Supreme Court Issues Notice On Plea Against NCLAT Ruling That Suspended IPs Can't Act In Other CIRPss

The Supreme Court on Monday issued notice on a plea filed by insolvency professional Anshul Gupta challenging the National Company Law Appellate Tribunal's (NCLAT) order holding that an insolvency professional whose registration is suspended cannot continue to act in other ongoing insolvency proceedings.

A Bench of Justices Manoj Misra and Vijay Bishnoi, however, did not stay the NCLAT order and directed the appellate tribunal to decide Gupta's appeal in the meantime.

"Issue notice, returnable in 4 weeks. The NCLAT shall decide the appeal in the meanwhile without being prejudiced by any observation in this order," the Court said.

The NCLAT, while refusing interim relief to Gupta, had held that suspension of registration under Section 220(2) of the Insolvency and Bankruptcy Code renders an IP ineligible to act as an Interim Resolution Professional or Resolution Professional in any other insolvency process.

"The consequence of such suspension is that the person ceases to be a registered insolvency professional and, consequently, stands disentitled to act as Interim Resolution Professional or Resolution Professional in any insolvency process under the Code," the NCLAT had held.

The tribunal had also held that an insolvency professional's registration is not assignment-specific. It said registration is "the gateway to rendering services as an insolvency professional in any insolvency process under the Code."

The NCLAT further held that the IBBI is required to intimate the suspension to the Committees of Creditors of the professional's other ongoing assignments and to the Adjudicating Authority. It said such intimation, and any consequential replacement, is distinct from the CoC's power to replace an RP under Section 27 of the Code.

Appearing for Gupta in the Supreme Court, Senior Advocate Neeraj Kishan Kaul argued that the suspension had consequences beyond the CIRP in which the alleged violations arose and prevented Gupta from continuing with his other ongoing assignments.

"That resolution professional has been barred for two years. Even pertaining to his ongoing other CIRP proceedings which are going on in the matter," Kaul submitted.

Kaul primarily raised a jurisdictional challenge to the disciplinary proceedings. He argued that the IBBI was required to form an opinion and conduct an investigation before issuing a show-cause notice.

"There is a mandate requirement under the statute. That you must form an opinion, conduct an investigation and after an investigation has been conducted, a show cause notice is issued. Based on that investigation."

He submitted that no such investigation had been conducted in Gupta's case and referred the Bench to Sections 218 and 219 of the IBC.

"It is a jurisdictional issue. And how can you assume jurisdiction by way of a show cause notice where you've not carried out an investigation which the statute mandates?"

Kaul also relied on Section 220, arguing that the Disciplinary Committee's power to suspend or cancel registration operates upon examination of the investigating authority's report.

On merits, Kaul said the disciplinary action concerned Gupta's alleged failure to disclose in Form-H the assignment of assets to secured financial creditors and his failure to take adequate steps against the erstwhile management.

The IBBI Disciplinary Committee had suspended Gupta's registration for two years on June 16, 2026. It found that he failed to disclose in Form-H the assignment of outstanding loans and advances, trade receivables, and non-current investments having a book value of ₹5,456.48 crore of the corporate debtor.

It also found that he failed to take adequate steps, including recourse to Section 19(2), to secure information required for valuation of those assets.

Gupta had argued before the NCLAT that the assets were already dealt with in Clause 5.8 of the approved resolution plan, which provided for their assignment to secured financial creditors. He also submitted that independent IBBI-registered valuers had valued the assets as nil or non-ascertainable because of the lack of information and uncertainty over recoverability.

On Section 19(2), Gupta said the erstwhile directors had resigned years before the CIRP commenced and the management was untraceable and had failed to cooperate. He argued that the decision not to pursue proceedings was taken after deliberation with the CoC.

The NCLAT held that Gupta's contentions raised triable issues but did not establish a sufficiently strong prima facie case for interim relief.

It said the issues concerning Form-H disclosure, valuation, Section 19(2) and the statutory procedure under Sections 218 to 220 required examination at the final hearing.