The Insolvency and Bankruptcy Board of India (IBBI) has imposed a monetary penalty on the resolution professional (RP) of insolvent Electrosteel Steels for “failure to consider” the claim of an operational creditor, and also for “disregarding” repeated requests of the Board for a response on the complaint. Passing an order, dated April 13, the bankruptcy board imposed the penalty, which is equal to one-tenth of the total fee payable to Dhaivat Anjaria, a partner at PwC, as the IRP and the RP in the corporate insolvency resolution process of the bankrupt steel maker.
National Sales, an operational creditor of Electrosteel Steels, had submitted a complaint to the Board, seeking a direction under the norms of Insolvency and Bankruptcy Code to Anjaria after he allegedly “failed and neglected” to consider its claim. “Failure to consider a claim not only deprives the claimant of his rights, but also deprives the potential resolution applicants to have complete inforbuation required to submit a complete resolution plan. While implementing the resolution plan, if the resolution applicant discovers a liability to a claimant which has not been factored into the plan, the resolution plan will be frustrated.”
“Section 220(3) of the Code envisages a penalty which can be three times the amount of loss caused or likely to have been caused to the person concerned. In this case, Anjaria ultimately admitted a claim of Rs 72,09,150. Thus, Rs 72,09,150 is the amount of loss likely to have been caused to the claimant, ignoring for a moment the potential damage to the resolution plan. Considering the fact that Anjaria is new to the insolvency profession and the claim was ultimately admitted, 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,” the order said.
When contacted, Anjaria declined to make any comment on this matter. National Sales’ claims fell in the category of 31 operational creditors for which claims are under ‘dispute’ in the pre-corporate insolvency resolution process.