TaxTMI 
TaxTMI 
2026 (9) TMI 1602
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.... Code,2016 ("Code") against the Order No. IBBI/DC/332/2026 dated 14.07.2026 ("Impugned Order") passed by Disciplinary Committee ("DC") of Insolvency and Bankruptcy Board of India ("IBBI"). Insolvency and Bankruptcy Board of India ("IBBI") is the Respondent herein. 2. The Appellant submitted that he has an unblemished professional career of over nine years as an Insolvency Professional and over thirty-five years as a practicing Chartered Accountant. The Appellant stated that he has acted as an Interim Resolution Professional/Resolution Professional in fifteen matters, out of which seven cases were successfully resolved through implementation of Resolution Plans, three CIRPs are continuing, one matter went into liquidation and, in four matters, he was replaced by another Resolution Professional. The Appellant contended that he was appointed as the Resolution Professional of the Corporate Debtor i.e., Dream Procon Private Limited pursuant to the resolution approved with 77.94% voting share in the 18th meeting of the Committee of Creditors ('CoC') and was subsequently confirmed by the Adjudicating Authority on 22.01.2025, at a stage when the Resolution Plan of the Corporate Debtor h....
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....itted that, notwithstanding his position that the individual requests did not satisfy the statutory requirement under Regulation 18(3), he had acted transparently and placed the fact of the requests received from homebuyers before the 20th CoC meeting. The Appellant stated that he subsequently communicated the calculation of 32.24%, along with the supporting calculation sheet, to both Authorised Representatives of the homebuyers. The Appellant contended that the IBBI failed to appreciate that the Appellant had consistently kept the CoC and the Authorised Representatives informed regarding the developments relating to the requests for his replacement. The Appellant further submitted that he continued to diligently attend hearings and pursue matters concerning the Corporate Debtor, including filing appropriate applications for early hearing, despite the issue concerning his replacement being under consideration. 6. The Appellant submitted that a fundamental legal issue existed regarding whether individual homebuyers constituting financial creditors in a class could independently invoke Regulation 18(3) for the purpose of placing an agenda before the CoC, or whether such a request ....
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....d before the CoC and his replacement was approved with more than 91% voting share. The Appellant contended that the voting on the proposal was undertaken through the Authorised Representatives of the homebuyers, thereby reinforcing his contention regarding the statutory role of the Authorised Representatives. The Appellant further stated that, following his replacement, he handed over the records of the Corporate Debtor, including relevant email access and other material, to the successor Resolution Professional. 9. The Appellant submitted that the disciplinary proceedings were initiated on the basis of a complaint in relation to the CIRP of Dream Procon Private Limited and that the IBBI thereafter issued a Show Cause Notice dated 25.11.2025. The Appellant stated that he filed a detailed reply, participated in the personal hearing and subsequently filed written submissions. The Appellant contended that, despite the matter arising solely from one CIRP, the IBBI imposed a blanket suspension of his registration as an Insolvency Professional for a period of one year, thereby preventing him from acting as a Resolution Professional, Interim Resolution Professional or Liquidator in all....
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....entrench himself in office and, once the Adjudicating Authority directed that the agenda be placed before the CoC, he complied immediately and without demur. 12. The Appellant contended that the IBBI failed to consider that no irreversible prejudice had been caused to the CIRP or to the stakeholders and that the Resolution Plan had already been approved by the CoC prior to his appointment. The Appellant submitted that he continued to perform his duties and attend proceedings relating to the Corporate Debtor and that he had not received any remuneration during his tenure as Resolution Professional of the Corporate Debtor. The Appellant further stated that the complaint itself was filed by a person who had opposed the resolution of the Corporate Debtor and had previously challenged the Resolution Plan and filed applications which, according to the Appellant, had been rejected. The Appellant contended that the Respondent failed to properly appreciate these surrounding circumstances while arriving at adverse findings against him. 13. The Appellant submitted that the findings recorded in the impugned order were based upon minor and disputed discrepancies in voting-share calculatio....
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....enda concerning his replacement as Resolution Professional. The IBBI stated that the CIRP commenced pursuant to the order dated 06.09.2019 and, after the appointment of earlier insolvency professionals, Mr. Arunava Sikdar came to be appointed as the Resolution Professional. The IBBI contended that the CoC included financial creditors in the class of homebuyers as well as other financial creditors, whose voting rights were relevant for the purposes of Regulation 18 of the CIRP Regulations. 19. The IBBI submitted that, prior to the 20th CoC meeting scheduled for 29.03.2025, various homebuyers and financial creditors had requested the Resolution Professional to place an agenda for his replacement under Section 27 of the Code and had proposed the appointment of another insolvency professional. The IBBI stated that the Victory Welfare Association had also communicated a request for the replacement of the Resolution Professional, claiming support from creditors representing 34.42% of the voting share of the CoC. However, the Resolution Professional informed the 20th CoC that the requests received by him represented only about 32.35% of the voting share and, therefore, did not satisfy ....
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....g threshold of the CoC. 22. The IBBI contended that the Resolution Professional had admittedly received requests from creditors holding approximately 32.35% voting share before the 20th CoC meeting and that the alleged shortfall was merely 0.65%. In these circumstances, the IBBI stated that the Resolution Professional ought to have exercised his discretion in a fair and bona fide manner and placed the proposal before the CoC, instead of refusing to do so on the basis of such marginal shortfall. The IBBI further submitted that earlier disciplinary orders had already clarified that the discretion under Regulation 18(3) must be exercised carefully and with adequate reasons, particularly where the personal interest of the incumbent Resolution Professional is involved and where homebuyers face genuine difficulties in coordinating themselves. 23. The IBBI stated that, subsequent to the 20th CoC meeting, further requests were received from homebuyers and other financial creditors representing more than 40% of the total voting rights, seeking placement of the agenda for replacement of the Resolution Professional. The IBBI contended that, instead of promptly placing the proposal befor....
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....lacement. 26. The IBBI further submitted that, by withholding the agenda, the Resolution Professional effectively prevented the CoC from exercising its statutory right under Section 27(1) of the Code. The IBBI stated that the homebuyers were consequently compelled to approach the Adjudicating Authority by filing IA No. 2019/2025, which resulted in avoidable delay. The Adjudicating Authority, by order dated 03.11.2025, observed that nearly 40% of the homebuyers had supported the request and that the threshold under Regulation 18 had been satisfied. The Adjudicating Authority rejected the contention that creditors in a class could seek placement of an agenda only through prior intra-class approval and directed that a CoC meeting be convened for considering the replacement of the Resolution Professional. 27. The IBBI contended that a Resolution Professional is a facilitator of the CoC's decision-making process and cannot act as an arbiter of the CoC's will, particularly when the agenda concerns his own continuation in office. The IBBI stated that a prudent Resolution Professional ought to have placed the proposal before the CoC and allowed the stakeholders to decide the matter t....
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.... registration as an Insolvency Professional for one year and directed, under Section 27 of the Code, that CoC in his other ongoing assignments replace him. The disciplinary action arises from the CIRP of Dream Procon Private Limited, where the Appellant, until his replacement by the CoC on 17.11.2025, functioned as Resolution Professional. 31. At the outset, we note that the complaint received by the IBBI regarding Appellant's failure to place the agenda for his replacement as RP despite multiple requests from financial creditors. The Appellant submitted his reply to the complaint. Basis the complaint and the reply received thereto, the IBBI prepared an examination report. Based on aforesaid examination, IBBI formed a prima facie opinion against the Appellant and issued a Show Cause Notice ('SCN') to the Appellant, enclosing with relevant extracts of the examination report. The Appellant submitted his reply to the SCN. The SCN and the reply thereto were referred to the DC of the IBBI. The Appellant was afforded an opportunity of personal hearing before the DC. The Appellant submitted additional written submissions. The DC sought clarification from Mr. Arunava Sikdar and Mr. Suni....
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....onalism and independence and to act in the interests of all stakeholders rather than in furtherance of its own interests. The IBBI further stated that the Appellant's conduct was against the wishes of the CoC, as the agenda for its removal, when finally placed before the CoC, was approved by members holding 91% of the voting share. 35. The IBBI submitted that, by refusing to place the agenda for its removal, the Appellant compelled the homebuyers to approach the Adjudicating Authority and undergo adjudicatory proceedings to secure a right available to them under Regulation 18(3). The IBBI stated that the agenda ought to have been placed before the 20th CoC meeting held on 29.03.2025 but was ultimately placed only at the 25th CoC meeting held on 17.11.2025 after intervention by the Adjudicating Authority, resulting in an avoidable delay of nearly eight months. The IBBI submitted that this delay was caused by the Appellant's motivated attempt to continue in an office despite the clear lack of confidence of the CoC. 36. It is the case of the Appellant that if the Appellant is compelled to demit the ongoing assignments consequent upon intimation of the Impugned Order to the respe....
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..... It is submitted that reliance placed on Sachin Naveen Sinha (supra) is misconceived: apart from the facts of that case being distinguishable, a recall application against the said order is stated to be pending before the Appellate Tribunal, and reliance ought not to be placed on an order under recall. 42. The IBBI drew our attention to Sections 206, 207 and 208 of the Code appearing in Chapter IV, highlighting that no person may render services as an insolvency professional without being enrolled with an insolvency professional agency and registered with the Board, and that once registration is suspended, the person is disentitled, during the currency of the suspension, from acting as Interim Resolution Professional or Resolution Professional in any insolvency process under the Code and not merely in the CIRP in which the misconduct is found. 43. It is further submitted that, keeping in view the nature of the duties and powers entrusted to the Resolution Professional, it has been provided under Section 7(5)(a) and 9(5) (e) of the Code that a resolution professional against whom even any disciplinary proceeding is pending could not be appointed as an IRP or RP. It is vehemen....
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....cy professionals. The IBBI tried to impress us with logic that CIRP is a business of trust and once the trust is gone it would be very difficult for the stakeholders of an insolvency process to believe in the functioning of the resolution of the Corporate Debtor within the framework of the code. Hence, whatever decision we might take, with regard to the instant appeal, would convey a message to the whole of the body of insolvency professionals. Therefore, the IBBI very strongly urged us that it should not reflect that any misconduct committed by a Resolution Professional would be ignored by the guardians of law and therefore, having regard to the nature of misconduct committed by the appellant, he is not entitled to any interim relief. 47. We have considered the rival submissions and perused the record and at the outset, we would like to state that the question whether a Resolution Professional, whose registration has been suspended in relation to one assignment, ought to be granted interim protection from the consequences of that suspension qua his other, unconnected assignments, is not amenable to a straitjacket formula, and must depend on the facts and circumstances of each c....
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....ough a class's Authorised Representative once the intra-class majority under Section 25A(3A) of the Code is satisfied, and not by direct reckoning of individual members' e-mails - no strong prima facie case is made out. Section 25A(3A) governs how an Authorised Representative casts a composite vote once a resolution is put to a CoC meeting; Regulation 18(3) operates at the anterior, pre-meeting stage and does not, on its terms, condition the 33% count on a prior intra-class majority. This reading, which coincides with that of the Adjudicating Authority in its order dated 03.11.2025, is not shown, at this stage on prima facie basis, to be arguably wrong. 51. On the question of prima facie case, we are conscious that the Appellant has raised contentions touching the merits of the Impugned Order. These are matters meriting consideration; however, at this interim stage, we are required only to assess whether they disclose so strong and manifest a case in the Appellant's favour as to displace the presumption of regularity attaching to a reasoned order passed after issuance of show cause notice, consideration of the Appellant's detailed response, and grant of personal hearing. On a pr....
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.... the IBBI to intimate the order of suspension to the CoC of the Appellant's other ongoing assignments and to the Adjudicating Authority, and that such intimation, and any consequential exercise by those CoC of their powers under Section 27 of the Code, is a distinct exercise of statutory power from the disciplinary power exercised by the Board under Section 220 of the Code. The two powers operate in different fields; the communication of the suspension order to other Committees of Creditors, and the consequential steps that may follow, operationalise the legal effect of suspension and do not, by themselves, amount to an exercise of the power of replacement under Section 27 of the Code. 55. As regards reliance on Sachin Naveen Sinha (supra), of the Appellant we are of the view that, a recall application against that order being pending, it would not be appropriate to treat it as a settled statement of the law binding on this Bench at the present stage. In any event, even on the reasoning of that order, the CoC of the Appellant's other assignments would remain free to exercise their commercial wisdom upon intimation under Regulation 13(7); what the Appellant seeks by the present a....
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....pension is that the person ceases to be a registered insolvency professional and, consequently, stands disentitled to act as Interim Resolution Professional or Resolution Professional in any insolvency process under the Code. The authority to act as Resolution Professional is linked to the status of being a registered insolvency professional. Once that status is suspended and taken away, the person cannot lawfully continue to discharge the functions of a Resolution Professional. In this regard Section 206 of the code may be recalled wherein it is provided that the insolvency professional who is registered with the Board may only render his services as resolution Professional. 58. Regulation 13 of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017, which governs the disposal of show-cause notices, is of much significance. Sub-regulation (3) thereof expressly provides that the order of the DC may provide for, inter alia, any of the actions under sub-sections (2), (3) and (4) of Section 220, or "any other action or direction as may be considered appropriate." More importantly, sub-regulation (7) mandates that in case where the service prov....
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....action, but would also expose the stakeholders especially Homebuyers to continued risk. It may also be recalled that the Resolution Professional is not having a vested Right to continue as such and his continuation as Resolution Professional is subject to the procedure established by the Regulating Authority. 62. In view of the aforesaid, we hold that the intimation of the suspension order to the CoC of the other insolvency processes in which the appellant was acting as Resolution Professional, is fully within the jurisdiction of the DC and the IBBI as the same is expressly contemplated under Regulation 13(7) of the Inspection and Investigation Regulations and is a necessary and legitimate consequence of the order of suspension passed under Section 220(2) of the Code. We may also add that the scheme of the Code and the Regulations is designed to ensure that disciplinary action against an insolvency professional is effective and that the insolvency processes under the Code is not left in the hands of a person who has been found tainted and unfit to continue as a registered professional. Any other interpretation that would permit a suspended Resolution Professional to continue in ....
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....reated as constituting the irreparable injury necessary to justify interim stay of a disciplinary order passed after due process. We would observe, that an insolvency professional does not possess a vested right to continue in an assignment; his continuation is at all times subject to the regulatory framework governing his registration. Should the Appellant succeed in the appeal, his registration would stand restored, and it would remain open to the concerned CoC, in the exercise of their commercial wisdom, to consider his continuation or reappointment as they may deem appropriate. 65. The Appellant undoubtedly faces suspension of registration displaces him, for its duration, from every pending assignment, not merely the one under examination, with consequent effect on livelihood and professional standing. This is a relevant and weighty consideration. Set against it, however, are three factors that, in combination, weigh against interim interference. First, since suspension of registration is not assignment-specific any stay granted would necessarily operate across all of the Appellant's pending assignments. Second, in the very CIRP that gave rise to this proceeding, the CoC has....