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2019 (3) TMI 825

Regulations, 2016 and the IBBI (Insolvency Professionals) Regulations, 2016 - Mr. Kejriwal is a professional member of the ICSI Institute of Insolvency Professionals and an Insolvency Professional (IP) - Mr. Kejriwal [IP] did not conduct CIRP as required under section 23 of the Code. He did not submit progress report to AA in time, make public announcement in time, appoint registered valuers, prepare and circulate information memorandum, invite resolution plans under section 25(2)(h) of the Code, convene the meetings of CoC with adequate notice, etc.. He did not run the CDs as a going concern, as required under section 20 of the Code and resigned as RP in both the CIRPs, without prior permission of the AA, though he consented to act as IRP and as RP in both cases - HELD THAT:- An IP is not just another professional. He is dealing with a CD in distress. He needs to go beyond the call of duty to address the distress. The DC unfortunately finds that Mr. Kejriwal did not discharge any of his statutory responsibilities as IRP or RP either to manage the operations of the two CDs as going concern under section 20 of the Code or to conduct the resolution processes of the two CDs under .....

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appeared for a personal hearing on 29th October, 2018 and made oral submission. 2. The DC has carefully considered the oral and written submissions of Mr. Kejriwal and material available on record and proceeds to dispose of the SCN. Background 3. The SCN arises from the alleged conduct of Mr. Kejriwal as Interim Resolution Professional (IRP), and subsequently as Resolution Professional (RP) in corporate insolvency resolution processes (CIRPs) of two corporate debtors (CDs), namely, (a) Upadan Commodities Private Limited, and (b) Maa Tara Industrial Complex Pvt. Ltd. The undisputed facts leading to issue of SCN are as under: A. Upadan Commodities Private Limited 3.1 The Hon ble Adjudicating Authority (AA), vide order dated 29th August, 2017, admitted an application under section 9 of the Code for CIRP of the CD, Upadan Commodities Private Limited and appointed Mr. Kejriwal, proposed by the applicant, as IRP with a direction to list the matter on 4th October, 2017 for submission of progress report by the IRP. 3.1.1 Mr. Kejriwal did not file the progress report. The AA, in its order dated 4th October, 2017, observed: … even after expiry of more than 30 days, no progress report .....

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e CoC resolved to appoint Mr. Kejriwal as RP. The progress report included a few letters he had written to the CD seeking books of accounts. 3.1.6 The CoC met for 2nd time on 18th December, 2017 where it was informed that Mr. Kejriwal was resigning. The CoC resolved to appoint another insolvency professional as RP. Mr. Kejriwal filed an application dated 19th December, 2017 stating that he resigned as RP with effect from 18th December, 2017 due to personal reason. The AA, in order dated 20th December, 2017, observed: Let show cause notice be issued against the IRP as to why after accepting the work of resolution professional, he is resigning, without prior permission of the adjudicating authority. 3.1.7 The AA, vide order dated 16th January, 2018 appointed a new RP who conducted the CIRP. On conclusion of the CIRP, the AA issued an order for liquidation of the CD vide order dated 1st March, 2018 with the following observation: Vide order dated 29th August 2017, the petition was admitted by appointing Mr. Sandeep Kumar Kejriwal as the Resolution Professional for initiating corporate insolvency resolution process. Mr. Sandeep Kumar Kejriwal however, discontinued from completing the r .....

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15 days. List on 13/11/2017. 3.2.3 Mr. Kejriwal filed a progress report stating that a CoC comprising only one operational creditor was constituted on 14th November, 2017. He issued a notice on 14th November, 2017 convening a meeting of the CoC on 19th November, 2017 with advice to the sole operational creditor to submit resolution plan within four days. The CoC met on 19th November, 2017 where no resolution plan was submitted by the sole operational creditor. In the said meeting, Mr. Kejriwal offered himself for appointment as RP. Accordingly, the CoC resolved to appoint Mr. Kejriwal as RP. While taking note of the progress report, the AA, in its order dated 30th November, 2017, observed: Ld. IRP has filed the progress report but he has not annexed the minutes of CoC meeting. IRP is directed to file the minutes of CoC meeting along with the attendance sheet without which it cannot be ascertained whether he is appointed as RP or not. 3.2.4 The CoC met for 2nd time on 18th December, 2017 where it was informed that Mr. Kejriwal was resigning. The CoC resolved to appoint another insolvency professional as RP. Mr. Kejriwal filed an application dated 19th December, 2017 stating that he .....

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was not well from 4th September, 2017 to 22nd October, 2017. As regards resignation, he has stated in the letter of resignation that he resigned on personal reason. He responded vide his mail dated 2nd January, 2018 that he resigned because he did not get fee and CD did not co-operate. 4.3 Finding: The DC finds that:- a. Mr. Kejriwal has absolutely no defence as to why he did not conduct the CIRP. He has nothing to say as to, for example, why he did not invite resolution plan under the then provisions of section 25(2)(h) from prospective lenders, investors, and any other persons to put forward resolution plans. The sole purpose of CIRP is consideration and approval of resolution plan to resolve insolvency. The heart of the process is resolution plan. He did not invite resolution plans. He did not even prepare or provide the required information to prospective resolution applicants. b. As regards his excuse of non-co-operation from CDs to manage the operations of the CDs as a going concern, there is absolutely no evidence that he wanted to take over management of the CDs. For the sake of formality, he wrote a few letters to the CDs seeking certain documents. He never brought it to t .....

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charge any of his statutory responsibilities as IRP or RP either to manage the operations of the two CDs as going concern under section 20 of the Code or to conduct the resolution processes of the two CDs under section 23 of the Code. He has, therefore, violated provisions of sections 18, 20, 23, 25(2)(g), 25(2)(h), 29, 208(2)(a), and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016, regulations 6(1), 19(1), 27 and 36 of the IBBI (Insolvency Resolution process for Corporate Persons) Regulations, 2016 and regulation 7(2)(a) and 7(2)(h) of the IBBI (Insolvency Professionals) Regulations, 2016 read with clauses 1, 2, 3, 5, 10, 12, 13, 14, and 25 of the Code of Conduct under the said Regulations. It, however, finds in his favour two mitigating factors, namely, (a) Mr. Kejriwal was not well for some time during the relevant period, and (b) the CDs were practically not going concerns to start with. 6.1 In view of the above, the Disciplinary Committee, in exercise of the powers conferred under section 220 (2) of the Code read with sub-regulations (7) and (8) of regulation 11 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, hereby:- (a) imp .....

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