An insolvency professional who is appointed resolution professional, and who is later appointed liquidator by the same tribunal, may feel that he has moved from one statutory world to another. If the Insolvency and Bankruptcy Board of India (“IBBI”) then issues him a show cause notice, is the answer that he is now a liquidator and therefore outside the Board’s reach? The Madras High Court addressed that question in Ad. (CA) V. Venkata Siva Kumar v. Insolvency and Bankruptcy Board of India, W.P. No. 21186 of 2023, decided on 22 December 2023 by Justice N. Seshasayee.

The Facts

The corporate insolvency resolution process (“CIRP”) of a sugar company commenced on 25 February 2019, and the petitioner was appointed resolution professional. On 29 May 2020 the Adjudicating Authority found that the CIRP had failed, ordered liquidation, and appointed the same professional as liquidator.

A financial creditor applied to replace him, alleging that he had acted against the interests of the corporate debtor by sharing the valuation report with prospective scheme proponents. The petitioner admitted that he had shared it. By order dated 1 July 2022 the Adjudicating Authority removed him as liquidator.

A complaint was then made both to the Indian Institute of Insolvency Professionals of ICAI (“IIIP”) and to the IBBI. The IIIP rejected it as outside the purview of the Code. The IBBI did not: on 3 July 2023 it issued a show cause notice alleging contravention of Sections 35(1)(d), 208(2)(a) and 208(2)(e) of the Insolvency and Bankruptcy Code, 2016 (“IBC”), Regulation 34(5) of the liquidation process regulations and provisions of the insolvency professional regulations and the Code of Conduct. His authorisation for assignment stood suspended on the same date.

He challenged the show cause notice under Article 226 of the Constitution — that is, by invoking the High Court’s writ jurisdiction.

IBBI Jurisdiction Over Insolvency Professionals: The Court’s Answer

“I was acting as a liquidator under the Companies Act.” The petitioner argued that, being under a direction from the tribunal to explore a compromise or arrangement under Section 230 of the Companies Act, 2013, he had stepped outside the IBC.

The Court described this as where “the fallacy in the case of the petitioner is hidden”. Liquidation of a corporate debtor is not alien to the scheme of the IBC: where resolution fails, Section 33 requires the Adjudicating Authority to order liquidation, and the liquidator so appointed functions within the Code. Regulation 2B of the IBBI (Liquidation Process) Regulations, 2016 enables a scheme of compromise or arrangement under Section 230 to be read into the liquidation process. Performing a role directed by the tribunal therefore does not take the professional outside the Code or the regulations made under it.

“The same complaint was rejected by my agency.” The petitioner argued that once the IIIP had dropped the complaint under Section 204(e), the IBBI could not take cognisance under Sections 217 and 218.

The Court held, prima facie, that when the professional ceases to be a resolution professional and takes up the role of liquidator, the agency’s role in relation to its member ceases; and that at best the agency’s decision is a piece of evidence in the proposed disciplinary proceeding, not something that displaces the IBBI’s jurisdiction. Section 218 permits the Board to act on information received from any source, and is not confined to complaints under Section 217.

Confidentiality of the asset memorandum. On the merits, the Court noted that the information a resolution professional may share is listed in Regulation 36 of the CIRP Regulations and does not include the valuation of the corporate debtor; and that the asset memorandum prepared in liquidation, which includes the valuation of assets, is to be shared only with the Board and the stakeholders’ consultation committee, and not with potential purchasers. Since the petitioner admitted sharing the valuation report, a prima facie ground existed for issuing the notice. The order records these provisions as being in the CIRP Regulations; the asset memorandum and the stakeholders’ consultation committee are in fact provided for in Regulations 34 and 31A of the IBBI (Liquidation Process) Regulations, 2016.

Suspension of the authorisation for assignment. Suspension follows automatically on the commencement of disciplinary proceedings under Regulation 23A of the IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016. Since the Board had jurisdiction and no mala fides were established, the Court declined to interfere.

The writ petition was dismissed, with liberty to raise the entire defence in the disciplinary enquiry.

The Companion Ruling on Regulation 23A

A Division Bench of the same Court, in CA V. Venkata Sivakumar v. IBBI, W.P. Nos. 16650 of 2020 and 14448 of 2021 (Chief Justice Sanjay V. Gangapurwala and Justice D. Bharatha Chakravarthy), pronounced on 22 January 2024, upheld the constitutional validity of Regulation 23A and rejected a challenge to the two-tier structure of regulation of insolvency professionals by the Board and the agencies, holding one of the petitions also barred by constructive res judicata. The Bombay High Court took a similar view of suspension pending show cause notices in Kairav Anil Trivedi v. IBBI.

Why the Reasoning Matters

Three practical propositions emerge.

1. Role changes do not change the regulator. A professional’s obligations under the Code and the Code of Conduct follow the person, not the label of the assignment.
2. Agency exoneration is not a bar. Section 204 proceedings before an agency and Section 218 proceedings before the Board operate independently. This is a structural feature of the two-tier system, not an oversight.
3. Writ jurisdiction at the notice stage is narrow. Where the authority has jurisdiction to issue the notice, the defence belongs before that authority. Courts intervene at this stage mainly for want of jurisdiction or demonstrable mala fides.

The Position After 26 May 2026

The Insolvency and Bankruptcy Code (Amendment) Act, 2026 recast the enforcement architecture in Chapter VI and the surrounding provisions, extending the framework in Sections 196 and 214 to 220 to “service providers” as defined in the new Section 3(31A), providing for disciplinary committees, raising the outer limit of penalty to ₹2 crore, and providing for an appeal to the NCLAT within thirty days, extendable by fifteen days. Section 196(1)(sa) empowers the Board to specify standards of conduct and timelines for the committee of creditors. Section 34(4), as amended, now provides that the resolution professional cannot be appointed liquidator, so the specific sequence in this case — the same person moving from one role to the other — will not recur in liquidations commenced after that date. The reasoning on the reach of the Board’s jurisdiction, and on the limits of writ intervention against a show cause notice, is unaffected.

Practical Guidance

• Valuation material in a liquidation is confidential. A direction to explore a scheme under Section 230 does not, by itself, authorise disclosure of the asset memorandum or valuation to prospective purchasers.
• A favourable outcome before an insolvency professional agency should not be treated as concluding the matter for the Board.
• Where an authorisation for assignment is suspended on the issue of a show cause notice, the practical route is to engage with the disciplinary process and seek its expeditious disposal.

Frequently Asked Questions

Can IBBI take disciplinary action against an insolvency professional?

Yes. The IBBI can initiate disciplinary proceedings where it has jurisdiction under the IBC, including on information received from sources other than an insolvency professional agency.

Does becoming a liquidator take an insolvency professional outside IBBI jurisdiction?

No. Appointment as a liquidator does not, by itself, remove the professional from the regulatory framework of the IBC and applicable regulations.

Can a writ petition challenge an IBBI show cause notice?

A writ petition may be maintainable in exceptional circumstances, but courts generally do not interfere at the show cause notice stage where the authority has jurisdiction and no mala fides are established.

Does an insolvency professional agency’s decision prevent IBBI action?

No. Proceedings before an insolvency professional agency and the IBBI operate independently. A decision by the agency does not automatically bar the IBBI from proceeding.

Legal Information Disclaimer

This article provides general information about Indian law as it stood on 16 September 2026. It is not legal advice, and reading it does not create an advocate–client relationship. Statutes, rules and judicial interpretations change, and their application depends on the facts of each matter. Readers should consult the current official text of the laws and judgments cited and should not act on this information without advice specific to their circumstances. This article is published for legal awareness and education and is not intended to advertise or solicit professional work.

Sources / Authorities

1. Ad. (CA) V. Venkata Siva Kumar v. Insolvency and Bankruptcy Board of India & Ors., W.P. No. 21186 of 2023, High Court of Judicature at Madras, 22 December 2023 (Seshasayee, J.) — Indian Kanoon
2. CA V. Venkata Sivakumar v. Insolvency and Bankruptcy Board of India & Ors., W.P. Nos. 16650 of 2020 and 14448 of 2021, High Court of Judicature at Madras, 22 January 2024 — judgment PDF
3. Insolvency and Bankruptcy Code, 2016 — Sections 33, 34, 35, 196, 204, 207, 208, 217, 218 (as amended) — IBBI – Legal Framework
4. Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026) — Gazette text (IBBI); Notification S.O. 2625(E) dated 22 May 2026 — IBBI
5. IBBI (Liquidation Process) Regulations, 2016 — Regulations 2B, 31A, 34; IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 — Regulation 36; IBBI (Insolvency Professionals) Regulations, 2016 — Regulation 7 and the Code of Conduct in the First Schedule; IBBI (Model Bye-Laws and Governing Board of Insolvency Professional Agencies) Regulations, 2016 — Regulation 23A — IBBI – Regulations
6. Companies Act, 2013 — Section 230

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