NCLAT: Suspended Directors Not Entitled To Access Valuation Reports Rejected By CoC
Pranav B Prem
The National Company Law Appellate Tribunal (NCLAT), New Delhi, has held that suspended directors are not entitled to access valuation reports rejected by the Committee of Creditors (CoC), as such reports are confidential and not relied upon in the Corporate Insolvency Resolution Process (CIRP). A Bench comprising Justice Ashok Bhushan (Chairperson) and Barun Mitra (Technical Member) held that when earlier valuation reports have been rejected by the CoC in the exercise of its commercial wisdom and fresh reports have already been shared, insisting on access to redundant documents has no rational basis.
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The Bench observed: “When only the fresh valuation reports were germane for the insolvency resolution of the Corporate Debtor which had already been shared while the earlier set of valuation reports stood rejected by the CoC in the exercise of its commercial wisdom and had therefore become superfluous, the logic behind insisting on a document which had become redundant and irrelevant does not appeal to reason.”
Background
The case arose from an appeal filed by Manish Bagrodia, suspended director of Winsome Yarns Limited, against the order of the NCLT Chandigarh Bench dated May 16, 2025, which had dismissed his application seeking access to the initial valuation reports of the corporate debtor. Winsome Yarns Limited was admitted into Corporate Insolvency Resolution Process (CIRP) on December 22, 2023. Two valuers — M/s Gtech Valuers Pvt. Ltd. and M/s Value Edge Professionals Pvt. Ltd. — were initially appointed to determine the fair and liquidation value of the company’s assets. During the 9th CoC meeting held on June 6, 2024, the CoC found the valuations submitted by these valuers to be “high-pitched” and decided to appoint two new valuers — M/s Kanassure Valuation Services Pvt. Ltd. and R&A Valuation LLP — for a fresh valuation.
The appellant, however, repeatedly requested access to the first two reports, arguing that they were essential for ensuring transparency and value maximisation. The Resolution Professional (RP), Anil Kohli, denied the request on the grounds of confidentiality, stating that the initial reports had been rejected and did not form part of the CIRP records. The NCLT dismissed the appellant’s plea, prompting the appeal before NCLAT.
Appellant’s Contentions
The appellant argued that as an ex-director, he was entitled to access all documents relevant to the resolution process, including valuation reports, under Sections 24(3)(b) and 24(4) of the Insolvency and Bankruptcy Code (IBC). Citing the Supreme Court judgment in Vijay Kumar Jain v. Standard Chartered Bank, the appellant contended that participation rights of suspended directors include the right to review documents discussed in CoC meetings. He claimed that denial of access to the valuation reports hampered his ability to contribute effectively to the resolution process and violated his statutory rights.
Respondent’s Submissions
The RP argued that since the first set of valuation reports had been rejected by the CoC, they were no longer part of the CIRP records. He asserted that under Regulation 35(2) of the IBBI (CIRP) Regulations, 2016, valuation reports are to be shared only with CoC members having voting rights and who have submitted confidentiality undertakings — not with the suspended management. It was pointed out that the final valuation reports relied upon by the CoC had already been shared with the appellant, and that he was duly informed of all CoC meetings and permitted to participate, except during discussions of confidential valuation data.
Findings and Observations
The Tribunal clarified that suspended directors and CoC members occupy distinct roles under Section 24 of the IBC. While the former can participate in meetings, they are not entitled to the same privileges as voting members of the CoC. The Bench noted that the 9th CoC meeting agenda did not include the earlier valuation reports for discussion, and those reports were circulated only among CoC members who had submitted confidentiality undertakings. Even an authorised representative of a financial creditor was asked to leave the meeting temporarily for not providing such an undertaking — showing that no selective discrimination was exercised against the appellant.
Rejecting the appellant’s plea, the NCLAT held that the earlier valuation reports had become redundant after being discarded by the CoC, and hence, there was no right to access such documents. It also held that the Vijay Kumar Jain ruling could not be interpreted to mean that suspended directors are entitled to all confidential documents. The Tribunal explained that the Supreme Court judgment only extended access to resolution plans under discussion, not to rejected or non-relevant materials. The Tribunal further noted that the RP had acted transparently by providing all relevant documents, including the new valuation reports and resolution plans, which formed the basis of the CoC’s decision-making.
Holding that the denial of access was neither arbitrary nor discriminatory, the NCLAT dismissed the appeal. It reiterated that suspended directors cannot demand documents that are no longer part of the CIRP record or that have been rejected by the CoC in its commercial wisdom. The appeal was accordingly dismissed, affirming that confidentiality and procedural discipline must be maintained in insolvency proceedings to ensure fairness and integrity in the resolution process.
Appearance
For Appellant: Mr. Pulkit Deora, Advocate
For Respondent: Ms. Sandeep Bajaj, Ms. Honey Satpal, Mr. Mayank Biyani, Ms. Pooja Singh and Mr. Aakash Agarwala, Advocates
Cause Title: Manish Bagrodia Director (Suspended Powers) of Winsome Yarns Limited Versus Anil Kohli
Case No: Company Appeal (AT) (Insolvency) No. 1078 of 2025
Coram: Justice Ashok Bhushan (Chairperson), Barun Mitra (Technical Member)
