Disciplinary Committee sanctions IRP/RP for regulatory breaches in CIRP proceedings. Monetary penalty imposed

The Disciplinary Committee found Mr. Gupta, the Interim Resolution Professional (IRP) / Resolution Professional (RP), in contravention of various regulations during the Corporate Insolvency Resolution Process (CIRP). Despite some arguments presented by Mr. Gupta, the Committee imposed a monetary penalty equivalent to 100% of his fee and mandated him to undergo an educational course before taking on future assignments. The show cause notice was disposed of, and the order was shared with relevant authorities for information.

---

---

Issues Involved
1. Conduct of Mr. Gupta as Interim Resolution Professional (IRP) / Resolution Professional (RP).
2. Number of meetings of the Committee of Creditors (CoC) conducted.
3. Approval of Mr. Gupta as RP by the CoC.
4. Appointment of valuers and submission of valuation reports.
5. Non-receipt of resolution plans and communication with the CoC.
6. Allegations of misconduct and the role of the CoC in the Corporate Insolvency Resolution Process (CIRP).

Issue-wise Detailed Analysis

1. Conduct of Mr. Gupta as Interim Resolution Professional (IRP) / Resolution Professional (RP)
The Board reviewed the orders from the Adjudicating Authority (AA) and the National Company Law Appellate Tribunal (NCLAT) regarding Mr. Gupta's conduct during the CIRP of Stewarts and Lloyds of India Limited. The AA and NCLAT noted that Mr. Gupta failed to convene multiple meetings of the CoC and did not take appropriate steps to invite resolution plans, raising concerns about his performance.

2. Number of Meetings of the Committee of Creditors (CoC) Conducted
Contravention: Mr. Gupta conducted only one meeting of the CoC during the entire CIRP.
Submission: Mr. Gupta argued that neither the Code nor the CIRP Regulations mandate a specific number of CoC meetings. He aimed to save expenses and did not receive any requests for additional meetings from CoC members.
Finding: The DC found it unacceptable that Mr. Gupta did not convene even one meeting of the CoC during his tenure as RP, especially when no resolution plan was received. His failure to seek the CoC's views on extending the CIRP or liquidation was seen as acting against the best interests of the corporate debtor and creditors.

3. Approval of Mr. Gupta as RP by the CoC
Contravention: Mr. Gupta received only 73.42% of the voting share for his appointment as RP, below the required 75%.
Submission: Mr. Gupta received additional votes via email after the voting window closed, raising the voting share to 78.93%. He cited similar cases where the AA approved appointments with less than 75% votes.
Finding: The DC noted that Mr. Gupta did not hide any relevant information from the AA, which appointed him as RP after considering the voting details. Therefore, no irregularity in his appointment was found.

4. Appointment of Valuers and Submission of Valuation Reports
Contravention: Mr. Gupta delayed appointing valuers and receiving valuation reports, impacting the submission of the information memorandum.
Submission: Mr. Gupta admitted a two-day delay in appointing valuers, citing initial implementation challenges and the novelty of liquidation valuation.
Finding: The DC considered the minor delay and initial challenges reasonable, finding the lapse explicable and not severe enough for penal action.

5. Non-receipt of Resolution Plans and Communication with the CoC
Contravention: Mr. Gupta did not inform the CoC about the non-receipt of resolution plans and worked towards liquidation.
Submission: Mr. Gupta claimed he made efforts to receive resolution plans and informed the AA about the non-receipt.
Finding: The DC found that Mr. Gupta deprived the CoC of its right to decide the fate of the corporate debtor. His actions suggested he worked towards liquidation rather than resolution, undermining the CoC's role and the Code's premise.

6. Allegations of Misconduct and the Role of the CoC in CIRP
Mr. Gupta argued that the NCLAT found no misconduct on his part. However, the DC noted that the NCLAT's observations did not preclude the specific allegations in the SCN. The DC emphasized the CoC's critical role in deciding the corporate debtor's fate and found Mr. Gupta's actions contrary to the Code's objectives.

Order
The Disciplinary Committee imposed a monetary penalty equal to 100% of the total fee payable to Mr. Gupta as IRP and RP, to be deposited within 30 days. Additionally, Mr. Gupta was directed to undergo a pre-registration educational course to improve his understanding of the Code and regulations before accepting any future assignments. The show cause notice was disposed of, and copies of the order were forwarded to relevant authorities for information.

---