NCLAT Sets Aside Adverse Observations Against Resolution Professional Misattributed from CoC Member’s Submissions

The NCLAT set aside the adverse observations made against the Resolution Professional, holding that they were incorrectly based on submissions made by a member of the Committee of Creditors.

The National Company Law Appellate Tribunal (NCLAT), Principal Bench, comprising Justice Ashok Bhushan (Chairperson) and Technical Members Mr. Barun Mitra and Mr. Arun Baroka, while adjudicating an appeal, held that adverse observations against a Resolution Professional cannot be sustained when they are based on statements or submissions actually made by a member of the Committee of Creditors (CoC), and not by the Resolution Professional. The Tribunal concluded that such misattribution constitutes a valid ground for modifying the impugned order to expunge the incorrect findings.

.The National Company Law Appellate Tribunal (NCLAT) disposed of an appeal filed by the Resolution Professional (RP), which was confined to a limited prayer for deletion of certain adverse observations made against the RP in the National Company Law Tribunal’s (NCLT) order dated 30.04.2024. These observations, according to the RP, incorrectly attributed certain statements and intentions to the RP, which were in fact made by a member of the Committee of Creditors (CoC), Suraksha ARC. The RP had earlier filed IA No. 2379/ND/2024 before the Adjudicating Authority seeking deletion of the impugned remarks, but the said application was rejected by order dated 14.05.2024.

In the appeal, counsel for the RP submitted that references in Paragraph 2(n), the last sentence of Paragraph 6, and Paragraph 7 of the NCLT’s order wrongly used the term “Applicant” to refer to the RP, whereas the factual assertions regarding the non-renewal of the fire NOC and the frustration of the resolution plan were actually made by Suraksha ARC. Counsel referred to Paragraph 4 of the written submissions filed by Suraksha ARC, which had clearly stated that the resolution plan could not be implemented due to the lapse of hospital licenses and fire NOC, and not by the RP.

Upon examining the record, the NCLAT found that the statements contained in Paragraph 4 of the written submissions were indeed made by Suraksha ARC and had been wrongly attributed to the RP by the Adjudicating Authority. The Tribunal concluded that the RP’s application seeking deletion of these observations deserved to be allowed. Although counsel for the Successful Resolution Applicant (SRA) submitted that the RP had agreed with the factual situation regarding the non-implementability of the plan due to a lack of fire NOC, the NCLAT held that the core grievance was limited to the incorrect attribution of the prayer for rejection of the resolution plan to the RP.

Accordingly, the NCLAT set aside the NCLT’s order dated 14.05.2024 and allowed IA No. 2379/ND/2024 to the extent of deleting the incorrect observations against the Resolution Professional. The appeal was disposed of with these directions.

Ms. Eshna Kumar, Advocate with Ms. Ritu Rastogi, RP, represented the Appellant.

Mr. Vardaan Bhatia, Advocate, appeared for the Respondent No. 2 and Respondent No. 2A.

Mr. Chintranshul A. Sinha, Mr. Sagar Bansal, Ms. Pallavi, Mr. Shivam Shorewala, Ms. Aakansha, Ms. Rakshita Bhargava, Advocates, appeared for the Respondent No. 3.

Mr. Sumesh Dhawan, Ms. Vatsala Kak, and Mr. Raghav Dembla, Advocates, represented the SRA.

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