Principal Bench of NCLAT holds that failure to maintain formal minutes and concurrence to timeline extension without prior instructions are contraventions but cancellation penalty is grossly disproportionate; matter remanded to IBBI for fresh penalty determination.
In a significant judgment dated October 14, 2026, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, in the case of Deepak Kumar Goyal v. Insolvency and Bankruptcy Board of India (IBBI), has set aside the cancellation of registration of Mr. Deepak Kumar Goyal, a registered Insolvency Professional (IP), and remanded the matter to IBBI for reconsideration of the quantum of penalty.
The disciplinary proceedings arose from Mr. Goyal's role as the Authorised Representative (AR) of a class of approximately 1,428 homebuyers-constituting nearly 91% of voting share-in the Committee of Creditors (CoC) of M/s. Revital Realty Private Limited undergoing Corporate Insolvency Resolution Process (CIRP). The IBBI had found Mr. Goyal guilty of two contraventions: (1) failure to properly record proceedings and prepare formal minutes of meetings/consultations with the homebuyers as mandated under Regulation 16A(10)(i) and (11) of the IBBI CIRP Regulations, 2016; and (2) concurrence to an extension of timeline for submission of revised resolution plans without prior instructions of the class as required by Section 25A(3) of the Insolvency and Bankruptcy Code, 2016 (Code). Based on these findings, IBBI's Disciplinary Committee cancelled Mr. Goyal's registration, rendering him ineligible to continue his existing insolvency assignments.
Mr. Goyal challenged the order before NCLAT contending that although he did not maintain a formal minute book, he had continuously conducted meetings, collated concerns, and communicated them to the Resolution Professional (RP) through contemporaneous emails which substantively fulfilled the statutory requirement. He further argued that his concurrence to the timeline extension was a procedural necessity occasioned by an intervening Employees' Provident Fund Organisation (EPFO) claim that needed to be incorporated into the revised resolution plans, and obtaining prior instructions from a dispersed class of 1,428 homebuyers within the short timeframe was impractical.
The NCLAT Bench, comprising Justice Mohammad Faiz Alam Khan and Member (Technical) Naresh Salecha, carefully analyzed the competing submissions and statutory framework. On the first issue, the Tribunal held that the statutory obligation to "record proceedings and prepare the minutes" under Regulation 16A(10)(i) is mandatory and distinct from merely communicating concerns via emails. Although no specific format is prescribed, the minutes must at least specify the date of the meeting, identify or indicate the number of participating creditors, and record the substance of the concerns. The emails produced by Mr. Goyal satisfied the recording of concerns but lacked consistent indication of the extent or representative nature of participation, which is a material omission given the large size of the class. Thus, the contravention under Regulation 16A(10)(i) stood established, but it was one of incomplete documentation rather than absence of consultation or concealment.
On the second issue, the Tribunal acknowledged that Section 25A(3) of the Code mandates that the AR must "always" act in accordance with prior instructions of the class he represents, without exception for matters an AR may subjectively deem procedural. Mr. Goyal's concurrence to timeline extensions without obtaining prior instructions was held to contravene this provision. However, the Tribunal accepted the genuine circumstances of the EPFO claim necessitating the limited extensions and observed no evidence of any homebuyer prejudice, favoritism to any resolution applicant, or alteration of commercial interests.
Turning to penalty, the NCLAT invoked the doctrine of proportionality as enunciated by the Supreme Court in Ranjit Thakur v. Union of India (1987) and Coal India Ltd. v. Mukul Kumar Choudhury (2009). The Tribunal emphasized that cancellation of registration is the most severe disciplinary action under the IBBI regulatory framework and requires a proportionate justification based on the gravity of misconduct. Here, no finding of fraud, mala fide, personal gain, collusion, or actual prejudice was made. Mr. Goyal had a clean disciplinary record and cooperated fully during the investigation. The established contraventions related primarily to procedural lapses in documentation and instruction-seeking.
Considering these factors, the Tribunal concluded that the penalty of cancellation was "grossly disproportionate" and "shocks the conscience." While the contraventions stood proven, a lesser penalty was warranted. In line with the Supreme Court's guidance, the Tribunal remanded the matter to IBBI for reconsideration of the penalty within 30 days, with directions to provide Mr. Goyal an opportunity to be heard. Interim protection was granted to Mr. Goyal from the operation of the cancellation order pending fresh orders. He undertook not to accept fresh assignments during this period, and his existing assignment as AR was governed by a replacement resolution passed by the CoC.
This judgment underscores the importance of strict compliance with procedural requirements by Insolvency Professionals acting as Authorised Representatives, particularly in large-scale stakeholder representations. At the same time, it establishes that regulatory penalties must be just, proportionate, and cognizant of the surrounding circumstances and absence of mala fide conduct.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Authorised Representative of homebuyers - Failure to properly record proceedings/minutes of consultations and concurrence to extension of timeline for revised resolution plans without prior instructions of class held to be contraventions - However, cancellation of registration of Insolvency Professional held grossly disproportionate in absence of fraud, mala fides, personal gain, collusion or demonstrated prejudice - Matter remanded to IBBI for reconsideration of quantum of penalty.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Section 25A(3), Section 208(2)(a) and (e), Section 220(7), Regulation 16A(10)(i) and (11) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, Regulation 7(2)(a) and (h) of IBBI (Insolvency Professionals) Regulations, 2016, Clause 14 of the Code of Conduct in First Schedule to IP Regulations, Regulation 13 of IBBI (Inspection and Investigation) Regulations, 2017
