Insolvency professional barred for 10 years for violations, conflicts of interest, and unauthorized contracts.

The Disciplinary Committee found Ms. Ruia, an insolvency professional, unfit to continue her role due to violations of the Insolvency and Bankruptcy Code and IBBI Regulations. Her conduct, including conflicts of interest, lack of experience, exorbitant fees, and unauthorized contracts, led to her registration cancellation and a ten-year debarment from providing services under the Insolvency and Bankruptcy Code. The order would take effect in 30 days, with relevant authorities informed accordingly.

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Issues Involved:
1. Independence, Integrity, and Impartiality of the Insolvency Professional (IP)
2. Capacity and Experience of the IP
3. Exorbitant Fees and Unauthorized Contracts
4. Repeated Contraventions and Disciplinary Actions

Issue-wise Detailed Analysis:

1. Independence, Integrity, and Impartiality of the Insolvency Professional (IP):
The Board noted that Ms. Ruia, an insolvency professional, consented to act as Interim Resolution Professional (IRP) for 15 Corporate Insolvency Resolution Processes (CIRPs) initiated by her husband, Mr. Ruia. This raised concerns about her independence, integrity, and impartiality. The Hon’ble Adjudicating Authority highlighted the potential conflict of interest, questioning whether a relative's appointment contravenes the Code of Conduct under the IBBI (Insolvency Professionals) Regulations, 2016, particularly clauses 5 and 6 under "Independence and Impartiality." The Disciplinary Committee (DC) concluded that the assignments from one source to Ms. Ruia, who had no prior experience, indicated a conspiracy to exploit the corporate debtors (CDs) for personal gain, thereby compromising her independence and impartiality.

2. Capacity and Experience of the IP:
The Board found that Ms. Ruia consented to act as IRP for 15 CIRPs simultaneously, despite having no prior experience. The DC emphasized that managing the affairs of multiple CDs is a serious responsibility that requires substantial expertise and capacity. Ms. Ruia's claim that she would withdraw her consent if she received multiple assignments was deemed mischievous and impractical. The DC noted that such conduct could harm the insolvency regime and cause hardships to the CDs and their stakeholders.

3. Exorbitant Fees and Unauthorized Contracts:
Ms. Ruia contracted to act as IRP/RP for exorbitant fees, such as Rs. 5 crore for one month as IRP and Rs. 3 crore per month as RP, which were deemed unreasonable. Additionally, she entered into contracts with applicants who were not legally competent to appoint her as RP, thereby pre-empting the Committee of Creditors (CoC) from selecting an IP and fixing the fees. The DC found that this conduct denuded the CoC of its legitimate rights and was part of a conspiracy to exploit the CDs.

4. Repeated Contraventions and Disciplinary Actions:
Ms. Ruia argued that she could not be held liable twice for the same mistake, referencing a previous suspension for similar contraventions. However, the DC clarified that each CIRP constituted a separate cause of action. Despite the Hon’ble Adjudicating Authority's concerns and a previous disciplinary action, Ms. Ruia continued her misconduct in multiple CIRPs. The DC noted that her repeated contraventions demonstrated a disregard for the rule of law and the strictures of the Hon’ble Adjudicating Authority.

Findings and Order:
The DC found that Ms. Ruia's conduct violated several provisions of the Insolvency and Bankruptcy Code, 2016, and the IBBI (Insolvency Professionals) Regulations, 2016. It concluded that she was not a fit and proper person to continue as an IP. Consequently, the DC canceled her registration and debarred her from seeking fresh registration or providing any service under the Insolvency and Bankruptcy Code, 2016, for ten years. This order would come into force 30 days from its issue, and copies were forwarded to relevant authorities for information.

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