The Insolvency and Bankruptcy Board of India (IBBI) has suspended Insolvency Professional (IP) Mr R Thamodharan for violations of the Insolvency and Bankruptcy Code, 2016 (IBC). The action follows findings that the IP unlawfully delegated operational control of the corporate debtor to suspended directors without the approval of the Committee of Creditors (CoC).
The case underscores the non-delegable statutory responsibility of insolvency professionals to retain control of the corporate debtor and safeguard its assets during the Corporate Insolvency Resolution Process (CIRP).
Background of the Case
CIRP Commencement and Appointment of IP
The CIRP of Meenakshi Cargo Forwarders Private Limited commenced on July 10, 2023. Mr R Thamodharan was appointed as the Interim Resolution Professional (IRP) and was subsequently confirmed as the Resolution Professional (RP).
Unauthorized Delegation of Management Control
Delegation Without CoC Approval
During the CIRP, the IP delegated day-to-day management and overall operational control of the corporate debtor to its suspended directors, without obtaining prior approval or post-facto ratification from the CoC.
The Disciplinary Committee held that this amounted to a violation of Section 28(1)(h) of the IBC, which mandates CoC approval for decisions involving delegation of authority related to management or operations.
Informal Undertaking by Suspended Director
A suspended director, Mr A Sureshkumar, submitted an informal undertaking stating that he would function as Chief Executive Officer with delegated authority to manage operations.
The Committee noted that informal undertakings cannot substitute statutory compliance, nor can they override the RP’s obligation to exercise independent control and supervision.
Failure to Disclose to the Committee of Creditors
Despite the material nature of the delegation, the IP failed to inform the CoC during its meetings. The IBBI observed that such non-disclosure compromises transparency and defeats the collective decision-making role of the CoC under the IBC framework.
Justification by IP Rejected
Urgency and Risk-Mitigation Argument
The IP contended that the delegation was a temporary and urgent measure, taken shortly after his representative visited the company’s premises, citing time-sensitive business requirements. The Disciplinary Committee rejected this explanation, noting that:
- No documentary evidence of pre-existing contractual urgency was produced
- Due diligence and CoC disclosure cannot be bypassed on grounds of expediency
- Operational convenience does not justify relinquishing statutory control
GST Compliance Failures
No Fresh GST Registration
The IP failed to obtain a fresh GST registration for the corporate debtor during the CIRP period.
Returns Filed by Suspended Management
Instead, the suspended management was allowed to continue filing GST returns, which the Committee found to be a breach of both GST law and CIRP compliance obligations.
Findings of the Disciplinary Committee
The IBBI Disciplinary Committee concluded that the IP:
- Failed to assume full custody and control of the corporate debtor’s assets
- Unlawfully delegated authority to suspended directors
- Relied on unsupported claims of operational urgency
- Breached transparency obligations towards the CoC
- Contravened provisions of the IBC and related regulations
The Committee found the IP’s assertion that he retained effective control to be unsubstantiated.
Penalty Imposed by IBBI
One-Year Suspension
Based on the findings, the IBBI ordered a one-year suspension of Mr R Thamodharan’s registration as an Insolvency Professional. The suspension will take effect after 30 days from the date of the order.
Origin of Disciplinary Proceedings
The proceedings were initiated following a complaint alleging failure to take custody of assets and non-compliance with GST requirements during the CIRP.
Conclusion
This decision reiterates that insolvency professionals must personally retain control over the corporate debtor, ensure strict regulatory compliance, and maintain full transparency with the Committee of Creditors. Delegating operational authority to suspended directors, without approval or disclosure, constitutes a serious breach of professional and statutory duties under the Insolvency and Bankruptcy Code.
Source: IBBI Disciplinary Committee Order dated 13/01/2026