The court emphasized that disciplinary penalties must be proportionate to the misconduct and factors such as prior penalties and delays in proceedings must be considered.

JUDGMENT :

SACHIN DATTA, J.

1. The petitioner has filed the present petition, assailing the Order dated 25.04.2025 passed by the Disciplinary Committee of the Insolvency and Bankruptcy Board of India (respondent no.1) in IBBI/DC/284/2025, whereby the registration of the petitioner, a registered Insolvency Professional bearing Registration No. IBBI/IPA-001/IPP00501/2017-2018/10889, has been suspended for a period of one year.

2. The background of the matter is that National Company Law Tribunal, Chennai Bench (Adjudicating Authority), vide Order dated 19.02.2020, admitted an application under Section 7 of the Insolvency and Bankruptcy Code, 2016 (“the Code”) filed by State Bank of India for initiation of the Corporate Insolvency Resolution Process (CIRP) of Kamachi Industries Limited (Corporate Debtor). By the same order, the petitioner was appointed as the Interim Resolution Professional (IRP) to conduct the CIRP.

3. It is submitted that the said engagement was agreed at a consolidated fee of Rs. 7.42 lakhs, comprising IRP fees of Rs. 1.65 lakhs and support service fees of Rs. 5.77 lakhs.

4. It is submitted that on 05.05.2020, the first meeting of the Committee of Creditors (CoC) of the Corporate Debtor was convened, wherein the petitioner was proposed to be confirmed as the Resolution Professional (RP)on the same fee structure as approved at the IRP stage.

5. However, it is submitted that the CoC did not approve the proposed fees in the first meeting, expressing its desire to commercially negotiate the consolidated fees.

6. Thereafter, a second CoC meeting was held on 09.06.2020, wherein the fees was fixed at Rs. 4.50 lakhs, comprising RP fees of Rs. 1.65 lakhs and support service fees of Rs. 2.85 lakhs for support service provider (Quantuum Resolution Professional Private Limited). The relevant portion of the minutes of Second CoC meeting dated 09.06.2020 is reproduced as under –

“4. Voting matters:

i. To confirm the appointment of Mr. Vikas Prakash Gupta, IBBI Registration no. IBBI/IPA- 001/IPP00501/2017-18/10889 as the Resolution Professional (“RP”) of the Corporate Debtor for a monthly fee of Rs. 1.65 Lacs (Excluding of OPE & Taxes)

ii. To confirm the appointment of Quantuum Resolution Professional Private Limited as Support service agency for a monthly fee of Rs. 2.85 Lacs (Excluding OPE & Taxes)”

7. Subsequently, it is submitted that on 06.03.2021, a complaint was purportedly filed before the Insolvency and Bankruptcy Board of India (“IBBI”) by Mr. N. Murugesan, allegedly at the behest of Mr. Hari Iyer, claiming that the CoC had approved Rs. 2.85 lakhs to be paid directly to Quantuum, but that the petitioner engaged other professionals instead.

8. The IBBI forwarded the complaint to the petitioner on 12.05.2021, to which the petitioner submitted a reply on 01.06.2021.

9. It is further submitted that the respondent no.1 issued a Show Cause Notice (SCN) dated 05.04.2024, nearly three years later, alleging contravention of the Insolvency Professionals Regulations and Board Circular No. IP/004/2018 dated 16.01.2018. The SCN is reproduced as under –

10. The SCN, inter alia, alleged that the petitioner improperly received consolidated fees without segregating payments for himself and the support services.

11. The petitioner filed a reply to the SCN on 19.04.2024.

12. It is submitted that after almost 11 months from date of receipt of the reply filed by the petitioner, the Disciplinary Committee acted in furtherance of the Show Cause Notice and conducted a hearing on 27.02.2025.

13. Thereafter, the Disciplinary Comm