Insolvency Professional Cleared of Misconduct in Show Cause Notice Hearing

The Disciplinary Committee (DC) disposed of a Show Cause Notice (SCN) issued to an Insolvency Professional for violating specific sections and regulations by accepting an assignment without a valid Authorization for Assignment (AFA) after 31st December 2019. Despite the allegations, the DC found the professional not guilty of Professional Misconduct after considering his submissions regarding unintentional procedural lapses and commitment to compliance. The DC emphasized the importance of adherence to regulations for insolvency professionals to maintain process credibility, ultimately resolving the show cause notice without any direction against the professional.

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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 Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016 by an Insolvency Professional.

Analysis:

1. Show Cause Notice (SCN) Issued:
The Insolvency and Bankruptcy Board of India (IBBI) issued a Show Cause Notice (SCN) to an Insolvency Professional (IP), Mr. Romesh Chander Sawhney, for accepting an assignment without a valid Authorisation for Assignment (AFA) after 31st December 2019. Mr. Sawhney responded to the SCN, leading to a hearing before the Disciplinary Committee (DC) for further review.

2. Alleged Contraventions:
The SCN alleged contraventions of specific sections and regulations, including sections 208(2)(a) and 208(2)(e) of the Code, and regulations 7(2)(a), 7(2)(h), and 7A of the IP Regulations. The allegations were related to accepting an assignment without a valid AFA from the Insolvency Professional Agency (IPA).

3. Submissions by Mr. Sawhney:
Mr. Sawhney's submissions highlighted his unintentional procedural lapse due to health issues, his application for AFA rectification, and his commitment to compliance with regulations and professional conduct. The IPA also issued a show cause notice and found Mr. Sawhney not guilty of Professional Misconduct.

4. Analysis and Findings by the Disciplinary Committee (DC):
The DC analyzed the relevant regulations, including Regulation 7A, which mandates IP to hold a valid AFA before undertaking assignments after 31st December 2019. It was noted that Mr. Sawhney's registration was subject to compliance with the Code, regulations, and IPA bye-laws. The DC emphasized the importance of adherence to the Code of Conduct for insolvency professionals to maintain process credibility.

5. Order and Disposal of SCN:
Considering the IPA's disciplinary action against Mr. Sawhney and the findings of the DC, the SCN was disposed of without any direction against Mr. Sawhney. The Order was forwarded to the IPA and the National Company Law Tribunal for information, ultimately resolving the show cause notice issue.

This detailed analysis of the legal judgment involving an Insolvency Professional showcases the regulatory framework, compliance obligations, and disciplinary actions within the insolvency and bankruptcy domain.

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