The New Delhi Principal Bench of the National Company Law Appellate Tribunal (NCLAT)Third Member has concurred with the Judicial Member’s view that exclusion of a suspended director’s representative from CoC deliberations on the ground of non-compliance with Regulation 21(2) of the CIRP Regulations is legally sustainable where the requirement of prior written intimation of the authorised representative’s identity was expressly communicated through the meeting notice. The NCLAT also clarified that prior participation of a representative in earlier CoC meetings without formal authorisation does not create a vested right to participate in subsequent meetings, particularly where the later meeting involves consideration of resolution plans carrying a significantly higher degree of commercial sensitivity.
The confidentiality undertaking recognised in the Apex Court’s ruling of Vijay Kumar Jain v. Standard Chartered Bank [(2019) 20 SCC 455] is the mechanism for harmonising the suspended director’s right of access with the legitimate need to preserve confidentiality of resolution plans and does not require that such undertaking be obtained before the meeting or that documents be furnished unconditionally, added the Tribunal.
The Third Member also cautioned that once a resolution plan has been fully funded, implemented, and the closure report taken on record by the Adjudicating Authority, interference on the basis of procedural objections that do not establish denial of a substantive opportunity would be inconsistent with the time-bound and value-preserving framework of the IBC.
A Single Technical Member Naresh Salecha observed that the procedural irregularities in CoC proceedings do not automatically vitiate the outcome unless actual and demonstrable prejudice is established. The NCLAT reference arose from a difference of opinion between the Division Bench at Chennai comprising Justice Sharad Kumar Sharma (Member Judicial) and Jatindranath Swain (Member Technical).
The Judicial Member held that the exclusion of Mr. Bapuji was justified since Regulation 21(2) of the CIRP Regulations employs the mandatory expression ‘shall’ and the notice dated July 12, 2024, had specifically brought these requirements to the Appellant’s attention. The Technical Member took a contrary view, placing reliance on Vijay Kumar Jain v. Standard Chartered Bank [(2019) 20 SCC 455], and held that the exclusion was arbitrary and that the Resolution Professional could have adjourned the meeting or accepted the undertaking subsequently.
The Judicial Member treated the subsequent furnishing of documents as curing any alleged prejudice, while the Technical Member considered that post-meeting disclosure could not retrospectively validate the process. The Judicial Member viewed the incorporation of post-meeting emails into the minutes as permissible for completeness, whereas the Technical Member regarded such ‘retro-fitting’ as vitiating the contemporaneous character of the minutes. The Judicial Member held that mere pendency of interim application did not operate as a stay against continuation of the CIRP, while the Technical Member treated any infirmity in the 20th meeting as having a cascading effect on subsequent proceedings.
Briefly, the Corporate Insolvency Resolution Process (CIRP) against NSL Nagapatnam Power and Infratech Ltd. was initiated in January 2018, and Navneet Kumar Gupta was appointed as the Resolution Professional. The appellant, Mandava Prabhakar Rao, the suspended director of the Corporate Debtor, had been represented in CoC meetings by Nelluri Bapuji, who had participated in the 10th, 18th, and 19th CoC meetings without any written authorisation or confidentiality undertaking. For the 20th CoC meeting held on July 16, 2024, the Resolution Professional issued notice on July 12, 2024, expressly requiring prior intimation of the authorised representative’s identity at least 24 hours in advance.
When Bapuji appeared without the requisite written authorisation and confidentiality undertaking, he was asked to leave the meeting within 15 minutes. The Resolution Plan submitted by M/s. Rungta Mines Limited was thereafter approved by the CoC with 85.35% voting share on Aug 01, 2024, and the Adjudicating Authority approved the plan on May 27, 2025. The appellant challenged the 20th, 21st, and 22nd CoC meetings before the NCLT, which dismissed his applications with costs of Rs. 5 lakhs.
