2026 (3) TMI 1253 - AT - IBC

Locus standi and Section 29A disqualification under IBC must be strictly established; remote grievance and mere association were insufficient.

A person seeking to appeal under Section 61 of the Insolvency and Bankruptcy Code must be directly and legally affected by the impugned order; a remote ... Corporate Insolvency Resolution Process - Right of appeal under Section 61 - Person aggrieved - locus standi in insolvency appeal - Failure of the Adjudicating Authority to examine statutory ineligibility, suppression of material developments, and exercise of jurisdiction in conformity with Sections 29A, 30 and 31 of the Insolvency and Bankruptcy Code, 2016 - non- consideration of mandatory statutory disqualifications - Suppression of Material Facts - director disqualification under Section 164 - new grounds in appellate proceedings - finality of implemented resolution plan. Person aggrieved - locus standi in insolvency appeal - HELD THAT:- The Tribunal held that the right of appeal under Section 61 is available only to a person whose legal rights or interests are directly affected by the impugned order. Though the expression 'person aggrieved' is not to be read rigidly, the appellant must still be a stakeholder in the concerned CIRP. The appellant was neither a creditor, participant, prospective resolution applicant, resolution professional nor any other stakeholder in the CIRP of Afcan Impex Pvt. Ltd.; its status as an operational creditor in the separate CIRP of CAN Enterprises Pvt. Ltd. created only a collateral grievance. The alleged prejudice arising from observations in the impugned order did not establish a direct legal injury in the Afcan Impex CIRP, and the authorities cited by the appellant were held distinguishable on their own statutory and factual settings. [Paras 54, 55, 56, 57, 72] The appellant was not a stakeholder in the CIRP of Afcan Impex Pvt. Ltd. and therefore could not be treated as a person aggrieved under Section 61. Eligibility of Respondent No.1 as resolution applicant and to the approval of the resolution plan failed on merits. - HELD THAT: - The Tribunal held that mere association of Respondent No.1 with another company undergoing CIRP did not by itself attract Section 29A. For Section 29A(c), the statute requires an account classified as NPA in accordance with RBI guidelines, and no such material was shown in relation to Respondent No.1 or CAN Enterprises Pvt. Ltd. For Section 29A(e), disqualification under Section 164 of the Companies Act must already exist in law and cannot be presumed; in the absence of any formal declaration by the competent authority, no ineligibility could be inferred. The Tribunal also noted that the resolution professional had carried out due diligence on eligibility. Further, the appellant had not raised these objections before the Adjudicating Authority and could not introduce them for the first time in appeal. The resolution plan had already been implemented, management had changed hands, and the same approval order had also been upheld in earlier appellate proceedings, reinforcing the finality of the completed resolution process. [Paras 68, 69, 70, 71, 72] Respondent No.1 was not shown to be ineligible under Section 29A, the fresh objections were not entertainable at the appellate stage, and no legal infirmity was found in the approved and implemented resolution plan. Final Conclusion: The Tribunal dismissed the appeal as not maintainable, holding that the appellant was not a person aggrieved in the CIRP of Afcan Impex Pvt. Ltd. It further held that no ineligibility of Respondent No.1 under Section 29A was established and that the approved resolution plan, already implemented, disclosed no legal infirmity. Issues: (i) Whether the appellant had locus standi to maintain the appeal as a person aggrieved under Section 61 of the Insolvency and Bankruptcy Code, 2016; (ii) whether the impugned order approving the resolution plan suffered from illegality on account of the alleged ineligibility of the successful resolution applicant under Section 29A of the Insolvency and Bankruptcy Code, 2016 or alleged suppression of material facts.Issue (i): Whether the appellant had locus standi to maintain the appeal as a person aggrieved under Section 61 of the Insolvency and Bankruptcy Code, 2016.Analysis: The right of appeal under Section 61 is available to a person aggrieved, meaning one whose legal rights or interests are directly affected by the impugned order. The appellant was not a stakeholder in the corporate insolvency resolution process of the corporate debtor whose resolution plan was approved, had not participated before the adjudicating authority, and asserted grievance arising only from separate proceedings concerning another corporate debtor. Remote or collateral grievance was held insufficient to confer appellate locus.Conclusion: The appellant was not a person aggrieved and lacked locus standi to maintain the appeal.Issue (ii): Whether the impugned order approving the resolution plan suffered from illegality on account of the alleged ineligibility of the successful resolution applicant under Section 29A of the Insolvency and Bankruptcy Code, 2016 or alleged suppression of material facts.Analysis: Ineligibility under Section 29A was not established. Mere association with another company undergoing CIRP did not, by itself, attract disqualification under Section 29A(c) in the absence of material showing NPA classification. Likewise, Section 29A(e) could not be invoked without a formal disqualification under Section 164 of the Companies Act, 2013 by the competent authority. No such declaration was shown. The challenge based on suppression also failed, and new grounds could not be raised for the first time in appeal. The resolution plan had already been approved and implemented, and had earlier been upheld in related proceedings.Conclusion: No illegality in the approval of the resolution plan was established, and the alleged ineligibility of the resolution applicant was not made out.Final Conclusion: The appeal failed both on maintainability and on merits, and the approval of the resolution plan was left undisturbed.Ratio Decidendi: A remote or collateral grievance arising from separate insolvency proceedings does not confer locus under Section 61, and ineligibility under Section 29A must be shown by satisfying the statutory disqualifications on the basis of a formal and operative legal disqualification, not by mere assumption or association.