NCLT Delhi Mandates Strict Locus Standi Rules for RP Removal Post-CoC Approval in CIRP

The insolvency resolution framework in India, governed by the Insolvency and Bankruptcy Code, 2016 (IBC), is designed to ensure a time-bound and efficient revival of a distressed corporate entity. However, the process is frequently derailed by a barrage of frivolous interlocutory applications (IAs) filed by various stakeholders, including suspended directors and financial creditors. In a significant judicial pronouncement, the National Company Law Tribunal (NCLT), New Delhi, addressed a complex web of such applications in the Corporate Insolvency Resolution Process (CIRP) of Nimitaya Hotel & Resorts Ltd.

The ruling in the matter of Indian Bank Vs Nimitiya Hotel And Resorts Limited (Appeal Number ITEM No. 201 (IB)-1913(ND)2019) delivered on 16/07/2026, serves as a critical precedent. It firmly establishes that once the Committee of Creditors (CoC) has approved a resolution plan, the suspended management entirely loses the locus standi to demand the replacement of the Resolution Professional (RP). Furthermore, the Tribunal took a stringent view against institutional creditors attempting to arbitrarily replace the RP without substantive justification.

This comprehensive analysis breaks down the Tribunal's observations across multiple IAs, highlighting the legal principles enforced to prevent the abuse of the judicial process.

Introduction to the CIRP Proceedings and Stakeholder Dynamics

When a corporate assessee defaults on its financial obligations and is admitted into CIRP, the management of its affairs vests in an independent Resolution Professional. The suspended directors, who previously managed the corporate assessee, are legally obligated to assist the RP. However, adversarial dynamics often emerge, leading to protracted litigation.

In the present case, the CIRP of Nimitaya Hotel & Resorts Ltd. witnessed numerous applications filed by the suspended directors (Mr. Sanjeev Mahajan and Mr. Brij Mohan Mahajan) and the sole CoC member (Indian Bank). These applications ranged from seeking the removal of the RP to requesting the transfer of proceedings to a different bench. The Adjudicating Authority meticulously evaluated each application, ensuring that the sanctity of the Insolvency and Bankruptcy Code, 2016 was upheld.

Dismissal of Frivolous Transfer Applications

A common stalling tactic observed in insolvency proceedings is the filing of transfer applications when a party anticipates an unfavorable outcome. The NCLT dealt with several such attempts in this matter.

Proceedings under IA/2334/2026 and IA/2921/2026

Under IA/2334/2026, filed under Section 60(5) of the Insolvency and Bankruptcy Code, 2016, the RP submitted documents pertaining to a writ petition (W.P.(C) No. 5932/2026) filed by suspended director Mr. Sanjeev Mahajan before the Delhi High Court. The High Court, via an order dated 30.04.2026, explicitly declined to grant any interim relief without hearing the respondent. The NCLT formally took these documents on record and disposed of the application.