Suspended Directors Are Not Entitled To Access Valuation Reports Rejected By CoC: NCLAT New Delhi
The National Company Law Appellate Tribunal (NCLAT) New Delhi held that suspended directors are not entitled to access valuation reports rejected by Committee of Creditors (CoC), since such documents were confidential and not relied upon in the resolution process. A bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) held that “when only the fresh...
The National Company Law Appellate Tribunal (NCLAT) New Delhi held that suspended directors are not entitled to access valuation reports rejected by Committee of Creditors (CoC), since such documents were confidential and not relied upon in the resolution process.
A bench of Justice Ashok Bhushan and Mr. Barun Mitra (Technical Member) held that “when only the fresh valuation reports were germane for the insolvency resolution of the Corporate Debtor which had already been shared while the earlier set of valuation reports stood rejected by the CoC in the exercise of its commercial wisdom and had therefore become superfluous, the logic behind insisting on document which had become redundant and irrelevant does not appeal to reason.”
Background:
Winsome Yarns Limited (Corporate Debtor) was admitted into Corporate Insolvency Resolution Process (CIRP) on 22 December 2023. Two valuers were initially appointed to determine the fair and liquidation value of the corporate debtor's assets. However, the CoC found these reports to be high pitched and decided to appoint two new valuers for a fresh valuation exercise.
The suspended directors sent multiple e-mails to the Resolution Professional requesting access to the earlier reports but the RP denied the request stating that they were confidential and redundant. The directors filed an application before National Company Law Tribunal (NCLT) seeking access which came to be dismissed. Aggrieved, the suspended directors had filed an appeal before the NCLAT.
The Appellant submitted that as an ex-director, the appellant was entitled to participate in the CoC meetings and access all documents including valuation reports. It was further submitted that denial of access to the valuation reports violated sections 24(3)(b) and 24(4) of the IBC which guaranteed participation rights to suspended directors. Lastly, it was submitted that the denial deprived them of an opportunity to make meaningful contributions toward the resolution process and value maximisation.
Per contra, the RP submitted that since the earlier valuation reports were rejected by the CoC, they did not form part of the CIRP records. It was further argued that under Regulation 35(2) of the IBBI (CIRP) Regulations, 2016, valuation reports are to be shared with only CoC members holding voting rights and who have submitted confidentiality undertakings, not with the suspended management. Lastly, it was submitted that new valuer reports had already been shared with the directors.
Findings:
The Tribunal observed that there is a distinction between members of the CoC and participants under section 24 of the IBC. While suspended directors are entitled to attend and participate in the meetings but they do not possess the same rights as CoC members.
The Tribunal did not find any instance where the appellants were precluded from participating in the deliberations and discussions.
The Tribunal further observed that the first two valuation reports were not part of the circulated agenda of the 9th meeting. Since the reports were confidential and had not been approved by the CoC, they could be shared with CoC members only who had given confidential undertakings.
The Tribunal further observed that even an authorised representative of a financial creditor was excused from the meeting for not submitting a confidential undertaking until the discussion on the valuation reports concluded indicating that no selective discrimination was exercised against the appellant. It held that “this is therefore clearly not a case where the RP had been arbitrary or selectively discriminatory in not sharing the valuation report with the Appellant during the 9th CoC meeting.”
The Tribunal further observed that the first valuation reports having been rejected by the CoC in its commecial wisdom had become redundant and were no longer relevant for the ongoing resolution process.
“When only the fresh valuation reports were germane for the insolvency resolution of the Corporate Debtor which had already been shared while the earlier set of valuation reports stood rejected by the CoC… the logic behind insisting on a document which had become redundant and irrelevant does not appeal to reason,” the Tribunal said.
The Tribunal further held that the RP had acted transparently by providing all relevant documents including the valuation reports relied upon by the CoC and the resolution plans.
The Tribunal further observed that the Supreme Court's judgment in Vijay Kumar Jain v. Standard Chartered Bank must be read contextually. It held that the right to participate does not automatically confer a right to access all confidential documents including those which were no longer part of the CIRP record. It held that the Apex Court's judgment was limited to sharing resolution plans under discussion, not providing rejected materials.
Accordingly, the Tribunal dismissed the present appeal holding that the suspdended directors were not entitled to access valuation reports which had been rejected by the CoC.
Case Title: Manish Bagrodia Director (Suspended Powers) of Winsome Yarns Limited Versus Anil Kohli
Case Number: Company Appeal (AT) (Insolvency) No. 1078 of 2025
Judgment Date: 29/10/2025
For Appellant : Mr. Pulkit Deora, Advocate.
For Respondent : Ms. Sandeep Bajaj, Ms. Honey Satpal, Mr. Mayank Biyani, Ms. Pooja Singh and Mr. Aakash Agarwala, Advocates