Professional Accountability explained: this guide covers what it means, who it applies to, the step-by-step process, documents required, fees, due dates and penalties in India — so you can stay compliant with confidence and avoid costly mistakes.
A resolution professional who follows counsel's advice without agreeing with it has not discharged a duty. It has transferred one that cannot be transferred.
The institutional response to professional accountability
The panel discussed the growing role of Insolvency Professional Entities, structured similarly to a professional partnership, in which the majority of partners must be registered insolvency professionals, supplemented by company secretaries, law graduates, engineers and other domain specialists as the nature of the assignment requires, as the appropriate institutional response to the reality that an individual resolution professional cannot realistically discharge the full range of responsibilities on a large or operationally complex assignment single-handedly.
The composition is telling. Engineers alongside lawyers and company secretaries — because a resolution assignment on a manufacturing business requires someone who can assess plant, not only someone who can read a claim.
Who bears the professional accountability
Chartered accountants continue to constitute the large majority, some 65% to 70%, of registered insolvency professionals in India, a fact attributed to the profession's existing familiarity with documentation, audit discipline and regulatory compliance.
The panel nevertheless stressed that this professional grounding does not reduce the intensity of ongoing IBBI oversight, which the panel described as close and continuous, extending to the timeliness of routine communications such as meeting minutes and e-voting notices.
The panel drew a considered two-part distinction.
Where an issue is genuinely contested, or where the resolution professional is uncertain of the correct position, obtaining legal advice was described as not merely permissible but prudent, given that the resolution professional bears personal responsibility for decisions with consequences for employees, vendors and other stakeholders well beyond the professional's own interests.
Where, however, a resolution professional disagrees with the advice received — whether on questions of eligibility under Section 29A, in relation to preferential, undervalued, fraudulent or extortionate transactions, or otherwise — the panel's consistent view was that the professional must ultimately apply independent judgment and take a considered decision, since accountability cannot be outsourced to counsel.
The last phrase is the principle. Counsel advises; the professional decides. An opinion is evidence that the decision was taken carefully, not a substitute for taking it.
The areas named are the ones where this matters most. Section 29A eligibility determines who may bid — a wrong call either excludes a legitimate applicant or admits a disqualified one. Preferential, undervalued, fraudulent or extortionate transactions determine whether past dealings are challenged, which affects recoveries and, potentially, the position of people close to the debtor.
Both are areas where a professional may face pressure to adopt an opinion that resolves the difficulty. The answer is that the opinion does not resolve it.
The discipline that professional accountability requires
The appropriate discipline in such cases is to place the issue, together with the legal opinion received and the professional's own reasoning, before the Committee of Creditors, and to ensure that the basis for the eventual decision is comprehensively recorded in the minutes, both as a matter of good governance and as protection against later scrutiny by the IBBI, the Adjudicating Authority or the appellate courts.
| Step | Purpose |
|---|---|
| Obtain legal advice where genuinely uncertain | Informs the decision |
| Apply independent judgment | Discharges the duty that cannot be transferred |
| Place the issue, the opinion and the reasoning before the committee | Ensures the decision is taken with the committee's knowledge |
| Record the basis comprehensively in the minutes | Protection against later scrutiny by the IBBI, the Adjudicating Authority or the appellate courts |
Why the minutes matter so much
The panel recommended that resolution professionals treat contemporaneous, reasoned documentation, particularly Committee of Creditors minutes recording the basis for any decision taken on legal advice, as a non-negotiable discipline, given the weight that both the IBBI and the courts place on process integrity.
This is the same principle that runs through the valuation discussion. Courts do not review the merits of a properly taken decision; they review whether it was properly taken. The minutes are where that is established — or is not.
It also connects to Torrent Power. An RP acting strictly on the instructions of the Committee of Creditors is protected from a material irregularity finding on that ground alone — and minutes recording the issue, the advice, the reasoning and the committee's decision are what demonstrate that this is what happened.
Common mistakes
- Treating counsel's advice as discharging professional accountability on a contested point.
- Deciding a section 29A eligibility question without placing it before the committee.
- Recording a decision in the minutes without the reasoning behind it.
- Treating routine communications such as e-voting notices as outside regulatory scrutiny.