2026 (1) TMI 569 - HC - IBC

Writ review of administrative determinations under Article 226: court limits supervisory review and upholds sanctions on insolvency professional

Dominant issue: scope of writ jurisdiction under Article 226 to review administrative determinations. The HC reiterated that Article 226 is supervisory ... Scope of interference in the writ jurisdiction of High Court under Article 226 of the Constitution of India - exercise of powers conferred u/s 220(2) of the Code and the Regulations made thereunder - Resolution Plan vis-à-vis the Corporate Debtor - Cancellation of the MSME certificate - registration to practice as Insolvency Professional has been suspended for a period of two years - HELD THAT:- It is trite law that the scope of interference in the writ jurisdiction of Article 226 of the Constitution of India is extremely narrow and does not justify the exercise of the power to sit in appeal over the decision being challenged. The High Court does not review or reweigh the evidence upon which the determination is based in the order under challenge. In Syed Yakub v. K.S. Radhakrishnan & Ors. [1963 (10) TMI 26 - SUPREME COURT], it is held that the writ jurisdiction of the High Court under Article 226 of the Constitution of India is supervisory rather than appellate and the finding of fact reached as a result of appreciation of evidence cannot be reopened or questioned in writ proceedings. While the High Court may correct an error of law apparent on the face of record, it cannot correct the errors of facts, however grave. It cannot also review the adequacy or sufficiency of the evidence led on a point as these are matters within the exclusive jurisdiction of the administrative authority. It is clear that the scope of interference by way of a judicial review is limited under Article 226 of the Constitution of India and can only be exercised if it is found that the decision by the administrative authority was unreasonable, irrational, arbitrary or perverse. As regards the cancellation of the MSME certificate of the Corporate Debtor, the argument of the Appellant before the learned Single Judge that the Appellant was not aware of such cancellation was not accepted in the Impugned Judgment on the ground that the Appellant cannot be exonerated of his statutory obligation under Section 30(2) of the Code read with the Regulations made thereunder and the Code of Conduct for the Insolvency Professionals. In view of the statutory scheme of the Code and the Code of Conduct for Insolvency Professionals, the Appellant was under obligation to ensure the compliance with the provisions of the Code and the Regulations made thereunder, including Section 29A and Section 30(2) of the Code, and the Code of Conduct as held in the Impugned Judgment. Admittedly, the Appellant did not argue the factual aspects on merits before the learned Single Judge in the Writ Petition, which is sought to be argued for the first time in this Appeal, which is not permissible. The Appellant has not assailed the finding in the Impugned Judgment on the aspect of the decision of the First SCN being a res judicata for the Second SCN in this Appeal. Instead, the Appellant has sought to challenge the Impugned Judgment on the factual aspects on merits, which were never argued before the learned Single Judge and being canvassed for the first time in Appeal, which cannot be permitted. Thus, the observations and conclusions in the Impugned Judgment are justified and do not require any interference in this Appeal. Accordingly, the present Appeal is dismissed as being devoid of any merit. Issues: (i) Whether the Impugned Judgment dismissing the writ petition and upholding the suspension of the registration of the Insolvency Professional for two years calls for interference under the writ jurisdiction of Article 226.Analysis: The matter concerns supervisory judicial review under Article 226 where the High Court examines the decision-making process for jurisdictional error, perversity, arbitrariness or illegality rather than reweighing factual findings. The statutory and regulatory framework engaged includes Section 29A, Section 30(2) and Section 220(2) of the Insolvency and Bankruptcy Code, Regulation 36-A of the CIRP Regulations, and the Code of Conduct for Insolvency Professionals, which collectively impose obligations on a resolution professional to examine resolution plans, conduct due diligence, and disclose conflicts of interest. The learned Single Judge found that the disciplinary authority had considered relevant material and reached findings that there was lack of due diligence and potential conflict of interest; those findings involve appreciation of facts and do not disclose jurisdictional error, perversity or illegality on the face of the record. The appellant raised factual arguments on merits for the first time in this appeal which were not argued before the Single Judge and therefore cannot be entertained at this stage.Conclusion: The Impugned Judgment dismissing the writ petition and upholding the suspension of the Insolvency Professional is upheld; the appeal is dismissed (decision in favour of the Respondent).