Tribunal Expunges Remarks Against RP for Procedural Errors in Insolvency Process
In a significant development at the National Company Law Appellate Tribunal (NCLAT), the Principal Bench in New Delhi has expunged adverse remarks against Mr. Rajeev Ranjan Singh, the erstwhile Resolution Professional (RP) for Rancom Healthcare Pvt. Ltd. This decision follows an appeal for expungement after strictures were recorded against him in the tribunal’s judgment dated February 6, 2026. The judgment, which was part of the insolvency proceedings involving Rancom Healthcare, had directed liquidation and made certain observations regarding procedural irregularities by the RP.
The case in question revolved around the approval of a Resolution Plan submitted by Mahavir Medicare, the sole Operational Creditor and the sole member of the Committee of Creditors (CoC) for the corporate debtor. The NCLAT had initially set aside the approval of this Resolution Plan based on the statutory bar under Section 30(5) of the Insolvency and Bankruptcy Code, 2016, which prohibits a Resolution Applicant from voting on its own Resolution Plan unless it is also a financial creditor. The tribunal found that the RP’s actions arose from a misinterpretation of the statutory provisions rather than any deliberate misconduct.
The RP’s appeal highlighted the unusual circumstances under which the insolvency resolution process was conducted—there were no financial creditors, and the sole operational creditor was also the resolution applicant. It was argued that the RP acted in accordance with Regulation 16(4) of the CIRP Regulations, which gives operational creditors the same rights and powers as financial creditors in such scenarios.
In its detailed judgment, the NCLAT acknowledged the RP’s lack of mala fide intentions or personal gain and noted his efforts to ensure compliance with the statutory framework. The tribunal recognized the RP's genuine attempt to navigate the complex legal requirements and found that the error was due to an incorrect understanding of the legal provisions rather than any misconduct. Consequently, the tribunal decided to expunge the personal remarks and strictures recorded against the RP, while maintaining the findings on the legal issues.
This ruling underscores the tribunal’s commitment to ensuring fairness and transparency in insolvency proceedings while acknowledging the challenges faced by professionals dealing with unprecedented legal scenarios. The decision is expected to provide relief to the RP and reinforce the importance of correctly interpreting statutory provisions in insolvency cases.
Bottom line:-
Resolution Professional's error in permitting voting by the sole Operational Creditor on its own Resolution Plan arose from an incorrect understanding of statutory provisions rather than deliberate or mala fide conduct. Observations and strictures against the Resolution Professional expunged.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 30(5), Regulation 16(4) of CIRP Regulations, Section 21 of the IBC
