Mandatory insolvency procedure prevails over private settlement, and disciplinary action against the professional must go to the regulator.

An Interim Resolution Professional cannot withhold the mandatory public announcement or bypass the prescribed insolvency process merely because the parties have reached a private settlement; once CIRP begins, statutory duties under the Insolvency and Bankruptcy Code and the regulations remain binding. The Adjudicating Authority also lacks power to impose disciplinary action directly on the professional and must refer any such matter to the Insolvency and Bankruptcy Board of India for appropriate action. The application was disposed of accordingly, with the professional found to have acted beyond authority and regulatory action left to the regulator.

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Issues: (i) Whether the Interim Resolution Professional could withhold the mandatory public announcement and act on the basis of a private settlement between the parties. (ii) Whether the Adjudicating Authority could itself take coercive action against the Interim Resolution Professional or was required to forward the matter to the regulator.

Issue (i): Whether the Interim Resolution Professional could withhold the mandatory public announcement and act on the basis of a private settlement between the parties.

Analysis: Once the Corporate Insolvency Resolution Process had been initiated, the Interim Resolution Professional was bound to act strictly in accordance with the Insolvency and Bankruptcy Code, 2016 and the directions of the Adjudicating Authority. The duty to make a public announcement and call for claims within the prescribed time under the insolvency regulations was mandatory and could not be displaced merely because the parties claimed to have settled and wanted withdrawal of the application. The invocation of inherent powers could not justify non-compliance with the statutory scheme.

Conclusion: The Interim Resolution Professional had no authority to withhold the public announcement or to depart from the statutory procedure on the strength of the parties' settlement.

Issue (ii): Whether the Adjudicating Authority could itself take coercive action against the Interim Resolution Professional or was required to forward the matter to the regulator.

Analysis: The Adjudicating Authority noted that it did not have power to impose disciplinary action on the Interim Resolution Professional. The appropriate course was to place the matter before the Insolvency and Bankruptcy Board of India for such action as may be warranted under the insolvency framework and the regulations framed thereunder.

Conclusion: The matter was directed to be communicated to the Insolvency and Bankruptcy Board of India for suitable action, and no direct punitive order was passed by the Adjudicating Authority.

Final Conclusion: The application was disposed of with a finding that the Interim Resolution Professional had acted beyond his authority, while the question of action against him was left to the regulator.

Ratio Decidendi: An Interim Resolution Professional must strictly comply with the mandatory steps prescribed for commencement of the insolvency process, and private settlement between parties cannot by itself justify deviation from the statutory duties imposed by the Code and the regulations.

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