NCLAT Upholds NCLT Order Asking CoC To Consider Prior Judicial Observations On RP Before Appointment

The National Company Law Appellate Tribunal (NCLAT) in Chennai has refused to interfere with an order directing the Committee of Creditors (CoC) to consider adverse observations made against an insolvency professional in an earlier proceeding.

The observations were to be considered before proceeding with approval of his appointment as Resolution Professional in two corporate insolvency cases.

A bench of Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain observed that the National Company Law Tribunal (NCLT) Hyderabad's direction was only precautionary in nature. It did not finally determine any rights.

“In that eventuality, the orders, which have been subjected to challenge in the instant Appeals have not been attached with any finality, but rather the Adjudicating Authority has taken a precaution that the CoC while considering its decision dated 05.03.2026, to continue the Appellant as a Resolution Professional under Section 22 (2) of the Code, may take note of the observations recorded in the orders referred to in the impugned order and to record its reason on the same before pursuing the matter of appointment of the Appellant as RP with Learned NCLT.”, it noted.

The appeals were filed by TSN Raja, the Interim Resolution Professional (IRP) of Panduranga Energy Systems Pvt. Ltd. and GMP Infrastructure Pvt. Ltd.

The corporate insolvency resolution process against the two companies commenced in February 2026. The following month, the CoC voted unanimously to continue Raja as Resolution Professional. Applications were later filed before the National Company Law Tribunal seeking approval of his appointment.

While considering those applications, the tribunal referred to earlier orders passed in proceedings concerning VNR Infrastructure Ltd., where Raja had acted as liquidator. The tribunal noted that adverse observations had been made in those proceedings.

It also noted that the matter had been referred to the Insolvency and Bankruptcy Board of India (IBBI) for such action as it deemed appropriate. The CoC was directed to consider those orders and revert.

Raja challenged that direction before the appellate tribunal. He contended that the creditors had already approved his appointment unanimously. He also argued that no proceedings had been initiated against him by the IBBI despite the earlier observations.

The appellate tribunal noted that the CoC had only been asked to consider the earlier orders before pressing for approval of Raja's appointment. It further noted that no final decision had yet been taken on the issue.

“In fact, the impugned orders merely solicit an opinion from the CoC on the issue of appointment of RP in the light of observations made by the Learned NCLT in IA/741/2021 before pressing the application preferred by the Appellant under Section 22 (2) of the Code and the logic behind it is that, the CoC should be in a position to have entire conspectus of the credibility of the Appellant as to whether at all, he deserves to be appointed as RP in the light of the provisions contained under the provision of Section 22 (2) of the Code.”, it observed.

The bench observed that the effect of the earlier observations on Raja's appointment remained to be determined by the CoC. Since the impugned orders did not decide any substantive rights, they could not be treated as final orders.

The tribunal observed that the directions merely facilitated the decision-making process and were interlocutory in nature.

The NCLAT therefore declined to interfere and dismissed both appeals.