Gujarat High Court Stays IBBI Disciplinary Committee Order Suspending Insolvency Professional for Six Months
Sanchayita Lahkar
The High Court of Gujarat Single Bench of Justice Mauna M. Bhatt stayed the execution of an order of the Insolvency and Bankruptcy Board of India suspending the registration of an insolvency professional for six months. The petitioner had challenged the disciplinary order issued under Section 219 of the Insolvency and Bankruptcy Code, 2016, contending that the show-cause notice was improperly issued by the Chief General Manager and that a member involved in the investigation had also participated in the Disciplinary Committee’s decision. The Court issued notice and directed that the impugned order shall remain stayed till the next date of hearing.
The matter arose from a petition filed by Chandra Prakash Jain challenging an order dated 20.08.2025 issued by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (IBBI). By that order, the petitioner’s registration as an insolvency professional was suspended for a period of six months, to take effect after 30 days.
The petitioner contended that the proceedings initiated against him were legally flawed. He argued that the show-cause notice, dated 27.02.2025, was issued under Section 219 of the Insolvency and Bankruptcy Code, 2016 (IBC). According to him, the definition of “Board” under Section 2 read with Section 188 of the IBC requires that such notices be issued by the Board itself as a statutory body. Instead, in this case, the notice had been issued by the Chief General Manager of IBBI, which the petitioner argued was without authority.
Further, the petitioner submitted that the impugned disciplinary order was passed by a full-time member of the IBBI who had also been part of the investigation. Relying on Regulation 3(1) of the Insolvency and Bankruptcy Board of India (Inspection and Investigation) Regulations, 2017, it was argued that an investigating authority is expressly prohibited from participating in the Disciplinary Committee. Since the same individual was involved in both roles, the petitioner contended that the decision was void ab initio.
On the issue of maintainability, the petitioner submitted that no appeal is prescribed under the IBC against such an order, leaving Article 226 of the Constitution of India as the only available remedy. In support of this contention, reliance was placed on earlier orders of the High Court passed in 2022 and 2024 in similar matters.
Justice Mauna M. Bhatt recorded the submissions advanced by the petitioner’s counsel. The order states: “Learned Senior Advocate for 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 dated 27.02.2025 is erroneous.”
It was further noted that “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.”
The Court also recorded the challenge regarding the composition of the Disciplinary Committee. The order states: “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.”
On maintainability, the Court noted the reliance placed by the petitioner on earlier orders where Article 226 jurisdiction had been invoked in absence of an appellate remedy under the IBC.
The Bench directed: “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.”
“Over and above normal mode of service, direct service is to respondents is permitted.”
Advocates Representing the Parties
For the Petitioner: Mr. Percy Kavina, Senior Advocate with Mr. Rahul S. Bhavsar, Mr. Gnanesh G. Bhatt, Mr. Mayur Jugtawat
Case Title: Chandra Prakash Jain v. Insolvency and Bankruptcy Board of India
Case Number: R/Special Civil Application No. 11944 of 2025
Bench: Justice Mauna M. Bhatt
