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2020 (6) TMI 555 - Board - Insolvency and BankruptcyDisciplinary Action against the Insolvency Resolution Professional (IRP) - Contravention of provisions of the Code, Regulations, and directions issued thereunder on the part of Insolvency Professional - Regulation 11 of the Insolvency and Bankruptcy Board of India (Insolvency Professional) Regulations, 2016 read with Section 220 of the Insolvency and Bankruptcy Code, 2016 (Code) - HELD THAT:- A key supporting institution under the Code is insolvency profession. An IP exercises the powers of the Board of Directors of the firm under resolution, manages its operations as a going concern, and complies with applicable laws on behalf of the firm. He conducts the entire insolvency resolution process: he is the fulcrum of the process and the link between the Adjudicating Authority and stakeholders - debtor, creditors - financial as well as operational, and resolution applicants. The process culminates in a resolution plan that maximises the value of assets of the firm. This presupposes availability of many competing resolution plans and identifying the best of them. The key is generation of many promising resolution plans. This requires provision of and access to complete and accurate information about the firm for prospective resolution applicants and continued operation of the firm. The Code casts this duty on the IP. He organises all information relating to the assets, finances and operations of the firm, receives and collates the claims, prepares information memorandum, and provides access to relevant information, so that there is complete symmetry of information among the entitled stakeholders, while maintaining confidentiality. He thus addresses the market failure arising from information asymmetry. The resolution balances the interests of the stakeholders. This requires the services of a third person who does not side with any stakeholder and has no conflict of interests. The law casts this duty on the IP and makes several provisions to ensure his integrity, objectivity, independence and impartiality. It also requires him to be a fit and proper person. Given the responsibilities, an IP requires the highest level of professional excellence. DC observes that Mr. Aran Kumar Gupta displayed a casual approach during the conduct of CIRP. When a CD is admitted into CIRP, the Code shifts the control of a CD to creditors represented by a CoC for resolving its insolvency. The CoC holds the key to the fate of the CD and its stakeholders. Thus, several actions under the Code require approval of the CoC. The RP has displayed utter misunderstanding of the provisions of the Code and Regulations made thereunder. He has contravened the provisions. The DC is conscious of the fact that the profession of IP is in a stage in which IPs are striving to learn. Even though it is incumbent upon them to build and safeguard the reputation of the profession which should enjoy the trust of the society and inspire confidence of all the stakeholders, they may not be kept away from practicing the profession especially in the absence of any malafide intention and more so when the objective of the Code i.e. resolution has been achieved within the prescribed timelines. The RP is hereby warned to be extremely careful and diligent while performing his duties under the Code. Further, he must strictly act in accordance with the provisions of law and similar contraventions shall not be repeated.
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