In 2016, when India’s Non-Performing Assets (NPAs) and debt default were piling up after the ruin that UPA 2 left in its wake, the Modi government decided to introduce one of the greatest reforms in Insolvency laws that the country has ever seen. The Insolvency and Bankruptcy Code (IBC) was introduced by the Modi govt in 2016 to consolidate the process of recovery, resolve such conflicts promptly and most importantly, give more power to creditors than they held under the previous, scattered laws. 

The aim of the IBC 2016 was to focus on the resolution of a company becoming insolvent and ensuring that the rights of the creditors are also secured. 

Key aspects of the IBC are as follows: 

1. IBC initiates a paradigm shift from the existing ‘Debtor in possession’ to a ‘Creditor in control’ regime.
2. IBC consolidated all existing insolvency-related laws as well as amending multiple legislation including the Companies Act.
3. The code aims to resolve insolvencies in a strict time-bound manner – the evaluation and viability determination must be completed within 180 days. The moratorium period of 180 days (extendable up to 270 days) for the Company. 
4. Introduce a qualified insolvency professional (IP) as an intermediary to oversee the Process, keep the debtor as a going concern, protect the assets of the company, make sure the resolution plans are approved and sound, etc. 

In the previous 3 articles, we have demonstrated how the potentially inadequate role played by the Resolution Professional (RP), private Financial Institutions, IBBI, and NCLT in certain cases have led to the abuse of the IBC process, resulting in inordinate delays, thereby defeating the purpose of the IBC process itself. To demonstrate this, in the previous article, we took the example of the HNIG case which is the longest-running IBC case. It has been over 600 days and the case has remained unresolved since the lapses by the Resolution Professional, the IBBI, the CCI, and private financial institutions have led the case to be stuck in litigation.

As mentioned, one of the main aims of the IBC process was to ensure speedy resolution and ensure that the creditors were in a position to recover as much of the debt as possible. In the HNG case, however, due to the inordinate delay, the Committee of Creditors (CoC), which comprises public sector banks primarily led by SBI, is incurring a loss of Rs 30 crores per month. So far, they have collectively incurred a loss of Rs 840 crores since the resolution process of HNG has been pending since 2021. 

In January earlier this year, SBI was attempting to sell its Rs 1,272 crore debt in HNG to Asset Reconstruction Companies (ARCs). The Expression of Interest (EOI) by SBI was issued on the 25^th of January 2024.  In February 2024, the Economic Times reported that SBI had been unsuccessful in drawing ARCs to purchase their debt to HNG. 

It is quite logical to assume that SBI was attempting to sell its debt in HNG owing to the delay in the resolution process, which has led to SBI and other public banks incurring huge losses. SBI is now stuck in a situation where it is continuing to incur massive losses every month owing to the delay in the HNG insolvency process and is unable to offload its debt in HNG because of the lack of bidders. 

SBI is a public sector bank and the largest bank in India with a 23% market share by assets and a 25% share of the total loan and deposits market. It is also the tenth largest employer in India with nearly 250,000 employees. 

Any loss to SBI and other public sector banks comes straight out of the public exchequer and it is therefore to evaluate why SBI and other public sector banks are incurring massive losses in the HNG case, who should be held responsible for it, and how the impasse can be resolved.

The central role that seems to have emerged in the delay that has been caused in the HNG resolution process is that of the Resolution Professional (RP) and the potential collusion between the RP and private financial institutions. The RP, Girish Juneja, was appointed by the SBI-led CoC – the very CoC which is now reeling under the losses caused by the delay. RP Girish Juneja has been criticized for his controversial actions, for flouting necessary regulations of the IBC code and other applicable regulations. It is also alleged that the RP failed the assets of the corporate debtor (HNG). 

These grave allegations have been made by the employees of HNG and also, have been opined on by several legal luminaries, as discussed in previous articles. 

According to the IBC process and the laws governing it, it is the responsibility of the resolution professional (RP) to: 

• Manage the affairs of the corporate debtor (CD) as a going concern during the corporate insolvency resolution process (CIRP),
• Appoint and convene meetings of the CoC, so that they may decide upon resolution plans, and 
• Collect, collate, and finally admit claims of all creditors, which must be examined for payment, in full or in part or not at all, by the resolution applicant and be finally negotiated by the Committee of Creditors (CoC). 

According to the facts of the case and the legal opinion of former judges, the RP seems to have erred in all of his listed responsibilities, causing a delay in the HNG IBC process – leading to a Rs 30 crore+ loss daily – a loss being suffered by public sector banks in the CoC – eventually affecting the public exchequer. 

How the actions of the RP may be leading to value minimization of corporate debtor (HNG) and hindering the maintenance of HNG as a going concern 

To understand how the RP may have derelict his duties as far as maintaining HNG as a going concern, we need to analyze one of the criminal complaints filed by one of the supervisors employed at HNG’s Sinnar plant in Nashik, Maharashtra. The complaint makes some serious allegations against the RP. 

“In the aforementioned background, Mr. Girish Siriram Juneja, being the Resolution Professional and Mr. Ramchandra Parasram, Une, being the Sinnar plant head of the said Company, who are entrusted with and having dominion over the property of Hindustan National Glass &Industries Ltd., have dishonestly committed acts of misconduct, negligence misappropriations, dispossessions, destructions and criminal breach of trust, which have resulted huge loss to Hindustan National Glass & Industries Ltd. These acts have also posed serious risks to the lives of the 180 permanent employees and 600 workers of the said Company as well as to the people living in the vicinity and to the environment. The said dishonest and negligent acts of Mr. Girish Siriram Juneja and Mr. Ramchandra Parasram Une, are grave cognizable offences..”, the complaint said. 

On 29th December 2023, there was a massive fire at the Sinnar plant resulting in molten glass leaking from the furnace. The complaint essentially points out that the RP and the plant head colluded to endanger lives for personal benefit. 

Here are the allegations that the complaint makes: 

1. RP Juneja and Une were informed that the furnaces used in container glass production needed repair. Furnace No.12 at Sinnar Plant, which has been affected by fire was commissioned in 2012. Consequently, Furnace No.12 at the Sinnar plant of the Company had exceeded its lifespan by 10 years and the same was also overdue for repair. Despite receiving warnings from specialized agencies, the essential upkeep and repairs of the furnace were neglected for an extended period.
2. Molten Glass failed to flow into the designated tank during the leakage incident, which must be filled with water, but there, was no water in the designated tank to cool the leaked Molten Glass. This, the complaint says, was due to the negligence of the RP. 
3. The complaint says that despite showing capital expense for fire safety norms and the purchase of firefighting equipment, the plant was functioning without a fire NOC. The plant only had a provisional certificate. 
4. The disposal of hazardous waste generated during the production process was not carried out in compliance with regulations.
5. The complaint says that it was the negligence of RP Juneja and Une that led to the fire of 29^th December – resulting in a great risk to lives.
6. The complaint says that the fire could have spread to the explosive material storage area, leading to loss of lives. The current damage owing to the fire amounts to Rs 500 crores. 
7. The complaint says, “Mr. Juneja has not taken any steps to investigate the fire incident dated 29/12/2023 or to address the concerns raised by workers. Instead, his focus has solely been on pursuing insurance claims, which will benefit the resolution applicant. Mr. R.P. Une under instructions of Mr. Juneja has transferred the majority of the permanent employees to other plants of the Company which caused many employees to tender forced resignation, as, they were local residents, and canceled all contracts for the supply of labor, leading to loss of employment of all contract workmen”. 
8. The allegation is that despite HNG having a balance of Rs 300 crores, RP Juneja has refused to restart the functioning of the plant. 
9. The complaint says that the repair cost would be reimbursed by insurance, therefore, Juneja not utilizing the Rs 300 crores to restart the plant points to a conspiracy to shut down the functioning of the Sinnar plant, leading to loss of jobs and revenue for HNG. 
10. “Juneja has provided 100% advance payment to various Corporate Operational Creditors Mr. Juneja exhibited favoritism towards certain corporate customers by providing them with 100% advance payments and placing orders at higher rates compared to smaller and local suppliers/traders”, the complaint claims. 
11. It is further alleged that the RP has selected vendors showing favoritism, ignoring vendors who had quoted lower prices, pointing towards irregularities and personal gain. 
12. It is also alleged that RP terminated the contracts of the security company and gave it instead to his preferred company at a higher cost, gaining personally. 
13. The RP has refused to give increments to the staff. 

“Thus, Mr. Girish Siriram Juneja, being the Resolution Professional, and Mr. Ramchandra Parasram Une, being the Sinnar plant head of the said Company, who are entrusted with and having dominion over the property of Hindusthan National Glass & Industries Ltd., have dishonestly misused their position and have committed cognizable offenses of misconduct negligence, misappropriations, dispossessions and destructions which shows their negligent conduct concerning fire or combustible matter, explosive substance, machinery and pulling down buildings. Mr. Juneja and Mr. Une ‘have also committed a criminal breach of trust, and so, being the responsible employee of Hindusthan National Glass and Industries Ltd. in the post of Supervisor for the last 6 years, I am filing the present written Complaint against Mr. Girish Siriram Juneja, and Mr. Ramchandra ‘ Parasram Une”, the complaint concludes. 

Essentially, the complaint is alluding to the fact that RP Juneja is gaining personally and neglecting the needs of the HNG company itself, keeping it as a going concern and ensuring its adequate functioning. The complaint also alludes to the fact that the RP specifically wanted the Sinnar plant to not be functional again so that other plants could benefit instead. One has to wonder here if the complaint itself alludes to the fact that the RP may have been trying to increase the value of the Rishikesh Plant (which AGI wishes to divest) at the expense of the interest of the company HNG and minimizing the value of HNG itself in the process. 

It is pertinent to note that not just Wadhawe, but various stakeholders including a statutory authority have filed criminal complaints against those operating the Nashik plant, seeking a criminal investigation of the fire incident at the Sinnar Plant on 29.12.2023. 

In fact, K.T Zope (deputy director- of Maharashtra Industrial Safety Department) under Section 8(1) of the Factories Act, has submitted a report to the Chief Judicial Magistrate of Nashik. In the report by KT Zope, the negligence by the RP in the upkeep and maintenance of the Sinnar plant had been clearly pointed out. 

KT Zope, who is the Deputy Director of Maharashtra Industrial Safety Department categorically submitted to the Chief Judicial Magistrate of Nashik that during his inspection, he found firefighting equipment in scrap condition, and therefore he had concluded that the occupier of the factory had contravened the Maharashtra Factory Rules, 1963. He further said that the contravention was punishable under Section 92 of the Factories Act, 1948. 

With this finding by the Deputy Director of the Safety Department, it becomes evident that the fire incident at the Sinnar Nashik plant was not simply an accident but one that was a direct result of the negligence by the occupiers of the factory – in this case – Mukul Somany and Resolution professional Girish Juneja. 

While the finding of KT Zope indicts the negligence of the RP and the other occupier, based on the complaint by the Supervisor of the Sinnar Plant, certain questions are pertinent to ask. 

1. The Sinnar Plant being gutted in fire and not being restarted despite the RP having the resources to do so could potentially point towards collusion between the RP and AGI, as the letter accuses. Essentially, the non-functioning of the Sinnar Plant directly benefits AGI in two ways. Firstly, the business being conducted by the Sinnar Plant would go directly to AGI in the interim since AGI is the second largest glass manufacturer after HNG. Secondly, with one big plant non-functional, it also helps solve the AAEC (Monopoly) problem arising out of the combination of AGI and HNG. The negligence and actions of the RP are inexplicable and therefore, the complaint by the Supervisor alludes to a collusion between the RP and AGI. 
2. We established in the previous articles that private institutions like Ernst and Young have established a stranglehold on the RPs and the IBC process. With the allegations against the RP, what is the culpability of EY in the IBC process of HNG and the gutting of the Sinnar plant? EY was appointed as the advisor to the RP in this case – being the advisor, was EY in the know about the RPs alleged shenanigans in the Sinnar plant? 
3. There are grave allegations that the RP has been using the plant for personal financial gain and to benefit his preferred vendors. With such allegations, should it not then be incumbent upon the IBBI to remove Girish Juneja as the RP in the HNG case, investigate his role and the merits of the allegation, and appoint a different RP so the HNG resolution process is streamlined? 

Workers Union of HNG say plant workers are threatening suicide, demand FIR against RP Juneja, allege collusion between RP and AGI – Letter to Union Labour Minister

On the 9^th of July 2024, a letter was written to Dr Mansukh Mandaviya, Union Labour minister, by workers’ trade union Nala Sangam to bring to his attention the plight of workers stationed at the Puducherry plant and other plans of HNG “due to the arbitrary, illegal and negligent actions of the Resolution Professional (“RP”), Shri. Girish Sriram Juneja was appointed to conduct the Corporate Insolvency Resolution Process (“CIRP”) of HNGIL”. 

The letter says, “The conditions of workers at plants of HNGIL is unsettling and disturbing. The workers are fighting every day with the management i.e., RP as they have been denied basic necessities for survival. It is disheartening to see the inhumane conditions under which they work for long hours, knowing that RP and AGI have funds and resources at their end to suppress the voice of the workers and ultimately achieve their illicit goals”. 

The complaint states that Girish Juneja, in conspiracy with AGI, has deliberately not ensured the safety and security of the workers due to which, the workers are also threatening to commit suicide. The workers, most affected by the prolonged IBC process of HNG, have had to sell their personal belongings to sustain themselves because of the ‘illegal’ actions of the RP.

This letter by HNG Nala Sangam employees union directly alleges that the RP is in conspiracy with AGI. Following are the points raised by the workers’ union with regard to the collusion between the RP and AGI and the role of the RP: 

1. The letter says that “the present grave situation has arisen due to the RP’s misgovernance of the plants of HNGIL, one of which has already led to a serious fire incident (at Nashik) and other plants are also in risk of great danger”.
2. The workers are the most affected stakeholders from the prolonged litigation of HNGIL for which they have no resources and no funds. The RP has protracted these litigations only to benefit AGI. The workers are on the verge of selling everything they have for a fair chance to be heard before the Courts of Justice. 
3. The letter says that the RP, either through his inactions or by design, is seeking to help AGI Greenpac in overcoming and creating circumstances that would render the litigations pending before the Supreme Court and in the process is risking the lives of thousands of workmen of HNGIL.
4. There was enough material, in the knowledge of the RP that the furnaces of the HNGIL were in dilapidated condition and any such incident may occur at any time. However, the RP did not take any concrete steps to repair/rebuild the said furnaces risking the valuable lives of thousands of workers of HNGIL.
5. The workers of Sinnar Plant did complain and address the issue of the dilapidated furnaces directly to RP on several occasions. However, the RP ignored the same which resulted in the fire incident at the Sinnar Plant. 
6. The Sinnar plant was run without a valid NOC, despite having capital expenditure for installing firefighting equipment.
7. Following the Fire Incident at Sinnar Plant, highly skilled personnel crucial to the safety of the furnaces at Nashik are being coercively transferred to other units, while those refusing transfer orders are being pressured into resignation, exacerbating concerns regarding fair labor practices.
8. Workers of HNGIL have expressed concerns that similar incidents could potentially occur at the other plants of the NGIL, posing a significant risk to the lives and livelihoods of the workers. 
9. The malefice of the RP is evident from the fact that RP did not report the said fire and no investigation was conducted or ordered by him. It is evident that the RP was only interested in insurance claims which will ultimately benefit AGI Greenpac. Despite HNGIL having sufficient bank balance to repair the said plant, RP failed to do so as the cost of renovation plus loss of profit. The letter says this shows malafide intent of the RP. 
10. The employees at the plant are being constantly harassed by the RP, who is denying the employees their salary and other reasonable dues. It is also clear that the RP is not even fulfilling the basic requirements/needs of the employees and has created an unhealthy working environment due to which there are high attrition of employees.

Interestingly, the letter by the workers union categorically states what the potential intent of the RP could be, stating clearly the collusion between the RP and AGI. 

The letter says: 

The two main reasons behind RPs’ intentional interest in bringing down the plants of the HNGIL are:

1. To make AGIs’ non-compliant plan, CI compliant b burning down plants of HNGIL and reducing the total capacity of HNGIL;
2. By diverting al the customers of HNGIL to AGI and skilled workers to AGI; and
3. To misappropriate the insurance proceeds of the said fire incident for the benefit of AGI and the RP himself.

The workers union’s letter goes on to make certain demands, which include directing the IBBI to take action against RP Girish Juneja, conduct a proper investigation into the fire incident at Sinnar Plant where Nala Sangam is also heard, Direct State Labour Commissioner to look into the matter and submit a report to the concerned department of Labour Ministry, and most importantly, file an FIR against the RP. 

It is well-established law that during the process of insolvency, the RP is the ‘occupier’ of the Corporate Debtor’s factory as held by landmark judgment Subrata Monindranath Maity v. The State as well. 

In this landmark judgment, the Madras High Court has held that: (i) The protection to the resolution professional given under Section 233 of IBC is obviously only in respect of act done or intended to be done in good faith under the code. The failure or omission to provide safety measures in the factory cannot be stretched to inaction. (ii) The resolution professional is the occupier of the factory (as defined under Section 2(n) of the Factories Act, 1948) and he cannot abdicate his duties and responsibility of providing necessary safety measures in the factory as mandated in the Factories Act. (iii) The expression used in section 17 of the Code explicitly say that the resolution professional is the person who is vested with absolute control of the Corporate Debtor company. While so, for the violation or omission in the factory premises, Resolution Professional is responsible for the Proceedings if any, initiated against Resolution Professional under the Factories Act in his capacity as occupier. The said proceedings will not be covered under section 14 or 233 of the Code.

It is therefore evident that the RP was responsible for the upkeep of the Sinnar Plant and if the complaint by the employees, the report by the deputy director- of the Maharashtra Industrial Safety Department and the subsequent magistrate order is to be considered, the RP seems to be responsible for gross negligence. 

In the Subrata Monindranath Maity v. The State case, the court did take action against the RP for the breach of the same provisions that RP Girish Juneja is alleged to have breached based on the findings of KT Zope. With a solid judicial precedent in such cases, in this case as well, should it not be logical to then investigate RP Juneja for these alleged infractions?

How the RP seems to have erred in the resolution plan approval process 

The resolution professional who becomes occupier of the company during CIRP is primarily responsible for keeping the corporate debtor as a going concern, safeguarding assets of the corporate debtor, and ensuring value maximization for CoC to recover maximum money through CIRP which forms some of the key responsibilities of RP. In the case of HNG, several employee unions comprising the employees of HNG have registered their protest and filed complaints claiming that the RP is not maintaining the assets of HNG and is failing to maintain HNG as a going concern. 

The resolution professional is also primarily responsible for conducting a free and fair insolvency process to ensure value maximization and recovery for the CoC. In the HNG case, however, several questions have been raised about the RP and whether he discharged his responsibilities adequately. 

The CoC of HNG, which is led by SBI, voted 98% in favor of the Resolution Plan of AGI Greenpac while INSCO got 88% of the CoC votes. The difference in vote percentage was explained in our previous article.

CoC is meant to apply its commercial wisdom in favor of the resolution plan which is fully compliant with the provisions of the IBC Code. Did the CoC led by SBI do that? AGI Greenpac’s resolution plan lacked CCI approval while being declared as a successful resolution applicant by the CoC. Further on 5th Nov 2022, the RP filed a resolution plan of AGI Greenpac with NCLT Kolkata without CCI approval in place.

CCI in its order dated 15th March 2023 said that approval to AGI’s combination plan can only be given approval subject to the successful divestment of the Rishikesh plant of HNGIL which AGI offered to divest under voluntary modification to remedy AAEC concern raised by CCI through its show cause notice dated February 10th, 2023. First and foremost, this was conditional approval, which in itself is against the rules of the IBC process, since the combination of AGI and HNG would lead to a monopolistic market. In such cases, the combination plan approved has to be unconditional. However, there is more to it. 

AGI offered to divest the Rishikesh plant to remedy the monopolistic considerations the combination of AGI and HNG would lead to. The Rishikesh Plant is actually owned by HNG and not AGI. So AGI essentially offered to sell a plant it does not even own. Here is what the aim of this arrangement seems to be – AGI Greenpac through the help of RP, would divest the Rishikesh plant of HNG as per CCI order. Thereafter, the proceeds generated from said divestment would be used to fund its deferred payment scheme offered to CoC as part of its commercial offer. This would mean that AGI is offering to sell a part of the assets of HNG to fulfill its payment obligations to CoC as proposed in the resolution plan. When the AGI resolution plan was voted as the successful plan by the CoC, the divestment of the Rishikesh Plant by AGI did not feature in their plan. It would therefore appear that not only did AGI’s plan get approved by the CoC, led by SBI, despite the AAEC concerns, but also, there were considerations that were added after the approval by the CoC.

It should have been the duty of the RP to ensure that all the details of the AGI plan was disclosed to the creditors. Further, it was also the RPs responsibility to ensure that the plan had absolute, unconditional approval from the CCI before submitting the plan to the NCLT. According to experts, the RP seems to have erred and contravened the provisions of the IBC in not doing so.

Other questionable conduct by the RP in the IBC process of HNG 

In the previous articles by OpIndia on the case, we have elaborated on how RP Juneja had potentially contravened the law to favor AGI Greenpac. The saga of the Resolution Professional relaxing the norm and then changing his stand repeatedly with regards to when AGI needed to get approval from the CCI, in potential contravention of the law, has also been criticized by legal luminaries. Between the 25th of August 2022 when the RP relaxed CCI approval norms for AGI Greenpac to the 28th of October 2022 when the CoC approved the plan, consequently the filing of the Minutes of the Meeting with the NCLT, of the CoC where the plan was approved the RP changed the norm several times, allegedly, to suit AGI. 

For example, on the 25th of August 2022, RP while replying to a query raised by one of the resolution applicants watered down a mandatory provision of IBC by relaxing the requirement of prior CCI approval before the approval by CoC. RP relaxed the mandatory requirement despite not having adjudicating power (as stated by Justice Nariman Rohinton in his legal opinion), stating CCI approval can be availed after approval of CoC but before filling the resolution plan with adjudicating authority.

This relaxation was overturned by NCLT Kolkata on 21^st September 2022 saying “We seek to reliance on Bank of Maharashtra and Ors. V. Videocon Industries Ltd and orders. MANU/NL/0010/2022, wherein the Hon’ble NCLAT has observed that Statutory compliances do not fall under the commercial wisdom of CoC. Hence the statutory compliances as mandated by proviso to section 31(4) have to be ensured before the resolution plan is approved by CoC”.  Hence it is clear that before approval of the resolution plan, all the compliances have to be met by resolution applicants, a provision which was watered down by the RP apparently to favour AGI. Pertinently, there is no record of the CoC itself requesting the RP for such watering down of a mandatory provision. It would therefore indicate that the RP may have been acting either on his own or in possible collusion with AGI and/or other vested entities. 

As of 21^st September 2022, therefore, AGI had to get approval from the CCI as per established norms – which is before the CoC votes. 

On the 27^th of September, AGI applies for CCI approval under Form 1. As explained in the previous article, Form 1 is like the Green Channel which essentially means that AGI declares that their combination with HNG would not lead to a monopolistic market. This assertion was false evidenced by the fact that the CCI rejected the application of AGI under Form 1 terming it non-valid. On the 27th of October 2022, after the CCI rejected the application of AGI, AGI emailed the RP saying that they would re-apply under Form 2 and would get the requisite CCI approval by November 2022. 

On the 28th of October 2022, the CoC approved the plan of AGI. The RP in its Minutes of the Meeting filed with the Adjudicating Authority (NCLT) says that CCI approval can be availed before the adjudicating authority APPROVES the plan. In saying so, the RP seems to have contravened the NCLT order of September 2022. 

Interestingly, while on the 25^th of August 2022, the RP had said that the CCI approval could be taken before the filing of the resolution plan with the Adjudicating Authority, by the 28^th of October 2022, the RP seems to have changed his stand to claim that the CCI approval needs to be taken before the Adjudicating Authority approves the plan. This appears to have been done because AGI had already emailed the RP that they would get approval from CCI under Form 2 by November 2022. By changing the norm, the RP seems to have wanted to give AGI more time to get the required approval. 

By the 5^th of November 2022, the RP seems to have contradicted his own stand all over again. In the Form H (Compliance Form) filed by the RP with the adjudicating authority, the RP said under clause 11 of FOMR H that CCI approval has to be taken “Prior to CoC approval or prior to filling of application for approval of Resolution plan on the basis of the email dated October 27, 2022, the time frame proposed for obtaining CCI approval is November 2022”. 

The conduct of the Resolution Professional and the involvement of Edelweiss (as explained in our previous article) seem to have played a crucial part in the delay of IBC proceedings in the HNG case, leading to the resolution being pending for over 600 days due to ensuing litigation, causing of loss over Rs 840 crores to the members of the CoC, which has several public sector banks like SBI, Canara Bank, etc.

With this inordinate delay and exorbitant loss to public sector banks, several questions arise: 

1. The IBBI (Insolvency and Bankruptcy Board of India) has the authority to appoint, regulate, and dismiss Resolution Professionals. Has the IBBI taken any steps to evaluate the actions of the RP in this case? 
2. If the IBBI has not, why has this case escaped the attention of the Board? 
3. Does Ernst and Young have a role to play in the non-investigation against the RP, given that EY is the advisor to the RP? 
4. What kind of influence do private institutions like EY have over the IBBI and the process of IBC? 
5. Is the RP acting in concert with AGI to temporarily arrest AAEC concerns till the resolution plan is passed? 
6. After the action initiated against Edelweiss and the findings of SEBI, should AGI be barred from the IBC process in the HNG case? 
7. Do these potentially bad actors not tarnish the process and intent of the IBC and if so, is it not time to streamline IBBI and ensure such lapses are minimized? 
8. The CCI is a body constituted as a barrier to monopolistic practices. It would seem that in this case, the core function of CCI was overlooked to facilitate the acquisition of HNG by AGI even though INSCO taking over HNG would create no contingencies or monopolistic practices. With the case now pending in the Supreme Court, should the judiciary not step in and order for the speedy resolution of the HNG case? 

In the current case, the onus of rectification of the process lies squarely with the IBBI since the infractions seem to have been committed by the RP in delaying the process and also, allegedly colluding with AGI to not only tarnish the process of the IBC but also reduce the asset value of the corporate debtor (HNG). It is baffling as to why the IBBI has failed to launch an investigation, despite demands for an FIR to be filed against the RP, into the actions of Girish Juneja, his links to Edelweiss, EY, and AGI. 

SBI, the largest member of the CoC is incurring heavy losses due to the HNG insolvency process, a process that seems to have been severely compromised by RP Girish Juneja, Edelweiss, AGI, and the alleged collusion between the three entities. It is a fact that in the CoC, it was the Edelweiss’ vote that swung the deal in favor of AGI, even though the AGI plan had no approval from the CCI. In the CoC, SBI was the lead member being the biggest creditor of HNG. The chicanery by the RP in the CoC, by changing his stand repeatedly regarding the CCI approval requirement, seems to have colluded with Edelweiss to ensure that AGI wins the resolution. It is important to recall that Edelweiss had a vested interest in AGI’s plan being approved since through its related entity, Edelweiss has funded the acquisition of HNG by AGI, by extending Rs 1,100 crores, while also being a creditor in the CoC, after it acquired debt. Based on the complaints by the workers’ union, it becomes apparent that there is possibly a collusion between the RP and AGI. Further, with Edelweiss being on both ends of the HNG deal (as a CoC member and as the funder of AGI), it is not beyond the realm of possibility that Edelweiss was an equal partner in the conspiracy between RP and AGI – as alleged by the workers’ union. 

The Government body responsible for investigating the role of the RP is IBBI. With such details in the HNG case emerging and SBI along with other public sector banks incurring heavy losses, the demands of Nala Sangam seem legitimate. With such grave allegations, the Nala Sangam has demanded a thorough investigation by IBBI along with an FIR be registered against the RP for his role in the Sinnar Plant fire incident. 

These are policy loopholes that are being manipulated, rampantly, in the IBC process, marring the objectives of a law that protects creditors and the going concern. Perhaps it is time for the government to fine-tune the law to plug the last remaining loopholes in an otherwise transparent and fair process.

(The previous articles in this series can be read here, here and here)