NCLAT Orders Fresh Examination of Related Party Status in IDBI Trusteeship Case

Tribunal Sets Aside Previous Order and Calls for Re-evaluation of Committee of Creditors Composition

In a significant development on corporate insolvency proceedings, the National Company Law Appellate Tribunal (NCLAT), Principal Bench in New Delhi, has directed a fresh examination of an application seeking the exclusion of certain parties from the Committee of Creditors (COC) in the insolvency case involving IDBI Trusteeship Services Ltd. This decision was pronounced on October 30, 2025, by the bench comprising Justice Ashok Bhushan, Chairperson, and Barun Mitra, Member (Technical).

The appeals, filed by Rishi Gupta and others, challenged an earlier order dated September 16, 2025, issued by the National Company Law Tribunal (NCLT), New Delhi Bench, which had dismissed their application on grounds of non-maintainability. The appellants sought a declaration that Respondents No. 3 and No. 4 are related parties to the corporate debtor and should be removed from the COC. They argued that the adjudicating authority dismissed their application on merits despite reserving orders on maintainability.

The pivotal issue in these proceedings revolves around whether certain parties should be considered "related parties" and thus excluded from the COC. The appellants contended that the adjudicating authority erred in rejecting their application without duly considering the locus standi and maintainability aspects. Conversely, the respondents argued that the matter had been previously adjudicated and was barred by res judicata, referring to past judgments where similar issues were raised and settled.

Justice Ashok Bhushan, while setting aside the earlier order, emphasized the need for reconsideration by the NCLT, stating that the ends of justice require the adjudicating authority to reassess the applications afresh. The NCLAT has left all contentions open for determination, including locus and maintainability, without expressing any opinion on the merits of the application. This directive mandates that the NCLT thoroughly evaluate both the substantive merits and procedural aspects of the case anew.

The legal battle traces back to applications I.A. Nos. 3699 & 3793/2024, which were initially filed by the appellants aiming to challenge the composition of the COC. The appellants further requested the suspension of COC meetings pending the Supreme Court's decision on related appeals. The NCLT had earlier reserved orders on maintainability but ultimately dismissed the application, prompting the appellants to seek redress from the NCLAT.

This decision marks a crucial juncture in insolvency proceedings, underscoring the importance of procedural fairness and thorough examination of related party status within corporate debt resolution frameworks. The legal representatives involved, including Mr. Sumesh Dhawan for the appellants and Mr. Krishnendu Dutta for the respondents, are now poised to present their arguments afresh as the matter returns to the NCLT for re-evaluation.

The outcome of this reassessment could have significant implications for the governance and decision-making processes within insolvency proceedings, potentially influencing how related party designations impact creditor committees.

Bottom Line:

Application seeking to declare certain parties as related parties and to oust them from the Committee of Creditors (COC) should be reconsidered by the adjudicating authority as the earlier order dismissing the application on maintainability was set aside - Parties' contentions, including locus and maintainability, are to be considered afresh.

Statutory provision(s): Insolvency and Bankruptcy Code, 2016 Section 7

Rishi Gupta v. IDBI Trusteeship Services Ltd., (NCLAT)(Principal Bench, New Delhi) : Law Finder Doc Id # 2806638