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In the first ever instance of ‘harshest punishment’ on an insolvency professional (IP), the insolvency regulator, IBBI, has cancelled the registration of Mukesh Mohan, for contravention of insolvency process of four corporate debtors.
Declaring Mohan as a person “not fit and proper” to continue as an IP, the IBBI has also debarred him from seeking fresh registration as an IP or providing any services under the insolvency and bankruptcy code (IBC) for 10 years.
This disciplinary committee’s order — issued on August 23 — will come into effect in 30 days from this date, according to the Insolvency and Bankruptcy Board of India (IBBI).
The four corporate debtors for which Mohan had acted as IP were JEKPL Private Limited, Carnation Auto India Pvt Ltd, Athena Demwe Power Ltd and Tirupati Links Ltd.
It may be recalled that the insolvency regulator had, in May, initiated a disciplinary action of suspending an insolvency professional Bhavna Ruia for one year for charging an exorbitant fee.
Irreparable damage
The Disciplinary Committee has in its latest 19-page order concluded that Mohan had by his conduct and action caused “serious irreparable damage” to the “fledgling” insolvency profession. Mohan is enrolled as professional member of the Indian Institute of Insolvency Professionals of ICAI.
Experts’ take
Saurav Kumar, Partner, Induslaw, a law firm, said the allegation in all the four matters are very grave as that of suppression and wrongful influence, allowing suspended directors to regain control of the corporate debtor, appointment of the same valuer etc. The order of the disciplinary committee may be viewed as a strong measure from the resolution professionals’ point of view. However, owing to regular instances of misconduct by resolution professionals, the disciplinary committee has taken this first of a kind measure. Overall, the disciplinary committee has duly exercised its powers vested under the IBC, he said.
Statutory, legal duties
Daizy Chawla, Senior Partner, Singh & Associates, a law firm, said the fact is under the Code an IP is vested with a whole array of statutory and legal duties and power, therefore it is expected that the individual who has been given the power to drive the vehicle of CIRP will act with due care.
“The discretion with respect to action to be taken against an RP is with IBBI and one cannot comment as they have to consider all the facts while giving their decision,” she added.
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