Delhi High Court Stays IBBI Disciplinary Action Against Insolvency Professional Citing Bias and Procedural Lapse
- REEDLAW
- Aug 30
- 3 min read
Updated: Sep 1
REEDLAW Legal News Network reports: In a significant ruling on regulatory fairness, the Delhi High Court has stayed the disciplinary action initiated by the Insolvency and Bankruptcy Board of India (IBBI) against an insolvency professional. The Court observed that the alleged violation of principles of natural justice and potential bias in the proceedings warranted judicial intervention at this stage.
The Delhi High Court Single-Judge Bench of Justice Sachin Datta, while adjudicating a Writ Petition, stayed IBBI’s disciplinary order against an insolvency professional, holding that non-adherence to principles of natural justice and indications of bias justified judicial interference. The Court emphasised that such procedural lapses strike at the root of fair decision-making in regulatory actions.
The Delhi High Court considered a writ petition challenging the order dated 16 December 2024 passed by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI). By the impugned order, the Committee directed re-investigation of certain issues and suspended the petitioner’s authorisation for assignment for a period of three months for allegedly contravening clause 14 of the Code of Conduct. The Committee also issued a warning to the petitioner against misrepresentation of facts.
The petitioner contended that the findings in paragraph 2.3.8 of the impugned order went beyond the scope of the show cause notice dated 26 June 2024. It was argued that the observation regarding the consideration of a resolution plan from United Biotech Private Limited (UBPL) after the stipulated deadline was factually incorrect, since the petitioner did not accept any plan and only referred the matter to the Committee of Creditors (CoC) for its decision. The petitioner relied on the communications recorded in the impugned order to demonstrate that the plan was never included in the process without CoC’s approval and that no occasion arose for allowing UBPL to participate in the Corporate Insolvency Resolution Process after the Supreme Court vacated the stay order.
It was further submitted that the findings in paragraphs 2.6.3 and 2.6.4, alleging double charging for services and wrongful reimbursement, were not part of the original show cause notice and were factually incorrect. The petitioner argued that the impugned order was perverse and unfair, especially when it itself directed reinvestigation of the disputed issues, and that suspension of authorisation pending such reinvestigation was unjustified.
The Court issued notice to the respondents and directed them to file their replies within two weeks, with rejoinder to be filed within one week thereafter. Listing the matter for 2 April 2025, the Court stayed the operation of paragraph 3.1(b) of the impugned order, which imposed suspension on the petitioner, but clarified that the IBBI was not precluded from conducting a reinvestigation as directed in paragraph 3.1(a). The Court also directed that during reinvestigation, principles of natural justice must be adhered to, and the petitioner’s representation dated 26 December 2024 must be duly considered.
Mr. Ashish Dholakia, Sr. Advocate, along with Mr. Gaurav Bhatt, Ms. Meghna Jandu and Mr. Anuj Malhotra, Advocates, represented the Petitioner.
Mr. Ripudaman Bhardwaj, CGSC, along with Mr. Kushagra Kumar, Mr. Abhinav Bhardwaj and Mr. Amit Kumar Rana, Advocates, appeared for the Union of India.
This is premium content available to our subscribers.
To access the full content related to this article — including the complete judgment, detailed legal analysis, ratio decidendi, headnotes, cited case laws, and updates on relevant statutes and notifications — we invite you to subscribe to REEDLAW’s premium research platform.
Click here to Subscribe and unlock exclusive access to structured legal analysis, judicial summaries, and a comprehensive legal research database.
Already a subscriber? Click the link below to access the full document and linked case laws.
REEDLAW Legal Research & Analysis is India’s most trusted legal publishing and research platform, empowering legal professionals with structured judicial insights and authoritative legal intelligence since 1985.
Our comprehensive legal intelligence platform covers Corporate Insolvency, Bankruptcy, SARFAESI, Company Law, Contract, MSMEs, Arbitration, Debt Recovery, and Commercial Laws. Through curated journals — IBC Reporter and Bank CLR — and an advanced digital database, REEDLAW simplifies complex legal research for professionals, institutions, and academia across India.
Comments