Demanding bribe from directors of Corporate Debtor – IBBI absolves Insolvency Professional

Demanding bribe from directors of Corporate Debtor – IBBI absolves Insolvency Professional

In a recent order, Disciplinary Committee of Insolvency and Bankruptcy Board of India (IBBI) on benefit of doubt, absolved an Insolvency Professional (IP) of the charges of demanding bribe from directors of the suspended board of Corporate Debtor company

ABCAUS Case Law Citation:
4239 (2024) (09) abcaus.in IBBI

In the instant case, the IBBI has taken cognizance of the complaint by the Corporate Debtor forwarded to it by CBI.

The NCLT had admitted an application filed by the Financial Creditor under section 7 of the Insolvency and Bankruptcy Code, 2016 (the Code), for initiating Corporate Insolvency Resolution Process (CIRP) against a company (Corporate Debtor/CD) and appointed an Interim Resolution Professional (IRP).

Thereafter, a director of the Corporate Debtor preferred an appeal before the NCLAT who directed the IRP not to constitute Committee of Creditors (CoC) and keep the CD as going concern. The NCLAT set aside admission of the CD into CIRP.

The Board of Directors of the Corporate Debtor filed a complaint against the IRP with Anti Corruption Brach of the CBI which was forwarded to IBBI (The Board) for necessary action. In pursuance with the complaint, the IBBI appointed an Investigating Authority (IA) to conduct the investigation of IRP.

The allegation was that in one of the visits to the CD, the IRP demanded a bribe of Rs. 5 lakhs to submit a favourable report in favour of the CD. An audio recording of the purported conversation between IRP was also provided.

Thereafter, based on the findings of the investigation report, the Board formed a prima facie opinion that IRP had contravened provisions of the Code and Regulations made thereunder and issued a Show Cause Notice to the IRP.

The Disciplinary Committee (DC) observed that though the IRP did not deny the conversation with the chartered accountant of the CD. However, he had testified that in that in conversation, no demand for any kind of bribe has been made. According to the IRP, the cost mentioned in the conversation referred to the CIRP cost only and he was not in a position to give any favor to the CD since the CIRP was stayed he was just performing his duties as per the order to keep the CD as a going concern.

The DC was of the view that the reading of transcript too does not allude to any transaction which can termed as bribe. The DC also perused the recording tapes of the conversations and despite having doubt on its forensic veracity for the conversation, at any point, it did not appear that any bribe had been demanded. Further, neither, complainant nor IA report had provided any additional information which can establish beyond doubt that bribe had been demanded or any other mala-fide intensions. Therefore, the benefit of doubt was in favour of the IRP.

Accordingly, the DC held that there was no sufficient evidence to substantiate the charge of bribery.

Download IBBI Order Click Here >>

• Penalty u/s 271B for unfilled column 40 in Tax Audit Report Form 3CD deleted by ITAT
• Merely ex-parte rectifying computation without amending assessment order not make it nullity- ITAT
• Once assessee discharges primary onus, it shifts to AO to bring evidence to contrary – ITAT
• Cost Inflation Index for FY/Tax Year 2026-27 notified by CBDT. See Up-to-date Table of CII
• Power of CIT(A) u/s 251(1)(a) to remand case can be exercised only in best judgment assessment