Procedural fairness requires a specific opportunity to explain; failure to do so upheld adverse observations against the IRP.

Whether adverse observations against the interim resolution professional for concealment, reconstitution of the committee of creditors without approval, and backdating should be expunged was examined by reference to the IRP's filings, directions to explain, and opportunity afforded. The appellate analysis found inconsistent applications, failure to rectify registry objections or disclose earlier filings, and no adequate explanation when directed; applying the principle that procedural fairness does not protect a party given a specific opportunity who fails to explain, the Tribunal's observations were held supported by the record and not expunged.

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Issues: Whether the adverse observations recorded against the Interim Resolution Professional in paragraph 26 of the Tribunal's order dated 29.01.2025 (finding concealment/reconstitution of the Committee of Creditors, backdating of a letter, and misconduct) should be expunged for lack of opportunity of hearing and for want of merit.

Analysis: The issue was examined against the factual record of two interim applications (I.A. Nos. 942 and 671 of 2024) filed by the IRP under Regulation 17(1) of the IBBI (CIRP) Regulations, 2016 and related orders dated 11.12.2024 and 18.12.2024 where the IRP was directed to explain discrepancies and the opposite parties were afforded opportunity to respond. The Tribunal recorded material findings that the IRP had filed two inconsistent applications about constitution of the CoC, had not rectified registry objections timeously, had not disclosed the earlier application when filing the later one, had predated a letter to exclude a member, and had thereby misled the Tribunal and acted in a manner prejudicial to the CIRP process. The appellate review considered (i) whether an opportunity to explain was afforded and whether it was availed, (ii) the chronology and content of the IRP's filings, (iii) the Tribunal's direction to the IRP to explain discrepancies and the failure to provide explanation when the matters were listed, and (iv) corroborative consequences including setting aside the reconstitution and restoration of financial creditor status. The appellate determination treated the Tribunal's findings on concealment, reconstitution without approval, and backdating as supported by the record and by the IRP's failure to avail the opportunity given to explain, and applied the principle that procedural fairness does not protect a party who has been given specific opportunity and has not furnished explanation or cure of defects.

Conclusion: The observations in paragraph 26 are not required to be expunged; the Tribunal's findings regarding the IRP's concealment, reconstitution of the CoC without approval, and related misconduct are upheld and the appeals challenging those observations are dismissed in favour of the respondents.

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