NCLT refused to appoint a Resolution Professional as Liquidator of the same corporate debtor, citing the amended Section 34(4) of IBC which prohibits such dual roles to ensure impartiality.
NCLT Rejects RP’s Appointment as Liquidator in Same Case
In a ruling reinforcing structural integrity in insolvency proceedings, the National Company Law Tribunal (NCLT) has rejected the appointment of a Resolution Professional (RP) as Liquidator for the same corporate debtor. The order follows the amendment to Section 34(4) of the Insolvency and Bankruptcy Code (IBC), introduced via the IBC (Amendment) Act, 2021.
The amendment explicitly prohibits an RP from being appointed as a liquidator if they have served in that role during the CIRP. NCLT held that this bar ensures independence in the liquidation process and prevents conflict of interest. The tribunal rejected arguments that the RP’s familiarity with the case warranted exception.
With the Committee of Creditors failing to approve a resolution plan within the stipulated time, the matter progressed to liquidation. NCLT directed the IBBI to empanel a fresh liquidator from its database, ensuring compliance with Rule 36 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016.
This decision underlines the growing emphasis on role segregation in IBC proceedings. Legal practitioners must ensure compliance with statutory disqualifications when proposing professionals. The trend reflects broader regulatory focus on checks and balances in insolvency administration.
Citations
- Insolvency and Bankruptcy Code, 2016, Section 34(4)
