The Insolvency and Bankruptcy Board of India (IBBI) has suspended the registration of insolvency professional (IP) Sanjay Gupta for two years, citing his failure to verify inflated claims and the imposition of unauthorized charges that burdened 1,800 homebuyers of a Noida residential project.
Disciplinary Action by IBBI
IBBI chairperson Ravi Mital issued the suspension order on June 16 after the board's disciplinary committee found that Gupta had contravened provisions of the Insolvency and Bankruptcy Code and its regulations. The board acted on multiple complaints regarding his conduct during the assignment and issued a show-cause notice before the decision.
Background of the Case
Aranya Society, comprising 1,800 units in Sector 119, Noida, was launched by Unnati Fortune Holdings Ltd in 2011. In 2019, insolvency proceedings were initiated against the builder, and Gupta was appointed Interim Resolution Professional (IRP) on March 27, 2019, later confirmed as Resolution Professional (RP).
Violations Identified
The disciplinary committee flagged two specific violations. The first involved Gupta's failure to verify and revise an admitted claim by corporate creditor Nupur Finvest, which had sought Rs 19.6 crore on February 20, 2020. Nupur Finvest subsequently recovered an aggregate Rs 6.2 crore through resolution plans approved in two separate Corporate Insolvency Resolution Processes (CIRP) — Rs 3.2 crore and Rs 3 crore, respectively. Despite these recoveries, Gupta continued to treat the claim as Rs 19.6 crore without adjustment.
“By admitting the claim in full without adjusting the amounts already realised by the creditor, Sanjay Gupta allowed the claim to remain inflated,” the board stated, adding that his conduct demonstrated a “lack of reasonable care and diligence in discharge of his duties.”
The second violation related to the levy and enhancement of transfer charges and cancellation of residential units during the CIRP without approval from the Committee of Creditors (CoC), resulting in a financial burden of over Rs 3.5 crore on homebuyers. The board held that such a decision, given its scale, could not be treated as routine and should have been placed before the CoC.
Homebuyers' Concerns
Homebuyers expressed that the order affects thousands who have been awaiting resolution and possession for years. “At the onset, Sanjay Gupta, as an insolvency professional, was required to complete the proceedings in 180 days, for which he demanded Rs 12.5 lakh per month. The rules allow a 90-day extension, which was availed in this case, but resolution is nowhere in sight,” said Kunal Gupta, a homebuyer and one of the complainants.
He added, “It was after our complaint that we realised the rot ran deep, with Sanjay Gupta in the middle of these financial wrongdoings. What could be a more plausible explanation for all this other than that our IP, who was entrusted to bail us out, was minting money from the plight of over 1,800 poor homebuyers?”
Response from Sanjay Gupta
Sanjay Gupta told TOI that he had submitted a point-by-point explanation of the allegations. “I think my reply was not interpreted by the disciplinary committee in the way it should have been. I am contemplating my next course of action,” he said.
Broader Context
In Ghaziabad and Gautam Budh Nagar, 86 projects have been declared insolvent, with proceedings underway for as long as eight years in some cases.
