NCLAT Expunges NCLT Remarks Against SBI Officials, Says Tribunal Cannot Make Stigmatic Observations Without Giving Hearing

The NCLT dismissed the SBI's petition under section 95 of the IBC, 2016. In the impugned order, the learned adjudicating authority observed that the counsel of the SBI had failed to discharge his professional duties, as the petition was filed without the invocation of the bank guarantee and the relevant documents. These made the petition defective, as the cause of action was not disclosed.

The NCLT imposed the cost while observing that the counsel had been very negligent and casual in filing the petition, and it also directed that the order should be communicated to the Chairman and Managing Director of the Bank.

In the connected matter, the appellant challenged the impugned order and sought its recall. However, the learned NCLT declined the request.

The NCLAT, while considering the appeal from these two matters, observed that a similar matter had earlier come before it, namely, State Bank of India V. Mr. Potluri Mohana Murali Krishna & Anr., Company Appeal (AT) (CH) (INS) No. 363 / 2025, and its judgment passed in that case was later followed. Therefore, since the appeals are factually the same, they should be disposed of with the same direction.

Findings

It was held that before making any stigmatic remark against the professionals that may affect their professional career and future opportunities, they must be provided with the opportunity to raise their defence so as to understand the unforeseen circumstance in which the negligence has been made.

It was said that in this case, there was an absence of an effective opportunity to raise their defence regarding the accusation of negligence. Therefore, the remark being stigmatic in nature would stand 'expunged.'

The tribunal also modified the direction with regard to communication of the order to the Chairman and Managing Director of the Bank and said that this fresh order would be sent to the officials with the observations that the subordinates working under them would be diligent in assisting the NCLT, Amaravati.

Accordingly, the appeal was partially allowed.

Case Name: State Bank of India v. Smt. Nandamuri Meenalatha & M/s. Vantage Spinners Pvt. Ltd.

Case No.: Company Appeal (AT) (CH) (INS) Nos. 362 & 383 of 2025

For Appellant: Mr. K. Chandrasekaran, Advocate

Coram: Justice Sharad Kumar Sharma (Member-Judicial) and Jatindranath Swain (Member-Technical)

Order Date: 16.09.2025

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