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NCLAT Holds a Practising Chartered Accountant Is Not Ineligible to Submit a Resolution Plan Under Section 29A

Writer: Kaustav Chowdhury
Kaustav Chowdhury
8 minutes ago
4 min read

Background and Facts

The National Company Law Appellate Tribunal, New Delhi has held that a practising chartered accountant is not disqualified from submitting a resolution plan merely because of his professional status. The ruling in Vinay Gupta v. Oswal Minerals Limited and Satellite Cables Private Limited [Company Appeal (AT) (Insolvency) No. 1038 of 2026 with No. 1032 of 2024] is reported as 2026 LLBiz NCLAT 345.

Satellite Cables Private Limited was admitted into the Corporate Insolvency Resolution Process on January 3, 2023. The Resolution Professional placed competing plans before the Committee of Creditors, which approved the plan of Suraj Garg at Rs. 5.85 crore in preference to a rival bid of Rs. 6 crore. The Adjudicating Authority approved that plan by its order dated April 23, 2024.

The suspended directors, Vinay Gupta and Goel, challenged the approval. One limb of the challenge was that the successful resolution applicant, being a practising chartered accountant, was barred by Clause 11 of Part I of the First Schedule to the Chartered Accountants Act, 1949, and therefore ineligible under the Code.

Key Legal Issue

Whether professional status as a practising chartered accountant amounts to a disqualification under Section 29A of the Insolvency and Bankruptcy Code, 2016, and whether a restriction under professional conduct rules can be read into that provision.

The NCLAT's Ruling

A bench of Justice Mohd. Faiz Alam Khan (Judicial Member) and Arun Baroka (Technical Member) rejected the challenge, holding that a practising chartered accountant is not, merely by virtue of being a practising chartered accountant, included in the disqualifications enumerated in Section 29A.

Section 29A Is an Exhaustive List

Section 29A opens with the words "A person shall not be eligible to submit a resolution plan, if such person, or any other person acting jointly or in concert with such person", and then sets out clauses (a) to (j). Those clauses cover undischarged insolvents, wilful defaulters, accounts classified as non-performing for the prescribed period, specified criminal convictions, directors disqualified under the Companies Act, 2013, persons debarred by the Securities and Exchange Board of India, persons associated with preferential or fraudulent transactions, guarantors whose guarantees have been invoked, equivalent foreign disabilities, and connected persons falling within any of those categories.

Membership of a profession appears nowhere in that list. The Tribunal declined to enlarge a disqualification provision by implication, which is consistent with the settled approach that Section 29A, being a provision that takes away a right to participate, is construed strictly.

Professional Conduct Rules Operate in a Different Field

Clause 11 of Part I of the First Schedule to the Chartered Accountants Act, 1949 treats a member in practice as guilty of professional misconduct if he "engages in any business or occupation other than the profession of chartered accountant unless permitted by the Council so to engage". The proviso permits a member to be a director of a company, other than a managing director or a whole-time director, where neither he nor any of his partners is interested in the company as auditor.

The Institute of Chartered Accountants of India has clarified that a practising member may act as a resolution applicant under the Code provided he does not take up a whole-time director role. The consequence of a breach, in any event, would be disciplinary action against the member under the 1949 Act. It would not render his resolution plan void under the Code.

Standing of Suspended Directors

The appeal also engaged the position of suspended directors. Under Section 24(3)(b) of the Code, the Resolution Professional must give notice of meetings of the Committee of Creditors to members of the suspended Board of Directors. Section 24(4) makes the position plain: they may attend those meetings but have no right to vote. Their locus to be heard on plan approval does not convert into a commercial veto over the committee's decision.

Practice Notes

In practice, the ruling narrows a line of objection that has become common in plan approval litigation:

  • For resolution professionals: Eligibility screening should be conducted against the clauses of Section 29A and the affidavit furnished under Section 30(1), not against professional conduct rules governing the applicant's occupation. Recording the basis of the eligibility determination in the minutes reduces the surface area for later challenge.

  • For professionals bidding as resolution applicants: A practising chartered accountant may submit a plan, but should obtain Council permission where required and avoid assuming a managing or whole-time director role in the resolved entity, since that is where Clause 11 actually bites.

  • For suspended directors: Objections must be anchored in the statutory grounds. A higher rival bid is not by itself a ground to displace the committee's commercial decision, and professional status arguments of this kind are unlikely to survive.

  • For committees of creditors: The commercial wisdom of the committee continues to attract limited judicial review, but the record should show that eligibility was tested before the plan was put to vote.

Key Provisions Discussed

  • Section 29A of the IBC: Persons not eligible to be resolution applicants, clauses (a) to (j).

  • Section 30(1) of the IBC: Submission of a resolution plan together with an affidavit stating eligibility under Section 29A.

  • Section 24(3)(b) of the IBC: Notice of committee meetings to members of the suspended Board of Directors.

  • Section 24(4) of the IBC: Suspended directors may attend committee meetings but have no right to vote.

  • Clause 11, Part I, First Schedule, Chartered Accountants Act, 1949: Professional misconduct where a member in practice engages in another business or occupation without the permission of the Council.

Case Details

  • Case: Vinay Gupta v. Oswal Minerals Limited and Satellite Cables Private Limited

  • Case No: Company Appeal (AT) (Insolvency) No. 1038 of 2026 with No. 1032 of 2024

  • Citation: 2026 LLBiz NCLAT 345

  • Tribunal: National Company Law Appellate Tribunal, New Delhi

  • Bench: Justice Mohd. Faiz Alam Khan (Judicial Member) and Arun Baroka (Technical Member)

  • Order Below: Adjudicating Authority order dated April 23, 2024 approving the resolution plan

  • Outcome: Challenge rejected; a practising chartered accountant held not ineligible under Section 29A by reason of professional status.

Sources and References


Disclaimer: This article is for informational purposes only and does not constitute legal advice. Readers should consult a qualified legal professional for advice specific to their circumstances.

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