Principal Bench of NCLAT holds that complainants initiating disciplinary action under IBC can maintain appeals against final orders of the Disciplinary Committee; clarifies scope of appeal and party impleadment rules.
In a landmark judgment dated September 10, 2026, the Principal Bench of the National Company Law Appellate Tribunal (NCLAT), New Delhi, in the case of Navneet Gupta Insolvency Professional v. Insolvency and Bankruptcy Board of India (IBBI), has clarified the rights of complainants in disciplinary proceedings under the Insolvency and Bankruptcy Code, 2016 (IBC). The bench, comprising Mr. Justice Mohammad Faiz Alam Khan (Judicial Member) and Mr. Naresh Salecha (Technical Member), ruled that a complainant who initiates disciplinary proceedings is a "person aggrieved" under Section 220(7) of the IBC and is entitled to file an appeal before the NCLAT against any final order imposing punishment by the Disciplinary Committee.
The case arose when Navneet Gupta, an Insolvency Professional, challenged an order of the IBBI Disciplinary Committee that found him guilty of professional misconduct and imposed punishment. Meanwhile, Sanjeev Mahajan, the complainant who filed the original grievance leading to the disciplinary proceedings, sought to be impleaded as a party in the appeal and contended that he should be entitled to participate in the appellate proceedings. The appellant opposed this, arguing that the complainant's role ends once the complaint is filed and that there is no statutory provision granting the complainant a right to appeal or be heard in the appeal.
The NCLAT undertook a detailed analysis of the relevant provisions of the IBC, specifically Sections 217-220, and the Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017. The tribunal highlighted the two-stage mechanism under the Code for complaint disposal: (i) the preliminary stage where the Board investigates and may close the complaint if no prima facie case exists, and (ii) the final stage where the Disciplinary Committee may impose penalties including suspension or cancellation of registration.
Crucially, the tribunal noted the amendment brought by the Insolvency and Bankruptcy Code (Amendment) Act, 2026, which inserted sub-sections (7) and (8) in Section 220, thereby introducing a statutory right of appeal to the NCLAT from orders of the Disciplinary Committee. The language of Section 220(7) confers the right to appeal on "any person aggrieved" by final orders imposing punishment.
Citing authoritative Supreme Court precedents on the liberal interpretation of "any person aggrieved," including the recent decision in Independent Sugar Corporation Ltd. v. Girish Sriram Juneja (2025), the tribunal held that the complainant falls within this category. The court underscored that where the statute employs clear and unambiguous language, it must be given its natural and ordinary meaning without restrictive interpretation. It emphasized that the complainant's grievance with the inadequacy of the penalty imposed qualifies them as aggrieved.
Regarding party impleadment, the tribunal clarified that a complainant is not a necessary party to the appeal but is a proper party and may be impleaded upon their request under Order 1 Rule 10(2) of the Code of Civil Procedure, 1908, which allows courts discretion to add proper parties to enable complete adjudication. However, it is not mandatory for the appellant to implead the complainant as a respondent.
The tribunal also considered an intervention application filed by another party, Mr. Haravtar Singh Arora, seeking impleadment as a respondent. The tribunal dismissed this application, holding that the intervener had no direct or remote interest in the appeal and was a stranger to the disciplinary proceedings.
The judgment thus provides clarity on the procedural rights of complainants in disciplinary cases under the IBC, establishing that they can maintain appeals before the NCLAT against final punitive orders, thereby strengthening the accountability mechanism for Insolvency Professionals. The tribunal also directed the appellant to provide a copy of the appeal memo to the complainant to ensure fair participation.
This ruling aligns the disciplinary appeal process under the IBC with principles of natural justice and statutory interpretation established by the Supreme Court, balancing the rights of service providers and complainants within the insolvency regulatory framework.
Bottom Line:
A complainant on whose application disciplinary proceedings were initiated is considered a "person aggrieved" under Section 220(7) of the Insolvency and Bankruptcy Code, 2016, and can maintain an appeal before the NCLAT against an order of the Disciplinary Committee.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 217, 218, 219, 220(2) to (8); Insolvency and Bankruptcy Board of India (Grievance and Complaint Handling Procedure) Regulations, 2017 Regulation 7; Code of Civil Procedure, 1908 Order 1 Rule 10(2).
