Writ Jurisdiction and Professional Misconduct: An Analysis of Vivek Raheja Vs Insolvency And Bankruptcy Board of India

The legal landscape surrounding the Insolvency and Bankruptcy Code, 2016 (hereinafter referred to as "the Code") places an immense burden of responsibility on Insolvency Professionals (IPs). These professionals act as the backbone of the corporate resolution process. Consequently, the disciplinary mechanisms overseen by the Insolvency and Bankruptcy Board of India (IBBI) are stringent. A critical question often arises regarding the extent to which the High Courts can intervene in the disciplinary findings of the IBBI under the writ jurisdiction conferred by Article 226 of the Constitution of India.

In the recent judgment of Vivek Raheja Vs Insolvency And Bankruptcy Board of India, the Delhi High Court has clarified the boundaries of judicial review, establishing that the High Court will not act as a court of appeal against administrative orders unless there is a glaring jurisdictional error or perversity in the findings.

The Factual Matrix of the Dispute

To understand the legal conclusions, it is imperative to examine the chronological events that led to the disciplinary action against the Appellant.

The Appellant was appointed as the Resolution Professional (RP) for the Corporate Debtor, identified as Trading Engineers (International) Limited, by the National Company Law Tribunal (NCLT), New Delhi, on July 4, 2019. The Corporate Insolvency Resolution Process (CIRP) progressed, and by February 15, 2021, the Committee of Creditors (CoC) had approved a Resolution Plan.

However, the regulatory scrutiny began subsequently. The IBBI issued an initial Show Cause Notice (First SCN) on October 21, 2022. Upon adjudication, this notice was closed on February 17, 2023, without any adverse directions against the Appellant.

The situation escalated when a second Show Cause Notice (Second SCN) was issued on July 20, 2023. Unlike the first, the adjudication of this notice resulted in a finding of guilt. The IBBI’s Disciplinary Committee concluded that the Appellant had contravened multiple provisions of the Code and the underlying Regulations. Consequently, exercising powers under Section 220(2) of the Code, the regulator suspended the Appellant's registration as an Insolvency Professional for a period of two years, effective from February 12, 2024.

The Core Allegations of Misconduct

The disciplinary order was founded on five distinct counts of violation, which paint a picture of alleged negligence and lack of due diligence: