Disciplinary action: IRP sanctioned for misconduct in CIRP

The Disciplinary Committee found that the Interim Resolution Professional (IRP) misrepresented facts, showed contempt for authority, and failed to commence the Corporate Insolvency Resolution Process (CIRP) due to a typographical error. Consequently, the IRP was directed to work as an intern with a senior insolvency professional for six months and was barred from accepting new assignments until compliance. The order will take effect after 30 days, and relevant authorities were notified for monitoring.

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Issues Involved:
1. Delay in commencement of CIRP by the IRP due to typographical error.
2. Misrepresentation of facts by the IRP to the Board.
3. Conduct of the IRP in disciplinary proceedings.
4. Jurisdiction and authority of the Adjudicating Authority (AA) and the Insolvency and Bankruptcy Board of India (IBBI) in disciplinary proceedings.

Detailed Analysis:

1. Delay in commencement of CIRP by the IRP due to typographical error:
The Hon’ble Adjudicating Authority (AA) appointed Mr. Rishi Prakash Vats as the Interim Resolution Professional (IRP) for the CIRP of M/s. Rana Global Limited on 23rd March 2018. However, Mr. Vats did not commence the CIRP due to a typographical error in his name in the order. The AA found this attitude inexplicable and noted the correct address and registration number were provided. The AA directed the matter to the IBBI for appropriate action.

2. Misrepresentation of facts by the IRP to the Board:
Mr. Vats claimed he received the AA’s order on 16th April 2018, which delayed the commencement of CIRP. However, evidence showed he received the order on 5th April 2018 via WhatsApp from the financial creditor. This misrepresentation was found to be an attempt to mislead the Board. The DC found Mr. Vats in contravention of regulation 7(2)(a) and (h) of the IBBI (Insolvency Professional) Regulations, 2016, and clauses 1, 2, 12, 14, 16, and 19 of the Code of Conduct.

3. Conduct of the IRP in disciplinary proceedings:
Mr. Vats filed applications before the AA seeking expunction of the adverse observations made against him. The AA expunged the observations and directed the Board not to proceed against him. Despite this, the Board continued with the disciplinary proceedings. Mr. Vats did not appear for personal hearings and refused to make submissions on merits, displaying non-cooperation and contempt for the disciplinary process.

4. Jurisdiction and authority of the AA and the IBBI in disciplinary proceedings:
The AA directed the quashing of all disciplinary proceedings initiated by the IBBI against Mr. Vats. However, the Appellate Authority held that the IBBI has the exclusive power to close disciplinary proceedings or pass orders in accordance with the law. The AA does not have the jurisdiction to quash such proceedings. The matter was remitted to the IBBI to pass an appropriate order.

Conclusion and Order:
The Disciplinary Committee (DC) found that Mr. Vats misrepresented facts to mislead the Board, displayed contempt for the law and authority, and failed to commence the CIRP due to a typographical error. The DC directed Mr. Vats to work as an intern with a senior insolvency professional for six months and barred him from accepting new assignments until compliance. The order will come into force 30 days from issuance, and copies were forwarded to relevant authorities for monitoring and information.

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