Every IP shall ensure that his conduct would not undermine the credibility of the CIRP In this matter of Mr. Sanjay Kumar Agarwal, Insolvency Professional (IP), the Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI), in exercise of the powers conferred under Section 220 (2) of the Insolvency and Bankruptcy Code, 2016 (Code) read with sub-regulations (7), (8)...
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Every IP shall ensure that his conduct would not undermine the credibility of the CIRP
In this matter of Mr. Sanjay Kumar Agarwal, Insolvency Professional (IP), the Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI), in exercise of the powers conferred under Section 220 (2) of the Insolvency and Bankruptcy Code, 2016
(Code) read with sub-regulations (7), (8) and (10) of Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, has directed that the IP shall not seek or accept any assignment in any capacity under the Code, till he is exonerated of the charges.
The IBBI took on record the First Information Report (FIR) registered with Central Bureau of Investigation (CBI), Anti-Corruption Bureau (ACB), Dhanbad. The IP was arrested for demanding and accepting an illegal gratification of Rs. 5 Lakhs from complainant, Mr. Amit Sarawgi. The case was registered under Section 7 of Prevention of Corruption Act, 1988.
The IBBI had issued the SCN (Show Cause Notice) to Mr. Sanjay Kumar Agarwal, based on examination of material available on record including the FIR registered with CBI and order of the Special Judge, CBI in respect of his role as interim resolution professional (IRP)/ resolution professional (RP) in Corporate Insolvency Resolution Process (CIRP) of Adi I spat India Pvt Ltd. (CD). The SCN alleged contraventions of several provisions of the Insolvency and Bankruptcy Code, 2016 (Code), the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) and the Code of Conduct under regulation 7(2).
The IP had submitted that that FIR did not constitute substantive evidence but was mere untested/ unverified version of complainant and that the FIR was registered by the ex-Directors in an attempt to stall the CIRP. Hence, FIR could not be used as a primary evidence of truth of its contents as it could not be substituted for evidence given on oath.
It was also put forth from the IP's side that he would submit a voluntary undertaking before the IBBI to the effect that he would not take up any fresh assignment to act either as an IRP, RP or as a Liquidator, till he is exonerated from charges of the aforesaid criminal case. He also informed that he had intimated to the CoC his inability to conduct further CIRP process of this matter.
The DC affirmed that under the Code, the RP plays a central role in resolution process of the CD, he is appointed by the Adjudicating Authority as an officer of the Court to oversee the resolution process and it is the duty of the RP to conduct CIRP with integrity, transparency and accountability in the process ensuring that all the stakeholders are kept informed. Thereby ensuring an effective insolvency regime, which would in turn foster public confidence. Therefore, it becomes imperative for an IP to perform his duties with utmost care and diligence.
Section 208(2) of the Code provides that every insolvency professional shall abide by the Code of conduct. It is the duty of the IP to ensure that his conduct would not undermine the credibility of the process. Therefore, while granting certificate of registration to an IP they are subjected to follow the Code of Conduct specified in the First Schedule to the IP Regulations to ascertain that the IP is a fit and proper individual.
The Regulation 11 of the IP Regulations gives power to the IBBI to issue SCN based on findings of an inspection, investigation or on material otherwise available on record, if the facts prima facie disclose a contravention of the Code, Rules or the Regulations thereof.
The DC also noted that a trap proceeding was conducted by CBI against the IP wherein he was caught accepting an amount of Rs. 3 lakhs from Mr. Amit Sarawgi (complainant to CBI). However, it had been contended by the IP that the said amount was accepted as a part refund of Rs. 10 lakhs illegally withdrawn from the current account of CD held with Andhra Bank by the ex-Director.
The DC noted that as informed by the IP, a criminal writ petition had also been filed before Hon'ble High Court of Jharkhand against CBI praying that the Petitioner was not a public servant and, for quashing the FIR and any other proceeding emanating therefrom and the matter was not yet fully decided. The DC had also taken on record the voluntary undertaking submitted by the IP stating that he would not take up any fresh assignment under the Code, till he is exonerated from the criminal case. The DC considered all these factors and passed the order.