No Perversity in IBBI Order: Delhi HC Dismisses Resolution Professional’s appeal against 2 Year Suspension [Read Order]

The DelhiHigh Court has dismissed the appeal of a Resolution Professional (RP) against his 2-year suspension from practising as one, on finding that there was no perversity in the order passed by the Insolvency and Bankruptcy Board of India(IBBI)

The case arose from disciplinary proceedings initiated against Vivek Raheja by the IBBI. He was appointed as RP for Trading Engineers (International) Limited in July 2019. The committee of creditors approved the resolution plan. The IBBI subsequently issued a second show cause notice alleging multiple violations of the Insolvency and Bankruptcy Code (IBC) and its regulations.

This included permitting an ineligible resolution applicant, suppression of material facts from the CoC, inadequate scrutiny of financial capability, disposal of assets without approval, and execution of lease agreements with prospective resolution applicants without CoC sanction.

After considering the matter, the IBBI suspended him for two years, effective from February 12, 2024. Aggrieved, a writ petition was filed, which was dismissed by a single judge in August. A review petition was also rejected simultaneously. Aggrieved this appeal was filed.

Counsel for the appellant argued that he had acted in good faith. It was further argued that he basically relied on MSME registration certificates and affidavits submitted by resolution applicants, and as RP he was only a facilitator, not an adjudicator. It was also contended that asset disposals were in the ordinary course of business. Also the proceeds from the same was used for clearing statutory dues. He further submitted that the suspension was disproportionate and stigmatic, and that the Single Judge failed to appreciate his justifications.

IBBI’s counsel countered that Raheja was raising factual defences for the first time in appeal, which were not part of his writ petition. It was emphasised that writ jurisdiction is limited to correcting jurisdictional errors or perversity, not re‑weighing evidence.

The disciplinary order was passed after due consideration of material, and the Single Judge rightly refused to interfere.

The Division Bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tejas Karia agreed with IBBI, holding that the scope of Article 226 is confined to reviewing legality, not substituting conclusions.

In Syed Yakub v. K.S. Radhakrishnan & Ors.,it was held that the writ jurisdiction of the High Court under Article 226 of the Constitution of India is supervisory rather than appellate and the finding of fact reached as a result of appreciation of evidence cannot be reopened or questioned in writ proceedings.

It was observed that while the High Court may correct an error of law apparent on the face of record, it cannot correct the errors of facts, however grave. It cannot also review the adequacy or sufficiency of the evidence led on a point as these are matters within the exclusive jurisdiction of the administrative authority.

The Bench noted that Raheja’s writ petition had challenged the second show cause notice primarily on jurisdictional grounds, arguing res judicata due to closure of the first show cause notice. His factual defences were not part of the original pleadings and could not be entertained for the first time in appeal. The Court found that IBBI’s order was passed after examining all relevant aspects, and the Single Judge’s dismissal of the writ petition was justified.

Accordingly, the appeal was dismissed, and the two‑year suspension of Raheja’s registration as Insolvency Professional stands.

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