DC finds that Mr. Sanjay Kumar Singh has acted against the letter and spirit of the Code by allocating voting share to FC based on clubbing the whole loan amount disbursed to the three corporate debtors in the present CD despite repeated instructions of the Hon’ble AA and the Hon’ble NCLAT to ascertain the claim amount of FC based on the amount actually disbursed to the individual corporate debtor. The Code assigns the role of a saviour to the CoC. The constitution of the proper CoC is a crucial activity performed by the IP for the effective, timely and credible functioning of the entire edifice of the resolution process. In the present CD, admission of entire claim amount of FC disbursed to the three corporate debtors by Mr. Singh resulted in 96.77% voting share to FC and tilted the CoC in favour of the FC against the homebuyers. The FC with improper voting share having majority resolved to liquidate the CD without inviting the Expression of Interest for resolution of the CD. The decision of liquidation was taken without following the true spirit of the resolving the CD which is a heart and soul of the Code and ignoring the interest of other creditors. Hence, the DC, in exercise of the powers conferred under Section 220 of the Code read with Regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 and Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, hereby suspends the registration of Mr. Sanjay Kumar Singh having Registration No. IBBI/IPA-002/IP-N00188/2017-18/10505 for a period of two years.

claim amount of FC determinable based on amount actually disbursed to  individual corporate debtor

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
(Disciplinary Committee)

Order No. IBBI/DC/126/2022 | Dated: 23rd August 2022

In the matter of Mr. Sanjay Kumar Singh, 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 Professional) Regulations, 2016 and Regulation 13 of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017.

This Order disposes of the Show Cause Notice (SCN) No. IBBI/IP/INVS/2022/01/3635/544 dated 8th June, 2022, issued to Mr. Sanjay Kumar Singh, 003, Windsor, Grand Forte, Plot No. 76, Sigma-IV, Greater Noida, Uttar Pradesh– 201310 who is a Professional Member of the ICSI Institute of Insolvency Professionals and an Insolvency Professional registered with the Insolvency and Bankruptcy Board of India (IBBI) with Registration No. IBBI/IPA-002/IP-N00188/2017-18/10505.

1. Background

1.1 Mr. Sanjay Kumar Singh, IP was appointed as interim resolution professional (IRP) and Resolution Professional (RP) in the corporate insolvency resolution process (CIRP) in the matter of Value Infratech India Private Limited (CD). The Principal Bench, New Delhi (AA) vide Order dated 03.01.2020 had admitted the application under Section 7 of the Code for CIRP of CD and appointed Mr. Sanjay Kumar Singh as IRP. Subsequently he was also confirmed as RP and later was appointed by AA as liquidator vide its liquidation order dated 04.01.2021.

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 26.05.2022 appointed an Investigating Authority (IA) to conduct an investigation of Mr. Singh. IA submitted the Investigation Report to IBBI on 31.05.2022.

1.3 The IBBI on 08th June 2022 had issued the SCN to Mr. Singh, based on findings in the investigation report in respect of his role as IRP/RP in the CIRP of CD. The SCN alleged contraventions of several provisions of the Insolvency and Bankruptcy Code, 2016 (Code), IBBI (Insolvency Resolution Process for Corporate Persons) Regulations 2016 (CIRP Regulations), the IBBI (Insolvency Professionals) Regulations, 2016 (IP Regulations) and the Code of Conduct under regulation 7(2) thereof. Mr. Singh replied to the SCN vide email dated 29.06.2022.

1.4 The IBBI referred the SCN, response of Mr. Singh to the SCN and other material available on record to the Disciplinary Committee (DC) for disposal of the SCN in accordance with the Code and Regulations made thereunder. Mr. Singh availed an opportunity of personal hearing before the DC on 20th July, 2022 wherein he reiterated the submissions made in his written reply and also made a few additional submissions.

2. Show Cause Notice, Submissions and Findings

The contraventions alleged in the SCN and Submissions by Mr. Singh are summarized as follows:

3. Contravention- I

3.1 It is observed that Mr. Singh was appointed as IRP by AA vide its order dated 3.01.2020, in CP No. (IB) 771 (PB)/2018, in respect of CIRP of Value Infratech India Private Limited, CD. Section 12(1) of the Code provides that CIRP shall be completed within a period 180 days from the date of admission of the application to initiate CIRP. CIRP is a timebound process required to be completed within the timelines prescribed under the provisions of the Code and Regulations made thereunder.

3.2 It is observed that the 1st Committee of Creditors (CoC) meeting was conducted on 31.01.2020. However, the 2nd CoC meeting was conducted only on 10.12.2020 (adjourned to 12.12.2020). Thus, there was a substantial gap of 316 days between the two CoC meetings. It is also noted that no valuers were appointed, no Form G was published, no EOI was called for, no Evaluation Matrix shared etc in the timelines prescribed under Regulation 40A of the CIRP Regulations.

3.3 In view of the above, the Board is of the prima facie view that Mr. Singh has inter-alia violated section 12(1) of the Code, regulation 40A of CIRP Regulations read with clause 1, 2, 3, 10 and 14 of the Code of Conduct.

Submission

3.4 Mr. Singh has submitted a detailed chart enumerating actions undertaken by him and he submits that he had followed timelines as mentioned under the Code until the nationwide lock down imposed by the Govt. of India due to outbreak of the Covid-19 pandemic. Consequent upon the outbreak of the Covid-19, the IBBI also come up with amendment in the CIRP Regulations to give relief in adherence of timelines. The Hon’ble Supreme Court in Suo Motu WP (C) 3/2020 and Mics. Application 21/2022 has held that that the limitation period prescribed under any law for any judicial or quasi-judicial proceedings shall not apply from 1.03.2020 till 28.02.2022. While it is a fact that after lock-down imposed by the Govt. of India, the process got delayed but the same was not due to negligence or due to deliberate actions/omissions of the IRP/RP. The delay was beyond control of the IRP/RP.

3.5 Further, the application for appointment of Authorized Representative (AR) was filed before AA on 11.03.2020, which was delayed due to late receipt of the claims from the homebuyers, the first claim from homebuyers was received on 17.02.2020. The said Application did not get listed by the AA even after several reminders, emails, personal visits, which resulted into the delay in completion of process. It was most urgent to list the application for appointment of AR and the application filed under section 19(2) of the Code as the RP was also unable to move forward due to non-appointment of AR of homebuyers. Mr. Singh submits that he had at the last filed an application for urgent listing of the application for appointment of AR of the homebuyers, which was ultimately listed on 27.11.2020 and application for appointment of AR was allowed. The order was uploaded on the website of the NCLT after three-four days and the 2nd CoC meeting was called by issuing notice dated 5.12.2020. Thus, it is clear that the delay in process was not due any inaction by the IRP/RP. The delay was cause due to delay in appointment of AR by AA, which was beyond the control of the IRP/ RP and was due to the circumstances created after outbreak of the Covid-19.

3.6 Further, Mr. Singh submitted that Mr. Pankaj Chandani and Mr. Deepak Bansal were appointed as Valuers as per the requirement of the CIRP Regulations on 6.02.2020 within the prescribed timelines. It has been wrongly observed by the IA that no valuers were appointed. In fact, the valuation reports have also been received from both the Valuers. It is further submitted that publication of Form-G, invitation of expression of interest, evaluation matrix are items which requires approval of the CoC before their issuance.

Findings

3.7 In the present case it is observed that the 1st CoC meeting was conducted on 31.01.2020 and then the 2nd CoC meeting was held on 10.12.2020. It is noted from the minutes of the 2nd CoC meeting that the RP had filed an application under section 21A of the Code for appointment of AR on 11.03.2020, however, the matter could not be heard due to Covid-19 and after several e-mails and reminders to the registry of AA the Application was finally heard on 27.11.2020. Mr. Singh also submits that there was delay in submission of claims by homebuyers and the first claim from homebuyers was received on 17.02.2020. However, the processes envisioned under the Code are time-bound and awaiting submission for all the claims beyond the date prescribed in Public Announcement would lead to excessive delay. The RP cannot shirk his responsibility of timely conducting the CoC meetings by blaming the late submission of claims by Creditors. It is the duty of RP to continue the process under the Code without much ado especially when in the present case there is a substantial delay of 316 days. However, taking into account situation due to Covid-19 pandemic, submission of Mr. Singh is accepted.

IBBI suspend Registration of IP for not following true spirit of resolving CD

4. Contravention-II

4.1 It is observed that AA vide order dated 17.12.2018 in (IB)-22(PB)/2018 in the CIRP of M/s Value Infracon India Pvt. Ltd (sister concern of CD), wherein also Mr. Singh were a RP, had clarified the status of claim filed by Capri Global Capital Limited and had directed that “the Resolution Professional could not have allocated voting share to Capri Global Capital Ltd. in taking the total of all the 3 companies whereas only one of them is involved in the present proceedings.”

4.2 It is further observed that the above-mentioned order of AA was upheld by Hon’ble National Company Law Appellate Tribunal (NCLAT) vide order dated 14.05.2019 inter alia stating that “The amount having been separately disbursed as per request of three different entities who signed jointly, it is clear that individual entities like ‘Value Infrabuild India Pvt. Ltd.’ received a sum of Rs. 29,55,00,000/-; ‘Value Infracon India Pvt. Ltd.’ received a sum of Rs. 1,00,00,000/- and ‘Value Infratech India Pvt. Ltd.’ received a sum of Rs. 6,65,00,000/- in their respective Bank Accounts. Having received such amounts separately, the Appellant cannot claim all the payments from the ‘Corporate Debtor’ pursuant to the Loan Agreement dated 17th September 2014 whereinafter 19th September, 2014 letter was issued as extracted above.”

4.3 Thus, the issue relating to claim admission of three companies, namely Value Infrabuild India Pvt. Ltd., Value Infracon India Pvt. Ltd. and Value Infratech India Pvt. Ltd. based on common loan agreement was settled and clarified by AA and confirmed by Hon’ble NCLAT in the above-mentioned orders and Mr. Singh was fully aware of this order being RP in the CIRP of Value Infracon India Pvt. Ltd.

4.4 Despite such clear rulings by AA and NCLAT and Mr. Singh being fully aware of the same, admitted claim of Capri Global Capital Limited (FC) in the CIRP of CD in full for an amount of Rs. 1,49,08,68,701/- relying on the common loan agreement with three sister companies (Value Infratech India Private Limited, Value Infrabuild India Private Limited and Value Infracon India Private Limited), and not as held by NCLAT in it order dated 14.05.2019. As per the NCLAT order, the claim of FC should have been admitted based on the disbursement made to CD as per the common loan agreement. Admittance of claim of FC in full has resulted in violation of NCLAT order dated 14.05.2019 which gave it 100% voting rights in the first CoC meeting and 96.77% voting rights in second CoC meeting.

4.5 This incorrect admission of claim and resultant assignment of voting rights in one FC has been found to be willful disobedience of orders of the NCLAT with mala fide intention as Mr. Singh was fully aware of the NCLAT order dated 14.05.2019 being RP in that matter also. NCLAT’s observation in their order dated 29.11.2021 states that “we find that the CoC was not constituted in accordance with the provisions of IBC. In the matter, the CIRP was not pursued with fairness and due diligence by the Resolution Professional and the resolution for liquidation of the Corporate Debtor was taken in a meeting with an improper voting share.” As also observed by NCLAT, Mr. Singh acted with mala fide in the running of CIRP of the CD.

4.6 In view of the above, the Board is of the prima facie view that Mr. Singh has inter alia violated section 17(2)(e) and 21(1) of the Code, Regulation 13(1) of CIRP Regulations and clause 1, 2, 12, and 14 of the Code of Conduct.

Submission

4.7 Mr. Singh submitted that vide order dated 17.12.2018 the AA had clarified the status of the claim of Capri Global Capital Limited, FC in the matter of CIRP of Value Infracon India Private Limited and directed for consideration of the claim as per the disbursement made in the company. Accordingly, the constitution of the CoC of Value Infracon India Private Limited was changed and the claim of FC was reduced to Rs.1.86 Crores from Rs.76 Crores. That the aforesaid order of AA was confirmed by the Appellate Authority vide order dated 14.05.2019.

4.8 The position of claim of Capri Global Capital Limited got settled for everyone and the same become binding upon the Hon’ble AA it was confirmed in appeal but Hon’ble AA changed its instance in respect of the claim of Capri Global Capital Limited, upon considering the facts of the case and asked for submission of the Additional affidavit by Capri Global Capital Limited detailing the position of the financial debt vide its order dated 13.09.2019, passed in CP (IB)771/PB/2018 and the same was submitted FC on 4.10.2019. It is further being submitted that the Presiding Judge of the AA was the same person, who passed order dated 17.12.2017 in the matter of CIRP of Value Infracon India Private Limited as well as who passed the CIRP commencement order dated 3.01.2020 in the matter of CD. In the Additional affidavit submitted on 4.10.2019, as per order dated 13.11.2019, the FC clarified everything in respect of their claims and had claimed that there was joint and several liability of repayment of loan of all three sister companies namely value Infracon India Private Limited, Value Infratech India Private Limited and Value Infrabuild India Private Limited, which are co-borrowers. The affidavit had further stated that the claim of FC was reduced in the CIRP of the Value Infracon India Private Limited and that there is no other pending proceedings and FC is entitled to claim the entire outstanding amount from the CD on the basis of the Loan Agreement dated 17.09.2014.

4.9 Mr. Singh submitted that while passing order of CIRP dated 3.01.2020 the AA has appreciated the entire records available before it including the loan agreement, the charges created on the assets of the corporate debtor, the demand promissory note and the cheques issued by the CD for repayment of the entire loan amount. Mr. Singh submits that he followed the order of AA dated 3.01.2020, while admitting the claim of FC, which was passed after considering the AA order dated 17.12.2018 and Appellate Authority order dated 14.05.2019.

Findings

4.10 In the present matter it is observed that AA in its order dated 17.12.2018 in the CIRP of Value Infracon India Pvt. Ltd. with Mr. Singh as a RP, had decided regarding the claim status of Capri Global Capital Limited, FC that

“The RP could not have allocated voting share to Capri Global Capital Ltd. by taking total of all the three corporate debtors whereas only one of them is involved in the present proceedings. The CoC would tilt in favour of Capri Global as against the voting share of Home Buyers’ if the whole loan amount of three companies is clubbed.”

4.11 The AA went on to make observations regarding the bias conduct of the RP as follows: “We expect the RP to act fairly and dispassionately which is found wanted in the present case because he was aware after the filing of the present application that the aforesaid two matters are pending consideration before the NCLT as he has given consent to act as IRP even in those two matters.”

4.12 The DC notes that this view of the AA was upheld by the Appellate Authority as well vide its order dated 14.05.2019 while making the following observations,

“9. The amount having been separately disbursed as per request of three different entities who signed jointly, it is clear that individual entities like ‘Value Infrabuild India Pvt. Ltd.’ received a sum of Rs. 29,55,00,000/-; ‘Value Infracon India Pvt. Ltd.’ received a sum of Rs. 1,00,00,000/- and ‘Value Infratech India Pvt. Ltd.’ received a sum of Rs. 6,65,00,000/-in their respective Bank Accounts. Having received such amounts separately, the Appellant cannot claim all the payments from the ‘Corporate Debtor’ pursuant to the Loan Agreement dated 17th September, 2014 whereinafter 19th September, 2014 letter was issued as extracted above.

10. In view of the fact that the three entities were provided amounts separately in their respective Bank Accounts, the Adjudicating Authority rightly held that the Appellant as a ‘Financial Creditor’ can claim its voting shares based on the amount actually disbursed in favour of ‘Value Infracon India Pvt. Ltd.’- (‘Corporate Debtor’).”

4.13 It is submitted by Mr. Singh that he had followed the order of AA dated 03.01.2020, while admitting the claim of FC which had taken into consideration the Additional Affidavit of FC regarding the joint liability of the claim which was passed after the AA order dated 17.12.2018 and Appellate Authority order dated 14.05.2019. However, from the order dated 03.01.2020 it is observed that nowhere has the AA admitted the entire joint claim of the FC in the three sister concerns, it had only observed that a default had occurred in the matter. In fact the AA has clearly stated that it is making no determination regarding the amount due by FC as follows,

“20. Before parting we must notice the complaint generally made against Financial Creditor in the form of discrepancies in the statement of account. We cannot in summary proceedings determine the amount due. This function is required to be performed by the Information Utility which is not yet fully functional. Therefore, Resolution Professional may ask the ex-promoter/director of the Corporate Debtor for any such correction if need be and act accordingly by placing it before the Financial Creditor as it is only fair to do so.

4.14 It is also observed that the Appellate Authority in the present matter vide order dated 29.11.2021 made categorical remarks against the conduct of the RP stating as follows:

“23. We are of the clear and firm opinion that in view of the judgment of this tribunal in Capri Global Capital Limited vs. Value Infracon India Pvt. Ltd. (through its Resolution Professional Mr. Sanjay Kumar Singh) & Anr. (supra), it was the RP’s responsibility to fix financial creditors’ claim amounts and vote shares properly and in accordance with law, moreso, when the NCLAT had already given its verdict in CA (AT) (Ins) 29 of 2020 (supra). He has been sadly remiss and found wanting in the performance of his duties as per the provisions of IBC. The hasty manner in which the items were taken up for discussion in the 2nd CoC meeting, and no action was taken to pursue the application u/s 19(2) and file an application for exclusion of time spent in judicial intervention, are stark pointers to the irresponsible handling of these issues by the RP, for which he can’t be absolved of blame… 24. Thus the Resolution Professional, after wrongly fixing the vote share of Respondent No. 1 at 96.77% led the CoC into taking a malafide decision for liquidation of the Corporate Debtor by playing along with the intentions of Respondent No. 1, even though he had not taken requisite steps as required under IBC to call for Expression of Interests and submission of Resolution Plans which could have saved the Corporate Debtor from liquidation, which means corporate death and is not a desirable situation. He has claimed that, thus, a hasty decision for liquidation of the Corporate Debtor (Respondent No. 1) was taken by the CoC. In such a situation, he has claimed, the entire proceedings in the 2nd meeting of the CoC were hijacked in its favour by Capri Global Capital Limited’s representative with the Resolution Professional playing into his hands, and abandoning his duty, as enshrined in the IBC.

26. From the minutes of second meeting of the CoC, it is clear that the Resolution Professional has resorted to very novel and ingenious way of circumventing the duties imposed upon him in the IBC for preparation of information memorandum, exclusion of time to extend CIRP period and inviting Expression of Interest for Resolution Plan for the Corporate Debtor. He, with active support of Nitin Goel, representation of Respondent No. 4, managed to deal with these important issues in a very superficial and objectionable manner. Such action of RP betrays of prejudicial action reeking of favourtism for Respondent No. 4.

27. Thus we find that the CoC was not constituted in accordance with the provisions of IBC. In the matter, the CIRP was not pursued with fairness and due diligence by the Resolution Professional and the resolution for liquidation of the Corporate Debtor was taken in a meeting with an improper voting share ascribed to Respondent No. 4 and taken in unseemly haste. These are actions of omissions and commissions, which we cannot absolve the Resolution Professional from his conduct should be investigated by Insolvency and Bankruptcy Board of India and action as appropriate may be taken against the present Resolution Professional.”

4.15 In view of the above the DC observes that the stand of Mr. Singh that he had admitted the entire claim of the FC based on the submissions in additional affidavit is not correct. That despite adverse remarks from the AA and NCLAT regarding his previous conduct in IRP of Value Infracon India Pvt. Ltd for admitting the entire claim of FC against the three companies in a single CIRP, Mr. Singh repeated this action in the present CIRP of CD. By allowing the entire claim in three companies of FC in the present CIRP, Mr. Singh could ensure that FC has majority voting share to the detriment of the homebuyers and could confirm his own continued appointment and go for the liquidation directly as per the direction of FC to whom wrong voting share was assigned. The DC finds that there is a serious dereliction of duty, the IP has forsaken his integrity and impartiality in order to serve his own interests over that of the stakeholders and even made misleading submissions in an attempt to derail the DC proceedings.

5. Contravention-III

5.1 It is the duty of IP under section 25 (2)(a) of the Code whereby immediate custody and control of assets of the CD, including the business record of the CD is to be taken. Further, it is the duty of the IP under section 25(2)(g) to prepare an IM in accordance with the provisions of the Code. Section 29(1) of the Code requires the IP to prepare an IM in such form and manner containing relevant information as specified in the CIRP Regulations for formulating a resolution plan. Regulation 36 of CIRP Regulations provides the details which the IM should contain such as details of assets and liabilities of the CD, latest annual financial statement, audited financial statement of the CD, list of creditors, particulars of debt due from or to the CD and some other information.

5.2 It is observed that IM prepared by Mr. Singh did not have the details as envisaged under regulation 36(2) of CIRP Regulations and the same has also been noted by NCLAT in the order dated 29.11.2021, that “information memorandum was not prepared with full and correct details of assets and liabilities of the Corporate Debtor.

5.3 Furthermore, NCLAT has also noted that Mr. Singh has taken no steps to obtain details of assets and liabilities, financial statement from other records that have to be statutorily filed in relation to the CD under the provisions of the Companies Act. Hon’ble NCLAT has observed that “and no action was taken to pursue the application u/s 19(2) and file an application for exclusion of time spent in judicial intervention, are stark pointers to the irresponsible handling of these issues by the RP”

5.4 It is, thus, observed that Mr. Singh has prepared IM hastily without including thereunder all requisite information for which he did not take necessary actions prescribed under the provisions of Code and regulation. In view of this, the Board is of the prima facie view that Mr. Singh has inter alia violated section 25 (2)(a), 25(2)(g), section 29(1) of the Code, regulation 36(2) of CIRP Regulations and clause 2, 12 and 14 of the Code of Conduct.

Submission

5.5 It is submitted by Mr. Singh that the CD has closed its operations much prior to the commencement of CIRP. The Master Data of the CD shows that financial information were not filed after financial year 2011-12. The directors have already resigned from the CD in year 2015­16 itself and there was no director on record on the date of commencement of CIRP. It is submitted that the order of CIRP commencement was received by the Mr. Singh on 07.01.2020 and on the same date he wrote letters/emails to the last directors of the CD intimating them about commencement of CIRP and requested for the relevant information. That Mr. Singh searched the ROC records and collected the same for his records.

5.6 It is also pertinent to mention that the Uttar Pradesh Police has submitted a report before Hon’ble Supreme Court on 30.08.2019, wherein it was submitted that Pramod Kumar Singh, Promoter and ex-director of the CD might have left the country and the State Police had sent a letter to the Bureau of Immigration, Delhi for lookout circular against him. Mr. Singh also wrote to the auditors of the CD for information. The ex-director Ms. Reeva Gujral responded to the IRP on 31.01.2020 stating that she had left the company in year 2015-16 itself and she does not have any information.

5.7 In order to get the books of accounts and other information, the IRP filed an application under section 19(2) against the ex-directors, promoters and auditors on 27.01.2020. The Auditors of the CD through e-mail dated 09.03.2020 informed that he does not have any information about the CD. The CD has only one asset, which is a piece of land and the same has been mortgaged in favour of the Capri Global Capital Limited, FC for availing the loan facility. There are no other assets as per the last available balance-sheet. The RP prepared the IM as per the latest information available with him in respect of the assets and liabilities. In order to comply with the timelines of 54 days in respect of issuance of IM, the same was prepared and issued on the basis of the best available information. The same would have been updated upon receipt of any material information.

Findings

5.8 It is observed from the Master Data of the CD that the last date of balance sheet is 31.03.2012 and that the directors of the CD, Ms. Reeva Gujral and Dig Vijay Singh had resigned in the year 2016 and 2015 respectively. Mr. Singh submits that he does not have records of CD as no information has been forthcoming from the ex-directors and auditors and the CD has only one land asset as per the last balance sheet. However, it is observed that the Hon’ble NCLAT in its order dated 29.11.2021 has observed that

“For the Corporate Insolvency Resolution Process to result in successful resolution of the corporate Debtor, preparation of a correct information memorandum is a must, which may result in work able resolution plans. In the present case, we find that information memorandum was not prepared with full and correct details of assets and liabilities of the Corporate Debtor. The RP also did not pursue his application u/s 19(2). As a result the CoC decided to abandon the step of inviting of EOI for Resolution Plan. Thereafter in undue haste, the CoC decided to go for liquidation of the Corporate Debtor… It is surprising as to how the Resolution Professional could prepare an information memorandum without getting access to the records and documents of the Corporate Debtor, as he had sought through IA No. 827/PB/2020, and on which orders could be obtained from the Adjudicating Authority. In addition, the Resolution Profession did not even attempt to obtain details of assets and liabilities, financial statement from other records that have to be statutorily filed in relation to the company under the provisions of the Companies Act…”

5.9 The DC also finds from the material available that no efforts were made by the RP to obtain records that have been statutorily filed and that RP did not pursue the application filed under section 19. Hence, contravention could be made out.

6. ORDER

6.1 In view of the forgoing contraventions, the DC finds that Mr. Sanjay Kumar Singh has acted against the letter and spirit of the Code by allocating voting share to FC based on clubbing the whole loan amount disbursed to the three corporate debtors in the present CD despite repeated instructions of the Hon’ble AA and the Hon’ble NCLAT to ascertain the claim amount of FC based on the amount actually disbursed to the individual corporate debtor. The Code assigns the role of a saviour to the CoC. The constitution of the proper CoC is a crucial activity performed by the IP for the effective, timely and credible functioning of the entire edifice of the resolution process. In the present CD, admission of entire claim amount of FC disbursed to the three corporate debtors by Mr. Singh resulted in 96.77% voting share to FC and tilted the CoC in favour of the FC against the homebuyers. The FC with improper voting share having majority resolved to liquidate the CD without inviting the Expression of Interest for resolution of the CD. The decision of liquidation was taken without following the true spirit of the resolving the CD which is a heart and soul of the Code and ignoring the interest of other creditors. Hence, the DC, in exercise of the powers conferred under Section 220 of the Code read with Regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017 and Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016, hereby suspends the registration of Mr. Sanjay Kumar Singh having Registration No. IBBI/IPA-002/IP-N00188/2017-18/10505 for a period of two years.

6.2 This Order shall come into force on expiry of 30 days from the date of its issue.

6.3 A copy of this order shall be sent to the CoC of all the Corporate Debtors in which Mr. Sanjay Kumar Singh is providing his services, if any. The CoC may decide whether to continue his services or not. In case, CoC decide to discontinue his services, CoC may file an appropriate application before AA

6.4 A copy of this order shall be forwarded to the ICSI Institute of Insolvency Professionals where Mr. Sanjay Kumar Singh is enrolled as a member for their further necessary action.

6.5 A copy of this Order shall also be forwarded to the Registrar of the Principal Bench of the National Company Law Tribunal, New Delhi, for information.

Accordingly, the show cause notice is disposed of.

-Sd/-
(Ravi Mital)
Chairperson, IBBI

Dated: 23rd August 2022
Place: New Delhi

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