The Insolvency and Bankruptcy Board of India (IBBI) has suspended the registration of Narender Kumar Sharma, the insolvency professional (IP) for Indirapuram Habitat Centre Private Limited, for a period of two years. The board found that Sharma breached provisions of the Insolvency and Bankruptcy Code, 2016.
An investigative report filed by the board highlighted several allegations, including conflict of interest and non-disclosure of his relationship with a prospective resolution applicant (PRA). Sharma was also accused of undertaking actions during the Corporate Insolvency Resolution Process (CIRP) without the approval of the Committee of Creditors (CoC) and making inconsistent submissions before the investigative agency and disciplinary committee.
IBBI Order Details
The disciplinary committee, exercising powers under Section 220 of the Code and Regulation 13 of the IBBI (Inspection and Investigation) Regulations, 2017, cancelled or suspended Sharma's registration for two years. The June 10 order, issued by IBBI chairperson Ravi Mital, stated that during the suspension period, Sharma is ineligible to continue with his present assignment involving Indirapuram Habitat Centre Private Limited (IHCPL).
When approached by the Times of India for a comment, Sharma declined to provide any statement, saying, "At this point in time I have nothing to say in the matter."
Conflict of Interest Allegations
Atul Rawat, an IHC buyer, alleged that Sharma and his wife are directors and shareholders of Daksh Compliance Management Private Limited (DCMPL). This company transferred Rs 12.5 lakh to M/s SP Construction, which was a member of M/s ESWIN Infra Project Consortium. The consortium was included in the final list of prospective resolution applicants (PRA) during the CIRP.
Rawat claimed that the transaction occurred while resolution plans were under active consideration, and Sharma failed to disclose this relationship to stakeholders or his insolvency professional agency. The code of conduct requires an IP to disclose any relationship with the corporate debtor, other professionals, financial creditors, interim finance providers, and PRAs to the insolvency professional agency within a specified time. Sharma's failure to do so amounted to a conflict of interest and non-disclosure.
Lack of CoC Approval
Sharma was also found to have acted without proper CoC approval in connection with the Ghaziabad Development Authority's (GDA) one-time settlement (OTS) scheme. On March 30 this year, Sharma was issued a show-cause notice, and he submitted a reply on April 20. The disciplinary committee heard the matter virtually on May 16, with Sharma present.
It was discovered that Sharma never obtained a legal opinion before proceeding, which is a mandatory requirement. The committee viewed this action as a lack of transparency.
Contradictory Submissions
Sharma's previous submissions to the committee were deemed contradictory. In July last year, the disciplinary committee fined Sharma Rs 2 lakh each in two cases for failing to file an application regarding a fraudulent transaction in Indirapuram Habitat Centre.
Background of Indirapuram Habitat Centre
Indirapuram Habitat Centre (IHC), the corporate debtor in this case, was incorporated in 2002. The property was sold to approximately 2,000 allottees, of whom 300 received their shops and commercial spaces. In 2006, IHC bought over 5 hectares from GDA under an agreement that 28% of the land would be used for commercial purposes, 27% for recreational use, and 45% for socio-cultural purposes.
In July 2018, GDA sealed IHC after the promoters defaulted on dues amounting to Rs 105 crore. IHC approached the Allahabad High Court, leading to the unsealing of a portion of IHC on July 13, 2018, after a certain amount was paid to GDA.
On August 22, 2019, the National Company Law Tribunal (NCLT) principal bench admitted an application under the Insolvency and Bankruptcy Code, 2016, to initiate the CIRP of Indirapuram Habitat Centre Private Limited. On November 16 of the same year, Narender Kumar Sharma was appointed as the resolution professional.
Real estate investor Dimand Trimax had initiated the insolvency bid against IHC for non-payment of Rs 32 crore in dues.
