Gujarat High Court Stays IBBI Disciplinary Committee's Order Suspending Resolution Professional For 6 Months

The Gujarat High Court last week stayed an order issued by Insolvency and Bankruptcy Board of India (IBBI) which had suspended the registration of an insolvency resolution professional for six months pursuant to disciplinary proceedings. 

The court passed the order after the petitioner questioned the procedure by which the disciplinary proceedings were conducted. 

Justice Mauna M Bhatt issued notice on the petitioner's plea challenging an August 20 order passed by the Disciplinary Committee of the IBBI whereby the petitioner's registration was suspended for 6 months from the date of expiry of 30 days from the date of order, and said:

"Considering the submissions, issue Notice returnable on 03.11.2025. The effect and execution of order dated 20.08.2025 shall remain stayed till the next date of hearing". 

The petitioner's counsel argued that order of IBBI's Disciplinary Committee is unjust and void ab-initio since the proceedings initiated pursuant to a 27.02.2025 show cause notice issued under Section 219 of the Insolvency and Bankruptcy Code, 2016  is erroneous.

It was submitted that as per the definition of Board, under Section 2 read with Section 188 of the Code, it is a body which is empowered to issue show-cause notice. 

It was submitted that in the present case the show-cause notice was issued by the Chief General Manager of the IBBI.

It was also argued that the August 20 order is passed by the full time member of IBBI who is "party to the investigation".

It was submitted that as per Regulation No. 3(1) of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017 the "Investigating Authority" is prohibited to be a part of Disciplinary Committee. 

It was argued that since this was the case here suspension order is void ab-initio and deserves to be quashed and set aside.

With respect to maintainability of the plea, it was submitted that there is no appeal prescribed under the Code, 2016 and the only remedy is to file this petition under Article 226 of the Constitution of India.

Reference was made to a July 20, 2022 order of the high court passed in Sunil Kumar Agarwal v Insolvency and Bankruptcy Board of India where the high court had stayed IBBI's Disciplinary Committee's decision requiring a Resolution Professional to undergo pre-registration educational course from the insolvency professional agency of which he is a member. The committee had passed its order pursuant to disciplinary proceedings against the petitioner's therein.

The court thus stayed the suspension and listed the matter on November 3. 

Case title: CHANDRA PRAKASH JAIN v/s INSOLVENCY AND BANKRUPTCY BOARD OF INDIA

R/SCA NO. 11944 of 2025

Counsel for petitioner: Senior advocate Percy Kavina, advocates Rahul S Bhavsar, Gnanesh G Bhatt and Mayur Jugtawat

Click Here To Read/Download Order