NCLAT Expunges Stigmatic Remarks Against SBI Officials and Counsel
Appellate Tribunal Overturns Cost Imposition and Modifies Communication Directives
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT) Chennai Bench has expunged adverse remarks and cost imposition against State Bank of India (SBI) officials and their legal counsel, which were previously made by the National Company Law Tribunal (NCLT), Amaravati. The judgment, delivered on September 16, 2025, by Justice Sharad Kumar Sharma and Member (Technical) Jatindranath Swain, emphasizes the importance of providing affected professionals and officials an opportunity to defend themselves before any stigmatic observations are made.
The case revolved around the insolvency proceedings under Section 95 of the Insolvency and Bankruptcy Code, 2016, where the NCLT had criticized the counsel and SBI officials for alleged negligence in filing a defective company petition without invoking the necessary bank guarantee. The tribunal had imposed a cost of Rs. 50,000 and directed that the order be communicated to senior bank officials to ensure compliance in future proceedings.
Upon appeal, the NCLAT found that the stigmatic remarks could adversely affect the professional careers of the individuals involved and ruled that such observations should not be made without first offering the concerned parties a chance to present their defense. Consequently, the tribunal expunged the adverse observations and the associated cost, reinforcing the need for procedural fairness.
Additionally, the NCLAT modified the directive regarding communication of the NCLT's order to SBI's senior officials. Instead, the appellate tribunal ordered that its judgment be shared with the Chairman and Managing Director of SBI and the General Manager of the Stressed Asset Management Branch, urging them to ensure diligent and prompt assistance by their subordinates in future NCLT proceedings.
This decision aligns with previous judgments by the NCLAT, notably the ruling on August 12, 2025, in similar appeals involving SBI, which served as a precedent in this case. By overturning the NCLT's decision, the NCLAT has highlighted the importance of due process and the protection of professional integrity within judicial proceedings.
Bottom Line:
Insolvency and Bankruptcy Code, 2016 - Adverse remarks against counsel and bank officials - Tribunal must provide ample opportunity to affected professionals and officials to defend themselves before making stigmatic remarks that could affect their professional career.
Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 95
State Bank of India v. Smt. Nandamuri Meenalatha, (NCLAT)(Chennai) : Law Finder Doc Id # 2782284
