Suspension order passed by Full time member of IBBI who is Party to investigation is void ab initio: Gujarat HC Stays Disciplinary Committee's Order [Read Order]
In relation to maintainability of present petition, Senior Advocate 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.
IBBI - suspension - order - Taxscan
IBBI - suspension - order - Taxscan
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 petition is filed by Chandra Prakash Jain, challenging the order dated 20.08.2025 passed by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India, whereby the petitioner’s registration has been suspended for a period of 6 months from the date of expiry of 30 days from the date of order dated 20.08.2025.
The petitioner submitted that the order dated 20.08.2025 of Disciplinary Committee of the Insolvency and Bankruptcy Board of India is unjust and void ab-initio since the proceedings initiated pursuant to the show cause notice issued under Section 219 of the Insolvency and Bankruptcy Code, 2016 (‘the Code, 2016’) dated 27.02.2025 is erroneous.
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As per the definition of Board as defined under Section 2 r/w Section 188 of the Code, 2016, the Board which is a body constituted is empowered to issue show-cause notice. In this case, the show-cause notice is issued by the Chief General Manager of the Insolvency and Bankruptcy Board of India. Further, if the impugned order dated 20.08.2025 is perused, the same is passed by the full time member of the Insolvency and Bankruptcy Board of India who is the party to the investigation.
Justice Mauna M Bhatt observed 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 and the same being done here the order dated 20.08.2025 suspending the petitioner’s registration being void ab-initio deserves to be quashed and set aside.”
In relation to maintainability of present petition, Senior Advocate 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. Senior Advocate in support of his submissions in relation to maintainability of the petitioner under Article 226 of the Constitution of India has relied upon orders dated 20.07.2022 passed in Special Civil Application No. 13767 of 2022, 02.12.2022 passed in Special Civil Application No. 24566 of 2022 and 06.05.2024 passed in Special Civil Application No.7789 of 2024.
Considering the submissions, issue Notice returnable on 03.11.2025, the court stayed the order till the next date of hearing.
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