An IP must not act with mala fide or be negligent while performing his functions and duties under the Insolvency and Bankruptcy Code

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
(Disciplinary Committee)

1st December, 2020

No. IBBI/DC/46/2020

Order
In the matter of Mr. Ajay Gupta, Insolvency Professional (IP) under section 220 of the
Insolvency and Bankruptcy Code, 2016 read with regulation 11 of the Insolvency and
Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016.

Background

This Order disposes of the Show Cause Notice (SCN) No. IBBI/IP/INSP/2019/32 dated 17th June, 2020 issued to Mr. Ajay Gupta, 7-A, Siddhartha Extension, Pocket-B, New Delhi-110013, who is a Professional Member of the Indian Institute of Insolvency Professional of ICAI (IPA) and an Insolvency Professional (IP) registered with the Insolvency and Bankruptcy Board of India (IBBI) with Registration No. IBBI/IPA-001/IPP00140/ 2017-18/10304.

1.1 The Hon’ble National Company Law Tribunal, New Delhi Bench (AA) vide order dated 3rd January, 2019 admitted an application for Corporate Insolvency Resolution Process (CIRP) of M/s Alisa Infratech Private Limited (CD) under section 7 of the Insolvency and Bankruptcy Code, 2016 (Code) and appointed Ms. Monika Agarwal as an Interim Resolution Professional (IRP). However, she was not confirmed by the Committee of Creditors (CoC), hence, she could not continue as Resolution Professional (RP). The CoC approved the appointment of Mr. Gupta as RP which was confirmed by the AA vide order dated 22nd February, 2019.

1.2 In exercise of its power under section 218 of the Code read with the IBBI (Inspection and Investigation) Regulations, 2017, the IBBI vide Order dated 23rd December, 2019 appointed an Inspecting Authority (IA) to conduct an inspection of Mr. Ajay Gupta, on having reasonable grounds to believe that he had contravened provisions of the Code, or the rules or regulations made, or directions issued thereunder.

1.3 The IA submitted its final report on 13th February, 2020 and IBBI issued SCN against Mr. Gupta on 17th June, 2020 based on the findings of the IA in respect of his role as RP in the CIRP of the CD.

1.4 The SCN alleged contraventions of sections 23(1), 25(1), 208 (2) (a) & (e) of the Insolvency and Bankruptcy Code, 2016 (Code), regulation 7(2) (h) of the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) and Clause 14 of the Code of Conduct under Schedule 1 of the IP Regulations. Mr. Ajay Gupta replied to the SCN vide letter dated 14th July, 2020.

1.5 The Board referred the SCN, reply of Mr. Gupta to the SCN and other material available on record to the Disciplinary Committee (DC) for disposal of the SCN in accordance with the provisions of the Code and Regulations made thereunder. Mr. Gupta availed an opportunity of personal hearing before the Disciplinary Committee (DC) on 17th September, 2020 wherein he was represented by Mr. Arvind Kumar Gupta and Mr. Manohar Malik, Advocates on his behalf. Post the hearing, the DC is in receipt of email dated 18th September, 2020 from Mr. Anurag Solanki on behalf of India Infoline Finance Limited (IIFL), Financial Creditor, which was mailed on request of Mr. Gupta.

Show Cause Notice
The contraventions alleged in the SCN are summarized as follows:
2. It is provided in section 25(1) of the Code that it is the duty of the resolution professional to preserve and protect the assets of the corporate debtor. However, it has been observed that Mr. Gupta failed to do so and had handed over charge of the CD, back to the erstwhile directors after the stay order dated 29th March, 2019 was passed by the Hon’ble Supreme Court in Writ Petition (Civil) No. 354 of 2019. This led to preferential transactions conducted by the ex-management in the form of payment of interest dues to IIFL, one of the financial creditors of the CD. Therefore, the Board was of the prima facie view that Mr. Gupta has violated sections 25(1), 208(2)(a) & (e) of the Code, regulation 7(2)(h) of the IP Regulations and clause 14 of the Code of Conduct under Schedule 1 of the IP Regulations.

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