IBBI warns Interim Resolution Professional Dushyant C Dave involved in the CIRP of Top worth Steels and Power

IBBI warns Interim Resolution Professional Dushyant Dave involved in the CIRP of Topworth Steels and Power Private 

The Disciplinary Committee(DC) of the Insolvency and Bankruptcy Board of India(IBBI) warned the Interim Resolution Professional (IRP) (Mr. Dushyant C Dave), involved in the Corporate Insolvency Resolution Process (CIRP) of Topworth Steels and Power Private Limited (Corporate Debtor/CD) that he shall not accept any new assignment without obtaining Authorisation for Assignment in view of Regulation 7A of the IBBI (Insolvency Professionals) Regulations (IP Regulations), 2016 and in case of not having Authorisation for Assignment, he should bring the same to the notice of the Adjudicating Authority(Hon'ble NCLT, Mumbai Bench/AA) without any delay.

In this matter, the CIRP of Topworth Steels and Power Private Limited was commenced and the same was communicated to Mr. Dave on 28th February, 2020 and thereafter public announcement was made on 29th February, 2020. On 28th February, Mr. Dave applied to IPA seeking Authorization for Assignment (AFA) which was issued on 20th March with a validity of one year.

However, in the meantime, Mr. Dave issued public announcement in the CIRP of the CD on 29th February i.e. while not holding a valid AFA which as per IBBI was violation of Section 208(2)(a) & (e) of the Insolvency and Bankruptcy Code, 2016 (Code) and Regulation 7(2)(a), 7(2)(h) and 7A of the IP Regulations, read with clauses 1, 2, 12 and 14 of the Code of Conduct as given in the First Schedule of the IP Regulations.

The DC, in this matter, very elaborately discussed the various provisions of the Code and the aforementioned regulations. It has been mentioned that Regulation 7A of IP regulations requires an IP to have AFA before undertaking any assignment after 31st December, 2019.

One of the essential conditions for undertaking any assignment by an IP is that he should have an AFA which is issued by the IPA with which he is enrolled. An IP who intends to obtain AFA can make an application to the IPA under para 12A of the byelaws of Insolvency Professional Agency of Institute of Cost Accountants of India.

The DC also 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.

Regarding the issue of making public announcement in the matter of the CD on 29th February, 2020 while not holding a valid AFA, it had been observed that the SCN issued against Mr. Dave by IBBI was disposed of vide order dated 27th February and the very next day, Mr. Dave applied to his IPA for an AFA.

However, the issuance of AFA was rejected by the IPA on 6th March on the ground of accepting of assignment without holding a valid AFA. Mr. Dave thereafter submitted his explanation to the IPA which was also put on IBBI portal on 9th March. Thereafter, the IPA issued the AFA to Mr. Dave on 20th March with a validity of one year. In the meanwhile, Mr. Dave made public announcement on 29th February without holding a valid AFA from his IPA.

As per Regulation 12A (5) of the IBBI (Model ByeLaws and Governing Board of Insolvency Professional Agencies) Regulations, 2016the AFA shall be issued or renewed by the IPA within a period of fifteen days from the date of receipt of application and if the same is not issued, renewed or rejected by the IPA, the AFA shall be deemed to have been issued or renewed by the IPA.

In the present case, the application for AFA which was rejected by the IPA on 6th March, 2020 was reconsidered by the IPA and the AFA was subsequently issued by the IPA on 20th March. The DC further noted the date of commencement of CIRP of CD was after 31st December, 2019 but the acceptance for the assignment had been given by Mr. Dave prior to 31st December, 2019 i.e. on April 2, 2018. Hence, DC took a lenient view in this regard that he might not be held responsible.

Lastly, the DC also noted, "An IP assumes a pivotal role in CIRP under the Code. He is the backbone of all such processes and success thereof hinges on the conduct and competence of the IP. He is the fulcrum of the process and link between the AA and CoC (Committee of Creditors) as also other stakeholders. Thus, he performs a wide array of responsibilities and duties which are bestowed upon him in the process."

CORRIGENDUM

We are sorry for having published a photograph of Senior Advocate Dushyant A Dave alongside a news item regarding Interim Resolution Professional Dushyant C Dave, involved in the CIRP of Top Worth Steels and Power, being warned by the IBBI. We have replaced the photograph.

We regret the inconvenience & harm caused to Senior Advocate Dushyant A Dave's reputation due to the error.