Majority Opinion Validates Procedural Safeguards Under IBC Regulations, Affirms No Violation in Document Supply Post-Confidentiality Undertaking, and Reduces Cost Imposed on Appellant
The National Company Law Appellate Tribunal (NCLAT), Principal Bench at New Delhi, has delivered a crucial judgment on 18th September 2026 in the matter of Mandava Prabhakar Rao v. Mr. Navneet Kumar Gupta and others, concerning the conduct of Committee of Creditors (CoC) meetings during the Corporate Insolvency Resolution Process (CIRP) of NSL Nagapatnam Power and Infratech Limited. The appeals challenged the exclusion of the suspended director's representative from the 20th CoC meeting and the approval of the resolution plan submitted by M/s. Rungta Mines Limited.
The appellant, Mandava Prabhakar Rao, a suspended director of the corporate debtor, contended that his authorised representative, Mr. Nelluri Bapuji, was arbitrarily excluded from the 20th CoC meeting on 16 July 2024 for failure to produce prior written authorisation and a confidentiality undertaking. He argued that such exclusion was illegal, violated natural justice, and compromised his right to meaningful participation, especially since the meeting involved critical decisions including approval of the resolution plan. The appellant also alleged non-supply of key documents before the meeting, questioned the legality of subsequent CoC meetings held after the CIRP period, and contended bias on part of the Resolution Professional and majority CoC members.
The NCLAT bench was faced with a split opinion from an earlier Division Bench: one member upheld the exclusion and found the process compliant with the Insolvency and Bankruptcy Code, 2016 ("Code") and regulations, while the other member held the exclusion and delayed document supply vitiated the meeting and warranted restoration of the CIRP at that stage.
On reference, the NCLAT's majority opinion, authored by Member (Technical) Naresh Salecha, examined the relevant provisions of the Code and the Insolvency and Bankruptcy Board of India (IBBI) Regulations, particularly Section 24 of the Code and Regulations 21 and 24 of the CIRP Regulations, 2016. It emphasized that:
1. Exclusion of Representative Was Justified: Regulation 21(2) mandates that participants attending CoC meetings through authorised representatives must provide prior written authorisation and confidentiality undertakings. These are not mere formalities but substantive safeguards, especially when confidential resolution plans are under consideration. Despite earlier participation without formal authorisation, the heightened confidentiality at the 20th meeting justified strict compliance. The Resolution Professional's insistence and consequent exclusion of Mr. Bapuji for non-compliance did not invalidate the meeting. The absence of a suspended director or their representative does not invalidate CoC proceedings under Section 24(4).
2. Supply of Resolution Plan After Confidentiality Undertaking Is Lawful: The judgment referred to the Supreme Court's ruling in Vijay Kumar Jain v. Standard Chartered Bank (2019), which recognizes the right of suspended directors to access resolution plans but also authorizes confidentiality undertakings to protect sensitive information. Furnishing the resolution plan and related documents only after the appellant's representative furnished the confidentiality undertaking on 25 July 2024, and sharing the documents on 29 July 2024-prior to closure of e-voting on 1 August 2024-did not violate the appellant's rights or the law.
3. Subsequent CoC Meetings and Resolution Plan Approval Are Valid: The pendency of interlocutory applications challenging the 20th meeting did not stay the CIRP or subsequent CoC meetings. The Resolution Professional was entitled to convene meetings and continue the resolution process until the plan was approved by the CoC and sanctioned by the Adjudicating Authority. The resolution plan by Rungta Mines Limited, approved with 85.35% voting share, was lawfully passed and later implemented fully, with closure report recorded.
4. Costs Reduced But Imposed: While the Appellate Authority confirmed that the appellant's challenges amounted to attempts to obstruct and delay the CIRP, it also held that the exemplary costs of Rs. 5,00,000/- imposed by the Adjudicating Authority were disproportionate. The tribunal reduced the costs to Rs. 2,00,000/- considering the nature of the challenge concerning procedural conduct of CoC meetings.
5. No Need for SRA's Formal Impleadment: Considering that the resolution plan has been implemented and the rights of the Successful Resolution Applicant (SRA), Rungta Mines Limited, have crystallized, the tribunal found no prejudice in disposing of the appeals without formally impleading the SRA as a party, although the caveat and submissions of the SRA were taken on record.
The judgment thus reinforces the importance of adhering to procedural safeguards under the Insolvency and Bankruptcy Code and Regulations, balancing transparency with confidentiality during CIRP. It clarifies that exclusion of a representative for non-compliance with written authorisation and confidentiality requirements is lawful and does not vitiate CoC proceedings. It further confirms that the supply of resolution plans post-confidentiality undertaking fulfills the duty to enable meaningful participation without compromising sensitive information. Finally, the ruling protects the sanctity of resolution plans approved and implemented in accordance with the law, discouraging dilatory tactics in insolvency proceedings.
This authoritative decision will guide insolvency professionals, suspended directors, and stakeholders in CIRP processes regarding the procedural requisites for participation and access to confidential materials and underscores the judiciary's intent to uphold the time-bound and value-maximizing objectives of the Insolvency and Bankruptcy Code.
Bottom Line:
Insolvency and Bankruptcy Code - Suspended director's representative can be excluded from CoC meeting for want of prior written authorisation and confidentiality undertaking - Supply of resolution plan and related documents after furnishing confidentiality undertaking, but before close of e-voting, does not violate Vijay Kumar Jain - Subsequent CoC meetings and approved resolution plan not liable to be interfered with - Costs reduced from Rs. 5,00,000/- to Rs. 2,00,000/-.
Statutory provision(s):
Section 24(3) and 24(4) of Insolvency and Bankruptcy Code, 2016; Regulations 21(2), 21(3)(iii), 24(2), 24(4), 24(7), 35(2) of IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016; Section 61 of Insolvency and Bankruptcy Code, 2016
