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DISCIPLINARY ACTION AGAINST INSOLVENCY PROFESSIONALS

Corporate Laws / Banking / SEBI - By: - Mr. M. GOVINDARAJAN - Dated:- 17-4-2018 - Complaints against insolvency professionals Section 217 of the Insolvency and Bankruptcy Code, 2016 ( Code for short) provides that any person aggrieved by the functioning of the insolvency professional may file a complaint to the Insolvency and Bankruptcy Board ( Board for short) in Form A along with a fee of ₹ 2500/- within forty five days of the occurrence of the cause of the action of the complaint. Penal .....

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al amount of penalty imposed shall not exceed more than ₹ 1 crore. The Board may direct any person who has made unlawful gain or averted loss by indulging in any activity in contravention of the Code or the rules or regulations made there under, to disgorge an amount equivalent to such unlawful gain or aversion of loss. The Board may take such action as may be required to provide restitution to the person who suffered loss on account of any contravention from the amount so disgorged, if th .....

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tion or investigation of the insolvency professional. The inspection or investigation shall be conducted within such time and in such manner as may be specified by the regulations. The investigating authority may require any other person who is likely to have any relevant document, record or information to furnish the same, and such person shall be bound to furnish such document, record or information. A detailed report of inspection or investigation shall be submitted to the Board by the Invest .....

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the evidence in support of the alleged facts; the provisions of the Code, rules, regulations and guidelines there under allegedly violated, or the manner in which the public interest is allegedly affected; the actions or directions that the Board proposes to take or issue if the allegations are established; the manner in which the insolvency professional is required to respond to the show cause notice; consequences of failure to respond show cause notice; and procedure to be followed for dispos .....

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c means to the email address of the insolvency professional, provided by him or provided by the insolvency professional agency with which he is enrolled. Disciplinary committee Section 220 provides that the Board shall constitute a disciplinary committee to consider the reports of the Investigating Authority. The members of the disciplinary committee shall consist of whole time members of the Board only. On the examination of the report of the Investigating Authority, if the disciplinary committ .....

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have elapsed from the date of issue of the order unless the disciplinary committee states otherwise in the order along with the reason for the same. The order shall be issued to the insolvency professional, with a copy to the insolvency professional agency with which he is enrolled immediately and be published on the website of the Board. First disciplinary case The Board, for the first time, issued show cause notice to Shri Mr. Dhaivat Anjaria, PWC House, 252, Veer Savarkar Road, Shivaji Park, .....

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t July, 2017 which invited claims by 4th August, 2017 and stated that estimated date of closure of the CIRP is 16th January, 2018. In response to the public announcement, M/s National Sales (Claimant), a proprietorship firm, submitted a claim on 16th August, 2018. The IRP did neither include the claim in the list of operational creditors nor respond to the claimant. The claimant resubmitted the same claim on 3rd October, 2017. It met the same fate. As the IRP failed and neglected to consider the .....

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IRP was to close on 16th January, 2018, the Board issued the SCN on 29th January, 2018 to show cause as why disciplinary action should not be initiated against him for failure to respond to the clarifications sought through various mails by IBBI . Mr. Anjaria responded vide his communication dated 5th February, 2018 stating that the claim of the claimant was a subject matter of an ongoing legal proceedings. Therefore, he filed an application on 9th January, 2018 before the Adjudicating Authority .....

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As RP, he did neither consider the claim nor respond to the complainant. He utterly disregarded his statutory duty under section 18(1)(b) of the Code, which mandates him to receive and collate all claims. He contravened the provisions of section 18(1) (b) of the Code. The CIRP was estimated to close on 16th January 2018. Mr. Anjaria disregarded the claim of the claimant and remained incommunicative. He sent a mail on 22nd January, 2018, that is, after the estimated closure date of CIRP, to the c .....

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duct which requires him to promptly communicate to his stakeholders. Mr. Anjaria also disregarded repeated requests of the Board for a response on the complaint. He responded to the Board only after a show cause notice was issued to him. He made the stakeholder as well as the Board helpless. It is unbecoming of a professional to ignore repeated requests of the claimant and the Board for the entire CIRP period. Therefore, he failed to comply with the provisions of section 196(1)(g) and (h) of the .....

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