The New Delhi Principal Bench of the National Company Law Appellate Tribunal (NCLAT) has held that practising Chartered Accountants are not barred from submitting resolution plans under Section 29A, and that government dues, not provided for in an approved plan stand extinguished under the ‘clean slate’ doctrine. The NCLAT explained that the commercial wisdom of the CoC in approving a resolution plan with 100% voting share is non-justiciable and cannot be substituted by the Adjudicating Authority or the Appellate Tribunal. A suspended director’s challenge under Section 61 must demonstrate material prejudice, not merely procedural irregularity.
Further, the NCLAT asserted that a practising Chartered Accountant is not disqualified under Section 29A from submitting a resolution plan, and the ICAI has confirmed such eligibility subject to the restriction on acting as a whole-time director. At the same time, an OTS proposal does not terminate CIRP absent a Section 12A withdrawal, and the CoC is entitled to consider factors beyond the highest monetary bid. While interference with an implemented resolution plan is deprecated, the Tribunal imposed costs on both appellants for abusing the process of law.
The Division Bench comprising Justice Mohammad Faiz Alam Khan (Judicial Member) and Arun Baroka (Technical Member) observed that a suspended director is not completely excluded from the CIRP and is entitled to meaningful participation under Section 24(3)(b) of the IBC, as recognised by the Supreme Court in Vijay Kumar Jain v. Standard Chartered Bank [(2019) 20 SCC 455]. However, the appellants failed to demonstrate any specific prejudice arising from the alleged non-supply of the resolution plan, particularly since the CoC had already approved the plan with 100% voting share after detailed deliberation.
On the eligibility of Mr. Suraj Garg, the NCLAT noted that Section 29A of the IBC does not disqualify a practising Chartered Accountant from submitting a resolution plan, and the ICAI, as the statutory regulator, confirmed that a practising Chartered Accountant can act as a Resolution Applicant, provided he does not act as a whole-time director. The Tribunal further observed that Mr. Suraj Garg had been inducted as a non-executive director in the newly constituted board, as reflected in the DIR-12 filing before the MCA dated 23 January 2026.
On the OTS issue, the NCLAT observed that once CIRP commences, withdrawal can only occur under Section 12A with 90% CoC approval, and a mere settlement proposal does not nullify the CIRP. On the alleged higher bid, the Tribunal observed that entertaining post-closure revisions would destabilise the insolvency resolution process and could lead to manipulation, and that Mr. Anuj Goyal himself had not challenged the plan approval.
On government dues, the NCLAT observed that the CGST order-in-original was passed on 20 December 2023, two days before voting concluded, and the RP’s obligation under Section 30(2)(b)(ii) was only to examine plans against admitted or known dues. The Tribunal further noted that the Supreme Court in Ghanashyam Mishra and Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd. [(2021) 9 SCC 657], held that once a resolution plan is approved under Section 31, all claims not included in the plan stand extinguished under the ‘clean slate’ doctrine, and the approved plan becomes binding on government authorities and statutory creditors.
The NCLAT also relied on Sanjay Kumar Agarwal v. State Tax Officer [(2024) 2 SCC 362] to observe that the Rainbow Papers judgment is confined to statutes creating a first-charge or deemed-charge in favour of the tax authority and does not lay down a general rule that all statutory dues must be paid at par with secured creditors. The Tribunal further noted the Explanation to Section 3(31) of the IBC, notified on 26 May 2026, which clarifies that security interest shall exist only if created by agreement between parties and shall not include a security interest created merely by operation of any law, thereby overruling the Rainbow Papers position.
On the conduct of the RP, the NCLAT observed that the appellants had failed to establish any material irregularity within the meaning of Section 61(3)(ii) of the IBC, and that the suspended directors themselves had not cooperated with the CIRP, leading to proceedings under Section 19(2) and an ex parte order against them.
Briefly, the Corporate Insolvency Resolution Process (CIRP) against M/s Satellite Cables Private Limited was initiated on 3 January 2023 under Section 9 of the Insolvency and Bankruptcy Code, 2016, on the application of M/s Oswal Minerals Limited, and Mr. Abhimanyu Mittal was appointed as the Resolution Professional (RP). Three prospective resolution applicants, M/s Suraj Garg (a practising Chartered Accountant), Mr. Anuj Goyal, and M/s Sunrise Industries, submitted resolution plans after the RP issued Form G, the Information Memorandum, and the Evaluation Matrix. The Committee of Creditors (CoC), comprising Bank of Baroda as the sole financial creditor, approved the resolution plan submitted by M/s Suraj Garg with 100% voting share in the 11th CoC meeting held on 6 December 2023, after a hybrid challenge process in the 10th CoC meeting on 21 November 2023. The NCLT, New Delhi, approved the resolution plan.
Later, two suspended directors of the Corporate Debtor, Mr. Vinay Gupta and Ms. Niharika Goel, filed separate Section 61 appeals before the NCLAT challenging the approval. The appellants raised multiple objections, including non-supply of the resolution plan before the approval hearing, the alleged ineligibility of Mr. Suraj Garg as a practising Chartered Accountant, an alleged One-Time Settlement (OTS) of Rs. 2.50 crore with Bank of Baroda, the alleged acceptance of a lower bid over a higher revised bid by Mr. Anuj Goyal, and the failure of the plan to provide for government dues of approximately Rs. 17.47 crore confirmed by the Additional Commissioner, CGST, Alwar Commissionerate, vide order dated 20 December 2023.
