The Supreme Court of India on Thursday declined to grant interim relief to resolution professional Ritesh Prakash Adatiya, who sought to stay the cancellation of his registration by the Insolvency and Bankruptcy Board of India (IBBI). The three-judge bench, led by Chief Justice of India Surya Kant, observed that the challenge to the disciplinary order was already pending before the National Company Law Appellate Tribunal (NCLAT). Consequently, the Court directed the resolution professional to present all jurisdictional and factual arguments before the appellate authority rather than bypassing the existing legal hierarchy.

The dispute stems from a disciplinary proceeding initiated by the IBBI on July 20, 2026, which resulted in the cancellation of Adatiya’s registration. The regulator’s Disciplinary Committee found substantial lapses in his management of the corporate insolvency resolution processes (CIRPs) for three companies affiliated with the Anil Dhirubhai Ambani Group (ADAG). According to the IBBI, Adatiya failed to identify potential avoidance transactions, neglected to disclose material information, and failed to file the mandatory CIRP forms and cost disclosures required under the regulatory framework. Beyond the immediate cancellation, the order barred him from continuing his existing assignments, effectively halting his professional practice in ongoing insolvency cases.

Challenging Regulatory Jurisdiction and Timing

Representing the petitioner, Senior Advocate Neeraj Kishan Kaul argued that the disciplinary action was fundamentally flawed due to procedural irregularities, specifically regarding the timing and basis of the show-cause notice. Central to the dispute is the characterization of a regulatory amendment that permits the issuance of a show-cause notice based on currently available material. Kaul contended that prior to this amendment, the legal framework mandated a comprehensive investigation and the submission of a formal report before any show-cause notice could be issued to a professional.

Kaul asserted that the amendment in question should not be treated as merely clarificatory , arguing that it significantly altered the rights of professionals under scrutiny. He informed the Court that this specific point of law regarding the amendment’s scope is already pending consideration before another bench of the Supreme Court, which has already issued notice. "The amendment cannot be treated as clarificatory . I have prepared a chart showing the pre-amendment and post amendment positions," Kaul noted during the hearing. He further argued that because the show-cause notice was issued and the disciplinary committee was constituted prior to the amendment, the retrospective application of these standards to his client’s case was legally untenable.

Chief Justice Surya Kant, however, questioned the premise that the initiation of disciplinary proceedings violated any vested rights . "When you speak of powers, there is no vested right of a person being investigated," the Chief Justice observed. The Bench maintained that an amendment granting the regulator additional procedural tools for initiation does not inherently strip a professional of their due process rights . The Court clarified that the primary forum for examining the interplay between these amended provisions and the historical requirements of an investigation remains the appellate tribunal .

Allegations of Pre-planned Insolvency Strategies

The proceedings also touched upon broader concerns regarding the integrity of insolvency processes involving the Anil Dhirubhai Ambani Group. Senior Advocate Madhavi Divan, representing the IBBI, alleged that there has been a recurring pattern where resolution professionals have been utilized in multiple insolvency proceedings involving companies within the same conglomerate. Divan contended that these proceedings were potentially designed to facilitate the removal of substantial sums of money, suggesting that the Insolvency and Bankruptcy Code (IBC) was being leveraged as a device rather than a tool for corporate resolution.

Divan argued that granting relief in this specific instance could create a dangerous precedent, potentially emboldening other professionals to bypass regulatory oversight. She insisted that the issues raised by Adatiya should not be allowed to leave legal loopholes open, emphasizing the necessity of robust regulatory scrutiny when systemic abuse of the bankruptcy process is suspected.

In response to these allegations, Kaul vehemently denied that his client was involved in any pre-planned strategy. He maintained that Adatiya’s role was confined to the statutory duties of a resolution professional and that any external allegations regarding the nature of the insolvency should not be conflated with his client's specific performance. "Merely because an Anil Ambani company is involved and it is described as a pre-planned insolvency, what have I done? I am the resolution professional . If the insolvency was pre-planned, I had nothing to do with that," Kaul submitted. He argued that the allegations against him related solely to the discharge of his duties, such as the appointment of a transaction auditor and the filing of avoidance applications, all of which are matters of record that could be thoroughly debated at the appellate stage.

The Path Forward Before the Appellate Tribunal

Despite the detailed submissions regarding jurisdictional objections and the nature of the disciplinary process, the Supreme Court remained firm in its decision not to intervene. The Court highlighted that the NCLAT is the appropriate forum to evaluate whether the resolution professional adequately performed his duties or if he was indeed negligent in identifying avoidance transactions as alleged by the regulator.

By directing the matter back to the NCLAT, the Court has ensured that the substantive dispute—whether the regulatory process was conducted fairly and whether the resolution professional’s conduct met the required statutory standards—will undergo a rigorous merits-based review by the expert tribunal. Adatiya is now expected to pursue his arguments before the NCLAT, where he will have the opportunity to challenge both the procedural legality of the disciplinary notice and the factual findings of the IBBI’s committee.

This development marks a significant procedural milestone for resolution professionals operating under the IBC, as it underscores the judiciary’s preference for exhausting administrative appellate remedies before seeking intervention from the highest court. For the time being, the order canceling Adatiya’s registration remains in effect, and the focus of the litigation shifts entirely to the appellate proceedings, where the validity of the regulatory framework and the professional's conduct will be the central points of contention. The outcome of the upcoming NCLAT hearings will likely influence how future disciplinary challenges against insolvency professionals are framed and adjudicated.