Laws, Courts & Judgments.

NCLAT Rules Adverse Remarks Made Without Hearing Not to Tarnish Professional's Record

New Delhi - The National Company Law Appellate Tribunal (NCLAT) has ruled that any adverse observations made against an individual by a lower tribunal without providing an opportunity to be heard should not be considered a reflection on their character or conduct. This significant ruling reinforces the principles of natural justice within the insolvency resolution process.

Case Background

The case involved two appeals filed by Mr. Pulkit Gupta against an order dated June 13, 2025, from the National Company Law Tribunal (NCLT), Ahmedabad Bench. The NCLT had admitted insolvency petitions against two corporate debtors and, while doing so, declined to appoint Mr. Gupta as the Interim Resolution Professional (IRP), despite his name being proposed by the financial creditor.

The NCLT's order contained adverse observations against Mr. Gupta, which prompted him to file the present appeals before the NCLAT.

Arguments Presented

Mr. Gupta's counsel clarified that the appeal's objective was not to challenge the non-appointment as IRP. The appellant had no interest in pursuing the appointment. Instead, the grievance was solely against the adverse remarks, which were made based on objections raised by the corporate debtor.

Crucially, it was argued that Mr. Gupta was never given an opportunity to respond to these objections before the NCLT made its observations. This lack of a hearing, the appellant contended, violated the fundamental principles of natural justice and could unfairly harm his professional reputation.

Judgment and Key Observations

The NCLAT carefully considered the submissions and the record. The tribunal noted the appellant's clear statement that he was no longer seeking the IRP role. The bench found merit in the core of the appellant's grievance.

In its order, the NCLAT highlighted a critical procedural lapse: " Admittedly, the Appellant had no opportunity to meet the objections raised by the CD. In view of the fact that the Appellant has clearly stated that he does not intend to claim its right to be appointed as IRP... "

The tribunal provided a decisive remedy to protect the appellant's professional standing without interfering with the primary insolvency proceedings.

"We are of the view that any observation made in the order adverse to the appellant be not considered to be any adverse observation against the appellant for any purpose," the NCLAT stated.

The order further emphasized, " We observe that any observation made by the NCLT on the conduct or character of the Appellant shall not be taken as a final observation... disposal of this appeal will be no reflection on the character or conduct of the Appellant as such. "

Final Decision and Implications

The NCLAT disposed of both appeals without overturning the NCLT's primary order of admitting the insolvency petitions. However, it effectively neutralized the adverse remarks against Mr. Gupta, ensuring they would not prejudice his future professional engagements.

This decision serves as a vital precedent, underscoring that adjudicating authorities must provide individuals a fair chance to defend themselves before making observations that could impact their career and reputation. It upholds the tenet that justice must not only be done but must also be seen to be done.