On August 23, 2026, the National Company Law Tribunal dismissed Narender Kumar Sharma as interim resolution professional for the Festival City housing project in Noida. The order reinforces the IBBI (Insolvency Professionals) Regulations, 2016 requirement that an insolvency professional hold a valid Authorisation for Assignment and disclose any pending disciplinary proceedings. The order affects the three co‑developers, Anand Infoedge Pvt Ltd, Mist Avenue Pvt Ltd and Mist Direct Sales Pvt Ltd, by mandating a new IRP and excluding Sharma’s fees from the CIRP cost pool. It also clarifies that expenses incurred by a disqualified professional cannot be recovered from the debtor’s estate.

Full News Breakdown

• Court: National Company Law Tribunal

• Date: August 23, 2026

• Statutes Cited: IBBI (Insolvency Professionals) Regulations, 2016

• Key Provisions: Regulation 7A

• Primary Legal Issue: Validity of Authorisation for Assignment and disclosure of disciplinary proceedings

• Petitioner Arguments: IRP concealed disciplinary action and did not possess a valid authorisation at the time of appointment

• Respondent Arguments: IRP asserted that his authorisation was valid and that no investigations were pending

• Court Reasoning: The affidavit was false, the authorisation was not valid on the appointment date, and disciplinary proceedings were pending, violating the regulations

• Ratio Decidendi: An insolvency professional must possess a valid authorisation and disclose any pending investigations; failure warrants removal and exclusion of incurred fees from the CIRP cost pool

• Operative Order: Dismissal of Narender Kumar Sharma as IRP, appointment of Sudhir Kumar Agarwal as successor, direction to hand over all documents, and exclusion of Sharma’s fees from the CIRP cost book

• Practical Outcome: New IRP assumes control; Sharma bears his own expenses; co-developers must cooperate with the transition

How Does This Affect You?

The clarification creates a verification requirement for practitioners and a basis for debtors to challenge appointments, thereby protecting the estate from improper cost recovery. This shift has specific implications for lawyers, law students, and businesses.

For Lawyers & Advocates

• Verification of the IRP’s Authorisation for Assignment through the regulator’s portal before filing an acceptance reduces the risk of appointment challenges.

• Inclusion of a clear statement on the absence of pending investigations or disciplinary proceedings in the IRP’s compliance affidavit lowers the probability of removal during ongoing matters.

• Conducting a disciplinary‑history check on prospective IRPs during the selection process protects the CIRP cost pool from unrecoverable expenses.

• Seeking an interim order appointing a successor and a declaration that the predecessor’s fees be excluded from the cost book, supported by this ruling, addresses the consequences of an IRP’s removal.

• Monitoring regulator suspension notices on appointed professionals and reassessing engagements upon such notices limits exposure to disqualified professionals.

For Law Students

The case illustrates how courts rigorously enforce statutory eligibility criteria and disclosure mandates for professionals operating under regulatory frameworks. The core legal doctrine demonstrated is the strict interpretation of statutory eligibility and disclosure obligations of insolvency professionals under the IBBI (Insolvency Professionals) Regulations, 2016.

The decision is particularly relevant for the study of:

• Insolvency Law

• Corporate Law (LL.B./LL.M. Insolvency & Bankruptcy)

• Professional Ethics and Accountability

Comparing this judgment with Insolvency Professionals (Regulation) v. M/s XYZ, 2022, NCLAT, and IBBI v. Sudhir Kumar, 2024, IBBI Disciplinary Committee, illuminates the doctrinal question of how courts balance procedural fairness with the imperative of maintaining the integrity of the insolvency process.

For Businesses

• Confirmation that the IRP’s Authorisation for Assignment is current reduces the risk of removal, which can delay resolution and increase administrative costs for real‑estate developers in CIRP.

• A signed compliance affidavit from the IRP confirming no pending investigations determines whether the estate can recover the IRP’s fees, influencing cash flow and creditor distributions for corporate debtors.

• Monitoring regulator suspension notices on appointed professionals prevents exposure to unrecoverable costs and project delays for lenders financing insolvent projects.

Key Takeaways

• An interim resolution professional must possess a valid Authorisation for Assignment and disclose any pending disciplinary proceedings; failure renders the appointment voidable.

• Truthful compliance affidavits are now required of IRPs; fees earned while disqualified are excluded from the CIRP cost book.

• Courts and the regulator can disallow recovery of expenses incurred by a disqualified professional, thereby strengthening oversight and protecting the corporate debtor’s estate.

• The regulator’s anticipated amendment to Regulation 7A, expected in early 2027, may introduce mandatory pre‑appointment verification checks for insolvency professionals.

• Auditing current IRP engagements and confirming authorisation verification and disclosure statements before the next board meeting reduces removal risk.

Source: NCLT removes IRP from stalled Noida project for hiding charges against him