The Insolvency and Bankruptcy Board of India (IBBI) is the regulatory authority for Insolvency professional agencies, IRP, information utilities. A Resolution Professional while exercising their duties as an administrator and executive of a Company indulges in malpractice, attempts to profit, claims unreasonable fee from the Company or indulges in criminal breach of trust whole in-charge of the Company or deliberately spends amounts and earns kick-backs from the Vendors and service providers of the Company. To handle these issues, the IBBI has set forth a comprehensive and transparent mechanism for stakeholders to lodge complaints against insolvency resolution professionals, and for the IBBI to intervene.

Eligibility to Lodge a Complaint

A stakeholder, which could be a debtor, creditor, claimant, service provider, resolution applicant, or any other person with an interest in an insolvency resolution process, liquidation process, voluntary liquidation, or bankruptcy transaction under the Insolvency and Bankruptcy Code, 2016 (Code), is eligible to lodge a complaint.

Procedure and Timing for Lodging a Complaint

A stakeholder can lodge a complaint with the IBBI online in Form A and pay a fee of ₹ 2500. The complaint should detail the alleged breach of any provision of the Code, or rules, regulations, or guidelines made thereunder or circulars or directions issued by the IBBI by a service provider or its associated persons. It should also include details of alleged conduct or activity of the service provider or its associated persons, along with the date and place of such conduct or activity, which contravenes the provision of the law.

In the case it appears that the RP has purportedly breached several key provisions of the Code of Conduct as laid down in the First Schedule of the IBBI (Insolvency Professionals) Regulations, 2016. These purported breaches include lack of professional competence or lack of due diligence exercised by RP, failure to abide by timelines, lack of integrity and objectivity, failure to make relevant disclosures as per law, misrepresentation by the Resolution Professional and lack of transparency.

Implications Of Breach Of Code Of Conduct By Resolution Professional

The implications of non-compliance by an RP can be severe and the RP can be reprimanded for his/her actions while taking care of the Company. In the exercise of its power under Section 218 of the Code read with the IBBI (Inspection and Investigation) Regulations, 2017,  appoint an Investigating Authority to conduct an investigation against the RP. Further, the IBBI can impose penalties on the RP for contraventions of the Code.

The IBBI has the authority to intervene against an RP for dereliction of duty. The IBBI, not the National Company Law Tribunal (NCLT), is the competent authority to act against any RP for dereliction of duty.

In conclusion, the IBBI has established a robust mechanism for stakeholders to voice their grievances and complaints against insolvency resolution professionals. It is important for stakeholders to understand this process and utilize it effectively to ensure the integrity of the insolvency resolution process when there is injustice.