Tribunal Upholds Statutory Mechanism for Replacement of Insolvency Professionals, Declines to Reopen CIRP or Order Fresh Resolution Plans Based on Individual Grievance
In a significant ruling dated October 5, 2026, the National Company Law Tribunal (NCLT), New Delhi Bench, delivered its verdict in the case of Dr. Sudip Saran v. Mr. Narendra Kumar Sharma & Anr., concerning the corporate insolvency resolution process (CIRP) of Spaze Towers Pvt. Ltd. The tribunal dismissed the individual homebuyer's application seeking removal of the Resolution Professional (RP) and the Authorised Representative (AR), as well as the reopening of the CIRP to invite fresh resolution plans and conduct forensic audits.
Dr. Sudip Saran, an allottee of a service apartment in the Spaze Apotel/Boulevard-II project, had approached the tribunal under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 ("the Code") read with Rule 11 of the NCLT Rules, 2016. The applicant alleged that he was denied proper participation in the CIRP, including non-receipt of crucial documents such as notices, agendas, minutes of the Committee of Creditors (CoC) meetings, Information Memorandum, and resolution plans. He also contended that his claim was only partly admitted and that the interest component was not recognized, adversely affecting his voting rights. Additionally, the applicant sought the removal of the RP and AR for alleged non-disclosure and collusion, disciplinary proceedings, issuance of fresh Form G, fresh invitation of resolution plans, and a comprehensive forensic audit.
The tribunal, after hearing submissions from all parties, observed that the CIRP is a structured and statutory process governed by the Code and the Insolvency and Bankruptcy Board of India (IBBI) Regulations. It emphasized that the Code explicitly provides the procedure for replacing the Resolution Professional under Section 27, requiring the Committee of Creditors to pass a resolution with at least 66% voting shares and obtain the written consent of the proposed RP. Similarly, Regulation 16A(3A) of the CIRP Regulations mandates a specific process for replacing the Authorised Representative, which must be followed by creditors in the class holding at least 10% voting share.
The tribunal held that an individual creditor cannot bypass these statutory mechanisms by filing an application under Section 60(5) read with Rule 11. It cited the NCLAT judgment in Ashmeet Singh Bhatia v. Rakesh Verma, which upheld that the procedure for replacing the AR must be adhered to, and an application by a single homebuyer for removal without following the prescribed process is not maintainable.
On the verification of the applicant's claim, the tribunal found that the Resolution Professional's role is limited to collating and verifying claims based on the corporate debtor's records and does not extend to adjudicating disputed claims. The partial non-admission of the amount claimed by the applicant was justified as the disputed amount was not reflected in the corporate debtor's books.
Regarding the allegations of non-receipt of notices and CIRP documents, the RP and AR submitted that communications were sent to the email address provided by the applicant and that notices and minutes of CoC meetings were circulated as per the statutory requirements. The tribunal found no credible material to support the contention that the applicant was deliberately excluded from the CIRP process.
The tribunal further noted that access to confidential CIRP documents such as the Information Memorandum and resolution plans is governed by statutory confidentiality provisions and cannot be claimed by an individual creditor without furnishing the requisite confidentiality undertakings.
Importantly, the tribunal underscored that the applicant, as a member of a class of creditors represented by the AR, cannot independently challenge the collective CIRP process or seek its reopening merely on personal grievances. Serious allegations of collusion and mala fide conduct require cogent evidence, which was absent in this case.
Consequently, the tribunal dismissed the application, refusing to order removal of the RP and AR, fresh invitation of resolution plans, or forensic audit. It reaffirmed that the statutory procedures established under the Code and Regulations must be followed to ensure transparency and fairness in the CIRP.
This judgment reinforces the procedural sanctity of insolvency processes and clarifies that individual creditors must operate within the collective framework prescribed by the Code, safeguarding the integrity of the CIRP mechanism.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Individual homebuyer/allottee forming part of a class of creditors cannot, by invoking Section 60(5) of the Code read with Rule 11 of the NCLT Rules, bypass the specific statutory mechanism for replacement of Resolution Professional under Section 27 or replacement of Authorised Representative under Regulation 16A(3A) - Mere individual grievance regarding non-receipt of documents, non-admission of part of claim, or alleged exclusion from CIRP, without cogent material, does not justify re-opening CIRP, removal of RP/AR, issuance of fresh Form G, or directing forensic audit.
Statutory provision(s):
Insolvency and Bankruptcy Code, 2016 Sections 25A, 27, 60(5); Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 Regulation 16A(3A)
Dr. Sudip Saran v. Mr. Narendra Kumar Sharma, (NCLT)(New Delhi) : Law Finder Doc Id # 3001746
