Do Promoters and Suspended Directors Have Locus Standi to Intervene in CIRP Applications?

Once a company is admitted into a corporate insolvency resolution process (“CIRP”) under the Insolvency and Bankruptcy Code, 2016 (“IBC”), the board’s powers are suspended and the resolution professional takes control of the company’s affairs. Former promoters and suspended directors may remain involved in underlying commercial disputes and may seek to intervene when the resolution professional files an application before the Adjudicating Authority. Whether a suspended director has locus standi to intervene in CIRP proceedings depends on the nature of the application and the specific legal or financial interest the former director can demonstrate

The Statutory Starting Point

• Section 17 provides that from the insolvency commencement date the management of the corporate debtor’s affairs vests in the interim resolution professional, and the powers of the board of directors stand suspended and are exercised by the professional.
• Section 19 requires personnel of the corporate debtor, its promoters and persons associated with its management to extend all assistance and cooperation. Following the 2026 amendment, this duty applies to any person who is or has been personnel of the corporate debtor or its promoter, or who is associated with its management, or is engaged under a contract for service.
• Section 25 places the custody and control of assets, and the conduct of the process, with the resolution professional.
• Section 60(5) gives the Adjudicating Authority jurisdiction over applications and questions arising in the insolvency.

Suspended directors are entitled to notice of, and to attend, meetings of the committee of creditors under Section 24(3)(b), without voting rights. That entitlement is specific, and does not by itself confer a general right to be impleaded in every application.

The NCLT Hyderabad Decision on Intervention

In G. Ramakrishna Reddy v. Dantu Mitra & Ors. (NCLT, Hyderabad Bench), as reported, an ex-promoter and suspended director of a corporate debtor sought to be impleaded as a respondent in an application filed by the resolution professional concerning repossession of premises leased by the corporate debtor. The applicant pointed to a dispute over the computation of lease rent receivables.

The Bench, comprising a Judicial Member and a Technical Member, declined the intervention. According to the report, it examined whether the applicant had a concrete legal or financial interest in the outcome of the underlying application and found that the contentions substantially overlapped with those of the lessee, without new evidence or independent legal grounds that would justify impleadment. The decision therefore illustrates how locus standi of a suspended director in CIRP depends on demonstrating a distinct interest in the proceedings.

The Wider Line of Authority

The NCLAT has held in Ramesh Kesavan v. CA Jasin Jose (NCLAT, 2024) that an erstwhile promoter or suspended director lacks locus to challenge the approval of a resolution plan; a challenge to that decision was dismissed by the Supreme Court by order dated 5 April 2024, as recorded in subsequent NCLAT decisions. The Appellate Tribunal has also relied on the Supreme Court’s order in Manesh Agarwal v. Pramod Kumar Sharma, 2022 SCC OnLine SC 298, on the absence of locus of erstwhile directors to question the commercial wisdom of the committee of creditors.

The principle that emerges is not that a suspended director has no standing, but that locus standi in CIRP proceedings must be traced to a legally recognised interest:

Why Tribunals Guard Against Routine Intervention

The Code’s timelines are tight. Section 12 sets an outer limit of 330 days, and the 2026 amendments add thirty-day decision periods for plan approval under Section 31(2A), liquidation orders under Section 33(2A) and dissolution orders under Section 54(4), with reasons to be recorded for any delay. Allowing every interested party to be impleaded in every application would defeat that structure. New Section 64A, which permits a penalty of not less than ₹1 lakh and up to ₹2 crore for frivolous or vexatious proceedings, reinforces the point.

Practical Guidance

For former promoters and directors. Identify the specific right said to be affected, and the provision that recognises it. A dispute about the accuracy of the corporate debtor’s records is generally a matter to be raised with the resolution professional, or through the cooperation mechanism in Section 19, rather than by impleadment.

For resolution professionals. Record the reasons for excluding former management from a particular application, and document the cooperation sought under Section 19, since the 2026 amendment widens the category of persons bound to cooperate.

For lessors and counterparties. Deal with the resolution professional, who has custody and control of the assets. Where the moratorium under Section 14 applies, possession of property occupied by the corporate debtor cannot be recovered during the process except as the Code permits.

FAQs

Can a suspended director intervene in CIRP proceedings?
Whether a suspended director has locus standi to intervene depends on the nature of the application and the legal or financial interest affected.

Do suspended directors have a right to attend CoC meetings?
Yes. Section 24(3)(b) permits suspended directors to attend CoC meetings, but they cannot vote.

Can former promoters challenge a resolution plan?
Generally, former promoters and suspended directors cannot challenge the CoC’s commercial decision on merits.

When can former management be heard in CIRP applications?
They may be heard where the proceedings directly affect their legal rights or interests, such as avoidance proceedings or personal guarantee claims.

Legal Information Disclaimer

This article provides general information about Indian law as it stood on 16 September 2026. It is not legal advice, and reading it does not create an advocate–client relationship. Statutes, rules and judicial interpretations change, and their application depends on the facts of each matter. Readers should consult the current official text of the laws and judgments cited and should not act on this information without advice specific to their circumstances. This article is published for legal awareness and education and is not intended to advertise or solicit professional work.

Sources / Authorities

1. Insolvency and Bankruptcy Code, 2016 — Sections 12, 14, 17, 19, 24, 25, 31, 33, 54, 60, 64A (as amended) — IBBI – Legal Framework
2. Insolvency and Bankruptcy Code (Amendment) Act, 2026 (No. 6 of 2026), clauses 12, 19, 20, 33 and 44 — Gazette text (IBBI); Notification S.O. 2625(E) dated 22 May 2026 — IBBI
3. G. Ramakrishna Reddy v. Dantu Mitra & Ors., NCLT, Hyderabad Bench (intervention application in CIRP proceedings concerning Nexus Feeds Ltd.)
4. Ramesh Kesavan v. CA Jasin Jose, NCLAT, 2024, and the Supreme Court’s dismissal of the challenge by order dated 5 April 2024 in Civil Appeal No. 4419 of 2024, as recorded in Shankar Mukherjee v. Ravi Sethia, NCLAT, 14 May 2025 — Indian Kanoon
5. Manesh Agarwal v. Pramod Kumar Sharma, 2022 SCC OnLine SC 298, Supreme Court of India