4.1 Contravention: Mr. Agarwal did not proceed expeditiously even though he knew that the CIRP period was ending on 27th February, 2018. He issued a notice only 31st January, 2018 convening the third meeting of the CoC to be held on 12th February, 2018. He ought to have convened the meeting earlier and he should have done so with seven days’ notice, which is the requirement under the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations). Further, he should have adjourned the meeting to the next day (13th February, 2018), as required under the CIRP Regulations, if no one turns up for the meeting, instead of adjourning the meeting to 19th February, 2018
Finding: An IP has the highest professional responsibility. His conduct and performance have substantial bearing on survival of an ailing entity. He, therefore, ought to work with a sense of urgency and with utmost care and diligence and he should endeavour to fast track the process, wherever the situation demands. Though the DC would have appreciated had Mr. Agarwal fast tracked the process, it can’t hold him liable for the same in contravention of any specific regulation. The DC notes that even if Mr. Agarwal had complied with the regulations by adjourning the meeting to the next day, it would have been an exercise in futility and would not have made any difference to the process.
4.2 Contravention: Mr. Agarwal did not take over the management of operations of the CD in contravention of the provisions of section 23 of the Code. The excuse that he faced noncooperation from the CD is not tenable as he did not even seek help of the AA under section 19(2) of the Code
Finding: Mr. Agarwal, as the resolution professional (RP), has the statutory duty to manage the operations of the CD as a going concern. He has duty to protect and preserve the value of the property of CD. The statute anticipates that a RP may not always get co-operation and, therefore, entitles him in such situations to make an application under section 19(2) of the Code seeking a direction from the AA. Mr. Agarwal neither took over the management of the CD nor did he apply for direction of the AA. He merely informed the AA, through the progress report, at the fag-end of the CIRP period that he was not getting co-operation of the CD. It is a lame excuse that Mr. Agarwal could not trace the CD when there was an IRP for about 140 days, two meetings of the CoC were held, a director of the CD attended the meeting of the CoC convened by Mr. Agarwal, and the said director informed Mr. Agarwal about change of address of the CD. It is preposterous that Mr. Agarwal, as RP, never visited the premises of the CD and yet he claims that there was no co-operation from the CD. Mr. Agarwal has thus clearly failed in his statutory duty in contravention of the provisions of sections 20 and 23 of the Code.
4.3 Contravention: Mr. Agarwal did not appoint valuers, prepare information memorandum, issue invitation for expression of interest, invite resolution plans, etc., and, therefore, did not conduct the CIRP, in contravention of various provisions of the Code and the CIRP Regulations.
Finding: An RP exercises the powers of the Board of Directors of a CD in distress and conducts the CIRP. Obviously, the job is tough and challenging. Every other IP encounters difficulties similar to those faced by Mr. Agarwal. An IP is known for his ability to deal with challenges, not for his ability to explain the failure. Mr. Agarwal did not make serious effort to get any of the tasks done.
4.4 Contravention: Mr. Agarwal recused himself from being appointed as the Liquidator
without any cogent reasons for the same.
Finding: Although Mr. Agarwal wanted to be recused, he continued to discharge the
responsibilities as the Liquidator till the AA discharged him. Further, though the statute does not envisage an IP to avoid or to run away from the responsibility, there is no prohibition on seeking recuse with the approval of the AA. It may be difficult to find fault with Mr. Agarwal in this regard.
6.1 In view of the above, the Disciplinary Committee, in exercise of the powers conferred under section 220 (2) of the Code read with sub-regulations (7) and (8) of regulation 11 of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2016, hereby imposes on Mr. Agarwal a monetary penalty equal to one hundred percent of the total fee payable to him as IRP and as RP in the CIRP of Upadan Commodities Private Ltd. and directs him to deposit the penalty amount by a crossed demand draft payable in favour of the Insolvency and Bankruptcy Board of India within 30 days of the issue of this order. The Board in turn shall deposit the penalty amount in the Consolidated Fund of India. Accordingly, the show cause notice is disposed of.