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Insolvency Professional Violates Authorization Rules, Escapes Penalties The Disciplinary Committee found Mr. Ravi Sharma in violation of regulations requiring Insolvency Professionals to hold a valid Authorization for ...
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Insolvency Professional Violates Authorization Rules, Escapes Penalties
The Disciplinary Committee found Mr. Ravi Sharma in violation of regulations requiring Insolvency Professionals to hold a valid Authorization for Assignment (AFA) before undertaking assignments after December 31, 2019. Despite breaching relevant provisions, the Committee disposed of the Show Cause Notice without additional penalties, considering the prior disciplinary action taken by the Insolvency Professional Agency against Mr. Sharma. The matter was concluded, with the order shared with relevant regulatory bodies for information.
Issues: Violation of sections 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016, and regulations 7(2)(a), 7(2)(h), and 7A of the IBBI (Insolvency Professionals) Regulations, 2016 by Mr. Ravi Sharma.
Analysis: The Show Cause Notice (SCN) was issued to Mr. Ravi Sharma for accepting assignments in the voluntary liquidation process without a valid Authorisation for Assignment (AFA) after 31st December 2019. Mr. Sharma admitted the mistake but argued that it was unintentional and due to oversight of new provisions. He believed AFA was only required for court-appointed assignments, not voluntary liquidation processes. The Disciplinary Committee (DC) considered the SCN, Mr. Sharma's response, and relevant provisions before making its findings.
The DC found that Regulation 7A of the IP Regulations mandates Insolvency Professionals (IPs) to hold a valid AFA before undertaking any assignment after 31st December 2019. This regulation was introduced well before the deadline, providing ample time for compliance. Section 208(2) of the Code also requires IPs to follow the code of conduct specified by their professional agency. Mr. Sharma's actions contravened these regulations and the Code, affecting the credibility of the insolvency process.
Mr. Sharma's acceptance of assignments without a valid AFA post-31st December 2019 directly violated Regulation 7A. The DC noted that he also breached sections 208(2)(a) and 208(2)(e) of the Code, along with regulations 7(2)(a) and 7(2)(h) of the IP Regulations. The DC acknowledged that the IPA had already penalized Mr. Sharma for these violations, leading to the disposal of the SCN without further action against him.
Order: In light of the IPA's disciplinary action against Mr. Sharma, the DC disposed of the SCN without imposing additional penalties. A copy of the order was sent to the ICSI Institute of Insolvency Professionals and the Registrar of the National Company Law Tribunal for information. The show cause notice was officially resolved.
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