corporate law

Disciplinary Action Against Mr. Ramkripal Sharma: Key Findings and Implications

Overview of the Disciplinary Action against Mr. Ramkripal Sharma

On January 17, 2025, the Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI) issued Order No. IBBI/DC/262/2025 regarding the conduct of Mr. Ramkripal Sharma, an Insolvency Resolution Professional (IRP). This order follows a series of events tied to a Corporate Insolvency Resolution Process (CIRP) initiated against a Corporate Debtor (CD). The findings revealed significant lapses by Mr. Sharma in managing the CIRP, leading to disciplinary measures.

Key Findings of the Disciplinary Committee

The primary focus of the DC's analysis was on several infractions committed by Mr. Sharma, particularly concerning transparency and diligence:

  1. Misrepresentation of Claims:

    • Mr. Sharma misled the Adjudicating Authority (AA) by asserting that no outstanding claims existed when, in fact, multiple creditors, including Canara Bank, had submitted their claims.

  2. Inadequate Response to Settlement Breaches:

    • The CIRP was initially admitted and later withdrawn due to a settlement. However, upon violation of settlement terms, the CIRP was reinstated, prompting the invitation for claims from stakeholders.

  3. Failure to Rectify Statements:

    • Mr. Sharma did not amend his previous misstatements nor adequately address concerns raised by the AA concerning the handling of creditor claims. This represented a failure to comply with obligations stipulated in the Insolvency and Bankruptcy Code (IBC) and corresponding regulations.

In light of these findings, the DC suspended Mr. Ramkripal Sharma’s Authorization for Assignment (AFA) for a duration of three months as per Section 220 of the IBC and Regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017. This order mandates communication to relevant stakeholders, including the Committee of Creditors (CoC) and the Institute of Insolvency Professionals.

Background of the Case

  1. CIRP Initiation:

    • The National Company Law Tribunal admitted a CIRP application under Section 9 filed by M/S Natraj Transport. Mr. Sharma was appointed as the IRP on December 7, 2021. The AA later allowed withdrawal on December 22, 2021, following a settlement.

  2. CIRP Revival:

    • After settlement violations, the CIRP was revived on November 30, 2022. Mr. Sharma invited claims from creditors on December 13, 2022, prior to filing a withdrawal application just days later.

  3. Claim Submission:

    • Notably, Canara Bank submitted a claim before the withdrawal application was filed, yet Mr. Sharma failed to disclose this fact to the AA during the hearing.

Summary of Allegations and Findings

The DC analyzed submissions made by Mr. Sharma and observed the following key points:

  1. Timing of Claims:

    • Claims were submitted by several creditors before December 22, 2022, contradicting Mr. Sharma’s statements that no claims were outstanding.

  2. Responsibility for Misrepresentation:

    • Mr. Sharma attributed the misleading statements to his legal counsel, yet failed to present any evidence of communication attempting to rectify these inaccuracies.

  3. NCLAT Observations:

    • In a subsequent appeal, the National Company Law Appellate Tribunal reprimanded Mr. Sharma, highlighting his role in misleading the AA and suggesting possible collusion between him and the Operational Creditor.

  4. Code Contraventions:

    • The DC found that Mr. Sharma's actions contravened Section 208(2)(a) and (e) of the IBC, alongside various regulations meant to govern the professional conduct of insolvency professionals.

Conclusion and Order

In conclusion, the DC suspended Mr. Ramkripal Sharma’s AFA for three months considering the seriousness of his conduct. This disciplinary action emphasizes the need for transparency and the fulfillment of obligations as outlined in the IBC.

  • Implementation: This suspension takes effect 30 days following the issuance of the order, ensuring that all stakeholders, including the CoC and relevant professional organizations, are notified accordingly.

This case serves as a critical reminder of the professional responsibilities shouldered by insolvency professionals and the repercussions of non-compliance with established regulations and ethical standards in the field.