IBBI imposed Rs.2.5 Lakhs Penalty on Company Secretary for Violating CIRP Regulation as Professional Misconduct

The Insolvency and Bankruptcy Board of India (IBBI) has imposed a Penalty of Rs. 2.5 lakhs on the Company Secretary / Insolvency Professional for violating the corporate insolvency resolution process (CIRP) regulations .

Mr. Gopal Lal Baser was appointed as an interim resolution professional (‘IRP’) for the corporate insolvency resolution process (‘CIRP’) in the matter of Wianxx Impex Private Limited, Corporate Debtor.

The Disciplinary Committee found out that, “By taking into account votes cast by creditors in class prior to meeting of 6th CoC for declaring a resolution as passed, the board is prima facie of the view that Mr. Gopal Lal Baser had inter-alia violated Section 208(2)(a) and 208(2)(e) of the Code, Regulation 16(A)(9) of the CIRP Regulations, Regulation 7(2)(a) and 7(2)(h) of IBBI (Insolvency Professional) Regulations, 2017 (‘IP Regulations’) read with Clause 1, 2, 3 and 14 of the Code of Conduct as specified in the First Schedule of IP Regulations.”

IBBI noted that the DC notes from the perusal of the minutes of the 6th CoC meeting that the meeting was held on 17.10.2020 and the preliminary views were taken before starting the meeting on 15.10.2020 at 8 pm till 16.10.2020 at 9 p.m.

Further, the DC noted that the minutes clearly state that out of total 136 participants for the voting, 82 participants were yet to vote on both the proposed resolutions. The voting window opened again on 19.10.2020 at 9 am and closed on 19.10.2020 at 10pm. On perusal of the documents of voting results, DC noted that the voting link for casting the vote post the 6th CoC meeting was shared with all CoC members. However, the voting results were compiled in such a manner that the preliminary views of the CoC members, who had earlier casted their votes, were taken as final votes and the votes of CoC members who had voted on 19.10.2020 were added with the voting of the CoC members who had previously casted their preliminary views before 6th CoC meeting.

It is to be noted that second proviso to the Regulation 16A(9) of the CIRP Regulations states that preliminary views shall not be considered as voting instructions by the creditors. Hence, the DC is of the view that the conduct of Mr. Gopal Lal Baser considering the preliminary views of creditors who had voted prior to meeting of the CoC, as final views and based on that, declaring an agenda approved is a negligence as considering preliminary votes taken prior to the discussions/ deliberations in the CoC when full information has not been supplied and informed decision has not been made goes against the provisions of the Code. Hence, this is a contravention of regulation 16(A)(9) of the CIRP Regulations and clause 3 of the Code of Conduct for IP provided in the first schedule of IP Regulation.

IBBI Order that, “In view of the foregoing contravention, the DC, in exercise of the powers conferred under section 220(2) of the Code read with IBBI (Insolvency Professionals) Regulations, 2016 and the IBBI (Inspection and Investigation) Regulations, 2017, hereby,

i. imposes a penalty of Rs. 2,50,000/- (Rs. Two Lakhs fifty thousand only) on Mr. Gopal Lal Baser and directs him to deposit the penalty amount directly to the Consolidated Fund of India (CFI) under the head of “penalty imposed by IBBI” on https://bharatkosh.gov.in within 45 days from the date of issue of this order and submit a copy of the transaction receipt to the Insolvency and Bankruptcy Board of India.

ii. warns Mr. Gopal Lal Baser to be more cautious in future and directs him to strictly comply with the applicable provisions of the Code and its underlying Regulations while performing his duties.”

For Official Order Download PDF Given Below: