Disciplinary Committee finds Ms. Jain in breach of regulations, issues warning for future compliance

The Disciplinary Committee found Ms. Jain in contravention of regulations for a delay in relationship disclosure but took a lenient view due to mitigating circumstances. Ms. Jain was warned to act in accordance with the law in the future. The order was forwarded to relevant authorities, and the show cause notice was disposed of.

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Issues Involved:
1. Raising bills in the name of a partnership firm instead of the individual Insolvency Professional.
2. Raising bills for fees higher than those ratified by the Committee of Creditors (CoC).
3. Delay in cost disclosure submission.
4. Appointment of unregistered valuers.
5. Delay in relationship disclosure.
6. Failure to inform CoC about related party appointments.
7. Delay in making public announcements.

Issue-wise Detailed Analysis:

I. Raising Bills in the Name of a Partnership Firm:
The IBBI Circular No. IP/004/2018 mandates that an Insolvency Professional (IP) must raise bills/invoices in her name towards fees incurred. Ms. Sonu Jain raised bills in the name of her partnership firm, Jain Sonu & Associates, which was a typographical error later rectified. The error led to the CoC transferring the net amount to the firm's account. The DC found this a clear contravention of the circular but took a lenient view as Ms. Jain rectified the error.

II. Raising Bills for Fees Higher than Ratified by CoC:
Ms. Jain raised a bill for Rs. 25 lakhs despite the CoC fixing the IRP fees at Rs. 12.50 lakhs per month. The DC noted that the CoC had resolved to pay Rs. 12.50 lakhs per month plus Rs. 2 lakhs as out-of-pocket expenses. Despite this, Ms. Jain submitted a higher bill, which was not justified. The DC found this action inconsistent with the applicable regulations.

III. Delay in Cost Disclosure Submission:
The IBBI Circular No. IBBI/IP/013/2018 requires cost disclosure within seven days of demitting office as IRP. Ms. Jain submitted the disclosure three months late, citing unresolved fee issues and delays by the CoC and RP. The DC found her explanation satisfactory and noted no contravention.

IV. Appointment of Unregistered Valuers:
Regulation 27 of the CIRP Regulations and IBBI Circular No. IBBI/RV/019/2018 mandate the appointment of registered valuers. Ms. Jain appointed LSI Engineering & Consultants Ltd and AAA Valuation Professionals LLP, who were not registered with IBBI. The DC found this a contravention but noted that the CoC later cancelled these appointments and appointed registered valuers. A lenient view was taken.

V. Delay in Relationship Disclosure:
Circular No. IP/005/2018 requires IPs to disclose relationships within three days. Ms. Jain delayed this disclosure by more than three months. She cited uncertainty about her replacement as IRP and that professionals were engaged in her personal capacity. The DC found this explanation untenable and noted a delay in disclosure, which was a contravention of the regulations.

VI. Failure to Inform CoC about Related Party Appointments:
Ms. Jain did not inform the CoC that the employees of her firm were related parties. She argued that the professionals were appointed by her and paid from her pocket, not by the CoC. The DC found that since the personnel were employed directly by Ms. Jain and their fees were not charged from CIRP cost, there was no requirement to inform the CoC. Thus, no contravention was found in this regard.

VII. Delay in Making Public Announcements:
Regulation 6(1) of the CIRP Regulations requires a public announcement within three days of appointment. The announcement was delayed by 35 days. Ms. Jain attributed this to the CD's non-cooperation and a misplacement of the announcement on the CD's website. The DC found that the announcement was made within the stipulated time and noted no contravention.

Order:
The DC found a delay in relationship disclosure by Ms. Jain, which was in contravention of regulation 7(2)(h) of the IP Regulations and Circular No. IP/005/2018. Ms. Jain was warned to take reasonable care, be diligent, and act strictly as per law to avoid similar actions in the future. Copies of the order were forwarded to the Indian Institute of Insolvency Professionals of ICAI and the Registrar of the Principal Bench of the National Company Law Tribunal, New Delhi. The show cause notice was disposed of.

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