Judicial Analysis Court Copy Headnote Facts Arguments Court observation

2025 Supreme(Online)(Mad) 67109

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dr.Justice Anita Sumanth, Mr.Justice N.Senthilkumar, JJ
K.J.Vinod (Insolvency Professional) – Appellant
Versus
The Registrar of the National Company Law Tribunal – Chennai Bench – Respondent
W.P.No.22949 of 2025

Advocates:
For the Appellants/Petitioners: Mr.Varun Srinivasan
For the Respondents: Ms.Indumathi Ravi, Mr.Guru Dhananjay, for Mr.S.A.Vivekananda

NCLT must appoint the recommended Interim Resolution Professional unless disciplinary proceedings exist, ensuring compliance with statutory obligations under the Insolvency and Bankruptcy Code.

Headnote:(A) Insolvency and Bankruptcy Code, 2016 - Sections 10(3)(b) and 16(2) - Challenge to the appointment of Interim Resolution Professional - The petitioner, an Insolvency Professional, contended that the NCLT’s appointment of another individual as IRP instead of the petitioner was arbitrary and in violation of mandatory statutory provisions. Court emphasized that the Tribunal must appoint the IRP as recommended by the Corporate Debtor or Financial Creditor unless disciplinary proceedings exist against the recommended candidate. (Paras 2-20)

(B) Authority of NCLT - The powers vested in the NCLT are bound by statutory provisions; deviation from procedural undertakings without legitimate grounds renders the appointment unsustainable. (Paras 16-19)

Facts of the case:
The petitioner claimed wrongful non-appointment as Interim Resolution Professional against the appointed individual by NCLT in an application under the IB Code by the Corporate Debtor. The petitioner highlighted the mandatory requirement for NCLT to adhere to recommendations unless there are pending disciplinary actions.

Findings of Court:
The court found that the NCLT’s action in appointing an IRP contrary to the suggested individual lacked statutory basis and undermined the established legal framework.

Issues: Whether the NCLT possessed discretion to diverge from the applicant's recommendation regarding IRP appointments under the IB Code.

Ratio Decidendi: The court determined that Sections 10(3)(b) and 16(2) create an obligation for the NCLT to appoint the recommended IRP without deviation in the absence of disciplinary proceedings. The NCLT's authority does not extend to arbitrarily overlooking these recommendations.

Result: The NCLT's order was set aside, and the case was remanded for fresh orders compliant with legal principles.

Table of Content
1. petitioner claims wrongful non-appointment as irp. (Para 2 , 4)
2. mandatory appointment of irp based on statutory recommendations. (Para 5 , 6)
3. nclt's discretion limited to specific circumstances. (Para 7 , 8 , 9 , 11)
4. legal framework requiring adherence to recommendations. (Para 12 , 13 , 18)
5. court reinforces obligations of nclt in irp appointments. (Para 16 , 19)
6. writ petition allowed; nclt order set aside. (Para 20 , 21)

ORDER

(Made by Dr. ANITA SUMANTH.,J)

The petitioner is an Insolvency Professional and is aggrieved by an order passed by the National Company Law Tribunal (‘NCLT’ / ‘Tribunal’) / R1 on 04.06.2025 as under that order, the NCLT has proceeded to appoint one Mr.Thangamuthu Viswanathan as the Interim Resolution Professional (IRP) of R2 instead of the petitioner.

2. Mr.Varun Srinivasan, who appears for the petitioner states that the petitioner was enrolled as a member of the Insolvency Professional Agency of Institute of Cost Accountants of India (‘Agency’). He is also registered as a Resolution Professional (RP) with the Insolvency and Bankruptcy Board of India (‘IBBI’ / ‘Board’) / R3 and has a valid Authorization for Assignment (AFA) issued by the Agency valid till 30.06.2026.

3. An application under Section 10 of the Insolvency and Bankruptcy Code, 2016 (‘IB Code’) had been referred by R2 seeking initiation of Corporate Insolvency Resolution Process (CIRP). In that application, R2 had recommended that the petitioner acts as IRP. The recommendation was as per (3)(b) of the IB Code.

4. When the matter had come up for admission, the NCLT had gone ahead to appoint another RP in preference to the petitioner with which appointment the petitioner is aggrieved as being in contravention of the statutory provisions, particularly Section 16 (2) of the IB Code.

5. According to the petitioner, it is mandatory for the NCLT to appoint the IRP as recommended by the Financial Creditor (FC) under Section 7 of the IB Code or the Corporate Debtor (CD) as per Section 10 of the IB Code. It is only when an Operational Creditor (OC) prefers an application under Section 9 of the Code that the NCLT may has some leeway to deviate from the proposal of the OC qua the proposed RP.

6. Emphasis is laid on the fact that a RP has to undergo rigorous training in order to obtain the necessary professional qualifications. The IBBI is the governing statutory body, which regulates the appointments of IRPs, stipulate the requisite eligibility criteria and issues certificates recognizing them as Insolvency Professionals.

7. Thus, the competence and eligibility of the professional is beyond question, and where the recommendation of an IRP has been made by the applicant under Sections 7 and 10 of the Code, there is no provision that enables the NCLT to deviate from such recommendation. The legal issue that arises is thus whether the NCLT is vested with the requisite discretion to override the recommendation of the applicant under Section 7 and 9 in appointing an RP of its choice.

8. We had requested Ms.Indumathi Ravi, who accepted notice for the NCLT, to obtain instructions in regard to the legal issue as framed above.

9. After hearing the parties, an order had come to be passed on 07.07.2025 expressing our prima facie view in the following terms:-

“The petitioner relies on Sections 10 (3)(b) and 16(2) of the Insolvency and Bankruptcy Code, 2016 (in short 'Code') reading thus:

Section 10 . Initiation of corporate insolvency resolution process by corporate applicant.

............

(3) The corporate applicant shall, along with the application furnish the information relating to--

(a) .............

(b) the resolution professional proposed to be appointed as an interim resolution professional.

...............

Section 16 Appointment and tenure of interim resolution professional.

...............

(2) Where the application for corporate insolvency resolution process is made by a financial creditor or the corporate debtor, as the case may be

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2025 Supreme(Online)(Mad) 67109

IN THE HIGH COURT OF JUDICATURE AT MADRASDr.Justice Anita Sumanth, Mr.Justice N.Senthilkumar, JJK.J.Vinod (Insolvency Professional) – AppellantVersusThe Registrar of the National Company Law Tribunal – Chennai Bench – RespondentW.P.No.22949 of 2025

NCLT must appoint the recommended Interim Resolution Professional unless disciplinary proceedings exist, ensuring compliance with statutory obligations under the Insolvency and Bankruptcy Code.

IN THE HIGH COURT OF JUDICATURE AT MADRAS
Dr.Justice Anita Sumanth, Mr.Justice N.Senthilkumar, JJ
K.J.Vinod (Insolvency Professional) – Appellant
Versus
The Registrar of the National Company Law Tribunal – Chennai Bench – Respondent
W.P.No.22949 of 2025