After the commencement of liquidation proceedings, Insolvency and Bankruptcy Board of India (IBBI) has suspended Insolvency Professional (IP) Anil Anchalia for two years for the unauthorized use of a Corporate Insolvency Resolution Process (CIRP) bank account. Anchalia was suspended by the Disciplinary Committee (DC) of IBBI that was acting with a review of the case of breaches of Sections 34(2), 36(2), 36(3), 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code (IBC), 2016.
As of the date of commencement of the Corporate Insolvency Resolution Process of Gemus Engineering Limited starting April 30, 2024 Anchalia was appointed RP. However, the National Company Law Tribunal (NCLT), Kolkata Bench, dated December 17, 2024, made an order that directed the liquidation of the company along with appointment of Rashmi Chhawchharia as Liquidator. As per IBC, after liquidation orders are communicated, the Resolution Professional authority is terminated and vested in the Liquidator.
Even though Anchalia had been ordered to liquidate, the bank account of CIRP continued to be processed. He collected contributions from the Committee of Creditors (CoC) and paid numerous times, making even himself. Anchalia justified his position as the only way to pay back an outstanding CIRP-related debt. This defence was rebuffed by the Disciplinary Committee which stated in plain language that no longer can the RP handle the CIRP account or carry out financial transactions after the liquidation orders were made. The DC reiterated that ongoing operations are in violation of statutory provisions and a substantial degree of professional misconduct.
Anchalia also lodged initial objections on procedural irregularities and violation of natural justice principles. The Disciplinary Committee rejected these objections on the grounds that due process was followed and there was an adequate opportunity.
Therefore, IBBI suspended Anchalia’s registration as an Insolvency Professional for two years. The suspension goes into effect 30 days after the date of the order.
It upholds strict accountability standards which have been enforced on Insolvency Professionals under the IBC. In CIRP the only authority is limited to the period and the role and failure to comply with it can lead to significant disciplinary measures. The order is a useful reminder that procedural and statutory lines have very clear rules to follow in respect of insolvency.
