The National Company Law Appellate Tribunal (NCLAT) recently decided that resolution professionals can mandate suspended directors to sign a confidentiality undertaking before they are granted access to a resolution plan and other sensitive information during a corporate insolvency resolution process (CIRP). This ruling was made in the case of Mandava Prabhakar Rao Vs Navneet Gupta.
Technical Member Naresh Salecha was brought in to resolve a previous split decision by the NCLAT, ultimately siding with the view that the requirement for a confidentiality undertaking does not infringe on the suspended directors’ rights to participate in the CIRP. Salecha stated, “The resolution professional can take an undertaking from members of the erstwhile board of directors to maintain confidentiality.” He emphasized that the directors’ right to access the resolution plan must coexist with their duty to keep such information confidential.
This case emerged from an appeal by Mandava Prabhakar Rao, a suspended director of NSL Nagapatnam Power and Infratech Limited. The controversy arose during the company’s 20th Committee of Creditors (CoC) meeting on July 16, 2024. Rao appointed Nelluri Bapuji to represent the suspended management in CoC meetings. Bapuji had attended several prior meetings but was asked to leave the 20th meeting for not providing written authorization and a confidentiality undertaking. This meeting included an assessment of submitted resolution plans.
Rao contested Bapuji’s exclusion, contending it infringed on the suspended management’s statutory rights to participate in the CIRP and access necessary information to make informed representations to the CoC. The resolution professional argued that due to the sensitive nature of the material discussed, access could only be granted upon meeting confidentiality requirements.
The case was initially heard by an NCLAT Bench comprising Judicial Member Justice Sharad Kumar Sharma and Technical Member Jatindranath Swain, resulting in a split verdict on November 10, 2025. Justice Sharma supported the insolvency proceedings, while Swain opposed the exclusion of the suspended director’s representative, suggesting the process should restart from that point.
Technical Member Naresh Salecha was called upon as the third member to resolve the divergence, agreeing with Justice Sharma’s stance. He concluded that there was no need to intervene in the 20th, 21st, or 22nd CoC meetings. Additionally, he agreed that the costs imposed on Rao should be reduced to ₹2 lakh.
Salecha’s judgment highlighted that the resolution plan, already implemented by Rungta Mines with a payment of ₹176.83 crore, should not be undone over procedural objections that caused no substantial harm. He stressed that such actions would contradict the IBC’s focus on timely resolution and value preservation.
The matter is now set to be reviewed by the appropriate NCLAT Bench for the issuance of a final order based on the majority’s opinion. Representing Rao were Senior Advocate Ramji Srinivasan, with advocates VVSN Raju, GVL Meghana, Shefali Munde, and Aryansh Tripathi. For the resolution professional, Senior Advocate Arun Kathpalia, along with advocates Pulkit Deora and Anjali Soni, appeared. Senior Advocate Niranjan Reddy, with advocates Sidharth Sethi, Shreya Sircar, and Riya Singh, represented PTC India Financial Services. Meanwhile, Rungta Mines was represented by Senior Advocate Abhijeet Sinha and advocates Amir Bavani, Dhananjaya Mishra, Rishika Kumar, Pragati Prajapati, Ayan Rai, Navneet Dogra, and Bhargav Verma.
