TMI Blog2020 (6) TMI 499X X X X Extracts X X X X X X X X Extracts X X X X ..... a crossed demand draft payable in favour of the 'Insolvency and Bankruptcy Board of India'. The Board in turn shall deposit the penalty amount in the Consolidated Fund of India - Mr. Tarun Jaggi shall not accept any new assignment as an IP till he deposits the monetary penalty of ₹ 1,00,000/- (Rs. One Lakh only) with the Board and produces evidence to the Board of such deposit. - NO. IBBI/DC/20/2020 - - - Dated:- 20-3-2020 - Dr. Navrang Saini, Member For the Appellant : Om Prakash and Ms. Rashi Gupta ORDER In the matter of Mr. Tarun Jaggi, Insolvency Professional (IP) under 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). 1. Background 1.1 This Order disposes of the Show Cause Notice (SCN) dated 27th November 2019 issued to Mr. Tarun Jaggi, A-1/292 Ground Floor, Janakpuri, Delhi, 110058, who is a Professional Member of the Indian Institute of Insolvency Professional of ICAI and an Insolvency Professional (IP) registered with the Insolvency and Bankruptcy Board of India (Board) with Registration No. IBBI/IPA-001/IP- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one regional language newspaper. Since time- bound public announcement in newspapers, as stipulated in Voluntary Liquidation Process Regulations, is critical to the effective liquidation of the corporate person, therefore, the Board is of the prima facie view that the liquidator has failed to adhere to timelines prescribed under the said Regulations and violated section 208(2)(a) of the Code, regulations 14(1) and 14(3)(a) of Voluntary Liquidation Process Regulations and regulation 7(2)(a) and (h) of IP Regulations read with clauses 10, 13 and 14 of the Code of Conduct as given in the First Schedule of the IP Regulations. Submission: RP submits that Viber Media Private Limited was incorporated on 19.12.2014 but because of not having any commercial and economic viability in the near future, shareholder of the company decided to close down the operation of the company and in the shareholder meeting dated 15.1.2018, the initiation of proceedings of voluntary winding up under the provisions of the Code was approved and Mr. Tarun Jaggi was appointed as IP for voluntary winding up proceedings of the company. The company was not having any creditors except some account payable whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber Media India Private Limited did not have any website and thus, the requirement of Regulation 14 (3)(b) was not applicable. With regard to publication of the public announcement in one English and one regional language newspaper with wide circulation at the location of the registered office and principal office, if any, of the corporate person, the Liquidator admitted that such announcement was not made within the time as stipulated under Regulation 14(1) above. It is pertinent to mention that the provision regarding publication has been made to intimate the public at large about the liquidation proceedings of the corporate person so that an opportunity is accorded to all stakeholders to file their claims, if any, as on the liquidation commencement date. The submission of Liquidator, during personal hearing, that there were no creditors of the corporate person cannot be a ground for not making public announcement in newspapers as per Regulation 14(3)(a) of Voluntary Liquidation Process Regulations. Further, belated publication cannot hold good for the compliance of the provisions of aforesaid Regulation. This perhaps has happened either due to lack of knowledge or non-seri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcial and economic viability in the near future. In the shareholder meeting dated 8.5.2018, the initiation of proceedings of voluntary winding up under the provisions of the Code was approved and Mr. Tarun Jaggi was appointed as IP for voluntary winding up proceedings of the company. The company was not having any creditors except some account payable which was already a part of financial statements of the company as on the date of commencement of voluntary winding up proceedings under the Code. The company made public announcement on time and the same was issued on 9.5.2018 on IBBI website but the company inadvertently missed to make publication of the same in newspaper and to make that compliance good, he himself made a suo moto request to the IBBI to grant the permission and after permission was given by IBBI, publication has been made on 10.1.2019 which was a delayed publication as per the IBBI Regulations. He also submitted that except the delay in publication in the newspaper, all the reporting and compliances have been made on time before the Board and other respective authorities under IBC Regulations in connection with MGI Group India Private Limited. Analysis: Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e were no creditors of the corporate person, cannot be a ground for not making public announcement in newspapers as per Regulation 14(3)(a) of Voluntary Liquidation Process Regulations. Further, belated publication cannot hold good for the compliance of the provisions of aforesaid Regulation. This perhaps has happened either due to lack of knowledge or nonserious attitude of the Liquidator towards compliances. Further, it has also been observed that the Liquidator made a suo moto request to the Board to grant the permission to make a belated public announcement in the newspapers to which the Board, vide letter dated 28.12.2018, clearly responded that, This is clearly in contravention to the regulations. Hence, you are required to give suitable reply regarding the same. The language used by the Board is neither permissive nor corrective in nature. On the other hand, the Board took the view that the liquidator has contravened the provisions of the Code and shall give suitable reply regarding the same. The Board further directed the Liquidator to issue public announcement immediately keeping in consideration the interests of all the stakeholders and not to condone the contr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations and regulation 7(2)(a) and (h) of IP Regulations read with clauses 3, 10 and 14 of the Code of Conduct as given in the First Schedule of the IP Regulations. Submission: It is submitted that MGI Group India Private Limited has commenced its liquidation by way of Members Voluntary Winding up with effect from 8.5.2018 under the IBC Regulations and Deloitte Haskins Sells has been the statutory auditor of MGI Group India Private Limited prior to commencement of liquidation of the company. There were no creditors on the date of commencement of voluntary winding up of the Company and members decided to continue with the audit services of existing auditor i.e. Deloitte Haskins Sells, Mumbai who were the group auditors of the members shareholding companies, for the audit of financial statements for the liquidation period. In terms of Regulation 38 of Voluntary Liquidation Process Regulations, final report comprising of audited statement of account from the statutory auditor since liquidation commencement date is required to be submitted with the Board and Registrar of Companies. As the existing auditors were group auditors of the Company and it has been decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able since such a continuation is in contravention of regulation 11(2) of Voluntary Liquidation Process Regulations. During the personal hearing, the Liquidator was asked to produce any resolution passed by the members in this regard, however, the Liquidator denied of having any such resolution. It has also been observed that Deloitte Haskins Sells wrote a letter dated 26.11.2018 addressed to the Liquidator, Mr. Tarun Jaggi wherein the firm accepted the audit engagement for auditing the special purpose financial information of MGI Group India Private Limited under voluntary liquidation, as required under Regulation 38 of the IBBI (Voluntary Liquidation Process) Regulation 2017 for the period from 8.5.2018 to 15.12.2018. The opening lines of the abovementioned letter states, We refer to the letter dated 20th November 2018 requesting us that we audit the special purpose financial information of MGI Group India Private Limited... . This manifests that the Liquidator himself requested Deloitte Haskins Sells to audit the special purpose financial information of MGI Group India Private Limited under voluntary liquidation. Findings: The Liquidator compromised his ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ulations 4.4 Thus, Mr. Tarun Jaggi has displayed utter misunderstanding of the provisions of the Code and Regulations made thereunder. He has, therefore, contravened provisions of: (a) Sections 208(2)(a) of the Code, (b) Regulation 11(2), Regulation 14(1) and Regulation 14(3)(a) of IBBI (Voluntary Liquidation Process) Regulation 2017, and (c) Regulation 7(2)(a) and 7(2)(h) of the IBBI (Insolvency Professionals) Regulations, 2016 read with clause 3, 10, 13 and 14 of the Code of Conduct under the said Regulations. 5. Order 5.1 The DC is conscious of the fact that the profession of IP is in a stage in which IPs are striving to learn. However, it is incumbent upon the IPs to perform their duties diligently and act strictly in accordance with the provisions of the Code and the regulations made thereunder. They must endeavor to build and safeguard the reputation of the profession which should enjoy the trust of the society and inspire confidence of all the stakeholders. DC is also aware of the fact that the IP himself came forward and sought permission to make public announcement belatedly though there is no such provision. Further, non-compliance of law is not toler ..... X X X X Extracts X X X X X X X X Extracts X X X X
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