IP cannot charge fees as percentage of amount distributed or realised
INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
No. IBBI/DC/35(INTERIM)/2020 29th October, 2020
Interim Order
In the matter of Mr. Anil Goel, Insolvency Professional (IP) under sub-regulation (4) of regulation 5 of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017
The Insolvency and Bankruptcy Board of India (IBBI) has referred to the Disciplinary Committee (DC) the Interim Inspection Report (IIR) under sub-regulation (3) of regulation 5 of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 (I&I Regulations) for gross violation of the provisions of the Code, Regulations made thereunder and directions of the Hon‟ble National Company Law Tribunal, Kolkata Bench (Adjudicating Authority) by the IP, Mr. Anil Goel.
2. The IBBI, in exercise of its powers under section 218 of the Insolvency and Bankruptcy Code, 2016 (Code) read with the I&I Regulations has appointed the Inspecting Authority (IA), vide its order dated 13th October, 2020, to conduct inspection of Mr. Anil Goel with Registration No. IBBI/IPA-001/IP-P00118/2017-2018/10253 in the matter of liquidation of Varrsana Ispat Ltd., the Corporate Debtor (CD), on having reasonable grounds to believe that Mr. Goel had contravened the provisions of the Code and regulations thereunder and also the directions of Adjudicating Authority (AA) in the said matter. The IA has submitted an IIR to the IBBI under sub- regulation (2) of regulation 5 of the I&I Regulations.
3. On basis of materials available on record including the IIR, the DC notes as follows:
(i) Mr. Goel was appointed as an Interim Resolution Professional (IRP) for Varrsana Ispat Limited, the CD vide order dated 16th November 2017 of the AA.
(ii) Mr. Goel was appointed as a Resolution Professional (RP) by a unanimous decision of the Committee of Creditors (CoC) in the meeting held on 17th December 2017 and was later confirmed by the Hon‟ble NCLT vide its Order dated 02nd April 2018.
(iii) The Corporate insolvency resolution process failed as there being no prospective resolution applicant for resolution of insolvency despite CD being a going concern, due to the attachment of its assets by the Enforcement Directorate under Prevention of Money Laundering Act, 2002. The AA vide its vide Order dated 6th August 2019 declared the commencement of liquidation of the Corporate Director and appointed Mr. Goel as the Liquidator.
(iv) On the basis of material available on record, the IBBI having reasonable grounds to believe that there is a gross violations of the provisions of the Code by Mr. Goel in the matter of Varrsana Ispat Limited appointed the IA to conduct an inspection of IP, Mr. Anil Goel. The IA, in pursuance of regulation 4 (1) of I&I Regulations, served a notice on Mr. Goel vide email dated 14th October, 2020 and directed to provide copies of duly enlisted documents by 25th October 2020 which have not been received yet by the IBBI.
4. The DC notes from the IIR that the IA has observed contraventions of certain provisions of the Code, Regulations and directions of the Orders of Hon‟ble NCLT which are summarized as follows: –
Illegal distribution of funds by IP despite direction of the AA.
4.1 Mr. Goel illegally distributed funds despite the following directions of the AA given to the Liquidator, vide order dated 20th November, 2019 in C.A(IB) No. 1546/KB/2019 in CP(IB) No. 543/KB/2017:
“C.A(IB) No. 1546/KB/2019 is an application filed by the representative of the workmen alleging infringement of their rights as the stakeholders in taking decision by the liquidator regarding distribution of assets of the Corporate Debtor among the Financial Creditors pending consideration of the application filed u/s. 230 of the Companies Act, 2013. As the Company is a going concern the liquidator cannot distribute the assets till the determination of the interim application pending for compromise…”
4.1.1 Subsequently, an application was filed by Employees of the CD, against the Liquidator for blocking the sum of Rs.18 Crores for distribution amongst the stakeholders of the CD during liquidation process. This amount was to be utilized for the operations of the CD and disbursing of the same would adversely impact the operations of the CD. The Adjudicating Authority (AA) in the said matter has, vide an order dated 14th January, 2020, categorically observed as follows:
“….we are of the view that there is no justification for the Liquidator to withhold the aforesaid amount of Rs.18.00 crores and odd, lying with the Liquidator and it is directed that the same may be utilized for the operations of the Corporate Debtor to remain Corporate Debtor as going concern for distribution amongst stakeholders in equal manner as per provision of section 53 of the Insolvency & Bankruptcy Code, 2016, which would include the claims of the employees, if any.”
4.1.2 The Liquidator, Mr. Goel, however, disregarded the AA‟s Orders prohibiting distribution of the assets of CD amongst the stakeholders and distributed a sum of Rs. 26 Crores, which could have been used as the working capital of the company to continue it as a profitable going concern. In two phases, the Liquidator distributed the amount of Rs.21 Crores on 04.02.2020 and Rs.5 Crores on 16.06.2020 amongst the Financial Creditors.
Tags: Company Laws
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