Authority: High Court at Calcutta, Constitutional Writ Jurisdiction (Appellate Side)

Order Date: 16 July 2026

Case Overview

  • Parties: Writ petitioner Sashi Agarwal (insolvency professional) vs Union of India, Insolvency and Bankruptcy Board of India (IBBI), and others.
  • The petition challenges IBBI order dated 13 May 2022 cancelling Agarwal’s registration under section 220(2) of the Insolvency and Bankruptcy Code (IBC).
  • Background: Agarwal was appointed Industrial Resolution Professional (IRP) for INCAB Industries Ltd by the National Company Law Tribunal (NCLT), Kolkata Bench, on 7 August 2019 (W.P.A 10330 of 2022, CAN 1 of 2025).
  • INCAB Industries had been declared a sick unit by the Board for Industrial and Financial Reconstruction (BIFR) on 4 April 2000; its accounts were unaudited since 1 April 2000 and production at Jamshedpur ceased in 1999.
  • Committee of Creditors (COC) meetings were held on 6 September 2019 (1st), 18 October 2019 (3rd), 11 November 2019 (4th), and 5 December 2019 (5th). Financial creditors Pegasus Assets Reconstruction Pvt Ltd, Kamala Mills Ltd and Fasqua Investments Pvt Ltd participated, with disputes over the inclusion of Kamala Mills and Fasqua as related parties.
  • On 20 November 2019 the NCLT dismissed an application under section 19(2) IBC, confirming that Ramesh G. Gowani was not a director of the corporate debtor, and therefore the two entities could not be treated as related parties.
  • The COC, holding more than 80% voting share, resolved on 5 December 2019 that the company could not be revived and should be liquidated. The NCLT approved liquidation on 7 February 2020 (CA (IB) No. 1748/KB/2019).
  • Workers appealed to the National Company Law Appellate Tribunal (NCLAT); the NCLAT on 4 June 2021 set aside the liquidation order and directed IBBI to consider action against the petitioner.
  • IBBI issued a show‑cause notice on 10 September 2021 (under Regulation 11 of the IBBI (Insolvency Professionals) Regulations, 2016), relying on the NCLAT observations.
  • An inspection of the petitioner’s assignments was ordered by IBBI on 6 August 2020 (Order No. IBBI/IP/R(INSP)/2020/1). The final inspection report dated 2 June 2021 found no irregularities.
  • The petitioner filed Civil Appeal No. 2209‑2210 of 2021 before the Apex Court; on 3 December 2021 the Apex Court allowed withdrawal of the Special Leave Petition but permitted the petitioner to raise all pleas before IBBI.
  • Arguments before the High Court centered on alleged violations of sections 33(2), 217‑220 of the IBC, mis‑interpretation of IBBI Regulations 13, 14, 36, 40, 11, and procedural violations of natural justice.
  • The petitioner contended that claim verification was impossible due to lack of audited accounts, that the COC was constituted after partial verification as permitted by Regulation 14, and that the Information Memorandum could not be prepared for the same reason.
  • IBBI, represented by Jishnu Chowdhury, argued that the petitioner acted dishonestly, failed to verify claims, did not appoint valuers, and improperly included related parties, thereby breaching multiple IBBI regulations.
  • The court examined statutory provisions: Section 220(2) IBC requires the Disciplinary Committee to consist only of whole‑time members of the Board; the Chairperson is a distinct category and cannot sit on the committee.
  • The 2017 IBBI Delegation of Powers Order shows that the Chairperson may constitute certain committees but the Disciplinary Committee must be formed by whole‑time members, making the Chairperson’s order ultra vires.
  • The court also noted that Section 218 mandates an inspection or investigation before a show‑cause notice can be issued; the petitioner’s inspection report (June 2021) was favourable and should have been considered, which IBBI ignored.
  • Consequently, the High Court held that the IBBI’s disciplinary proceedings were vitiated by lack of jurisdiction, failure to comply with Sections 218 and 219, and procedural irregularities.

Final Outcome

  • The High Court set aside the IBBI order cancelling Sashi Agarwal’s registration, declaring it a nullity.
  • It held that the Disciplinary Committee constituted by the Chairperson was beyond its statutory authority because only whole‑time members may sit on the committee.
  • The court emphasized that IBBI must first conduct a Section 218 inspection before issuing a show‑cause notice; the failure to do so rendered the notice unlawful.
  • The petitioner’s registration as an insolvency professional remains in force, and any further action by IBBI must comply strictly with the provisions of the IBC and the IBBI Regulations.

Topics: Insolvency Regulation, Judicial Review, Professional Discipline