As per the provisions of Insolvency and Bankruptcy Code, 2016 (“the Code”), only that Insolvency Professional can be appointed as the Resolution Professional or Interim Resolution Professional or liquidator or bankruptcy trustee if no disciplinary proceedings are pending against that Insolvency Professional.
Even though before appointment of any Insolvency Professional as Interim Resolution Professional or Resolution Professional or Liquidator a proper inquiry so as to determine his/her professional competency but the concern arises when the Insolvency Professional contravenes any of the provisions of the IBC after getting appointed. Thereafter,
What is the recourse available with the aggrieved?
What is the procedure to take action against that Insolvency Professional?
First of all let’s understand the legal recourse available with the aggrieved pertaining to the contravention of any of the provisions of the Code. Any aggrieved person can file a complaint against the insolvency professional agency or insolvency professional or an informational utility to the Insolvency and Bankruptcy Board of India (“IBBI”). Upon receiving of the complaint, if the board deems fit will authorize any person or persons to act as investigation authority which is supposed to file a report to the IBBI to form an opinion about whether there was any contravention of the provisions of the code.
Based upon the findings of such report as well as other evidences, the IBBI issues a show cause notice to the Insolvency Professional for the disposal of same by the disciplinary committee constituted by the board.
Upon the examination of the report if there exists any sufficient cause then the disciplinary committee takes any of the following action against the Insolvency Professional:-
- Suspend or cancel the registration Insolvency Professional agency or information utility.
- Impose the penalty out of the following:-
- Three times the amount of the loss caused, or likely to have been caused, to persons concerned on account of such contravention; or
- Three times the amount of the unlawful gain made on account of such contravention, whichever is higher.
In the light of above provisions, rule and regulations of the Code any aggrieved person can take a legal action against the Insolvency Professional who contravenes any of the provisions of the Code or violates or deviates from the professional duty entrusted upon him/her.
Disclaimer – Please note that the above articles is based on the interpretation of related laws and judicial pronouncement which may differ from person to person. The reader are expected to take the expert opinion on the matter.