Proportionality in disciplinary review: suspension of an insolvency professional was reduced after delay and no personal gain was shown.

In disciplinary review under Article 226, a writ court may interfere where the penalty is grossly disproportionate, the process is procedurally flawed, or unexplained delay has caused material prejudice. The High Court found that the insolvency professional had disclosed the support-service arrangement, the earmarked sums were disbursed to the relevant team members, and no finding of personal enrichment or diversion of funds was recorded. It also treated the nearly one-year delay in concluding proceedings, during which assignment rights remained suspended, as aggravating the prejudice. On proportionality grounds, the one-year suspension of registration was reduced to the period already undergone.

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Issues: Whether the disciplinary penalty of one year's suspension of registration was disproportionate and liable to be interfered with in writ jurisdiction, having regard to the material placed on record, the delay in conclusion of proceedings, and the prejudice already suffered by the insolvency professional.

Analysis: Interference in disciplinary matters under Article 226 is ordinarily confined to cases of statutory infraction, violation of natural justice, vitiation of the decision-making process, or penalties that are grossly disproportionate. The impugned order was based on the finding that support-service fees approved separately by the Committee of Creditors ought to have been paid directly to the support-service provider, and that routing the entire amount through the petitioner contravened the Board circular and the Code of Conduct. However, the record also showed that the petitioner had disclosed the support-service arrangement, that the sums earmarked for support services were in fact disbursed to the concerned team members, and that no specific finding was recorded of personal enrichment or diversion of funds. The Court further noted that the disciplinary proceedings remained pending for nearly one year after the reply to the show cause notice, during which the authorisation for assignment remained suspended, and that this delay materially added to the prejudice already suffered by the petitioner. In these circumstances, the punishment imposed could not be sustained as proportionate.

Conclusion: The suspension of registration for one year was held to be excessive and was reduced to the period already undergone, with the suspension deemed to have come to an end from the date of the judgment.

Final Conclusion: The writ petition succeeded to the extent that the disciplinary penalty was interfered with and materially scaled down, leaving the petitioner free from any further suspension under the impugned order.

Ratio Decidendi: In disciplinary review, where the proven lapse is procedural in character, no unlawful gain is shown, and the penalty becomes disproportionately harsh because of unexplained delay and cumulative prejudice, the writ court may interfere and reduce the punishment on proportionality grounds.

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