Concept Of An 'Aggrieved Person' Under Section 61 Of The IBC: A Settled Law?

One of key recurring issues which comes across in insolvency litigation(s) across the Indian sub-continent seems to be the locus of the director/promoter/shareholder(s) of a corporate debtor (“Corporate Debtor”/ “CD”), especially when it comes to invoking Section 61 of the Insolvency and Bankruptcy Code, 2016 (“IBC, 2016”/ “Code”), as an aggrieved person. Now, the pertinent question which arises is what are the remedies available to a suspended director/shareholder/promoter of a CD once CIRP has been initiated despite their objection? It is well settled that the IBC, 2016, along with its rules and regulations, is a self-contained code which has a dedicated provision for challenging an order passed by the Adjudicating Authority before the National Company Law Appellate Tribunal (“NCLAT”). Section 61 of the IBC, 2016, lays down that “any person aggrieved by the order of the Adjudicating Authority under part-I may prefer an appeal to the NCLAT”. As the IBC, 2016 does not define an “aggrieved person”, therefore, the same is generally ascertained in light of the existing judicial pronouncements.

In October 2024, the Supreme Court in the matter of GLAS Trust Company LLC vs. BYJU Raveendran & Ors. , and more recently in January 2025 in Independent Sugar Corporation Ltd. vs. Girish Sriram Juneja and Ors., has interpreted the term “aggrieved person” under Section 61 of the IBC, 2016 very broadly, holding that the expression “aggrieved person” in the context of IBC, 2016 is indicative of there being no rigid locus requirements to institute an appeal against an order of the Adjudicating Authority before the NCLAT. The basic premise for it is that once a CIRP of a CD is admitted by the Adjudicating Authority, it ceases to be a proceeding “in personam” and becomes a proceeding “in rem”.

Furthermore, the Supreme Court recently, in its judgment dated 02.05.2025 in Kalyani Transco vs. M/s Bhushan Power and Steel Limited (“Kalyani Transco-I”) had categorically held that a suspended director of such CD falls within the definition of an “aggrieved person”, hence has the locus standi to prefer an appeal before the NCLAT. However, it is pertinent to note that the judgment in Kalyani Transco-I (Supra.) has been recalled and had been directed to be considered afresh by the Apex Court vide Review Petition (C) NO. 1432 OF 2025 in Civil Appeal No. 1808/2020 dated 31.07.2025 . (“Kalyani Transco-II”)

Interestingly, now the question to whether a director/promoter/shareholder of the CD is an “aggrieved person” U/s. 61 of the IBC, 2016, and therefore, if he/she has the locus standi to challenge the order of the Adjudicating Authority before NCLAT appears to be unsettled. During the course of research, and writing a piece on this important legal proposition, the authors came to the understanding that various benches of Hon'ble NCLAT seem to be inclined towards upholding the time-bound nature of CIRP proceedings by nipping in the bud frivolous appeals by shareholders/promoters and ex-directors, while allowing some of them in peculiar facts and circumstances of certain matters .

Appeal against an order admitting a company petition under Sections 7 or 9 of the IBC, 2016 by director/promoter/shareholder:

While the Kalyani Transco-I (Supra.) was pending reconsideration before Hon'ble Supreme Court, in a separate matter, the question of locus standi of the shareholders/promoters in challenging an order under Section 7 or 9 of IBC, 2016 was referred to a three-member bench of NCLAT Chennai Bench in Park Energy Private Limited vs. State Bank of India , wherein the Appellate Tribunal has categorically held that, shareholders/promoters of the CD cannot be treated as an “aggrieved person” as per the provision of the IBC, 2016. The NCLAT Chennai Bench, in this matter, while distinguishing the Judgment of the Supreme Court in GLAS Trust (Supra.), held that the broad interpretation of the phrase “aggrieved person” would not automatically include shareholders, as the Supreme Court has interpreted this phrase in the context of a class of creditors.

In our analysis, we are of the view that while analysing the position of law in the instant case, the NCLAT Chennai Bench seem to have gone a step ahead and held that an “aggrieved person” would be a person who does not have any other forum or a platform under law available to safeguard his right or interest. However, in the case of shareholders, their interests are protected by the Resolution Professional or liquidator (as the case may be). The NCLAT Chennai Bench opined that these two aforesaid agents are appointed by the NCLT under law; and furthermore, the proceedings at the behest of shareholders in their individual capacity before the NCLAT will be contrary to the very object of the timely resolution of insolvency and therefore would amount to abuse of the process.

Challenge to the successful resolution plan by the shareholders/promoter/ex-director:

A resolution plan, once approved by the Committee of Creditors (“CoC”), becomes binding on all stakeholders, and it is presumed that the successful resolution plan is feasible and viable. Therefore, the bar is very high when it comes to challenging an approved resolution plan before the Appellate authority. There is a line of pronouncements of NCLAT which has held that a suspended director/ shareholder does not have the locus standi to challenge the resolution plan . Most recently, a three-member bench of the NCALT Delhi vide its Final Order/ Judgment dated 04.09.2025 in the matter of Praful Satara vs. Vaishali Patrikar , has held that though the suspended director has the locus to challenge the CIRP of the CD, however, it does not have locus standi for challenging the approval or otherwise of the resolution plan. This view of NCLAT Delhi seems to be in sharp contrast to the recent view taken by the Hon'ble three-member Bench of the Hon'ble NCLAT Principal Bench in Anuj Gaur & Ors. vs. Rabindra Kumar Mintri RP of Som Resorts Pvt. Ltd. & Anr. [Order dated 30.05.2025] wherein the Bench relied on the ratio of Kalyani Transco-I (Supra) and held that a suspended director is an aggrieved person under Section 61 of the IBC, 2016 and therefore has a locus standi to challenge the approval of resolution plan of such CD. However, the Kalyani Transco-I (Supra) was recalled on 31.07.2025 by Kalyani Transco-II (Supra), thereby making its ration non-binding. However, interestingly, the SC in its revised judgement passed in the matter of Kalyani Transco vs. M/s Bhushan Power and Steel Limited and Others, Civil Appeal No. 1808 of 2020 on 26.09.2025 (“Final Judgment”), while reversing its earlier judgement, and upholding the approval of the resolution plan of the successful resolution applicant (“SRA”) therein, has not explicitly answered the question of locus standi however, however, it gives an implicit recognition of Promoter's locus to challenge the SRA and CoC.

It is worth noting that the ratio of Supreme Court in Final Judgment in Kayani Transco dated 26.09.2025; and NCLAT Delhi (Principal Bench) in in Anuj Guar (Supra.) qua the locus standi of a suspended director resonates with the interpretation of “aggrieved person” in Glass Trust (Supra.) and Independent Sugar Corporation Ltd (Supra.), which holds that once a CIRP is admitted, it becomes a proceeding rem and therefore, any person who is aggrieved by an order of the Adjudicating Authority can approach the NCLAT.

Author Details:

Palash Taing, Principal Associate - TLH, Advocates & Solicitors palash.t@tlh.law

Mayank Kumar, Senior Associate - TLH, Advocates & Solicitors mayank.k@tlh.law