IIBBI Slaps Penalty on Electro Steel’s Resolution Professional

IBBI Slaps Penalty on Electro Steel’s Resolution Professional 

The bankruptcy regulator has slapped a penalty and issued a show cause notice to the resolution professional of Electrosteel Steels, Dhaivat Anjaria, who is backed by consulting PWC for neglecting the claims made by operational creditors. 

The Insolvency and Bankruptcy Board of India has ordered a fine of one-tenth of the amount of fees that is payable to him as RP of Electrosteel Steels within 30 days of the order. 

Quantum of Penalty

IBBI stated that ideally the penalty on Anjaria for the violations would be three times the loss caused to the person concerned. However, considering that Anjaria is new to the insolvency professional IBBI said that “a penalty equal to one tenth of the total fee payable to him as IRP and RP in the CIRP of Electrosteel Steels would meet the ends of justice.”

Omitting the Claim by an Operational Creditor

Anjaria has invited claims on August 4, 2017 and an operational creditor M/s National Sales had submitted a claim on August 16 which the RP did not include in the list of claims nor did he justify the rationale to claimant. The RP neglected the claim when the claimant resubmitted the claims on October 3. On receiving complain from the operational creditors, when IBBI sough clarifications from Anjaria thrice (between November 17 to January 3) “he failed and neglected to respond to three communications of the Board and the resolution plan was to close on 16th January, 2018,” IBBI said. 

REPLY TO SHOW CAUSE NOTICE

On January 29, a show cause notice was issued seeking explanation on “why disciplinary action should not be initiated against him for failure to respond to the clarifications sought through various mails by IBBI”.

Anjaria responded saying that claim was subject of ongoing proceedings. He admitted the claim after seeking approval from Adjudicating Authority seeking guidance on admission of disputed claims which was admitted on January 25.

The claim of Rs 72 lakh would have meant a penalty of almost more than Rs 2.1 

COURTESY : THE ECONOMIC TIME S

ACcrore. However, Anjaria would only be required to pay a tenth of his fee.