INSOLVENCY AND BANKRUPTCY BOARD OF INDIA
No. IBBI/DC/115/2022
In the matter of Mr. Anil Tayal
Facts:
(1) CIRP was initiated against M/s AVJ Developers (India) Private Limited (CD). The AA appointed Mr. Anil Tayal as an Interim Resolution Professional (IRP) on 21.10.2019 who was later confirmed as the Resolution professional (RP) on 12.12.2019
(2) Resolution plan submitted by suspended director has been approved by the COC and pending for approval before the NCLT.
(3) Board having reasonable ground to believe appointed an inspecting authority to conduct the inspection vide order dated 16.02.2021. Inspecting officer submitted the report on 28.05.2021.
(4) Based on record and material available including the report show cause notice was issued on 10.05.2022. SCN alleged contravention of section 18(b), 208(2)(a) and 208(2)(e) of the Code, regulation 13(1) of Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 (CIRP Regulations), regulation 7(2)(h) of IP Regulations read along with Clause 27 of Code of Conduct under First Schedule of IP Regulations and Circular No. IP/013/2018 dated 12th June 2018 and Circular No. IP/003/2018 dated 3rd January 2018.
(5) SCN involves contravention with respect to
a. Appointment of third party for verification and collation of claim. Mr.Tyagi appointed M/s Detax Consultants Private Limited for collation of claims at a remuneration of Rs 350/- per claim amounting to a total of Rs. 1,08,150 plus applicable tax.
b. Further appointed M/s Sunil Arora and Associates for claim collation. It is also observed that agenda placed before 4th CoC in this regard was to ratify/approve expenses incurred by RP for claim verification at a remuneration on Rs. 350/- per claim amounting to a total Rs. 1,07,450/-
c. By appointing the above two he has outsourced his duty under section 18 of the code.
d. Board observed from the minutes of 5th CoC meeting dated 23.06.2020 that Mr. Anil Goel was appointed as CIRP Advisor/Consultant to assist Mr. Tayal in the CIRP at a remuneration of Rs. 6,00,000/- per month. It has, however, been observed from email dated 16.03.2020 addressed to Mr. Anil Goel that instead of Mr. Tayal fixing the scope of work of the process advisor, he had requested the advisor to propose a scope of work. It has further been noted that Mr. Tayal proposed an agenda for appointment of Mr. Anil Goel as CIRP consultant in 5th CoC meeting held on 23.06.2020, however the payment was made wef 21.03.2020.
Issue:
- Whether RP has contravened the provision of the code, regulations, rules and circulars by the board?
- Whether RP can outsource his/her duty to verify and collection of claims?
- Whether failed to take reasonable care and diligence while appointing professional?
Arguments:
(1) Mr. Tayal submitted that the services of M/s Detax Consultants Pvt. Ltd. were engaged only for the purpose of processing of claim forms i,e., secretarial work/ clerical work including preparation of sets after getting the printouts, etc. Every individual claim has approximately 20-100 pages which needs to be printed and proper sets are to be made accordingly.
(2) Considering the extremely bulky nature of each individual claim, the services of M/s Detax Consultants Private Limited were engaged. The said engagement was done after obtaining proper confidentiality undertakings and with a view to facilitate the CIRP
(3) He further submitted that after receipt of 309 claims, he appointed M/s Sunil Arora & Associates for the purpose of processing of claim forms i.e., secretarial work/clerical work including preparation of sets after getting the printouts, etc. It is to be noted that M/s Sunil Arora & Associates has thereafter processed 307 claims.
(4) He submitted that he himself has verified the claims and not outsourced his duties. As far as the concerns is that the agenda placed before 4th CoC Ratification of Expenses Incurred by RP for Claim Verification”, the verification word intents to such secretarial/clerical work i.e. preparation of proper sets of the claims after getting the printouts and not such verification as defined in regulation 13(1) of CIRP Regulations which states that the IRP/RP should verify every claim.
(5) He submitted that CoC in its commercial wisdom, has duly approved the resolution proposed for the ratification of fees of M/s Detax Consultants Private Limited (in 1st CoC Meeting) as well as Mis Sunil Arora and Associates (in 4th CoC Meeting) by 97.55% and 98.07% respectively. Hence, the terms of Circular No. IP/013/2018 were never violated by him and has been duly complied with.
(6) He submitted that in order to achieve the objective of the Code which is resolution not liquidation and avail the process advisory services, has approached CA Anil Goel, who is the founder partner and the Chairman of the AAA Insolvency Professionals LLP, which is a duly registered IPE recognized by the IBBI in the month of March, 2020.
(7) He submitted that before appointing Mr. Anil Goel as CIRP Advisor, he has diligently analyzed about him and took reasonable steps by conducting various physical or virtual meetings with Mr. Goel and therefore, in order to discuss the scope of work methodically, the scope of work has been discussed in a physical meeting and thereafter, in order to formalize the same, he wrote to Mr. Goel vide mail dated 16.03.2020 to submit his proposal and letter of intent to appoint CA Anil Goel as the process advisor for the insolvency process of the CD. Thereafter, in order to formalize the appointment of CA Anil Goel as process advisor, Mr. Tayal has signed the engagement letter on 21.03.2020 which was a mutual arrangement between the parties to which both parties agreed to and signed the same with scope restricted only to advisory and assisting him.
(8) He submitted that engagement was on 21.03.2020, however due to ourtbreak and lockdown he could not take the permission of COC and as situation gets normal he convened the meeting and took approval.
(9) He submitted that he has duly complied with all the provision and have taken reasonable care.
Decision
(1) DC find that the actions of Mr. Anil Tayal are in violation of 208(2)(a) and 208(2)(e) of the Code, regulation 7(2)(h) of IP Regulations read along with Clause 27 of Code of Conduct under First Schedule of IP Regulations.
(2) He cannot outsource his duties.
(3) He failed to perform the duties, taking reasonable care and diligence while appointing professional.
(4) Suspended the registration for a period of 6 months.
Rationale:
(1) Board noted that invoice dated 19.11.2019 from Detax Consultants Private Limited raised to CD narrates description of services as ‘Verification of Claim Forms. It was noted that though engagement letter matches the submission of the Mr. Tayal however a bare perusal of the above resolutions passed in respective CoC meeting highlights that the appointment of third party was for the purpose of collation and verification of claims.
(2) Mr. Tayal cannot outsource his duties as IRP/RP. Further, the expenses should be reasonable in corelation to the work done
(3) The relevant agenda no. 10 of the 5th CoC was for appointment of Mr. Anil Goel as advisor and not for ratification of action of Mr. Tayal, about appointment of Mr. Goyal from 21.03.2020. Pursual of agenda item as placed for consideration of CoC does not reflect in, anyway, that proposal is for ratification of appointment which was already done w.e.f 21.03. 2020. Hence for all practical purposes, appointment of Mr. Anil Goel cannot be construed from 21.03.2020 but from 23.06.2020 only.
(4) MOU was submitted by mr.tyagi MoU, that the previous engagement letter of Mr. Anil Goel was terminated with effect from 30.06.2020. Though this MoU was signed on 06.07.2020, the same was made effective from 01.07.2020. So effectively, there was no advisory services between 30.06.2020 to 05.07.2020. It is very surprising that proposal to engage Mr. Anil Goel was proposed in 5th CoC meeting on 23.06.2020 and the said engagement was terminated with effect from 30.06.2020
(5) Mr.Tyagi has followed rather unprofessional approach in taking decision on hiring professional and other support services. It is evident that many of the activities which have been delegated to process consultant, under the statute are required to be accomplished by Mr Tayal as RP.
(6) The scope of services, as provided in the said engagement letter covers finalisation of strategy and structure for resolution process on conducting CIRP of CD, assisting in assessing overall financial position, assistance in bidding process and search for suitable prospective resolution applicant and evaluation of proposed resolution plan including its compliance and legal vetting. The said terms of engagement clearly indicates that IP had outsourced his responsibilities under regulation 39(2) of CIRP regulations read with regulation 40A of CIRP regulations
