NCLAT rules on the additional report under IBC

NCLAT rules on the additional report under IBC

The tribunal advised the Adjudicating Authority to consider both the reports before taking any decision

The National Company Law Appellate Tribunal (NCLAT) has held that the Resolution Professional (RP) can submit an additional report under the Insolvency and Bankruptcy Code, 2016.

The bench comprising Justice Ashok Bhushan, Dr. Alok Srivastava and Shreesha Merla was ruling on the case of Ramesh Chander Agarwala versus the State Bank of India.

The personal guarantors of a corporate debtor had filed an appeal under IBC before the NCLAT. This was against the December 2021 order of the National Company Law Tribunal (NCLT), which appointed an RP without furnishing limited notice to the personal guarantors.

As per the rule, once the application is filed, the Adjudicating Authority (AA) has to act on it. Also, adhering to the principles, sufficient time is given to the personal guarantors to appear before the authorities. Thereafter the RP is appointed, who then submits the report. Finally, the adjudication of the application is decided by giving a proper hearing to the parties.

But the grievance of the personal guarantors was that the RP submitted the report without giving them enough time to respond to the notice.

NCLAT observed that though sufficient notice time was not issued, the personal guarantors still appeared before the AA. The tribunal, thus, permitted the personal guarantors to submit a representation to the RP. It advised that the RP then submit an additional report in continuation of his first report.

The tribunal further ruled that the AA should consider both reports before taking any decision under IBC.