Appellate Tribunal Declines to Interfere, Highlighting Non-Finality of Orders in Panduranga Energy Systems Case
In a significant development, the National Company Law Appellate Tribunal (NCLAT) has upheld the precautionary orders issued by the National Company Law Tribunal (NCLT), directing the Committee of Creditors (CoC) to reconsider the appointment of a Resolution Professional (RP) for M/s Panduranga Energy Systems Pvt. Ltd. The NCLAT, in its judgment dated May 27, 2026, emphasized that such orders are interlocutory and do not decide any final rights, thereby not warranting interference by the appellate body.
The appeals were filed by TSN Raja, the Interim Resolution Professional for Panduranga Energy Systems, challenging the NCLT's orders which required the CoC to revisit the decision of appointing him as the RP. The orders in question were precautionary, urging the CoC to consider previous observations made by the NCLT in related proceedings against VNR Infrastructure Limited, where Raja was previously appointed as the Liquidator.
The Appellant argued that the orders violated Section 22 of the Insolvency and Bankruptcy Code, 2016, by undermining the CoC's commercial wisdom, which had unanimously voted for his continuation as RP. However, the NCLAT clarified that the NCLT's directive was merely to ensure that the CoC was fully informed of past observations that could affect the RP's credibility and adherence to statutory provisions.
The NCLAT's decision highlights the importance of transparency and thorough consideration in insolvency proceedings, ensuring that all material facts and past conduct are evaluated before confirming the appointment of a Resolution Professional. The Tribunal underscored that the orders from NCLT were procedural, designed to facilitate informed decision-making by the CoC, rather than to conclude any substantive rights.
The judgment reiterates the principle that interlocutory orders, which do not attach finality to the rights of the parties involved, are not subject to appellate review unless they result in manifest injustice or contravene statutory provisions. This decision serves as a reminder of the careful balance courts must maintain between procedural safeguards and the autonomy of the CoC in insolvency resolutions.
Bottom line:-
Insolvency and Bankruptcy Code, 2016 - Orders passed by the Adjudicating Authority directing the Committee of Creditors (CoC) to reconsider the appointment of a Resolution Professional (RP) in light of earlier observations made by the NCLT are precautionary and interlocutory in nature. Such orders do not decide any final rights and hence do not warrant interference by the Appellate Tribunal.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Sections 22(2), 22(3)(a), 60(5)
