The Insolvency and Bankruptcy Board of India (IBBI/Board) has suspended the registration of insolvency professional (IP) Partha Sarathy Sarkar for two years after finding that he had conducted the entire corporate insolvency resolution process (CIRP) of Innovari Technologies Pvt Ltd (corporate debtor-CD) in a 'brazen manner', without having due regard to the provisions of the IBBI code of conduct (Code) and the regulations.
In an order passed earlier this month, Sudhaker Shukla, a whole-time member (WTM) of IBBI, says, "The disciplinary committee of IBBI notes that the IP has shown utter disregard and contempt towards the established monitoring activity of the Board. Rather than cooperating with the inspecting authority (IA) in effectively carrying out of the statutorily mandated monitoring functions of the Board, the IP had tried to evade his duties entrusted on him under the Code and regulations on one pretext or the other. Actions, bereft of logic, taken in utter disregard to laid down compliances are against the professional conduct and ought to be avoided by the IP."
"Even during the hearing, Mr Sarkar, the IP appeared to be excessively aggressive and used foul and contemptuous language casting allegations against all the officers of the Board dealing with the case and also tried to challenge the locus of the DC to hear the case despite clear directions of the High Court of Bombay," the order says.
Further, IBBI noted that as per the provisions of the Code, the IP is required to form an opinion within 75 days of the insolvency commencement date (ICD), make a determination within 115 days of ICD and file an application before the adjudicating authority (AA) within 135 days of ICD. However, in the case of Innovari Technologies, IBBI observed that Mr Sarkar, the IP, has taken more than twice the permissible time to form the opinion. "Even if he had some corroborative evidence, he was required to hand over the details to the liquidator of the CD who could have pursued these transactions."
During the hearing, Mr Sarkar contended that Regulation 17(1) of CIRP Regulations nowhere mandates that while filing a report certifying the formation of a committee of creditors (CoC) with the AA, a list of creditors containing certain mandatory information is to be mentioned.
However, IBBI elucidated that in the absence of any specific provision, an interim resolution professional (IRP) is not expected to maintain different lists of creditors for different purposes. It noted that "the IP has also not provided any document to the IA to prove otherwise that the list of creditors is maintained in accordance with Regulation 13. Therefore, the reliance of IA on the list of creditors submitted by the IP to the AA along with the report certifying the constitution of the committee is valid."
Opining that it is plain for anyone willing to see that the IP has not done anything to show that he intended to complete the CIRP with required diligence, IBBI emphasised that continuing with the assignment without following the due processes establishes wilful contravention of procedures provided in the Code.
"An IP has a larger responsibility owed towards the whole insolvency ecosystem…The acts of an insolvency professional should, therefore, be in consonance with the letter and spirit of the Code of Conduct of IBBI," the order concludes.