The , , has issued a landmark ruling emphasizing that individual creditors cannot unilaterally bypass the statutory framework of the () to challenge ongoing corporate insolvency proceedings. In a stern order, the bench consisting of Judicial Member Shri Mahendra Khandelwal and Technical Member Shri Atul Chaturvedi dismissed an application filed by Dr. Sudip Saran, a homebuyer in a project managed by Spaze Towers Pvt. Ltd., which sought to de-rail the company’s insolvency process by requesting the removal of both the and the .
The tribunal’s decision reaffirms that the is a collective, structured mechanism where individual grievances, while valid in nature, must be channeled through established statutory provisions rather than through independent litigation that threatens the entire process. The case centered on the applicant's contention that he was excluded from key decision-making stages of the CIRP, specifically regarding the approval of and the evaluation of claims.
Adherence to Statutory Mechanisms The applicant, Dr. Sudip Saran, had invested significantly in the Spaze Apotel / Boulevard-II project, but his claim was partially rejected by the RP, who admitted ₹92,14,110 of his claim while keeping the balance of ₹2,24,347 under verification before eventually rejecting it based on the 's financial records. The applicant alleged that the RP’s failure to admit his full claim, coupled with an alleged lack of access to critical documentation such as the Request for Resolution Plan (RFRP) and meeting minutes, constituted a violation of his rights as a member of the (CoC).
However, the tribunal noted that the resolution professional is limited to verifying claims against the records of the
. As the court clarified,
"The Code prescribes the respective roles and functions of the Resolution Professional,
and Authorised Representative and also provides the manner in which claims are to be submitted and verified, creditors in a class are to be represented, meetings of the CoC are to be conducted and
are to be considered."
The bench observed that the RP does not possess the
of a court to settle disputed contractual claims and found that the rejection of the disputed amount was based on the verifiable records of the company, showing no material evidence of professional misconduct or deliberate exclusion.
Collective Interests Over Individual Grievances A critical aspect of the ruling was the tribunal's refusal to entertain requests for the removal of the Resolution Professional and the Authorised Representative in the absence of procedural compliance. The applicant attempted to seek their removal by invoking the tribunal’s under Rule 11 of the Rules, 2016, and . The bench rejected this approach, pointing to the specific provisions laid out in the law. Under , the replacement of an RP requires the approval of at least 66% of the voting share within the CoC. Similarly, the replacement of an Authorised Representative of a class of creditors is governed by Regulation 16A(3A) of the (Insolvency Resolution Process for Corporate Persons) Regulations, 2016, which requires a minimum of 10% of the voting share from the creditor class to trigger the replacement process.
In its judgment, the bench emphasized that individual creditors cannot circumvent these specific requirements.
"Where the Code provides a particular procedure for the CoC to replace the Resolution Professional under Section 27 and the Regulations provide a specific procedure for replacement of the Authorised Representative under Regulation 16A(3A), the same cannot be circumvented by invoking Section 60(5) read with Rule 11,"
the tribunal remarked. This highlights the judiciary's commitment to protecting the integrity of the CIRP, ensuring that a single stakeholder cannot halt the commercial recovery process on the basis of personal assertions of negligence or bias without solid, admissible proof of fundamental illegality.
Evaluating Claims of Misconduct The applicant had also sought to initiate disciplinary proceedings against the respondents, alleging collusion and a general failure to provide information. The tribunal closely examined these allegations, finding that the respondents had provided evidence of communication to the email address registered by the applicant. Furthermore, the tribunal noted that the applicant had not fulfilled his own duties under the code, such as providing necessary required to access sensitive documents like the .
Regarding the applicant’s call for a comprehensive , the tribunal noted that while such audits are legitimate tools within the insolvency process, they cannot be ordered merely on the basis of general apprehensions. The court required specific material evidence of wrongdoing to justify such an intervention, which the applicant failed to produce. The bench also addressed the applicant’s reliance on a prior disciplinary order against the RP, ruling that past regulatory penalties do not automatically establish misconduct in a separate, ongoing resolution process.
The tribunal concluded that the CIRP had proceeded in accordance with the law, with the having already received overwhelming support from the CoC—reaching 99.989% approval in certain instances. By dismissing the application, the has sent a clear message that the efficiency and finality of the insolvency process depend on participants adhering to the prescribed statutory avenues for dispute resolution. The ruling serves as a reminder to creditors that while the provides a robust forum for the protection of interests, this forum operates through collective action and procedural discipline, and the tribunal will not allow individual members to undermine the commercial viability of a restructuring plan through fragmented, non-compliant litigation. The case stands dismissed with no order as to costs, allowing the insolvency proceedings for Spaze Towers to continue toward their ultimate resolution without further procedural interference.
insolvency procedure compliance - creditor participation rights
