JSA successfully represents PTC India Financial Services Ltd., in securing majority verdict before the National Company Law Appellate Tribunal, Chennai Bench; preserving resolution plan in the CIRP of NSL Nagapatnam Power and Infratech Limited
JSA Advocates and Solicitors (JSA) successfully represented PTC India Financial Services Limited ("PFS"), a financial creditor and member of the Committee of Creditors (CoC), in one of the most significant appellate insolvency disputes arising from the Corporate Insolvency Resolution Process ("CIRP") of NSL Nagapatnam Power and Infratech Limited ("Corporate Debtor").
JSA had previously represented PFS before the NCLT, Hyderabad Bench, culminating in the approval of the resolution plan submitted by Rungta Mines Limited in May 2025. The approved resolution process was subsequently challenged by the suspended promoter-director of the corporate debtor through multiple applications alleging irregularities in the conduct of the CIRP, particularly the validity of the 20th CoC meeting at which competing resolution plans were evaluated and the successful resolution plan was approved.
The challenge centred on the exclusion of the appellant's purported representative from the 20th CoC meeting due to the absence of valid authorization and a confidentiality undertaking. It was contended that such exclusion, along with the alleged non-disclosure of resolution-plan documents, vitiated the CIRP and the subsequent approval of the resolution plan.
After the NCLT dismissed these challenges, holding them to be devoid of merit and intended to delay the resolution process, the suspended management/Board of Directors of the Corporate Debtor appealed before the NCLAT. The matter assumed significance when the Division Bench rendered a rare split verdict. While the Judicial Member dismissed the appeals and upheld the resolution process, the Technical Member set aside the approval order, quashed the minutes of the 20th CoC meeting, and directed that the CIRP recommence from that stage.
The split verdict was subsequently referred to a Third Member of the NCLAT, raising important questions regarding the participation rights of suspended directors, confidentiality protections applicable to resolution-plan information, and the circumstances in which procedural irregularities may justify setting aside an approved resolution plan.
By judgment dated 18 September 2026, the Third Member concurred entirely with the Judicial Member, resulting in a majority verdict in favour of the CoC and the successful resolution applicant. The decision preserved the approved resolution plan and rejected the challenges raised by the suspended management.
To arrive at the majority opinion, the Hon'ble Third Member, inter alia, laid down the following principles:
- Regulation 21(2) of the IBBI (CIRP) Regulations, 2016 is not a mere procedural or administrative formality. It serves the substantive purpose at the stage when the CoC is called upon to deliberate upon resolution plans, which constitute some of the most commercially sensitive information generated during the CIRP.
- The requirement ensures that participation in such deliberations is confined to persons whose identity and authority to represent a participant are duly established.
- Where written authorisation and a confidentiality undertaking are stipulated in advance in the meeting notice, non-compliance cannot be treated as an inadvertent or inconsequential omission.
- The mere fact that the requirement was not insisted upon at earlier meetings of a different nature, cannot operate as a waiver of requirement when the CoC is called upon to consider material of a significantly higher degree of confidentiality.
- An undertaking furnished by a person whose authority to represent a director has not been established does not stand on the same footing as one furnished by the director or a duly authorised representative. Excluding an unauthorised representative does not deny the suspended director's right under Section 24(4) of the Insolvency and Bankruptcy Code, 2016, which may be exercised personally or through a duly authorised representative; the absence of a director does not invalidate the proceedings.
- In any event, suspended directors are not entitled to receive resolution plans unconditionally. The resolution professional may require a confidentiality undertaking to balance access with the need to protect confidential information, and no particular point of time is prescribed for obtaining it.
- Departure from a procedural requirement does not by itself vitiate proceedings unless actual and demonstrable prejudice is shown; there is no automatic annulment.
- In assessing whether to interfere, a holistic view should be adopted i.e., account for the pendency of CIRP and the position of other stakeholders.
- An approved and implemented resolution plan should not be set aside on a procedural objection which does not deny substantive opportunity, as that would be inconsistent with the time-bound, value-preserving framework of the Insolvency and Bankruptcy Code, 2016.
The matter involved a value of approximately INR 700 crores (Indian Rupees Seven Hundred Crores).
JSA Disputes Team comprised Sidharth Sethi, Lead Partner; Shreya Sircar, Partner; and Riya Singh, Associate. The matter was argued by Mr. Niranjan Reddy, Senior Advocate, who was assisted by JSA team.