$~J * IN THE HIGH COURT OF DELHI AT NEW DELHI % Judgment pronounced on: 02.02.2026 + W.P.(C) 8974/2025 and CM APPL.38317/2025 VIKAS PRAKASH GUPTA .....Petitioner Through: Mr. Satyajit Sarna, Mr. Sudev Juneja, Mr. Mohit Negi and Mr. Debarchan De, Advocates. versus INSOLVENCY AND BANKRUPTCY BOARD OF INDIA AND ANR .....Respondents Through: Ms. Amrita Singh, Mr. Prasang Sharma and Mr. Sanket Khandelwal, Advocates for R-1. Mr. Rakesh Kumar, CGSC along with Mr. Sunil, Advocate for UOI. CORAM: HON'BLE MR. JUSTICE SACHIN DATTA JUDGMENT 1. The petitioner has filed the present petition, assailing the Order dated 25.04.2025 passed by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (respondent no.1) in IBBI/DC/284/2025, whereby the registration of the petitioner, a registered Insolvency Professional bearing Registration No. IBBI/IPA-001/IPP00501/2017-2018/10889, has been suspended for a period of one year. 2. The background of the matter is that National Company Law Tribunal, Chennai Bench (Adjudicating Authority), vide Order dated 19.02.2020, admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) filed by State Bank of India for initiation of the Corporate Insolvency Resolution Process (CIRP) of Kamachi Industries Limited (Corporate Debtor). By the same order, the petitioner was appointed as the Interim Resolution Professional (IRP) to conduct the CIRP. 3. It is submitted that the said engagement was agreed at a consolidated fee of Rs. 7.42 lakhs, comprising IRP fees of Rs. 1.65 lakhs and support service fees of Rs. 5.77 lakhs. 4. It is submitted that on 05.05.2020, the first meeting of the Committee of Creditors (CoC) of the Corporate Debtor was convened, wherein the petitioner was proposed to be confirmed as the Resolution Professional (RP) on the same fee structure as approved at the IRP stage. 5. However, it is submitted that the CoC did not approve the proposed fees in the first meeting, expressing its desire to commercially negotiate the consolidated fees. 6. Thereafter, a second CoC meeting was held on 09.06.2020, wherein the fees was fixed at Rs. 4.50 lakhs, comprising RP fees of Rs. 1.65 lakhs and support service fees of Rs. 2.85 lakhs for support service provider (Quantuum Resolution Professional Private Limited). The relevant portion of the minutes of Second CoC meeting dated 09.06.2020 is reproduced as under – “4. Voting matters: i. To confirm the appointment of Mr. Vikas Prakash Gupta, IBBI Registration no. IBBI/IPA- 001/IPP00501/2017-18/10889 as the Resolution Professional (“RP”) of the Corporate Debtor for a monthly fee of Rs. 1.65 Lacs (Excluding of OPE & Taxes) ii. To confirm the appointment of Quantuum Resolution Professional Private Limited as Support service agency for a monthly fee of Rs. 2.85 Lacs (Excluding OPE & Taxes)” 7. Subsequently, it is submitted that on 06.03.2021, a complaint was purportedly filed before the Insolvency and Bankruptcy Board of India (“IBBI”) by Mr. N. Murugesan, allegedly at the behest of Mr. Hari Iyer, claiming that the CoC had approved Rs. 2.85 lakhs to be paid directly to Quantuum, but that the petitioner engaged other professionals instead. 8. The IBBI forwarded the complaint to the petitioner on 12.05.2021, to which the petitioner submitted a reply on 01.06.2021. 9. It is further submitted that the respondent no.1 issued a Show Cause Notice (SCN) dated 05.04.2024, nearly three years later, alleging contravention of the Insolvency Professionals Regulations and Board Circular No. IP/004/2018 dated 16.01.2018. The SCN is reproduced as under – 10. The SCN, inter alia, alleged that the petitioner improperly received consolidated fees without segregating payments for himself and the support services. 11. The petitioner filed a reply to the SCN on 19.04.2024. 12. It is submitted that after almost 11 months from date of receipt of the reply filed by the petitioner, the Disciplinary Committee acted in furtherance of the Show Cause Notice and conducted a hearing on 27.02.2025. 13. Thereafter, the Disciplinary Committee passed the Impugned Order dated 25.04.2025, holding the Petitioner guilty of violating the 2018 Circular and Clauses 25C and 26A of the Code of Conduct, and suspended his registration for one year with effect from 24.05.2025.The relevant portion of the Impugned Order dated 25.04.2025 is reproduced as under – 14. Aggrieved with the aforesaid, the petitioner has filed the present petition. 15. While challenging the said order the petitioner has submitted as under:– i. The petitioner has already suffered punishment exceeding that imposed by the Impugned Order. It is submitted that in terms of Regulation 23A1 of the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016, the Authorisation for Assignment (AFA) of an Insolvency Professional stands automatically suspended upon issuance of a Show Cause Notice. Without a valid AFA, an Insolvency Professional is statutorily barred from accepting new assignments. ii. Further, Regulation 13(2)2 of the IBBI (Inspection and Investigation) Regulations, 2017 mandates that the Disciplinary Committee shall endeavour to dispose of a show cause notice within sixty days from the date of receipt of the reply thereto. iii. It is emphasised that in the present case, the Show Cause Notice dated 05.04.2024 was duly replied to by the petitioner on 19.04.2024. However, the Impugned Order was passed only on 25.04.2025, i.e., after more than one year, in clear breach of Regulation 13(2). iv. It pointed that on account of the said inordinate delay, the petitioner’s AFA remained suspended for nearly one year prior to the passing of the Impugned Order, during which period the petitioner was prevented from undertaking any professional assignment, resulting in financial and reputational loss. It is submitted that this punitive consequence has not been considered by the respondent no.1 while imposing the further suspension of one year, rendering the action ex facie arbitrary and excessive. v. It is averred that the respondent no.1, by permitting the AFA suspension to continue for nearly one year due to its own delay, and thereafter imposing a further suspension of one year, has subjected the petitioner to a punishment wholly disproportionate to the alleged lapse. vi. It is further submitted that while observing that as per the Second Meeting of the Committee of Creditors, Quantuum Resolution Professional Private Limited (“Quantuum”) ought to have been paid directly for support services, and that payment through the petitioner amounted to a contravention, the Disciplinary Committee ignored the factual background that Quantuum is a company in which the petitioner holds 90% shareholding, and that serious shareholder disputes involving Mr. Hari Iyer were pending before the NCLT, Mumbai. vii. It is submitted that in order to safeguard the CIRP and prevent misuse of funds, the petitioner, with full knowledge of the CoC, directly paid the relevant team members the amounts earmarked for support services. viii. The case of the petitioner is that CoC approved the requirement of support services and fixed only the upper limit of CIRP costs, as contemplated under Section 28 of the Code. The case of the petitioner is that under Section 28 of the Code, the power of the CoC is only limited to approve the upper limit of CIRP costs and not to approve each appointment made by the RP to assist in the CIRP. ix. It is submitted that the petitioner has the right under the Code and the regulations flowing from it, to appoint his support staff team, and pay them as per the fees approved by the CoC. x. It is also emphasised that the Impugned Order records no finding whatsoever of unlawful gain, derived by the petitioner under Section 220(3) of the Insolvency and Bankruptcy Code, 2016. It is submitted that the petitioner did not retained any sum in excess of the RP Fee earmarked for him by the CoC. xi. It is submitted that the entire allegation, even if assumed to be correct, pertains at best to a procedural or secretarial non-compliance. xii. The CoC was kept duly informed of all such matters, and CoC did not ever make any objection. xiii. In order to substantiate its case the petitioner has placed reliance on Sandeep Kumar Bhatt v. Insolvency & Bankruptcy Board of India and Others, 2025 SCC OnLine Del 2102. 16. While refuting the aforesaid contentions of the petitioner the respondent no. 1 has submitted as under – i. The petitioner has acted in blatant violation of Circular No. IP/004/2018 dated 16.01.2018 issued by the Insolvency and Bankruptcy Board of India, as well as Clauses 25C3 and 26A4 of the Code of Conduct under the IBBI (Insolvency Professionals) Regulations, 2016. ii. It is submitted that the said provisions mandate that an insolvency professional must charge remuneration in a transparent manner and that any professional engaged by an insolvency professional must raise invoices in his/its own name and receive payment directly in his/its own bank account. iii. It is pointed that the minutes of the meetings of the Committee of Creditors unequivocally demonstrate that the CoC approved a bifurcated fee structure,(a) a sum of ?1.65 lakh per month as the fee payable to the petitioner; and (b) a sum of ?2.85 lakh per month towards appointment of Quantuum Resolution Professional Private Limited as the support service agency. iv. Despite the above, it is submitted that the petitioner received the entire consolidated amount of ?4.50 lakh per month (?1.65 lakh + ?2.85 lakh) in his own name. Further, in the disclosures made by the petitioner in Form CIRP-2 filed before the respondent no.1 and Form III submitted to the Insolvency Professional Agency, the petitioner stated that his fees were inclusive of the fee for support services. This disclosure was directly contrary to the express resolution passed by the CoC in its second meeting, wherein the fee of the petitioner and the fee payable to Quantuum were approved separately. v. The petitioner was unable to demonstrate that the CoC had ever modified or altered the resolution passed in the second CoC meeting with regard to the approved fee structure. vi. It is submitted that the petitioner attempted to justify his conduct by contending that the sum of ?2.85 lakh per month was distributed by him to professionals engaged as part of his internal team and that such engagement did not require approval of the CoC. This contention was categorically rejected by the Disciplinary Committee. It is averred that while the petitioner was free to distribute his own fee of ?1.65 lakh in any manner he deemed fit, he was not entitled to receive or redistribute the separately approved support service fee contrary to the CoC’s decision. vii. Further the case of the respondent no. 1 is that the timeline prescribed under Regulation 13(2) of the IBBI (Inspection and Investigation) Regulations, 2017 is directory and not mandatory, as evident from the expression “shall endeavour to dispose of the show cause notice”. The Regulation does not prescribe any consequence for non-adherence to the indicative timeline. Accordingly, mere consumption of time beyond the period mentioned in Regulation 13(2) does not invalidate the disciplinary proceedings or the Impugned Order. viii. The respondent also submits that no double jeopardy has been caused to the petitioner. It is submitted that Suspension of Authorisation for Assignment (AFA) under Regulation 23A of the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 and suspension of registration under Section 2205 of the Insolvency and Bankruptcy Code, 2016 operate in distinct fields and serve different purposes. ix. It is emphasised that the Suspension of AFA under Regulation 23A is an automatic consequence upon issuance of a show cause notice. It is intended as a protective measure to safeguard the interests of stakeholders during the pendency of disciplinary proceedings. The suspension merely prevents acceptance of new assignments and does not affect ongoing assignments. In contrast, suspension of registration imposed upon conclusion of disciplinary proceedings constitutes a punishment under the Code. Such suspension impacts both new and ongoing assignments, as the order is communicated to stakeholders, who may then decide whether to continue with the services of the insolvency professional. Since the two suspensions differ in their nature, purpose, and legal effect, one cannot be set off against the other. x. Another contention is that the scope of judicial review under Article 226 of the Constitution of India in disciplinary or departmental proceedings is confined to examination of the decision-making process and not the merits of the decision itself. This Court does not sit as an appellate authority over disciplinary findings. xi. It is submitted that the determination of the appropriate punishment for proved misconduct lies exclusively within the domain of the competent disciplinary authority. Where the penalty imposed is permissible in law and based on established misconduct, the writ court cannot substitute its own discretion for that of the disciplinary authority. xii. Reliance has been placed on State of Andhra Pradesh v. S.Sree Rama Rao - 1963 SCC Online SC 6, UOI v. Sardar Bahadur-(1972) 4 SCC 618, Union of India v Parma Nanda (1989) 2 SCC 177, B.C. Chaturvedi v. UOI - (1995) 6 SCC 749, Regional Manager & Disciplinary Authority v. S. Mohammed Gaffar (2002) 7 SCC 168, Lucknow Kshetriya Gramin Bank v. Rajendra Singh (2013) 12SCC 372, State of Karnataka &Anr. v. N. Gangaraj (2020) 3 SCC 423, General Manager, Appellate Authority, UCO Bank v. Krishna KumarBhardwaj (2022) 13 SCC 237 and State of Karnataka &Anr. v. Umesh (2022) 6 SCC 563. ANALYSIS AND CONCLUSION: 17. Both the parties have been heard. At the outset this Court considers it apposite to first examine whether the scope of its jurisdiction extends to interfering with orders passed by the Disciplinary Authority. 18. In Sandeep Kumar Bhatt v. Insolvency & Bankruptcy Board of India and Others, 2025 SCC OnLine Del 2102, a Division Bench of this Court, while delineating the scope of judicial review under Article 226 in matters arising from disciplinary proceedings of the IBBI, observed as under– “31. Ordinarily, the writ court would not interfere in matters arising out of disciplinary proceedings or administrative decision, save and except where there is apparent or palpable infraction of a statute, statutory rule or regulation or the proceeding displays violation of the principles of natural justice. It is trite that it is the decision-making process and not the decision itself which may be open to judicial review under Article 226 of the Constitution of India. Yet another facet to consider such category of matters is on the proportionality of the penalty imposed. It is trite that unless the penalty imposed is such which shocks the conscience of the court, or that which no prudent man would reach, no interference by courts is warranted, ordinarily. This view of this Court stands fortified from the judgment of the Supreme Court in Union of India v. K.G. Soni7. The relevant paras are extracted hereunder: (SCC pp. 797-799, paras 13 and 15) “13. In Union of India v. G. Ganayutham this Court summed up the position relating to proportionality in para 31, which read as follows: (SCC pp. 478-479, para 31) ‘31. The current position of proportionality in administrative law in England and India can be summarised as follows: (1) To Judge the validity of any administrative order or statutory discretion, normally the Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. test is to be applied to find out if the decision was illegal or suffered from procedural improprieties or was one which no sensible decision-maker could, on the material before him and within the framework of the law, have arrived at. The court would consider whether relevant matters had not been taken into account or whether irrelevant matters had been taken into account or whether the action was not bona fide. The court would also consider whether the decision was absurd or perverse. The court would not however go into the correctness of the choice made by the administrator amongst the various alternatives open to him. Nor could the court substitute its decision to that of the administrator. This is the Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. test. (2) The court would not interfere with the administrator's decision unless it was illegal or suffered from procedural impropriety or was irrational — in the sense that it was in outrageous defiance of logic or moral standards. The possibility of other tests, including proportionality being brought into English administrative law in future is not ruled out. These are the Council of Civil Service Unions v. Minister for the Civil Service principles. (3)(a) As per Bugdaycay v. Secy. of State for the Home Deptt., Regina v. Secy. of State for the Home Department, ex p Brind and R. v. Ministry of Defence, ex p Smithas long as the convention is not incorporated into English law, the English courts merely exercise a secondary judgment to find out if the decision-maker could have, on the material before him, arrived at the primary judgment in the manner he has done. (3)(b) If the convention is incorporated in England making available the principle of proportionality, then the English courts will render primary judgment on the validity of the administrative action and find out if the restriction is disproportionate or excessive or is not based upon a fair balancing of the fundamental freedom and the need for the restriction thereupon. (4)(a) The position in our country, in administrative law, where no fundamental freedoms as aforesaid are involved, is that the courts/Tribunals will only play a secondary role while the primary judgment as to reasonableness will remain with the executive or administrative authority. The secondary judgment of the court is to be based on Associated Provincial Picture Houses Ltd. v. Wednesbury Corpn. and Council of Civil Service Unions v. Minister for the Civil Service principles as stated by Lord Greene and Lord Diplock respectively to find if the executive or administrative authority has reasonably arrived at his decision as the primary authority. (4)(b) Whether in the case of administrative or executive action affecting fundamental freedoms, the courts in our country will apply the principle of ‘proportionality’ and assume a primary role, is left open, to be decided in an appropriate case where such action is alleged to offend fundamental freedoms. It will be then necessary to decide whether the courts will have a primary role only if the freedoms under Articles 19 and 21, etc. are involved and not for Article 14.’ ??? 15. To put it differently, unless the punishment imposed by the disciplinary authority or the appellate authority shocks the conscience of the court/tribunal, there is no scope for interference. Further, to shorten litigations it may, in exceptional and rare cases, impose appropriate punishment by recording cogent reasons in support thereof. In the normal course if the punishment imposed is shockingly disproportionate, it would be appropriate to direct the disciplinary authority or the appellate authority to reconsider the penalty imposed.” (emphasis supplied) 35. Lastly, in respect of the charge levelled against the appellant for violation of procedures and process of CIRP as envisaged in IBC, this being purely on factual basis, we are refraining from entering into such issue. Though, we are not interfering with the opinion of the DC that the appellant may have infracted certain procedural aspects of the IBC of obtaining valuation reports, etc. we have considered the issue only with respect to the proportionality of penalty. 36. The above analysis regarding charges (a), (b) and (c) levelled against the appellant appear to our mind to be aspects which may have inadvertently been overlooked by the DC and it is possible that considered from the above point of view, a penalty, not so severe in nature may perhaps, have been imposed upon the appellant. We are also aware that ordinarily in such cases, the remit to the DC on this aspect, would be the correct course of action, however, having regard to the fact that almost 1 year and 4 months of the penalty imposed have already lapsed i.e. from 1-12-2023 leaving 8 months remaining, we deem it appropriate not to remit the matter for decision of the DC lest it may get further delayed defeating the purpose of such remit. In that view of the matter and in our considered opinion, the penalty imposed of two years suspension from taking any assignment as IRP is reduced to the period already undergone and the suspension of the appellant would be deemed to come to an end from the date of this order.” 19. Thus, it is clear that interference by a writ court in disciplinary or administrative matters is permissible in the following circumstances: (i) where there is a clear infraction of a statute, statutory rule or regulation, or violation of principles of natural justice; (ii) where the decision-making process itself is vitiated, rather than the decision on merits; and (iii) where the penalty imposed is grossly disproportionate, such that it shocks the conscience of the Court. 20. Applying the above principles to the present case, this Court is of the considered view that the penalty imposed upon the petitioner does not meet the test of proportionality. Also, certain relevant aspects have not been considerate while passing the impugned order. 21. The gravamen of the allegation against the petitioner, as also the finding recorded by the Disciplinary Committee (“DC”), is that pursuant to the decision taken in the second meeting of the Committee of Creditors, Quantum Resolution Professional Private Limited was approved as the support service agency, and consequently, payments towards support services were required to be made directly to Quantuum. It has been observed that the petitioner, Mr. Vikas Prakash Gupta, by drawing the entire professional fee into his personal account, acted in contravention of the approval accorded by the CoC as well as the relevant Circulars issued by the Insolvency and Bankruptcy Board of India (“IBBI”). 22. However, while arriving at the aforesaid conclusion, the Disciplinary Committee failed to advert to relevant material and mitigating circumstances placed on record by the petitioner. It has been specifically contended that the petitioner holds a 90% shareholding in Quantuum and that, after the amounts were credited to his account, the sums earmarked by the CoC towards support services were duly disbursed to the concerned team members of Quantuum. Any deviation, if at all, was confined solely to the mode of disbursement (the payments were made by the petitioner to individual team members instead of being routed through Quantuum as a corporate entity). 23. The petitioner has also annexed in the present petition invoices raised by the support team, Forms 16A evidencing deposit of TDS (Annexure P-11), as well as a detailed Statement of Kamachi RP and Support Fees. Statement of Kamachi RP and Support Fees are reproduced as under - 24. Significantly, there is no specific finding by the Disciplinary Committee that the petitioner retained any amount for personal gain or diverted the monies for any purpose other than that for which they were sanctioned by the CoC. 25. Consideration of these circumstances, lend credence to the petitioner’s contention that the penalty imposed is unjustified/excessive/disproportionate. 26. Furthermore, the Regulation 13(2) of the IBBI (Inspection and Investigation) Regulations, 2017 mandates that the Disciplinary Committee shall endeavour to dispose of a show cause notice within sixty days from the date of receipt of the reply thereto. It is true that the usage of the term “shall endeavour to” makes the said regulation directory and not mandatory. While it is correct that there is no mandatory statutory prescription obligating the Disciplinary Committee to conclude proceedings within sixty days from the date of filing of reply to the show cause notice, the absence of an express upper time limit cannot be construed as conferring unfettered discretion upon the Disciplinary Committee to pass orders after an inordinate and unexplained delay. Administrative authorities are required to act within a reasonable period, and any prolonged delay must be justified by cogent reasons. 27. In the present case, the show cause notice was issued on 05.04.2024, on which date the petitioner’s Authorisation for Assignment stood automatically suspended as per regulation 23A of the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. The petitioner submitted his reply on 19.04.2024. However, the impugned order came to be passed only on 25.04.2025, nearly one year thereafter. As a consequence, the petitioner remained subjected to suspension of AFA for almost one year even before the final adjudication, and was thereafter visited with an additional penalty of one year suspension of registration by the impugned order. 28. Though it is true that suspension of AFA pending disciplinary proceedings and suspension of registration upon conclusion of proceedings operate under different provisions and are distinct in nature, the cumulative effect of the delay has resulted in the petitioner effectively suffering a bar from professional assignments for a period of almost two years. 29. The Disciplinary Committee, while imposing the penalty of one year’s suspension, failed to account for the prejudice already suffered by the petitioner on account of the prolonged pendency of proceedings and the mitigating circumstances noted hereinabove. 30. Considering the peculiar facts and circumstances, the penalty of one year suspension from taking any assignment as Resolution Professional is, therefore, reduced to the period already undergone; the suspension shall be deemed to have come to an end from the date of this order. 31. The petition stands disposed of, in the above terms. SACHIN DATTA, J FEBRUARY 2, 2026/sv 123-A. The authorisation for assignment shall stand suspended upon initiation of disciplinary proceedings by the Agency or by the Board, as the case may be. 2(2) The Disciplinary Committee shall endeavour to dispose of the show-cause notice within a period of [sixty days from the due date for receipt of reply to the show-cause notice]. 3 25C. An insolvency professional shall ensure that the insolvency professional entity or the professional engaged by it raises bills or invoices in their own name towards their fees, and such fees shall be paid to them through banking channel. 426A. An insolvency professional shall not accept/share any fees or charges from any professional and/or support service provider who are appointed under the processes. 5220. Appointment of Disciplinary Committee.—(1) The Board shall constitute a Disciplinary Committee to consider the reports of the Investigating Authority submitted under sub-section (6) of Section 218: Provided that the members of the Disciplinary Committee shall consist of whole-time members of the Board only. (2) On the examination of the report of the Investigating Authority, if the Disciplinary Committee is satisfied that sufficient cause exists, it may impose penalty as specified in sub-section (3) or suspend or cancel the registration of the insolvency professional or, suspend or cancel the registration of insolvency professional agency or information utility as the case may be. (3) Where any insolvency professional agency or insolvency professional or an information utility has contravened any provision of this Code or rules or regulations made thereunder, the Disciplinary Committee may impose penalty which shall be— (i) three times the amount of the loss caused, or likely to have been caused, to persons concerned on account of such contravention; or (ii) three times the amount of the unlawful gain made on account of such contravention, whichever is higher: Provided that where such loss or unlawful gain is not quantifiable, the total amount of the penalty imposed shall not exceed more than one crore rupees. (4) Notwithstanding anything contained in sub-section (3), the Board may direct any person who has made unlawful gain or averted loss by indulging in any activity in contravention of this Code, or the rules or regulations made thereunder, to disgorge an amount equivalent to such unlawful gain or aversion of loss. (5) The Board may take such action as may be required to provide restitution to the person who suffered loss on account of any contravention from the amount so disgorged, if the person who suffered such loss is identifiable and the loss so suffered is directly attributable to such person. (6) The Board may make regulations to specify— (a) the procedure for claiming restitution under sub-section (5); (b) the period within which such restitution may be claimed; and (c) the manner in which restitution of amount may be made. --------------- ------------------------------------------------------------ --------------- ------------------------------------------------------------ W.P.(C) 8974/2025 Page 1 of 26