IBBI fines chartered accountant for misconduct and violation of regulations
Sunil Kumar Agarwal has been ordered to pay Rs.2 lakh
The Insolvency and Bankruptcy Board of India (IBBI) has imposed a fine on a chartered accountant for the alleged contravention of Section 12, 25(2)(f), 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code; regulation 34 of the Insolvency Resolution Process for Corporate Persons Regulations, 2016; and regulation 7(2)(a) and 7(2)(h) of the Insolvency Professional Regulations, 2017 read with clauses 1, 2, 13, 14 and 16 of the Code of Conduct.
Sunil Kumar Agarwal, a member of the Indian Institute of Insolvency Professionals (IIIP), the Institute of Chartered Accountants of India (ICAI), is an Insolvency Professional (IP) registered with IBBI. He was appointed as the Interim Resolution Professional (IRP) and later confirmed as the Resolution Professional (RP).
However, vide the January 2021 order of the Indore bench of the National Company Law Tribunal (NCLT), he was replaced by Bhavi Shreyans Shah.
Shah filed an application for an exclusion of 538 days from the Corporate Insolvency Resolution Process (CIRP). The Adjudicating Authority (AA) observed that it could not be allowed and directed the liquidation and, in April 2021, appointed Navin Khandelwal as the liquidator.
The Disciplinary Committee (DC) noted that the approval of expenses placed in the first CoC meeting was approved by HDFC Bank, then the sole CoC member. During the second CoC meeting, the bank again gave its approval for the appointment of a forensic auditor and other appointments as deemed necessary to Agarwal.
However, for the second CoC meeting, the bank did not accord specific approval of the expenses. These included travel, boarding and lodging, and conveyance of the RP and his team, and professional accounting firm fee, forensic auditor fee, meeting hall charges, and security expenses.
The DC noted that CoC confirmed Agarwal’s fees and expenses after deliberation. It observed that HDFC passed the resolution for the appointment of forensic auditors and authorized Agarwal to appoint another professional. However, the CoC did not approve the expenses due to a lack of documents. Agarwal had referred the expenses to CoC for ratification and the contravention was more of a procedural nature.
Thus, IBBI ruled, “Sunil Kumar Agarwal shall pay a penalty of Rs.2 lakh and deposit the amount directly to the Consolidated Fund of India (CFI) under the head ‘penalty imposed by IBBI’ on https://bharatkosh.gov.in within 45 days from the date of issue of this order and submit a copy of the transaction receipt to IBBI.”
The Board also warned the IP to be more careful and cautious while dealing with assignments under IBC.
In its order, IBBI said, “In addition, Sunil Kumar Agarwal will work as a probationer for four months with another experienced IP. Until the completion of the probation, the authorization for assignment of Agarwal will remain in suspended animation. He will not take any fresh assignment or service under IBC in the capacity of an IP.”