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The Delhi High Court has stayed the Insolvency & Bankruptcy Board of India order which imposed a penalty on Resolution Professional, Mohan Lal Jain for violating provisions of the Insolvency & Bankruptcy Code during the corporate insolvency resolution process of the corporate debtor, Mack Soft-Tech. (Mohan Lal Jain vs IBBI & Ors)
Stay is subject to Jain making a deposit of Rs 25,00,000 with the Insolvency and Bankruptcy Board of India.
The order was passed by a single Judge Bench of Justice AK Chawla in a petition moved by Mohan Lal Jain (Petitioner).
As per the Petitioner, he took over as the Insolvency Professional of Mack Soft Tech Private Limited in January 2018 when the insolvency resolution process had started in August 2017.
Subsequently, it was alleged that the Petitioner violated the terms of moratorium inasmuch as he is allowed some amounts to flow out to HDFC Bank in violation of the provisions of IBC.
After proceedings were initiated by IBBI, the Petitioner was found to be in violation of IBC and its Regulations and a penalty of Rs 34,22,500 i.e. 25% of the fee received by him, was imposed.
Assailing the IBBI order, the Petitioner stated that there was no violation of any term of the moratorium as the monies were remitted from the escrow account maintained by HDFC Bank, which was not under his control.
It was added that the Petitioner did not take any decision of his own but only followed the past decisions taken by his predecessor and the Committee of Creditors.
The Petitioner also asserted that while in quite similar circumstances of misunderstanding of the provisions of the IBC Code, the Insolvency Professionals were let off with warnings by IBBI, he was slapped with a disproportionate penalty.
In view of the submissions, the Court issued notice to IBBI and HDFC Bank and sought their counter-affidavits within four weeks.
The Court directed that the amount shall be kept in a fixed deposit with a nationalized bank for an initial period of one year.
The deposit would be disbursable subject to any further orders that may be passed by the Court, it was clarified.
The matter would be heard next on September 4.
The Petitioner was represented by Advocates Sumesh Dhawan, Vatsala Kak, Ankita Bajpai.
IBBI was represented by Advocates Vikas Mehta, Kushal Sarkar.
HDFC Bank was represented by Advocates Rahul Malhotra, Varun Garg.
Read the Order: