Good News! Apex Court Holds Retired Bankers and Receiving Pension Eligible to be Appointed As Resolution Professional in CIRP

Appellate Tribunal’s judgment holding that an Insolvency Professional who was in service and getting pension from a financial creditor was disentitled to be a Resolution professional has been rejected by the Supreme Court. In an order passed by a 3-judge bench on 19th August, 2020, the Supreme Court has categorically held that the approach adopted by NCLAT is not correct “that merely Resolution Professional who remained in the service of SBI and is getting pension, was disentitled to be Resolution professional” .

The Court held that since the order of NCLAT does not reflect correct approach, the same shall not be considered as a precedent. Incidentally, following its own judgment, NCLAT, in another case, also followed it and removed another past banker who was drawing pension.

The Supreme Court judgment has come as huge relief for retired bankers who became worried as it severely affected their career as an Insolvency Professional. They can now join the party and share cake of responsibility as a Resolution Professional.

This judgment is a step in right direction but banks as financial creditors should give no preference to their employees in appointing them as Resolution Professionals. They are expected to allow equity and fair play. Merit should play a dominant role rather than doling favors for their own fraternity.

Analyzing Delhi High Court Order on Threshold Limit under IBC

When the Central Government increased the threshold limit with effect from 24th March, 2020, many speculative interpretations were doing the rounds.

Here we have a ‘prima facie’ view of Hon’ble Delhi High Court dated 23rd June, 2020 in the matter of Pankaj Aggarwal vs. Union of India and Ors which noted that NCLT fell in error while ignoring the increased threshold limit from 24th March, 2020 while admitting a petition on the basis of default of Rs. 1,00,000/-. The Court stayed the order of NCLT till next date of hearing on deposit of Rs. 10 lakhs with the Registrar of the Court within 2 weeks. It also allowed the company to carry on its day to day operations and IRP was given a liberty to approach the Court for seeking any directions.

Let’s analyze this order:

  1. This order is only an interim order and presents prima facie view of the Court. It is not the final view.
  2. None appeared on behalf of the operational creditor whose application was admitted by NCLT and even the IRP was not present at the time of hearing.
  3. What probably persuaded the court was the protection of MSME’s from insolvency proceedings. This aspect weighed heavily in favor of the Petitioner.
  4. At this moment, the Court has not gone into the question whether the notification applies prospectively and not retrospectively.
  5. It seems that the application u/s 9 was pending prior to this notification was not brought to the notice of the Court.
  6. The law on the date of filing of application should apply as has been held by Supreme Court in Supreme Court in Glaxo Smith Kline Plc. & Ors. v. Controller of Patents and Designs & Ors., 2008 (4) CHN 197 while upholding single bench judgment of Calcutta High Court held that “the petitioner’s application submitted on September 29, 1999 is to be decided by the transport authority under the law that was existing at that date, and not by applying the government notification dated August 2, 2004 that was given no retrospective effect”.
  7. The mandate of law is clear on this aspect and this interim order which is only a prima facie view should not be a cause of concern amongst IP fraternity.
  8. No doubt, uncertainty will continue to prevail on this issue till 13th August, 2020, which is the next date of hearing in this case unless the Operational Creditor challenges it or some other Court passes an authoritative judgment on this aspect in some other case.
  9. The Court was under the impression that NCLT was not aware of notification dated 24th March, 2020. It seems the NCLT order did not deal with this issue.
  10. A question also needs to be answered on the fact whether High Court should have entertained the Writ Petition on non-consideration of notification of 24th March, 2020 in a specific case by NCLT. There is alternative efficacious remedy provided in IBC in the form of appeal before NCLAT, which is hearing all urgent matters online during these unprecedented times.
  11. In conclusion, this interim order, is not a conclusive or authoritative judgment being a prima facie view.

Disclaimer: The views expressed here are for academic purposes alone and should not be deemed as legal or professional advise on the subject. If relied upon, Tranzission does not take any responsibility for any liability or non-compliance.

We Create, We Innovate, We Lead – They Follow Us

Tranzission is a leader in learning management in IBC space. We innovate, disseminate focussed learning and provide enriching experience to our participants.

We created unique Master Classes for Insolvency Professionals and launched it recently with focus on qualitative learning – knowing more and more about less and less. In other words, we worked for imbibing excellence and expertise in a particular topic with innovative style during the Masterclass. We chose topics after thorough and deliberate discussion amongst our knowledge team and future topics were notified on our website –

Other Organizations are copying us and holding programs calling them as Master Classes. This has given strength to our belief that what we are doing is right. We love competition.

We are not stopping here and keep watching our website for many unique programs in IBC in future. We know we will be copied again. We will keep on innovating. We do not believe in following. We believe in continuous innovation.

We are here to serve Insolvency Professionals and the aspirants and we do so in every way we can – through quality programs with unique takeaways.

We thank our Alumni who have been a part of of our journey from excellence to notch above.

Join our Masterclasses and experience the difference! Visit

Creating ‘Safety Net’ for Insolvency Professionals

Creating ‘Safety Net’ for Insolvency Professionals

Insolvency Professionals are bound by Code of Conduct notified by Insolvency and Bankruptcy Board of India (IBBI or Board). Besides the Code, the Insolvency and Bankruptcy Code, 2016 (Code) prescribes duties of the Insolvency Professionals while functioning in several capacities such as Interim Resolution Professional, Resolution Professional, Liquidator or Bankruptcy Trustee. The process laid down in the Code and Regulations is to be followed scrupulously by the IPs lest they can be pulled up by the Authorities under the Code or the Board. Handling of cases under the Code requires not only a combination of several skill sets but also excellent knowledge of the provisions and their legal understanding. Any misstep can land the IP in a tight spot with the Board or Adjudicating Authority.

IPs have to deal with stakeholders while performing their functions. Any dissatisfied stakeholder is entitled to haul up the IP in a disciplinary proceeding. The Board, being a public authority, has to deal with the complaints in an unbiased manner, which, at times, leads to preventable harassment to the IPs.

The IPs, therefore, need to create a ‘Safety Net’ around them to see at bay the problems which could erupt anytime. The Board has, in many cases, penalized IPs severely including revoking their registration. Masterly knowledge of disciplinary provisions, proceedings and mechanism under IBC will help them in deft handling of such matters. It is also significant that IPs should have excellent knowledge of principles of natural justice and rules of interpretation.

The following enumerated topics must be deeply understood by the IPs before they begin their journey in the professional field:

  • Disciplinary Powers of IBBI and IPA’s
  • Role of Investigative Authority under IBC
  • Understanding Disciplinary Procedure
  • Handling Disciplinary Cases
  • Applicability of Principles of Natural Justice to Disciplinary proceedings
  • Mechanism to challenge Disciplinary Orders
  • Code of Ethics
  • Disciplinary Cases under IBC
  • How to create Safety Net for – Do’s and Don’ts

It is recommended that IPs should join a program especially created for them for this purpose – Master Class on Disciplinary Proceedings and Code of Ethics under IBC by Ashish Makhija. More details about the program can be had from