In the matter of Ms.Sonu Jain Insolvency professional
No. IBBI/DC/139/2022
Facts:
1.Ms. Jain handled certain assignment in the matter of Diamond Shipping Company Limited Bengal Chemicals and Pharmaceuticals Limited, Jinprabhu Infrastracture Developments Limited and Falcon Consultancy Private Limited.
2.Board on the basis of the investigation conducted issued Show Cause Notice alleging contraventions of 18(1)(c), 21(2), 24(8), 35(1)(c), 35(1)(d), 208(2)(a) and 208(2)(e) of the Code, regulations 17(2), 22(1), 22(2), 24(3), 24(4) and 39A of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), regulations 5(2), 6(2), 15, 35(2), 45(3) and 46(1) of the IBBI (Liquidation Process) Regulations, 2016 (Liquidation Regulations), regulations 7(2)(a) and (h) of IP Regulations, clauses 1, 2, 3, 5, 9, 10, 12, 13,14, 15, 16 and 19 of Code of Conduct of IP Regulations.
3.SCN alleged following contraventions:
3a.Diamond Shipping Company Limited: It was noted that Ms. Jain filed report certifying constitution of CoC on 9.05.2019, however, she issued a notice dated 06.04.2019 and conducted the 1st meeting on 12.04.2019, much earlier than the report certifying constitution of CoC itself. In this meeting she has recorded the presence of 2 operational creditors (OC) as CoC members. In the said meeting, in item no. 2, Ms. Jain recorded that ‘The Chairperson marked the presence of representative of operational creditors in the CoC. As the quorum was ascertained the Chairperson declared that the Meeting was in order and properly constituted.’ It is further noted from the said minutes that Ms. Jain had submitted list of creditors comprising 3 OCs, which the committee took note of. It is, thus, evident that she conducted the 1st CoC meeting without properly constituting the CoC and even before the report certifying the constitution of CoC.
In the report it was submitted that COC has been constituted with one FC namely ICICI Bank, 2nd COC was held and resolution was passed in the presence of Operational Creditors and without the presence of Financial Creditors.
3b.It was observed from an undated letter issued by Ms. Jain to Mr. Sekh Tarik Anowar that she had appointed him as registered valuer to determine the liquidation value of CD-I. The relationship disclosure filed with the IPA reflects that the said valuer has been appointed on 23.09.2019 for all asset categories. However, it has been observed from IBBI website records that Mr. Sekh Tarik Anowar has got registered on 5.12.2018 with registration number IBBI/RV/01/2018/10285 for ‘Land and Building’ asset category.
There is inconsistency in the asset categories for which the valuer was appointed by Ms. Jain. It is further noted that there is inconsistency of information regarding appointment of Valuers disclosed by Ms. Jain in the Relationship Disclosures and that provided in various progress reports filed by Ms. Jain before the AA and the Board. The date of appointment of valuer indicated in the Relationship Disclosure is 23.09.2019. 2nd 3rd and 4th progress reports dated 01.01.2020, 01.04.2020 (signed on 15.07.2020) and 15.07.2020 indicate that valuer was yet to be appointed. 5th progress report (30.09.2020) indicates appointment of valuer during the period of 4th progress report. The said appointment period is inconsistent with the date reported in relationship disclosure and unverifiable from undated appointment letter and only one liquidator was appointed.
3B. Bengal Chemicals and Pharmaceuticals Limited: AA vide order dated 1.11.2019 ordered initiation CIRP of Bengal Chemicals & Pharmaceuticals Limited under section 9 of the Code and appointed Ms. Jain as the IRP. Further vide order dated 13.11.2019, AA set aside the admission order on the ground that the entire amount had been paid to the OC by the CD-II. Thus, the CD-II was under CIRP only for 13 days. It is, however, observed that Ms. Jain had charged Rs.
5,50,000 as fee for such brief period of CIRP.
3C. Falcon Consultancy Private Limited: Ms. Jain was the liquidator in the matter of Falcon Consultancy and she had filed the progress report with delays in the range of 34 to 91 days. Further during inspection only undated/ unsigned word file copies and not the signed copies were provided to IA for majority of progress reports.
Ms. Jain has furnished significant number of information/ documents in editable `.docx’ files (like report certifying constitution of CoC, progress reports, list of stakeholders, notice and agenda, minutes of meetings of stakeholders) and a lot of them are unsigned. Further she has provided limited information to IA during the inspection.
Submissions By Ms.Jain:
1.It was submitted that the CoC was constituted of only two Creditors. Hence, as required under section 22 of the Code, the IRP called the 1st CoC meeting on 12.04.2019 with OC as on this date no FC had filed their claim. As for 2nd CoC meeting was called on 18.05.2019. The CoC was re-constituted as the ICICI Bank Limited, FC had filed claim. Since, FC was not present in the CoC meeting no resolution in the CoC meeting relating to appointment of Valuer and issuance of FormG was passed. In the 3 rd CoC meeting was called on 29.05.2019, the CoC resolved that registered valuer is to be appointed, subject to asset details shared by CoC (ICICI Bank Limited) and quotation finalized by it for the same. The COC had also resolved that Form G is to be published, subject to quotation finalized by ICICI bank Limited for the same.
2.She had laid down the quotations received by the valuers for valuation of the CD-I assets and newspaper vendors for issuance of Form G. The quotations were, however, rejected by the CoC. To resist the noncompliance of the Code Ms. Jain issued Form G dated 24.08.2019 as it is a mandatory requirement. Later on only one valuer was appointed due to prevailing conditions of the COVID -19 pandemic.
3.Ms. Jain submits that as the distance of Kutch from Kolkata is 2427 km. She had approached so many valuers to do valuation of Kutch Property none of them were interested at last after making so many calls finally she could found one registered valuer who has accepted her proposal. Kutch is too small place so that she was unable to appoint two valuers.
4.Ms. Sonu Jain submitted that according to IBBI Circular No. IP/004/2018 dated 16.01.2018, IP is under obligation to raise bills/ invoice towards fees incurred. Ms. Jain raised bills but informed that she did not receive any payment from FC. Ms. Sonu Jain submitted that her offices is at Kolkata and the AA is at Cuttack. The Progress report is sent vi courier so the delay has happened in filling first progress report and it is prayed to kindly condone the delay. Ms. Jain submitted that only in filing first progress report there is a delay of 30 days and there has not been delay in filing any other progress reports. Ms. Jain assures that she will not delay in future assignment
5.She submitted that she is maintaining books of accounts for at least three years and the soft copy of files which have been received in Word Format (.doc) she will send a signed document.
Decision: Ms. Jain contravened various provisions of the Code and the Regulations made therunder.
Rationale:
1.Ms. Jain conducted the 2 nd CoC meeting dated 18.05.2019, without presence of ICICI Bank Limited which was marked as ‘Absent’ thereby without the requisite quorum as per regulation 22 of the CIRP Regulations. Although no resolution was passed in the aforesaid 2nd CoC meeting, however, a meeting without the any CoC member was technically void in absence of requisite quorum of the meeting
2.There is no clarity as to the date of appointment of the valuer and various inconsistent dates are mentioned in relationship disclosure and the progress reports and the appointment letter is also undated. Hence, it is observed that there is a lapse on the part of Ms. Jain in making clear and transparent disclosure. Ms. Jain claimed a CIRP Cost of Rs. 6,49,000/- (inclusive of Rs. 1,50,000/- IRP fees) which is excessive for a CIRP that lasted for mere 13 days and is a steep charge as proposed by Ms. Jain are not in proportion to the work done by her.
3.It was observed that Ms. Jain claims that the latest stipulated timeline for 2nd Progress Report is 15.07.2019 even when the latest dated for 1st Progress Report is 15.01.2019. It is noted that she skipped the reporting of an entire quarter to ensure alignment with her delayed timelines. The Progress Report in the liquidation process is an essential report as it enables the AA and the Board to supervise the activities, functioning and financial position of the CD. Hence, the conduct of Ms. Jain omitting reporting of a quarter to suit her delayed timelines is a negligence and is a contravention
4.Ms. Jain has taken a casual and inattentive approach in discharging her duties and has failed to provide relevant documents to the IA.
5.IBBI imposes penalty on Ms. Sonu Jain for Rs. 5,00,000/- (Rupees Five Lakhs only) and she will be working as probationer for four months with other experienced IP so nominated by her IPA under which she is registered.
Order Copy:
