TaxTMI 
TaxTMI 
2026 (7) TMI 1196
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..... Earlier, the Adjudicating Authority vide its Order dated 26.09.2025, in I.A.382/2025 in C.P.(IB) 63/9/JPR/2020 had removed the appellant as a resolution professional in a certain CIRP and also directed him to refund Rs.. 2.0 lakhs he had received as his initial remuneration besides recommending a disciplinary action against him by the IBBI. This Order of the Adjudicating Authority was challenged in C.A.1609 of 2025, wherein this tribunal has passed an interim Order of stay of the direction to return Rs.. 2.0 lakh. 3. Besides the CIRP from which the appellant was removed, there were three other CIRP in which the appellant has been appointed as a resolution professional. Now, by virtue of the Order impugned in this appeal, IBBI has removed him as the resolution professional. This Order of suspension was to take effect from 08.07.2026. The appellant's core contention is that, the IBBI, in exercise of its disciplinary jurisdiction, has the authority to remove a resolution professional only from a particular assignment in relation to which it had initiated a disciplinary proceeding against the resolution professional, and cannot ban him from functioning as a resolution professional....
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....e, does not have a limiting factor in defining the extent of jurisdiction of the tribunal. Indeed, the report of the BLRC, published on 15th November, 2015 (before the IBC was launched), states: "The Committee recognises that actions taken by regulators can impose significant penalties and burden on regulated entities. Therefore, the rule of law requires that a clear judicial process be available to persons who seek to challenge regulatory actions." The report of the Select Committee on IBC (Amendment) Bill, 2025, in paragraph 62.5.1(i) records the written replies received by it from the Ministry which reads: "The proposed amendments to section 220 address the concern about proportional and fair penalties" and that ".. the amendments aim to ensure fairness, transparency, and appropriate safeguards against excessive punishment for minor lapses." The report of the Select Committee thereafter proceeds to record its recommendations, and in paragraph 62.6.2 it concludes: "Upon examination and after considering the view of the Ministry and stakeholders, the Committee observe that the amendments proposed in clause 62 are necessary to ensure fairness and proportionality in disciplinary act....
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....e has intended not to vest absolute power to the appellate tribunal under Sec. 220(7), it would have limited it. The bottomline is, where Sec. 220(7) does not have a limiting clause on the extent of authority this tribunal has, it should not be read into it. 7. Per contra, the learned counsel for the IBBI contended, that the role of the IBBI is that of a regulator and has its defined role as an expert body in regulating the course of working of the Code and that may not be easily interfered with. He explained: a) A disciplinary action is not initiated without application of mind. Sec. 218 of the Code provides that when a complaint is received against a service provider (prior to 2026 amendment, it was 'insolvency professional agency or information utility') alleging contravention of any of the provisions of the Code, or the rules, or regulations or directions made thereunder, then IBBI can hold an inspection or investigation. And, only after ascertaining the existence of prima facie case of contravention of the Code or Regulations etc., it issues a show cause notice as provided for in Sec. 219 of the Code and invites a reply to it. Then commences the job of the Discipli....
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....ad of an Advocate. 8. In response the learned counsel for the appellant argued that, no parallel can be drawn as between the suspension of registration of a resolution professional and suspension of sanad of an Advocate. What it fails to negotiate is the effect of Sections. 22, 27 and Regulation 13(7) of IBBI (Inspection & Investigation) Regulation. So far as the ratio of Vishal Tiwari case goes, there the challenge was to a certain regulation as framed by an expert body under Article 32 of the Constitution and not what flowed from its operation. In the present case, no statutory provision or rules are challenged, but what is purported to have been done pursuant thereto. So far as Apex Heights Case goes, on facts the corporate debtor had undertaken multiple projects, and the Supreme Court has desisted the resolution professional from associating himself from all the projects of the same corporate debtor till his name is cleared, and not from every assignment in which the resolution professional is appointed as such. Discussion & Decision 9. The issue in relation to which a decision is required to be made falls within a very narrow space: inasmuch as the impugned proceeding....
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....er Sec. 240, is required to be placed before the Parliament while in session, and becomes operational subject to the authority of the Parliament to modify them. Can therefore a Regulation, which in the instant case is Regulation 13(7), which has passed the legislative process as envisaged under Sec. 241, be allowed to be diluted under the weight of authority which the IBBI claims under Sec. 220(2)? 13. Existence of authority must be distinguished from its exercise. A Regulator may have been vested with the power of a giant, but is it necessary for it to act as a giant? Who will check if it is arbitrarily exercised? Statutorily, Regulation 13(7) steps in which has required the IBBI, which itself is a creation of the statute, only to inform the CoCs of other assignments where the same resolution professional who has been indicted by the Board, for them to take appropriate decision. This has at least three advantages: (a) first, it ensures rule of proportionality when it indicates that no resolution professional be penalised more than the extent required to, and to arrest excessive reaction and response from the Board to an allegation of misconduct in a particular assignment; (b) s....