The Insolvency and Bankruptcy Board of India (IBBI) had issued 'Show Cause Notice' (SCN) to Suresh Kumar, Insolvency Professional (IP) under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016 for acce

The above facts are similar to the case of U. Balakrishna Bhat, Insolvency Professional (IP) , decided on 11th January, 2021. The credibility of the processes under the Insolvency & Bankruptcy Code (IBC) depends upon the observance of the Code of conduct by the IRP/RP during the process. Section 208 of the IBC casts an obligation on Insolvency Professional (IP) to abide by the code of conduct and comply with all requirements and terms and conditions specified in the byelaws of the IP agency of which he is a member. Section 208(2) which relates to the functions and obligations of insolvency professionals, states that every insolvency professional shall abide by the following code of conduct: - to take reasonable care and diligence while performing his duties; to comply with all requirements and terms and conditions specified in the byelaws of the insolvency professional agency of which he is a member; and to perform his functions in such manner and subject to such conditions as may be specified." It was further noted that the certificate of registration granted to an IP is subject to the condition that he should follow at all times the provisions of the Code and Regulations and the bye-laws of Insolvency Professional Agency of which the IP is a member and also follow the Code of Conduct specified in the First Schedule to the IP Regulations including maintaining of integrity and professional competence for rendering professional service, representation of correct facts and correcting misapprehension, not to conceal material information and not to act with mala fide or with negligence. In the present matter, Mr. Suresh Kumar had given consent to accept the assignment as IRP in June, 2018 in the CIRP of the CD and the CIRP commenced in November, 2019. However, it is also observed that Mr. Suresh Kumar was ratified as RP in the CIRP of the CD in the 1st meeting of the CoC held on 19th January, 2020, i.e., after the threshold date of 31st December, 2019 without having a valid AFA. Mr. Suresh Kumar has submitted that since the provision relating to AFA was newly inserted and made effective on 1st January, 2020, he was under the impression that it was not applicable for the ratification to act as RP. Though acceptance of assignment was given prior to cut off date, i.e., 31st December, 2019, however, it was held that notification for AFA was issued on 23rd July 2019, hence RP was having sufficient time to apply for AFA. In the above case, the IP has not complied with the section 208 of the IBC, therefore an order has been passed against the IP by the DC of IPA for accepting assignment as RP after 31st December, 2019 without holding a valid AFA in the CIRP of the CD and it has been decided that IP is guilty of Professional Misconduct and a penalty of ₹ 10,000/- has been imposed.