Case Overview

This judgment arises from an appeal (Comp. App. (AT) (Ins) No. 1160 of 2026) filed by Mr. Sanjay Gupta, an Insolvency Professional (IP), against an order dated 16.06.2026 passed by the Disciplinary Committee (DC) of the Insolvency and Bankruptcy Board of India (IBBI). The DC had suspended Mr. Gupta's registration as an IP for two years due to three contraventions found during his tenure as the Resolution Professional (RP) in the Corporate Insolvency Resolution Process (CIRP) of M/s Unnati Fortune Holdings Ltd. (UFHL), a real estate company. The CIRP involved the residential project "The Aranya" in Noida, comprising 1,302 units and 120 shops. The appellant sought an interim stay on the operation of the suspension order, arguing that his removal would disrupt the CIRP, which was at an advanced stage with a resolution plan approved by 97.32% of the Committee of Creditors (CoC) and possession handed over to 1,023 allottees.

The IBBI's DC had identified three contraventions:

1. Failure to verify and revise the claim of M/s Nupur Finvest Pvt. Ltd.: The claim, based on corporate guarantees, was initially admitted at ₹9.13 crore, revised to ₹19.56 crore, and then to ₹16.63 crore after a ₹3.15 crore recovery from another group company. However, a further ₹3 crore recovery from a second group company (Unnati Fortune Hotmart Pvt. Ltd.) in May 2021 was noted in CoC minutes but not reflected in the updated claim list filed on the IBBI's platform, despite the RP being aware of it via email in November 2025.

2. Unauthorized collection of transfer charges: The RP collected approximately ₹3.55 crore in transfer/administrative charges from incoming transferees, citing a pre-existing clause in the Builder-Buyer Agreement. This was done without seeking prior approval or ratification from the CoC, despite objections being raised by homebuyers in a CoC meeting.

3. Improper reduction of homebuyers' claims: The RP reduced the admitted claims of homebuyers who had been given fit-out possession, arguing it prevented "unjust enrichment." The DC held that mere possession letters did not constitute a transfer of ownership (which requires a registered sale deed) and that such a reduction altered the composition and voting share of the CoC. The RP's reliance on a legal opinion and Regulation 46A (which applies to liquidation) was found misplaced.

The DC concluded these actions violated Sections 18, 25(2)(e), and 28(1)(k) of the Insolvency and Bankruptcy Code (Code), along with clauses of the Code of Conduct for Insolvency Professionals.

Final Outcome

The NCLAT dismissed the application (I.A. No. 4509 of 2026) seeking an interim stay of the suspension order. The tribunal found no prima facie case for granting the stay, and the balance of convenience did not lie with the appellant. It was noted that the appellant had subsequently expressed an unwillingness to continue as RP, and a new RP had already been appointed for UFHL's CIRP. The court emphasized that the suspension of registration renders an IP ineligible to act in any CIRP under the Code, and allowing a suspended professional to continue would defeat the purpose of disciplinary action. The main appeal challenging the merits of the suspension order will be heard on 30.09.2026.

Topics: Insolvency Professional Discipline, Regulatory Suspension, CIRP Process Compliance