TaxTMI 
TaxTMI 
2021 (2) TMI 871
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.... Institute of Insolvency Professionals (IPA) and an IP registered with the Insolvency and Bankruptcy Board of India (IBBI) with Registration No. IBBI/IPA-002/IP-N00063/2017-2018/10141. Background 1.1 The IBBI had issued on 28th August, 2020, the SCN to Mr. Pinaki Sircar for accepting the assignment as the Liquidator in Liquidation process of M/s. Bansal Refineries (P.) Ltd. (CD) after 31st December, 2019 without holding a valid Authorisation for Assignment (AFA) from his IPA. The order of Liquidation was passed by the National Company Law Tribunal (NCLT), Kolkata Bench (AA) on 17th January, 2020 due to failure of the Corporate Insolvency Resolution Process (CIRP) of the CD. 1.2 Mr. Sircar submitted reply to the SCN, dated 5th Septe....
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....e taking reasonable care and diligence. (iii) he had submitted the AFA on 14th December, 2019, well prior to 31st January, 2019 and the auto-filled date stamp is still present on the uploaded form. (iv) a perusal and consideration of the Step by Step Guide-AFA would elucidate the bona fide error and the reasons behind the same. (v) upon completion of step 5, he received a notation that form had been saved and that AFA was 'submitted'. He was under the true belief and impression that AFA had been duly submitted and will be processed in due course in accordance with and under the aegis of IBBI and the IPA. (vi) The decision for liquidation was taken by the Committee of Creditors (CoC) of the CD on 1....
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....his authorisation for assignment." 4.2 Thus, it is clear from the said Regulation that one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs. 4.3 The bye laws of ICSI Institute of Insolvency Professionals defines in para 4(1)(aa) the expression "Authorisation for Assignment" as an authorisation to undertake an assignmen....
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....ertificate of registration. (2) The registration shall be subject to the conditions that the insolvency professional shall - (a) at all times abide by the Code, rules, regulations, and guidelines thereunder and the bye-laws of the insolvency professional agency with which he is enrolled; (h) abide by the Code of Conduct specified in the First Schedule to these Regulations;" 4.6 The credibility of the processes under the Code depends upon the observance of the Code of conduct by the IRP/RP during the process. Section 208(2) of the Code provides that every IP shall take reasonable care and diligence while performing his duties and to perform his functions in such manner and subject to such conditions as may be sp....
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.... under the aegis of IBBI and the IPA. However, the DC notes that the Step by Step Guide-AFA has clearly provided for 10 steps. Since, Mr. Sircar was following the Step by Step Guide, it is not clear as to why he did not follow steps 7 to 10 of the process. The DC, thus, finds that the contention of Mr. Sircar in this regard is untenable and unjustified. An IP is required to closely follow the complete process. The conduct of leaving the process of authorization without its completion reflects his negligence towards the basic requirement to undertake the professional assignment. 4.9 The DC, further, finds that an SCN has been issued by the IPA against Mr. Sircar and an order has been passed against Mr. Sircar on 7th September, 2020 for ac....