for Assignment (AFA), and also failed to inform the Adjudicating Authority within five days as directed.

While deciding the punishment, DC noted that he admitted the lapse as an error of judgment, misinterpreting communication from his professional agency, and the absence of a valid AFA was due to a delay in renewal, not disciplinary action or misconduct.

Taking these into consideration, the whole Time Member Sandip Garg directed the suspension of the insolvency professional’s AFA for six months under Section 220 of the Code and Regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017. The order will take effect 30 days from issuance.

Accordingly, the show cause notice was disposed of.

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates