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2021 (3) TMI 646 - Board - Insolvency and BankruptcyValidity of accepting the assignment as Resolution Professional (RP) in corporate insolvency resolution process (CIRP) of Torus India Limited (CD) without holding a valid Authorisation for Assignment (AFA) issued to him by his IPA - contravention of sections 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016 (Code), regulations 7(2)(a), 7(2)(h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) read with clauses 1, 2, 11, 12 and 14 of the Code of Conduct for Insolvency Professionals contained in the First Schedule of the IP Regulations - HELD THAT:- As per Regulation 7A of IP regulations, it is clear that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled as a professional member. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July, 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs - The bye laws of Indian Institute of Insolvency Professional of ICAI defines in para 4(1)(aa) the expression "Authorisation for Assignment" as an authorisation to undertake an assignment, issued by an insolvency professional agency to an insolvency professional, who is its professional member, in accordance with its bye-laws regulation. An application for grant of AFA can be made to the IPA under para 12A of said bye laws. In the present matter, Mr. Bhat had given consent to accept the assignment as IRP in Form-2 on 5th June, 2018 in the CIRP of the CD and the date of commencement of the CIRP is 20th December, 2019. However, it is also observed that Mr. Bhat was ratified as RP in the CIRP of the CD in the 1st meeting of the CoC held on 17th January, 2020, i.e., after the threshold date of 31st December, 2019 without having a valid AFA. Mr. Bhat has submitted that since the provision relating to AFA was newly inserted and made effective on 1st January, 2020, he was under the impression that it was not applicable for the ratification to act as RP. The DC finds that though acceptance of assignment was given prior to cut off date, i.e., 31st December, 2019, however, notification for the same was notified on 23rd July, 2019. Mr. Bhat should have applied for AFA especially in view of acceptance given for the assignment and at least after coming into force of the provision of regulation 7A of the IP Regulations. He applied for AFA on 4th August, 2020, approximately after 8 months of the admission of the application on 20th December, 2019. In view of the fact that the Disciplinary Committee of the Indian Institute of Insolvency Professional of ICAI has already passed order in this matter, the DC, in exercise of the powers conferred under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposes of the SCN without any direction.
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