NCLAT: Ten-Day Timeline Under Section 99 of IBC for Submission of Resolution Professional’s Report is Directory, Not Mandatory
Pranav B Prem
In a significant ruling, the National Company Law Appellate Tribunal (NCLAT), Principal Bench, New Delhi, has clarified the nature of the ten-day timeline stipulated under Section 99(1) of the Insolvency and Bankruptcy Code, 2016 (IBC) for the submission of the report by a Resolution Professional (RP). The Bench comprising Justice Ashok Bhushan (Chairperson), Mr. Arun Baroka (Technical Member), and Mr. Barun Mitra (Technical Member) held that this time period is directory in nature and not mandatory, given the absence of any prescribed consequence for non-compliance within the section itself.
Factual Background
The case arose from a loan transaction between Geekay Colonizers and Builders Ltd. and Dewan Housing Finance Ltd. (DHFL), wherein DHFL sanctioned a project loan of ₹94 crore, out of which ₹69 crore was disbursed. The appellant, Suresh Atlani, stood as a personal guarantor for the said loan. Later, Piramal Capital and Housing Finance Ltd. acquired DHFL through a resolution process.
Subsequently, a demand notice dated 13.07.2022 was issued to the appellant under Rule 7(1) of the IBBI (Resolution Process for Personal Guarantor) Rules, 2019. When no payment was made, Omkara Asset Reconstruction Pvt. Ltd. filed an application under Section 95 of the IBC on 31.10.2022, initiating insolvency proceedings against the appellant. A Resolution Professional was appointed on 16.01.2024.
The appellant objected to the process, arguing that the RP failed to submit the required report within the 10-day period prescribed under Section 99(1) of the IBC, thereby rendering the report invalid. The RP filed the initial report on 02.02.2024 and an amended report on 14.02.2024. The Adjudicating Authority (NCLT) admitted the Section 95 application on 20.12.2024, after considering both the reports.
Appellant’s Contentions
The appellant submitted that:
The Resolution Professional was required to file the report within 10 days from the date of appointment, i.e., by 26.01.2024.
Since the report was submitted on 02.02.2024, it was filed beyond the permissible period.
The statute uses the word "shall," indicating a mandatory obligation.
The IBC does not provide for any condonation of delay, nor does it permit late submission of the report.
Respondent’s Submissions
On the other hand, Omkara Asset Reconstruction Pvt. Ltd. and the RP argued that:
The 10-day period under Section 99(1) is merely directory and not mandatory.
The RP had valid reasons for the delay, which were explained before the Adjudicating Authority.
The RP not only submitted the initial report on 02.02.2024 but also filed an amended report on 14.02.2024, both of which were accepted by the NCLT.
NCLAT’s Observations and Findings
The Tribunal undertook a detailed interpretation of Section 99 of the IBC. It held: “When we examine the scheme under Section 99(1), (4), (5), (6), and (7), it becomes evident that the 10-day period for submission of the report by the RP is directory, not mandatory.”
It observed that Sub-section (4) empowers the RP to seek further information or explanations from the debtor, creditor, or any other person, and such persons have 7 days to respond. Following this, the RP must examine the received material and then submit a recommendation under Sub-section (7).
The Tribunal emphasized that the use of the word “shall” in legislative drafting does not always imply a mandatory requirement. Instead, the context and scheme of the statute must be considered to determine the legislative intent. Importantly, the NCLAT noted that: “Section 99 does not provide for any consequence if the RP fails to submit the report within 10 days. This supports the interpretation that the provision is directory.”
Furthermore, the Tribunal rejected the appellant’s contention that the absence of a provision for condonation of delay implied a mandatory timeline. It clarified that: “Section 5 of the Limitation Act applies only to statutory limitation periods. The 10-day period for the report submission is not a limitation period; hence, Section 5 does not apply.” The Tribunal also noted that there was no undue delay in the present case, particularly because the amended report was necessitated by further information received from the financial creditor after the initial submission.
Verdict
The NCLAT upheld the order passed by the Adjudicating Authority admitting the Section 95 application, rejecting the appellant’s contention regarding the delay in submission of the Resolution Professional’s report. It held that the reports submitted on 02.02.2024 and 14.02.2024 were properly placed on record and duly accepted by the Adjudicating Authority. The Tribunal concluded that the ten-day time period prescribed under Section 99(1) of the IBC for the RP to submit the report is directory in nature, not mandatory, as the section does not provide for any consequence in the event of a delay. It further clarified that the delay in submission was adequately explained and, therefore, did not warrant rejection of the reports. Accordingly, the appeal was dismissed.
Appearance
For Appellant: Mr. Ujjwal Anand Sharma, Mr. Justine George and Mr. Tushar Saigal, Advocates.
For Respondents: Mr. Joy Saha, Sr. Advocate with Ms. Kiran Sharma, Advocate.
Cause Title: Suresh Atlani Atlani Villa V. Omkara Asset Reconstruction Pvt. Ltd.
Case No: Company Appeal (AT) (Insolvency) No. 200 of 2025
Coram: Justice Ashok Bhushan [Chairperson] , Mr. Arun Baroka [Member (Technical)], Mr. Barun Mitra [Member (Technical)]
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