NCLT rejected appointment of a Resolution Professional as Liquidator for the same corporate debtor, invoking amended Section 34(4) of IBC to prevent conflict of interest.
NCLT Bars RP from Becoming Liquidator in Same IBC Case: Conflict of Interest Rule Enforced
The National Company Law Tribunal (NCLT) has ruled that a Resolution Professional (RP) cannot be appointed as the Liquidator for the same corporate debtor under the amended Section 34(4) of the Insolvency and Bankruptcy Code (IBC). The decision comes after the Committee of Creditors (CoC) failed to secure a resolution plan, triggering liquidation proceedings.
The NCLT held that appointing the same RP as Liquidator creates a conflict of interest, as the individual would be reviewing their own conduct during the resolution process. The amendment to Section 34(4), introduced to enhance accountability, now explicitly bars such dual roles. The Tribunal emphasised institutional integrity and impartiality in liquidation, citing public confidence in IBC processes.
"The liquidator must independently assess the RP’s actions; therefore, one person cannot wear both hats,"
the order stated. This ruling mandates stricter adherence to procedural fairness during the transition from resolution to liquidation. Legal teams and CoCs must now identify alternate eligible insolvency professionals for liquidation, ensuring compliance with the bar under Section 34(4).
Citations
- In re: [Unnamed Corporate Debtor] (2026) NCLT
