Issues: Whether an insolvency professional who accepted an assignment before 31 December 2019, but whose appointment was confirmed later, could be proceeded against for lack of a valid authorisation for assignment under Regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.

Analysis: Regulation 7A requires an insolvency professional to hold a valid authorisation for assignment before accepting or undertaking an assignment after 31 December 2019. The record showed that the professional had accepted the assignment on 28 August 2019, before the cutoff date, and the later confirmation of appointment did not alter the date of acceptance. The order also noted that the professional had already faced disciplinary action from the insolvency professional agency, including a warning and a direction not to accept new assignments without authorisation. In these circumstances, the regulatory breach alleged in the show-cause notice was not pursued further by the Board's disciplinary process.

Conclusion: No further direction was called for against the insolvency professional, and the show-cause notice was disposed of without adverse action.

Ratio Decidendi: Regulation 7A is not attracted where the assignment was accepted before 31 December 2019, and no additional disciplinary direction is warranted where the professional has already been dealt with by the relevant insolvency professional agency.

Issues: (i) Whether acceptance of the revised claim of the financial creditor, to the extent it included post-insolvency commencement date interest, violated the requirement that claims be verified as on the insolvency commencement date; (ii) Whether deferment of publication of the expression of interest attracted disciplinary action; (iii) Whether the discrepancies noticed in the information memorandum warranted adverse action; (iv) Whether the public announcement was defective for not being published at the principal office location; and (v) Whether acceptance of the valuation reports furnished by the two registered valuers called for interference.

Issue (i): Whether acceptance of the revised claim of the financial creditor, to the extent it included post-insolvency commencement date interest, violated the requirement that claims be verified as on the insolvency commencement date.

Analysis: The resolution professional is required to receive, collate and verify claims with reference to the insolvency commencement date. A revised claim may be considered to the extent it reflects the amount due as on that date, but amounts arising after that date do not form part of the admissible claim. The inclusion of interest accruing after commencement of the process, therefore, was inconsistent with the statutory scheme governing verification of claims.

Conclusion: The acceptance of the claim for the pre-commencement period was permissible, but acceptance of the post-commencement portion was in violation of the governing regulations.

Issue (ii): Whether deferment of publication of the expression of interest attracted disciplinary action.

Analysis: The deferment was considered in the context of a settlement proposal placed before the committee of creditors and was not treated as a unilateral departure from the process. In the circumstances, the delay was viewed as having occurred within the decision-making framework of the process and a stricter disciplinary view was not considered necessary.

Conclusion: No adverse action was warranted on this issue.

Issue (iii): Whether the discrepancies noticed in the information memorandum warranted adverse action.

Analysis: The information memorandum must contain accurate and updated particulars of assets and liabilities, but the record also showed limited cooperation from the corporate debtor and an explanation for the inconsistency in the worker-dues figures. The discrepancy was treated as inadvertent and not as suppression of material information.

Conclusion: No severe disciplinary consequence was imposed on this issue.

Issue (iv): Whether the public announcement was defective for not being published at the principal office location.

Analysis: The publication was made in newspapers with circulation covering the relevant operational area, and supporting circulation material was produced to show adequate reach. The announcement was treated as compliant with the publication requirement in the circumstances of the case.

Conclusion: The public announcement was held to be in compliance.

Issue (v): Whether acceptance of the valuation reports furnished by the two registered valuers called for interference.

Analysis: Valuation was undertaken by two registered valuers in accordance with the statutory framework. Although one report noted limited asset details, the divergence in the reports was not material, and the explanation regarding non-cooperation in providing asset particulars was accepted.

Conclusion: No interference was called for on the valuation issue.

Final Conclusion: The disciplinary authority recorded contravention in relation to admission of the post-commencement portion of the revised claim, but otherwise took a largely lenient view and disposed of the matter with directions restricting fresh assignments until compliance with the specified educational requirement.

Ratio Decidendi: Claims in insolvency resolution must be verified strictly with reference to the insolvency commencement date, and amounts accruing after that date cannot be treated as admissible claims in the resolution process.

Issues: Whether the insolvency professional violated the requirement of holding a valid authorisation for assignment before accepting the assignment after 31 December 2019, and whether any further direction was warranted.

Analysis: Regulation 7A of the Insolvency Professional Regulations prohibits an insolvency professional from accepting or undertaking an assignment after 31 December 2019 unless a valid authorisation for assignment is held on the date of acceptance or commencement, as applicable. The order records that the relevant assignment commenced after 31 December 2019 and that the professional did not hold a valid authorisation for assignment at that time. The Code and the Regulations also require adherence to the code of conduct, compliance with the bye-laws of the insolvency professional agency, and performance with reasonable care and diligence. Although the conduct was found to be in contravention, the record also notes that the professional institution had already taken disciplinary action and issued a warning for the same conduct.

Conclusion: The contravention was noted, but no further direction was issued against the insolvency professional.

Ratio Decidendi: An insolvency professional cannot accept or undertake an assignment after 31 December 2019 without a valid authorisation for assignment, though separate disciplinary consequences may be declined where adequate prior action has already been taken.

Issues: Whether the insolvency professional had contravened the regulatory requirements by accepting or undertaking the liquidation assignment without a valid authorisation for assignment after 31 December 2019.

Analysis: Regulation 7A of the Insolvency Professional Regulations prohibits acceptance or undertaking of an assignment after 31 December 2019 unless the insolvency professional holds a valid authorisation for assignment. The disciplinary authority also noted that the authorisation regime is linked with the eligibility conditions under the model bye-laws, including the age restriction for obtaining such authorisation. On the facts, the professional had given written consent for appointment as liquidator before the cut-off date and that consent had been filed with the tribunal before the new requirement became operative. In addition, the authority accepted that a person above seventy years was ineligible to apply for authorisation for assignment, which explained the absence of such authorisation in the present case. In that backdrop, no lapse was found in the professional's conduct.

Conclusion: No contravention was made out and no direction was warranted against the insolvency professional.

Issues: (i) Whether the liquidator's failure to publish the public announcement in newspapers within the prescribed time under the voluntary liquidation regulations constituted a contravention; (ii) Whether engaging the erstwhile statutory auditor for audit work during voluntary liquidation violated the requirement of independence and the prohibition on engaging a prior auditor.

Issue (i): Whether the liquidator's failure to publish the public announcement in newspapers within the prescribed time under the voluntary liquidation regulations constituted a contravention.

Analysis: Regulation 14 of the IBBI (Voluntary Liquidation Process) Regulations, 2017 requires the liquidator to make a public announcement in Form A within five days of appointment and to publish it in one English and one regional language newspaper, on the corporate person's website, if any, and on the Board-designated website. The liquidator admitted that the newspaper publication was not made within time in both liquidation matters. The purpose of the publication is to notify stakeholders and invite claims, and the absence of known creditors does not dispense with the regulatory requirement. Belated publication does not amount to compliance, and the liquidator's own admission established the breach.

Conclusion: The delay in newspaper publication amounted to contravention of Section 208(2)(a) of the Insolvency and Bankruptcy Code, 2016 and Regulations 14(1) and 14(3)(a) of the IBBI (Voluntary Liquidation Process) Regulations, 2017, read with the applicable code of conduct provisions.

Issue (ii): Whether engaging the erstwhile statutory auditor for audit work during voluntary liquidation violated the requirement of independence and the prohibition on engaging a prior auditor.

Analysis: Regulation 11(2) of the IBBI (Voluntary Liquidation Process) Regulations, 2017 prohibits engagement of a professional who has served as an auditor of the corporate person at any time during the five years preceding the liquidation commencement date. The liquidator continued the services of the existing auditor for audit of financial information during liquidation, notwithstanding that the firm had served as statutory auditor before commencement. The regulations place the responsibility on the liquidator to act independently and ensure compliance, and member approval cannot override the statutory bar. The record showed that the liquidator himself requested the auditor's engagement, which confirmed the breach of the independence requirement.

Conclusion: The engagement of the erstwhile auditor was contrary to Regulation 11(2) of the IBBI (Voluntary Liquidation Process) Regulations, 2017 and amounted to a further contravention of Section 208(2)(a) of the Insolvency and Bankruptcy Code, 2016 and the applicable code of conduct provisions.

Final Conclusion: The disciplinary authority found negligence and multiple regulatory breaches in the conduct of voluntary liquidation and imposed a monetary penalty with a bar on fresh assignments until compliance with the penalty direction.

Ratio Decidendi: An insolvency professional must strictly comply with mandatory timelines and independence restrictions under the insolvency regime, and belated action or member approval cannot cure a statutory breach.