IBBI Imposes Monetary Penalty on Resolution Professional for Defying NCLT Directives During CIRP Proceedings

Introduction to the Disciplinary Action

The Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI) recently concluded a rigorous examination of alleged professional misconduct by an Insolvency Professional. The core of the matter revolved around the professional's repeated failure to adhere to the explicit instructions issued by the Adjudicating Authority (National Company Law Tribunal) during an ongoing Corporate Insolvency Resolution Process (CIRP). The disciplinary authority ultimately concluded that the professional exhibited a noticeable lack of diligence by missing crucial hearings and failing to submit required legal affidavits within the stipulated timeframes.

While the professional offered various explanations—ranging from miscommunications by legal counsel to conflicting judicial summons—the IBBI maintained that foundational non-compliance cannot be entirely excused. Consequently, the Board issued a formal warning and levied a financial penalty to reinforce the necessity of strict adherence to the Insolvency and Bankruptcy Code and its underlying regulations.

Background of the Corporate Insolvency Resolution Process

The procedural history traces back to the initiation of the CIRP for M/s. Mainframe Energy Solution Private Limited, which acted as the Corporate Debtor in this scenario.

  1. Commencement of CIRP: The National Company Law Tribunal, New Delhi Bench, officially triggered the insolvency proceedings via an order dated 11.10.2019.
  2. Initial Appointment: At the onset of the process, Mr. Deepak Gupta was designated as the Interim Resolution Professional (IRP) to manage the affairs of the Corporate Debtor.
  3. Subsequent Appointment: As the resolution process advanced, Mr. Devendra Kumar Lodha was formally appointed as the Resolution Professional (RP) on 07.10.2020, taking over the mantle of steering the corporate debtor towards a viable resolution.

Escalation to the IBBI

The matter caught the attention of the regulatory board when the Adjudicating Authority passed a critical order on 05.05.2025, documenting severe adverse observations regarding the conduct of Mr. Devendra Kumar Lodha. Reacting to these judicial remarks, the IBBI initiated an inquiry, seeking a detailed explanation from the professional via an electronic communication dated 02.06.2025. The professional promptly submitted his defense the very next day, on 03.06.2025.

Upon a preliminary review of the tribunal's observations juxtaposed with the professional's defense, the Board established a prima facie opinion that statutory contraventions had occurred. This led to the issuance of a formal Show Cause Notice (SCN) on 14.11.2025. Following the receipt of the professional's reply on 26.11.2025, the case was escalated to the Disciplinary Committee, culminating in a virtual personal hearing on 06.03.2026.

Detailed Allegations of Non-Compliance

The primary grievance against the Resolution Professional was a persistent disregard for the Adjudicating Authority's directives. The tribunal's records from multiple dates—specifically 05.03.2025, 24.03.2025, 05.05.2025, and 19.05.2025—painted a picture of repeated absences and delayed filings.