Disciplinary Committee (orders no. IBBI/DC/112/2022 dated 13thJuly,2022) in the matter of Mr. Mahender Kumar Khandelwal, Insolvency Professional. on the issue of working of RP as Monitoring Professional after approval of resolution plan, observed as under;
Clause 23A of the said Code of Conduct which prohibits an IP from rendering professional services to stakeholders, 'other than services under the Code till expiry of one year from cessation of the CIRP handled by an IP.
However, fact remains evaluation of plan was rested with CoC headed by him. There is no documentary evidence to suggest that he, at any point of time, apprised the CoC about this condition as included in the resolution plan of the SRA, being violative of the provision of the Code.
It was his duty under section 30 of the Code to ensure that the resolution plan does not contravene any provision of the Law.
His failure to do so casts doubt on his intentions when seen in conjunction with the fact that he was the beneficiary of such omission.
Excerpts of the Order;
3.16. Contravention No. VI
3.16.1. Mr. Mahender Kumar Khandelwal continued to run the affairs of the CD in the capacity of the Monitoring Professional after approval of resolution plan. The Code of Conduct specified in First Schedule of IP Regulations inter alia provide that an IP should maintain confidentiality and avoid conflict of interests. This is done with an intent to enhance the credibility of the ecosystem under the Code. Further, to ensure that direct or indirect interest of an IP must not compromise the interests of the stakeholders, Clause 23A of the said Code of Conduct prohibits an IP from rendering professional services to stakeholders, 'other than services under the Code', till expiry of one year from cessation of the CIRP handled by an IP. Thus, within the said restraint period the IP can accept only those activities that are permitted under section 208 of the Code and clause 23A of the Code of Conduct. Mr. Mahender Kumar Khandelwal had become part of the Monitoring Committee and failed to abide by the said Code of Conduct under Clause. 3.16.2. In view of the above, the Board is of the prima facie view that Mr. Mahender Kumar Khandelwal inter-alia violated section 208(2)(a), 208(2)(c) of Code, regulation 7(2)(a) and 7(2)(h) of IP Regulations read with clause clauses 2, 14 and 23A of the Code of Conduct.
3.17. Submissions of Mr. Mahender Kumar Khandelwal
3.17.1. Mr. Mahender Kumar Khandelwal submitted that he continued to run the affairs of the
Corporate Debtor in the capacity of the Monitoring Professional in terms of Section 2(a) of Part A of the Resolution Plan, which inter alia envisages that in the interim till the implementation completed, the person acting as the erstwhile resolution professional shall be appointed as a monitoring professional ("Monitoring Professional") who shall continue to perform the duties as were discharged by the resolution professional during the CIR Process period (subject to decisions of the reconstituted board, in accordance. with the applicable law).
3.17.2. Thus, the appointment of the Resolution Professional as the Monitoring Professional and member of the Steering Committee was envisaged in terms of the Resolution Plan for the Corporate Debtor, which was approved by the Hon'ble NCLT in terms of Section 31 of the Code and was binding on all stakeholders. Mr. Mahender Kumar Khandelwal submitted that his appointment as part of the Monitoring Professional was envisaged under the Resolution Plan solely for the purpose of facilitating the implementation of the resolution plan and ensuring smooth takeover by the successful resolution applicant. Such continuation of appointment as a Monitoring Professional to facilitate implementation is not barred under the provisions of the Code and has in fact, been the general practice under various resolution plans at the time of their implementation post approval by the Ld. NCLT.
3.17.3. In fact, the implementation of the Resolution Plan was successfully completed on 26 March 2021, pursuant thereafter, Mr. Mahender Kumar Khandelwal had no association whatsoever with the Corporate Debtor or JSW.
3.18. Summary Findings
3.18.1. The DC notes that Mr. Mahender Kumar Khandelwal had become part of the Monitoring Committee and failed to abide by Clause 23A of the said Code of Conduct which prohibits an IP from rendering professional services to stakeholders, 'other than services under the Code till expiry of one year from cessation of the CIRP handled by an IP. The DC further notes the submission of Mr. Mahender Kumar Khandelwal that his appointment as part of the Monitoring Professional and member of the Steering Committee was envisaged in terms of the Resolution Plan for the Corporate Debtor, which was approved by the Hon'ble NCLT. However, fact remains evaluation of plan was rested with CoC headed by him. There is no documentary evidence to suggest that he, at any point of time, apprised the CoC about this condition as included in the resolution plan of the SRA, being violative of the provision of the Code. It was his duty under section 30 of the Code to ensure that the resolution plan does not contravene any provision of the Law. His failure to do so casts doubt on his intentions when seen in conjunction with the fact that he was the beneficiary of such omission.
4. Order
4.1. In view of the submission made by Mr. Mahender Kumar Khandelwal, and materials available on record, DC notes that Mr. Mahender Kumar Khandelwal has contravened, as observed hereinabove, with respect to lack of due diligence during the claim collation, transactions with related party, not taking control of assets of the CD immediately which allowed the CD to make some pre-CIRP payments and being part of the monitoring Committee.
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