National Company Law Appellate Tribunal Sets Aside Adverse Judicial Remarks Against Resolution Professional for Typographical Mistake in Form-H During CIRP
In a significant judgment dated August 21, 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, delivered a ruling in the appeal filed by Ashish Arjunkumar Rathi, the erstwhile Resolution Professional (RP) of Goyal Energy and Steel Private Limited. The appeal challenged adverse observations made against him by the National Company Law Tribunal (NCLT), Cuttack Bench, concerning a clerical error in Form-H filed during the Corporate Insolvency Resolution Process (CIRP).
The dispute arose from a minor discrepancy in the claim amount recorded for the Chhattisgarh State Power Distribution Company Limited (CSPDCL). While the admitted claim was Rs. 34,50,11,865, the claimed amount was Rs. 34,50,71,329. However, in Form-H, the admitted claim figure was inadvertently reflected as the claimed amount, showing a difference of Rs. 59,464. The NCLT, despite noting that the error caused no prejudice to any stakeholder or affected the CIRP or the approved Resolution Plan, labeled the mistake as a "gross dereliction" of duty on the part of the RP and directed that the order be forwarded to the Insolvency and Bankruptcy Board of India (IBBI).
Upon appeal, the NCLAT thoroughly examined the facts and found the error to be a bona fide clerical or typographical mistake. The tribunal observed that the discrepancy did not alter the admitted claim, impact the constitution or voting shares of the Committee of Creditors, nor influence the commercial wisdom exercised during the CIRP. The NCLAT emphasized that the RP had an unblemished professional record with no prior penalties or notices from the IBBI.
Critically, the NCLAT held that adverse judicial remarks without any finding of fraud, deliberate misconduct, negligence, wrongful gain, or prejudice to stakeholders cannot be sustained. Furthermore, the tribunal underscored that the principles of natural justice were violated as the RP was not afforded an opportunity to explain the circumstances surrounding the clerical error before adverse comments were made.
Consequently, the NCLAT expunged the impugned paragraph 26 of the NCLT order containing the adverse observations and also set aside the direction to forward the order to IBBI (paragraph 96). The tribunal clarified that such isolated, inadvertent clerical errors causing no prejudice do not amount to gross dereliction warranting judicial censure.
This judgment reinforces the importance of distinguishing between genuine mistakes and misconduct in insolvency proceedings, protecting the reputation of professionals acting in good faith while ensuring the integrity of the CIRP framework.
Bottom Line:
Adverse observations in a judicial order regarding clerical error, not resulting in prejudice to any stakeholder or affecting the Corporate Insolvency Resolution Process (CIRP), cannot be sustained in absence of findings of fraud, deliberate misconduct, negligence, wrongful gain, or prejudice.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 30(6), 31, 61
