NCLT Is Bound To Appoint IRP Proposed By Corporate Debtor: Madras High Court

The Madras High Court on Monday held that the suggestions of the financial creditor, operational creditor, or corporate debtor with regard to the appointment of the IRP are liable to be accepted. While hearing a writ petition challenging the appointment of an Interim Resolution Professional (IRP) by the National Company Law Tribunal (NCLT), Chennai, the Madras High Court interpreted Sections 10 and 16 of the Insolvency and Bankruptcy Code, 2016. The petition was filed challenging the appointment of the IRP, which deviated from the name proposed by the corporate debtor. The bench noted that the combined reading of Sections 10(3)(b) and 16(2) of the Code lays down that the IBBI board is bound to accept the name suggested by the financial creditor or corporate debtor. “A combined reading of Sections 10(3)(b) and 16(2) of the Code indicate that in case of applications filed by Financial Creditor (FC) or Corporate Debtor (CD) seeking ownership, it is incumbent on the Insolvency and Bankruptcy Board of India (in short 'Board') to appoint an Interim Resolution Professional (IRP) as suggested by the FC or CD as the case may be.” Annie Traders Pvt. Ltd. filed a Section 10 IBC petition before the NCLT and proposed the name of Mr. K.J. Vinod to be appointed as an IRP. However, the Adjudicating Authority appointed Mr. Thangamuthu Viswanathan, as the IRP. Aggrieved by the decision of the NCLT, Mr. Vinod approached the Hon'ble High Court to quash the NCLT's order partially. The court observed that Section 16(3) of the IBC, which allows the board's discretion to appoint an IRP, comes into play when the application is filed by the operational creditor and no name is proposed. “To be noted that even Section 16(3 which grants some leeway for the Board to appoint RP as per its discretion, would stand triggered only in the event that the Operational Creditor (OC) does not give a proposal for appointment of a specific IRP. Therefore, it appears prima facie that in all the three cases (FC, OC and CD), suggestions for appointment of IRP by the applicants, are liable to be accepted.” The bench noted that only the Committee of Creditors (CoC) can replace the IRP, and NCLT cannot do so at initial stages. The court instructed that since the NCLT has appointed the IRP different from that suggested by the corporate debtor, hence, the counsel appearing on behalf of the NCLT will file a detailed counter affidavit, clarifying the instances where the NCLT has appointed the IRP other than the proposed one. Case Title: K.J. Vinod (Insolvency Professional) v. Registrar, National Company Law Tribunal, Chennai & Ors.Citation: 2025 LiveLaw (Mad) 235 Case Number: W.P. No. 22949 of 2025 with W.M.P. Nos. 25783 & 25784 of 2025 For Petitioner: Mr. Varun Srinivasan For Respondent: Ms. S. Indumathi for R1, Mr. Girish Ramanathan for R2 Bench: Hon'ble Dr. Justice Anita Sumanth and Hon'ble Mrs. Justice Govindarajan Thilakavadi Judgment Date: 07/08/2025 Click Here To Read/Download The Order

NCLT Is Bound To Appoint IRP Proposed By Corporate Debtor: Madras High Court

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NCLT Is Bound To Appoint IRP Proposed By Corporate Debtor: Madras High Court

Mohd.Rehan Ali

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Mohd.Rehan Ali

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