Sanjay Garg is a practising Company Secretary and an Insolvency Professional. He is acting as an Interim Resolution Professional in Saturn Toys Limited. (STL) vide the order of Hon'ble National Company Law Tribunal, Prin

The IBBI (Insolvency Professionals) Regulations, 2016 makes provision for the Examination and Registration of Insolvency Professionals with the IBBI. These regulations also make provisions for the disciplinary proceedings against the Insolvency Professional as well as prescribes a code of conduct for Insolvency Professionals. First Schedule to the aforesaid regulations prescribe a code of conduct for the Insolvency Professionals (IP). According to Regulation 7(2)(h), the registration of an Insolvency Professional shall be subject to the condition that he shall at all times abide by the Code of Conduct specified in the First Schedule to the Regulations which provides for the following: Integrity and Objectivity Independence and impartiality Professional competence Representation of correct facts and correcting misapprehensions. Timeliness Information management Confidentiality Occupation, employability and restrictions Remuneration and costs Gifts and hospitality An Insolvency Professional must maintain integrity by being honest, straightforward and forthright in all professional relationships. (Clause 1 of the First Schedule to the Regulations) An Insolvency Professional must provide services for remuneration which he charged in transparent manner, is a reasonable reflection of the work necessarily and properly undertaken. and is not inconsistent with the applicable regulations. (Clause 25 of the First Schedule to the Regulations) An Insolvency Professional shall disclose the fee payable to him, the fee payable to the IPE and the fee payable to Professionals engaged by it to the IPA of which he is a professional member and the agency shall publish such disclosure on its website. (Clause 25A of the First Schedule to the Regulations) An Insolvency Professional shall not accept any fee or charges other than those which are disclosed to and approved by the persons fixing its remuneration. (Regulation 26 of the First Schedule to the Regulations) In the NCLT Order dated 14.10.2019 in the matter of Anurag Nirbhaya Vs. Anuj Maheshwari & Ors , Resolution Professional (RP) claimed ₹ 12 Lakhs for the first month and ₹ 11 Lakhs per month for the period of rest of the two and half months and he was paid ₹ 6 Lakhs for the total period of three and half months. The AA observed that the exorbitant fee has been claimed by the IRP and stated that generally they allow fee @ ₹ 1 Lakh per month to the professionals. Further, in the NCLT Order dated 13.03.2018 in the matter of Punjab National Bank Vs. Divyajyoti Sponge Iron Pvt. Ltd , the AA took notice of fixation of exaggerated insolvency resolution cost, inclusive of fixation of fee of RP in a lump sum manner by the CoC without applying its mind as regards to the fate of CD, the volume, nature and complexity of CIRP. It is observed that it is time to have legitimate guidelines or regulation in this regard so as to safeguard and to ensure the prospects and revival of a dying CD not be at the highest cost which canned be affordable by the CD. An IP should not charge abnormally high fee in relation to the services: The Disciplinary Committee of IBBI found that an IP attempted to charge abnormally high fee in relation to the services. Besides, he acted malafide by seeking increase of his fee after approval of fee by the AA and displayed professional incompetence by using stale information for decision making. He, then signed the term sheet with the applicant, who is not legally competent to appoint RP or fix his fee, and thereby attempted to deprive the CoC of its legitimate right to appoint a RP of its choice and fix his fee. The Disciplinary Committee suspended the registration of the IP for two years, directed the IP to undergo the pre-registration educational course and work for at least six months as an intern with a senior insolvency professional, at any time during the period of suspension. In view of the above stated precedence, Sanjay Garg as a resolution professional is liable as per the provisions of the code of conduct.