The National Company Law Appellate Tribunal (NCLAT) has held that a resolution professional can ask suspended directors to furnish a confidentiality undertaking before providing them access to a resolution plan and other confidential material in a corporate insolvency resolution process (CIRP) [Mandava Prabhakar Rao Vs Navneet Gupta].
Technical Member Naresh Salecha, who was called upon to resolve an earlier split verdict by the NCLAT, agreed with the view that such a requirement does not violate the rights of suspended directors to participate CIRP.
“The resolution professional can take an undertaking from members of the erstwhile board of directors to maintain confidentiality,” Salecha held.
He said that the right of suspended directors to access resolution plans has to operate alongside their obligation to maintain confidentiality.
The ruling arose from appeals filed by Mandava Prabhakar Rao, a suspended director of NSL Nagapatnam Power and Infratech Limited.
The dispute concerned the company's 20th Committee of Creditors (CoC) meeting held on July 16, 2024.
Rao had nominated Nelluri Bapuji to represent the suspended management in CoC meetings.
Bapuji had participated in several earlier meetings. However, at the 20th meeting, he was asked to leave after failing to furnish a written authorisation and a confidentiality undertaking.
The meeting involved consideration of resolution plans submitted for the company.
Rao challenged Bapuji's exclusion, arguing that it deprived the suspended management of its statutory right to participate in the CIRP and access material necessary to make representations before the CoC.
The resolution professional maintained that the 20th CoC meeting involved commercially sensitive material and that access could be granted only after compliance with confidentiality requirements.
The appeals were initially heard by a two-member NCLAT Bench comprising Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain. The Bench delivered a split verdict on November 10, 2025.
Justice Sharma upheld the insolvency process while Swain took the view that the exclusion of the suspended director’s representative from the 20th CoC meeting was impermissible and warranted reopening the process from that stage.
In view of the difference of opinion, the points on which the two members disagreed were referred to Technical Member Naresh Salecha for determination as the third member.
Salecha agreed with Justice Sharma's view and held that no interference was warranted with the 20th, 21st or 22nd CoC meetings.
He also declined to interfere with the resolution plan submitted by Rungta Mines and agreed that the costs imposed on Rao should be reduced to ₹2 lakh.
The judgment further noted that Rungta Mines had already implemented the resolution plan and paid ₹176.83 crore, including amounts towards the resolution plan, CIRP costs and upfront payment.
He observed that undoing an approved and implemented resolution plan over a procedural objection that had caused no substantive prejudice would have consequences far beyond the alleged irregularity.
Such an approach, he said, would also run contrary to the IBC's emphasis on timely resolution and preservation of value.
The matter will now be placed before the appropriate NCLAT Bench for passing a final order in accordance with the majority opinion.
Senior Advocate Ramji Srinivasan appeared for Rao along with advocates VVSN Raju, GVL Meghana, Shefali Munde and Aryansh Tripathi.
Senior Advocate Arun Kathpalia appeared for the resolution professional along with advocates Pulkit Deora and Anjali Soni.
Senior Advocate Niranjan Reddy appeared for PTC India Financial Services along with advocates Sidharth Sethi, Shreya Sircar and Riya Singh.
Senior Advocate Abhijeet Sinha appeared for Rungta Mines along with advocates Amir Bavani, Dhananjaya Mishra, Rishika Kumar, Pragati Prajapati, Ayan Rai, Navneet Dogra and Bhargav Verma.
[Read Judgment]