Disciplinary Committee ruling on Insolvency Professional's Authorization for Assignment eligibility

The Disciplinary Committee disposed of the Show Cause Notice against Mr. Kishan Gopal Somani, an Insolvency Professional, finding no lapse on his part for accepting a Liquidator assignment without a valid Authorization for Assignment due to his age and prior written consent. The Committee noted his ineligibility to apply for AFA under the regulations, ultimately resolving the matter without any direction against Mr. Somani.

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Issues:
Violation of Insolvency and Bankruptcy Code regarding accepting an assignment without valid authorization, Challenge to age limit for obtaining authorization for assignment.

Analysis:
The judgment concerns a Show Cause Notice (SCN) issued to Mr. Kishan Gopal Somani, an Insolvency Professional (IP), for accepting a Liquidator assignment without a valid Authorization for Assignment (AFA) after 31st December 2019. The IBBI alleged contraventions of sections 208(2)(a) & (e) of the Insolvency and Bankruptcy Code, and regulations 7(2)(a) & (h) and 7A of the IBBI (Insolvency Professionals) Regulations, 2016. Mr. Somani defended himself by citing his written consent to act as Liquidator filed before the cut-off date, and the pending challenge to the age limit for obtaining AFA. He argued that the assignment was not new and that he could not apply for AFA due to the age bar.

The Disciplinary Committee (DC) analyzed the regulations, including Regulation 7A of IP regulations, which mandates having a valid AFA before undertaking any assignment after 31st December 2019. The DC noted that an IP above 70 years is ineligible to apply for AFA under the bye-laws. Section 208 of the Code obliges IPs to comply with the code of conduct and byelaws of their professional agency. The DC found that Mr. Somani's written consent before the AFA requirement and his age made him ineligible to apply for AFA, thus no lapse on his part was found.

Conclusion:
The DC, under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, disposed of the SCN without any direction against Mr. Kishan Gopal Somani. The order was to be forwarded to the Indian Institute of Insolvency Professionals of ICAI and the Registrar of the National Company Law Tribunal, New Delhi, for information. The show cause notice was thereby resolved.

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