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IBBI upholds Chartered Accountant guilty of accepting role of RP without holding valid Authorisation


The Insolvency and Bankruptcy Board of India (IBBI) Disciplinary Committee has upheld an order against a Professional Member of the Indian Institute of Insolvency Professional of ICAI (IPA) on the grounds of professional misconduct.


Mr. U. Balakrishna Bhat allegedly accepted the role as a Resolution Professional (RP) in the corporate insolvency resolution process (CIRP) of Torus India Limited without holding a valid Authorisation for Assignment (AFA) issued to him by his IPA which was in violation of Regulation 7A of the IP Regulations that came into effect on 31 December 2019.


Mr. Bhat contended that he accepted to act as the IRP in the said assignment on 5 June 2018 and therefore he was under bonafide belief that provision of Regulation 7A of the said IP Regulations 2016 was not applicable at the time when consent was given. He has further stated that he did not have any malafide intention for not obtaining the AFA and that the lapse was unintentional and he earnestly apologized for the same and that he had applied for an AFA from his IPA and the same is pending with them.


Dr. Mukulita Vijayawargiya while passing the order observed, “.....the provisions of the Code and regulations are spelt out in a plain and unambiguous language. Regulation 7A of IP regulations requires for any IP to have AFA before undertaking any assignment.......one of the essential conditions for undertaking any assignment by an IP is that he should have a valid AFA which is issued by the IPA with which he is enrolled as a professional member. In other words, without AFA, an IP is not eligible to undertake assignments or conduct various processes thereof. Regulation 7A was inserted in the IP Regulations vide notification dated 23rd July, 2019, much before 31st December, 2019. Adequate time was given to the professionals to obtain AFA from respective IPAs.


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