TaxTMI 
TaxTMI 
2026 (10) TMI 1309
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.... India ("IBBI") in Case No. IBBI/DC/341/2026. Insolvency and Bankruptcy Board of India is the Respondent, herein. 2. The Appellant submitted that the present Appeal arises from the Impugned Order, whereby the Appellant has been held to be in contravention of Regulation 16A(10) of the CIRP Regulations and Section 25A(3) of the Code, resulting in cancellation of his registration as an Insolvency Professional and consequential directions affecting his existing assignments. 3. It is submitted by the Appellant that the CIRP of M/s. Revital Realty Private Limited ("Corporate Debtor") commenced on 04.06.2024 and, on 04.07.2024, the Appellant was appointed as the Authorised Representative ("AR") of the class of homebuyers. The Appellant initially represented approximately 573 homebuyers, which subsequently increased to approximately 1,428 homebuyers, constituting around 91% voting share in the Committee of Creditors ("CoC"). 4. The Appellant contended that throughout the CIRP, he discharged his representative functions by conducting preliminary and consultation meetings with the homebuyers, collating their concerns and communicating the same to the Resolution Professional throu....
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....r was not placed before the CoC merely because a separate formal minute's document was not maintained. Equally, no specific homebuyer has been identified as having been deprived of information or participation, or having suffered any prejudice on that account. 10. In these circumstances, the Appellant contended that the substantive purpose of the AR mechanism was duly served. The Appellant acted as the channel of communication between the class of homebuyers and the Resolution Professional/CoC and continuously conveyed the concerns received from the class. The finding of a continuing failure, therefore, proceeds substantially from the absence of a particular form of document rather than from an absence of evidence regarding the meetings or their substance. 11. It is further submitted that the Appellant had fully cooperated with the examination conducted by the IBBI and had furnished the documents and information sought from him. There was no suppression, withholding or concealment of any material on his part. The material furnished during examination ought to have been considered cumulatively rather than being discarded merely because it was not maintained in the form of a se....
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....or rejection of any Resolution Plan. It did not determine the commercial merits of any plan, alter the voting rights of any creditor, determine distribution, or confer any substantive benefit upon a particular PRA. The decision was confined to a short procedural extension necessitated by the intervening EPFO claim. 17. The Appellant further submitted that during the CoC meeting held on 06.03.2026, the Chairman/Resolution Professional had elaborated upon the steps and timelines concerning the revised Resolution Plans and the CoC had taken the same on record. The specific date of 17.03.2026 was not fixed by a formal CoC resolution. The subsequent extension was sought in the context of the intervening EPFO claim and was not a unilateral alteration of a formally resolved CoC decision. 18. It is therefore contended that the Appellant's conduct cannot be equated with an exercise of independent commercial decision-making authority. The Appellant was acting within the resolution process and responding to the Resolution Professional in circumstances where consideration of a newly received statutory claim was necessary before finalisation of the revised plans. 19. The Appellant ....
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.... him. 23. It is contended that the overall conduct of the Appellant is therefore relevant while considering both the existence and the gravity of the alleged contraventions. The Appellant cooperated with the regulatory examination, furnished the material available with him and consistently explained the circumstances in which the relevant actions were undertaken. 24. The Appellant also submitted that he was entitled to an effective opportunity of hearing before an order carrying such serious professional consequences was passed. The personal hearing was scheduled for 05.08.2026 at 2:00 PM but commenced at approximately 3:35 PM and concluded within a few minutes. The Appellant submitted that the nature and duration of the hearing did not afford a meaningful opportunity to address the factual and legal issues arising from the allegations. 25. It is submitted that the requirement of hearing is not merely a formal opportunity to appear. Particularly in disciplinary proceedings involving cancellation of professional registration, the affected professional must have a reasonable opportunity to explain the surrounding circumstances, documentary material and the distinction betwee....
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....or consequential replacement. Thus, the order affects not only the Appellant's professional status but also the ongoing proceedings and stakeholders associated with his other assignments. 31. The Appellant further submitted that the Disciplinary Committee was consequently required to examine whether such an extreme consequence was necessary in the facts of the case, particularly when no actual prejudice, dishonest conduct or aggravating circumstance has been identified. A lesser regulatory consequence, if considered warranted, would have been capable of addressing any procedural deficiency while preserving the continuity of the Appellant's professional assignments. 32. It is also submitted that the Appellant possesses professional qualifications and experience relevant to the discharge of his functions and has been performing assignments in the insolvency field. The consequences of cancellation upon his professional livelihood and existing assignments were required to be considered while determining the proportionality of the penalty. 33. The Appellant contended that the Impugned Order, when read as a whole, does not adequately deal with the cumulative effect of th....
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....A(10) of the CIRP Regulations. The second related to his concurrence to an extension of time for submission of revised Resolution Plans without obtaining prior instructions from the class of creditors as required under Section 25A(3) of the Code. The IBBI contended that the Appellant's defence does not satisfactorily answer either of the statutory obligations. 40. The IBBI submitted that the Appellant's defence proceeds on the basis that since he conducted preliminary/preview meetings with the homebuyers, collated their concerns and communicated them to the Resolution Professional through continuous emails, the requirement of recording the proceedings stood substantially satisfied. Such a submission, however, overlooks the distinct statutory obligation to maintain a proper record of the proceedings of meetings held with the class of creditors. The fact that meetings were conducted and certain concerns were subsequently communicated to the Resolution Professional does not, by itself, establish compliance with the requirement to record the proceedings of those meetings. 41. It is further submitted that the absence of a prescribed format does not mean that the statutory ....
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....s "minutes". What is relevant is whether the proceedings of the consultations were properly recorded. The concurrent emails relied upon by the Appellant may demonstrate communication of certain concerns, but they do not, by themselves, establish that the proceedings of the meetings were duly recorded in terms of the applicable Regulation. 46. The IBBI submitted that the second contravention concerns the Appellant's concurrence to an extension of time for submission of revised Resolution Plans without obtaining prior instructions from the class of creditors. The Appellant seeks to justify his conduct by relying upon the receipt of the EPFO claim on 19.03.2026 and the limited nature of the extension sought. However, the circumstances which led to the request for extension cannot dispense with the statutory requirement governing the manner in which an AR is required to act on behalf of the class. 47. It is submitted that there were three PRAs, out of whom two sought additional time for submission of their revised Resolution Plans. On 19.03.2026, being the last date for submission of the revised Resolution Plans, the Resolution Professional had shared an EPFO claim with the P....
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....The subsequent explanation furnished by the Appellant may explain his reasoning, but does not establish that the statutory requirement stood complied with. 52. The IBBI submitted that the two contraventions have to be considered in the context of the statutory responsibilities attached to the office of an AR. The role of an AR is not merely to transmit individual grievances to the Resolution Professional. The AR acts as the representative of an entire class of creditors and is required to discharge that responsibility in the manner prescribed under the Code and the applicable Regulations. It is further submitted that the requirements concerning maintenance of records and obtaining instructions serve the broader purpose of ensuring accountability in the functioning of an AR. Where a large number of creditors act through a single representative, the statutory safeguards assume greater significance. The absence of an identified instance of individual prejudice cannot, by itself, negate a statutory contravention. 53. The IBBI contended that the regulatory framework is intended not merely to address prejudice after it occurs but also to ensure proper procedure, transparency and ac....
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.... consequence would have been appropriate. The question before this Appellate Tribunal is whether the Impugned Order suffers from a legal or factual infirmity warranting interference. The mere availability of other regulatory measures does not, by itself, render the consequence imposed by the DC unsustainable. 59. It is further submitted that the consequential direction concerning the Appellant's existing assignments follows from the cancellation of his registration and cannot be considered independently of the principal disciplinary consequence. Once the registration of an Insolvency Professional stands cancelled, the Appellant cannot claim an independent right to continue assignments which require him to possess valid registration under the applicable regulatory framework. 60. The IBBI submitted that the Impugned Order was passed after consideration of the Appellant's conduct in the discharge of his statutory functions as an AR. The findings relate to two distinct obligations: first, the requirement to properly record the proceedings of consultations with the class of creditors; and second, the requirement to act upon the instructions of the class while exercising th....
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....2021 (Manish Taneja & Ors. v. Revital Realty Private Limited), on a petition under Section 7 of the Code. Mr. Gaurav Katiyar was appointed as the Resolution Professional of the Corporate Debtor. 68. It is pertinent to note that on an application filed by the Resolution Professional under Section 21(6A) (b) of the Code read with Regulation 16A of the CIRP Regulations (I.A. No. 3320/2024), the Adjudicating Authority, by order dated 04.07.2024, appointed the Appellant as the Authorised Representative of the class of financial creditors comprising homebuyers of the Corporate Debtor. This was the Appellant's first assignment in the capacity of an AR. The class represented by him grew from approximately 573 to approximately 1,428 homebuyers by the 22nd meeting of the CoC, constituting close to 91% of the CoC's voting share. 69. From the record before us, we note that on 02.04.2026, the IBBI informed the Appellant that an examination had been initiated pursuant to a complaint alleging failure on the part of the Appellant to adequately represent the class of homebuyers. The Appellant responded on 04.04.2026 and, upon further and more specific queries from the IBBI dated 09.04....
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....2. We will record that Arguments were heard finally and concluded on 18.09.2026, when this Appellate Tribunal reserved judgment and, in the interim, extended the operation of paragraph 3.5 of the Impugned Order (which postpones the coming into force of the direction of cancellation) until pronouncement of present judgement. Learned Senior Counsel for the Appellant undertook that the Appellant would not accept any fresh assignment in the interregnum, and that the specific assignment in respect of which the impugned punishment was awarded (i.e., the AR-ship of the Corporate Debtor) would stand governed by the replacement resolution already passed by the concerned CoC. We have taken this statement on record. 73. It has been brought to our notice by the appellant during hearing that the Appellant is a Chartered Accountant, additionally holding degrees of Master of Business Administration (Finance) and Master of Commerce, and has been registered with the Board as an Insolvency Professional since 28.07.2022, and during his professional career, the Appellant has undertaken ten assignments under the Code in the capacities of Resolution Professional, Authorised Representative, and Volunt....
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.... the Resolution Professional, the Appellant expressed the view, by e-mail of the same date, that a two-day extension be granted, on the stated ground that it would enable more competitive plans without adversely affecting the overall CIRP timeline. The Resolution Professional accordingly extended the deadline to 19.03.2026, and the Appellant communicated this development to the homebuyers by e-mail dated 18.03.2026. It has been brought out to our notice by the Appellant that on an earlier occasion, 12.03.2026, when a similar extension request had come from one PRA, the Appellant had expressed the contrary view that the timeline ought not to be extended further indicating that his concurrence on 17.03.2026 was not a matter of course, but a considered response to the specific circumstances then prevailing. 77. It has been also brought out by the Appellant to our notice that that on 19.03.2026, the revised deadline, the Resolution Professional informed stakeholders that a claim had been received from the EPFO requiring consideration and appropriate treatment in the revised resolution plans. One PRA (Alpha Corp) represented that the quantum involved was substantial and that verifica....
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....ideration that broadly it the case of the Appellant that (a) neither the Code nor the CIRP Regulations prescribe any specific form, template, register or signature requirement for the minutes/record contemplated under Regulation 16A(10)(i), and that the contemporaneous e-mail record maintained by the Appellant substantively fulfilled the object of that provision; (b) that the concurrence recorded to the extension of the resolution-plan timeline was a narrow, RP-driven administrative step occasioned by an intervening statutory claim (EPFO dues), and did not involve approval or rejection of any resolution plan, alteration of voting rights, or exercise of the CoC's commercial wisdom, such that Section 25A(3) either did not apply or was not, on a fair reading, contravened; (c) that the finding on non-recording of minutes rested substantially on an allegation not contained in the original complaint, but introduced suo-motu in the course of the Board's examination; (d) that the personal hearing dated 05.08.2026 was illusory, having concluded within under five minutes; and (e), without prejudice to the foregoing, that even assuming both contraventions established, the penalty of c....
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....l communications with the Resolution Professional, in the admitted absence of any separately maintained minutes-register, satisfy the requirement of Regulation 16A(10)(i) read with sub-regulation (11) of the CIRP Regulations. ISSUE II- Whether the Appellant's concurrence, without prior instructions of the class of creditors, to the extensions of 17.03.2026 and 19.03.2026 for submission of revised resolution plans, contravened Section 25A(3) of the Code. ISSUE III- Whether, even assuming both contraventions to be established, the penalty of cancellation of registration and the consequential disqualification from the Appellant's other, unconnected assignments, is proportionate to the gravity of the established misconduct. 82. Before addressing the issues framed above, we would like to set out the relevant statutory provisions which are required in our examination of issues later. (a) Section 25A (3) of the Code- Section 25A was inserted by the Insolvency and Bankruptcy Code (Amendment) Act, 2018 with effect from 06.06.2018, and sub-section (3) presently reads: "(3) The authorised representative shall not act against the interest of the f....
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....t the insolvency professional shall - (a) at all times abide by the Code, rules, regulations, and guidelines thereunder and the bye-laws of the insolvency professional agency with which he is enrolled; ... (h) abide by the Code of Conduct specified in the First Schedule to these Regulations..." (e) Clause 14, First Schedule (Code of Conduct) to the IP Regulations: "An insolvency professional must not act with mala fide or be negligent while performing his functions and duties under the Code." (f) Section 220(7) and (8) of the Code- As substituted by the Insolvency and Bankruptcy Code (Amendment) Act, 2026 with effect from 26.05.2026: "(7) Any person aggrieved by an order of the disciplinary committee, under sub-sections (2) to (5), may prefer an appeal to the National Company Law Appellate Tribunal within a period of thirty days from the date of receipt of the order. (8) The National Company Law Appellate Tribunal may, if it is satisfied that a person was prevented by sufficient cause from filing an appeal within thirty days, allow the appeal to be filed under sub-section (7) within a further period not exceeding fifteen days." (g) Regul....
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....is mutandis, to clause (10)(i). We need to appreciate that Regulation 16A does not itself elsewhere prescribe the content of "minutes" save by the oblique reference, in clause (10)(b), to minutes "prepared by the resolution professional", which are, in substance, the minutes of the CoC meeting governed by Regulation 24. On a purposive reading, sub-regulation (11) is best understood as importing, mutatis mutandis, the standard applicable to CoC minutes under Regulation 24 into the AR's record of his own class-consultations. We find that Code or Regulations prescribes no specific form, template, register or signature requirement; it requires, however, that the minutes "disclose the particulars of the participants" and be reasonably promptly generated and available. 86. In view of this regulatory regime, we are of view that the absence of a prescribed form is not synonymous with the absence of any prescribed content. Applying Regulation 24's standard mutatis mutandis, an AR's record of a class-consultation meeting should, at a minimum, identify: (a) that the meeting/consultation was held and its date; (b) the number, or at least a representative indication, of the class....
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....absence of consultation, or of concealment, or of any consequence traceable to a homebuyer having been left uninformed or unheard. This contravention is carried forward to the proportionality analysis at later stage 89. ISSUE II- Whether the Appellant's concurrence, without prior instructions of the class of creditors, to the extensions of 17.03.2026 and 19.03.2026 for submission of revised resolution plans, contravened Section 25A (3) of the Code. 90. We note that Section 25A (1) of the Code confines the AR's obligation to cast an instructed vote to "meetings of the committee of creditors," in accordance with "prior voting instructions... obtained through physical or electronic means." Sub-section (3), on which the Impugned Order rests, provides that the AR shall not act against the interest of the financial creditor he represents and shall always act in accordance with their prior instructions. The word "always" is emphatic, and on a purely textual reading admits no carve-out for matters the AR may subjectively regard as procedural rather than substantive. To this extent, the IBBI findings that an AR has no free-standing discretion to reclassify a matter as procedur....
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....ection 25A was designed to install, particularly where, the AR's class commanded 91% of the CoC's voting share, such that the AR's individual view, however well-intentioned, effectively substituted for the will of a decisive majority of creditors on a matter (timeline extension enabling PRAs to compete for resolution of the Corporate Debtor) not without consequence for the eventual resolution outcome. It is also material that the Appellant, on his own pleaded practice, held preview meetings before conveying views to the RP on other CoC-agenda items; no corresponding preview meeting preceding the communications of 17.03.2026 or 19.03.2026 specifically has been shown, suggesting an inconsistency between the Appellant's general practice and his conduct on the two occasions actually in issue. 93. On balance, we find that the Appellant's concurrence to the extensions of 17.03.2026 and 19.03.2026, without prior instructions of the class of homebuyers, does contravene Section 25A(3) of the Code, the provision admitting of no textual exception for matters an AR characterises as procedural. This finding is, however, qualified by the then prevailing circumstances, agai....
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....unds of judicial review." 96. We note that above principle was again applied by Hon'ble Supreme Court in the specific context of disciplinary proceedings against a professional/employee in Chairman-cum-Managing Director, Coal India Ltd. v. Mukul Kumar Choudhuri, (2009) 15 SCC 620, where the Hon'ble Supreme Court, following Ranjit Thakur, B.C. Chaturvedi v. Union of India, and other precedents, held: "In such a situation, unless the court/tribunal opines in its secondary role, that the administrator was, on the material before him, irrational according to Wednesbury or CCSU norms, the punishment cannot be quashed. Even then, the matter has to be remitted back to the appropriate authority for reconsideration. It is only in very rare cases as pointed out in B.C. Chaturvedi case that the Court might - to shorten litigation - think of substituting its own view as to the quantum of punishment in the place of the punishment awarded by the competent authority." and, further extracting the governing principle from B.C. Chaturvedi: "If the punishment imposed by the disciplinary authority or the appellate authority shocks the conscience of the High Court/Tribunal, it w....
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....prejudice to the class, the CIRP, or the resolution outcome, traceable to either contravention; (d) the Appellant's disciplinary record is otherwise found to be clean so far, in across ten assignments spanning several years, this being his first assignment as an AR, a role materially different, in terms of continuous large-scale stakeholder management, than the other capacities in which he has functioned. 100. We also note few aspects which goes against the Appellant, which we have already noted while examining Issues (I) and (II) above, that: (a) the sheer size of the class he represented (1,428 homebuyers, 91% voting share) heightens rather than diminishes the responsibility to maintain a rigorous, verifiable consultation-and-documentation trail, since the consequence of any lapse is correspondingly magnified (b) the Regulation 16A(10)(i) lapse, on the finding recorded above, persisted without correction across the length of the CIRP and (c) Section 25A(3) admits no self-certified "procedural" exception, and the Appellant's concurrence to both extensions, however well-intentioned, was not preceded by even an informal sounding of the class, in seeming departure from his....