NCLAT Limits IBBI’s Blanket Suspension Of Resolution Professional Across CIRPs

Background Of The Dispute

The matter in Sachin Naveen Sinha Vs Insolvency and Bankruptcy Board of India (NCLAT Delhi) arose from a stringent disciplinary order passed by the Insolvency and Bankruptcy Board of India (IBBI) against a resolution professional. By order dated 08.06.2026, the Disciplinary Committee of the IBBI suspended the appellant’s registration for three years. The suspension was to take effect from 08.07.2026.

This regulatory order had a cascading impact:

  • The appellant was already removed as resolution professional in one Corporate Insolvency Resolution Process (CIRP) by the Adjudicating Authority’s order dated 26.09.2025 in I.A.382/2025 in C.P.(IB) 63/9/JPR/2020, with a direction to refund ₹2.0 lakhs taken as initial remuneration and a recommendation for disciplinary action before the IBBI.
  • That removal order and the direction to refund ₹2.0 lakhs were challenged before the NCLAT in C.A.1609 of 2025, where an interim stay had been granted only on the refund direction.
  • In addition to this CIRP, the appellant was engaged as resolution professional in three other ongoing CIRPs, from all of which he was effectively debarred by virtue of the IBBI’s suspension order.

The appeal before the NCLAT primarily questioned whether IBBI could, on the basis of alleged misconduct in one CIRP, effectively disable the resolution professional from operating in all his other unrelated assignments.

The Tribunal framed and examined two central issues at the interim stage:

  1. Scope of IBBI’s disciplinary reach
    Whether, in exercise of its powers under Sections 218–220 of the Insolvency and Bankruptcy Code, 2016 (Code), IBBI could suspend a resolution professional’s registration in such a manner that he is automatically removed from all current CIRPs, or whether the effect of such disciplinary action must be confined to the specific CIRP in which the alleged misconduct occurred.

  2. Amplitude of NCLAT’s appellate jurisdiction under Section 220(7)
    The IBC (Amendment) Act 6 of 2026, effective from 22.05.2026, introduced Section 220(7) providing a first appeal to NCLAT from orders of the Disciplinary Committee. The Tribunal had to consider, at least prima facie, whether this appellate power was wide (akin to a full merits appeal) or narrowly limited to procedural scrutiny.

The immediate question, however, was narrower: Should the IBBI’s order be stayed to the extent that it barred the appellant from acting as resolution professional in other CIRPs, pending final disposal of the appeal?

Appellant’s Submissions

1. Nature and width of Section 220(7) jurisdiction

The appellant argued that Section 220(7) gives NCLAT a broad and unrestricted first appellate jurisdiction comparable to that of a civil court under Section 96 CPC. Key points advanced were:

  • The language of Section 220(7) contains no express limitation curtailing the scope of NCLAT’s review. The provision merely states that any person aggrieved by an order of the Disciplinary Committee “may prefer an appeal” to NCLAT within thirty days.
  • Parliamentary material was relied upon:
    • The Bankruptcy Law Reforms Committee (BLRC) report (15 November 2015) stressed that regulatory actions can impose serious burdens and therefore must be subject to clear judicial processes.
    • The Select Committee on the IBC (Amendment) Bill, 2025 recorded, in paragraph 62.5.1(i), the Ministry’s statement that amendments to Section 220 “address the concern about proportional and fair penalties” and aim at “fairness, transparency, and appropriate safeguards against excessive punishment for minor lapses.”
    • In paragraph 62.6.2, the Select Committee concluded that the proposed amendments were necessary to ensure fairness and proportionality and accepted clause 62 (containing the amendment) without change.
  • According to the appellant, Section 220(7) is the legislative embodiment of these principles and therefore cannot be read down by implying artificial limits on NCLAT’s appellate power.

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