NCLAT Delhi Refuses Stay On 2-Year Suspension Of Insolvency Professional Over BRG Iron & Steel Sale

The National Company Law Appellate Tribunal (NCLAT), Delhi, on 14 October refused to stay the two-year suspension of Insolvency Professional Kannan Tiruvengadam for conducting a private sale of BRG Iron & Steel without prior consultation with the Stakeholders' Consultation Committee (SCC).

A Bench comprising Judicial Member Justice Mohd Faiz Alam Khan and Technical Member Naresh Salecha observed:

“We are of the considered view that having regard to the powers and duties conferred on the insolvency professional in IBC and relevant Regulations, once the Insolvency Professional is found tainted there is no space for him to continue as a resolution professional in other CIRPs. It is important to keep the faith of the stakeholders in the resolution of the CD through the mechanism provided in the IBC, otherwise the whole edifice of the insolvency Resolution mechanism as provided in the IBC would become meaningless to its users/ stakeholders.”

Tiruvengadam challenged the Insolvency and Bankruptcy Board of India (IBBI) Disciplinary Committee's order dated 3 September 2026 under Section 220(7) of the Insolvency and Bankruptcy Code, 2016. The order suspended his registration for two years, made him ineligible to continue his existing assignments and directed his replacement in ongoing corporate insolvency resolution processes (CIRPs).

As liquidator of BRG Iron & Steel Co. Pvt. Ltd., Tiruvengadam had accepted a private sale offer of Rs. 507.20 crore from Rimjhim Ispat Ltd. without prior SCC consultation or approval from the National Company Law Tribunal (NCLT).

Tiruvengadam argued that the Disciplinary Committee wrongly treated his non-appearance in person as misconduct, although counsel represented him at every hearing. He submitted that Regulation 13(1) of the IBBI (Inspection and Investigation) Regulations requires an opportunity of hearing but does not mandate physical presence.

He also submitted that six public auctions had failed and the reserve price had fallen to Rs. 506.03 crore, below Rimjhim's offer. He maintained that he had regularly informed the SCC of the failed auctions and reserve prices, and that the committee had neither specifically advised against a private sale nor directed him on the course to follow.

Further, he relied on legal opinions from three Senior Advocates stating that prior NCLT approval was unnecessary because the offer exceeded the last failed auction's reserve price . He argued that the suspension would ruin his 35-year professional career, during which he supervised 28 insolvency assignments (completing 22), and would disrupt the progress of his 6 ongoing CIRPs.

The IBBI argued that Regulation 31A(1)(b) requires SCC consultation on asset-sale matters, including the reserve price, marketing strategy and manner of sale. It submitted that Tiruvengadam accepted the offer without following this requirement or obtaining NCLT approval. The legal opinions were obtained only after he received 10% of the total consideration, while the SCC was informed of the sale months later. The IBBI maintained that the suspension was proportionate to the misconduct.

The Bench noted that although Tiruvengadam had regularly consulted the SCC on important matters, he accepted Rimjhim's offer without seeking the committee's advice or informing it of the proposal. It also noted that he had earlier assured the SCC that he would seek NCLT permission for a private sale but did not do so.

It observed that the legal advice was obtained after receipt of 10% of the consideration and that an insolvency professional's integrity is essential to maintaining stakeholder confidence in the insolvency process.

Accordingly, the NCLAT refused interim relief and listed the appeal for final hearing on 18 November.