AgenciesThe plea cited certain preferential transactions alleging against the promoter. The Insolvency and Bankruptcy Board of India (IBBI) is looking to plug rule gaps, especially pertaining to the power of the resolution professional to make defaulting promoters comply with the law, after a recent ruling by the National Company Law Tribunal, Kolkata.
IBBI is said to be alerting all the professionals citing this order for timely compliance, said three insolvency executives present in regulatory discussions. “An IP is the soul of an insolvency proceeding,” said M S Sahoo chairperson at Insolvency and Bankruptcy Board of India. His actions affect the interests of parties.” A person aggrieved by an action of an IP, according to the chairperson is likely to complain against him even if what IP did is just and proper. A person genuinely aggrieved by an unjust and improper action of an IP is also likely to complain against him.
“The IBBI has to distinguish between the two to ensure that it does not harass an innocent IP, but does not spare a mischievous one,” Sahoo told ET. The order is said to have left Insolvency Professionals and other stakeholders under the resolution process bewildered. Since it has the effect of creating a precedent where the malefactor may escape its liability by shifting the onus to the concerned resolution professional. In an unprecedented manner Kolkata’s NCLT chapter dismissed an avoidance application filed by Santosh Choraria, the RP of Suraj Fabrics Industries Limited in February.
The plea cited certain preferential transactions alleging against the promoter. The NCLT Kolkata bench comprising judges including Rajasekhar V.K and and Harish Chander Suri dismissed the application as it was filed by RP after 389 days of commencement of corporate insolvency process. Insolvency and Bankruptcy Code stipulates, such an application is required to be filed in 135 days. ‘IBBI should look into the gaps in the provisions for which the Insolvency Professionals are not getting information from promoters and transaction audits are delayed and ultimately the promoters, who have committed some wrongs are getting benefitted’ said an Insolvency Professional, who dealt with multiple cases from North and Eastern India.
“The feeling is inescapable that the RP has filed the application under section 43 read with section 44 of the Code only to avoid adverse scrutiny on the part of the IBBI and not with any real intention to pursue the alleged preferential transactions to their logical end,” the court said in the order. “That may be the only plausible reason for filing the section 43 application after filing the application for approval of the resolution plan.” eompolicy