NCLT Jaipur ruled that an RP cannot be replaced under IBC merely due to dissatisfaction with recommendations or outcomes.

June 19, 2026 : In a significant ruling under the Insolvency and Bankruptcy Code, 2016 (IBC), the National Company Law Tribunal (NCLT), Jaipur Bench, has held that a Resolution Professional (RP) appointed in insolvency proceedings against a personal guarantor cannot be replaced merely because one of the parties is dissatisfied with the professional’s conduct or recommendations. The Tribunal emphasized that substitution of an RP is an exceptional measure and can be ordered only when there is substantial evidence of bias, conflict of interest, misconduct, incapacity, or failure to discharge statutory duties fairly.

The order was passed on June 19, 2026, by Technical Member Ms. Kavita Bhatnagar in an application filed by Islamuddin Kagzi, personal guarantor to M/s Sanga Builders Private Limited, seeking replacement of Resolution Professional Rishabh Chand Lodha in proceedings initiated by Union Bank of India under the personal guarantor insolvency framework of the IBC. The application was moved under Section 98 of the Insolvency and Bankruptcy Code read with Rule 11 of the National Company Law Tribunal Rules, 2016.

The dispute arose from insolvency proceedings initiated by Union Bank of India against the personal guarantor. According to the record, the financial creditor had filed an application under Section 95 of the IBC on January 1, 2024, following which the Resolution Professional was appointed on January 4, 2024. Thereafter, the RP submitted a report under Section 99 of the Code recommending admission of the insolvency application. Dissatisfied with the RP’s role and recommendations, the personal guarantor sought his substitution, arguing that the RP performs a consultative and facilitative function and therefore could be replaced.

Examining the issue, the Tribunal framed the central question as whether a Resolution Professional appointed in proceedings under Section 95 of the IBC can be replaced after admission of the insolvency process under Section 100, and whether the facts of the present case justified such a replacement. The Bench undertook a detailed analysis of Sections 97, 98, 99 and 100 of the Insolvency and Bankruptcy Code and observed that the RP’s responsibilities do not end with submission of the report under Section 99. Rather, the professional continues to perform statutory functions even after admission of the insolvency resolution process.

The Tribunal clarified that while the Adjudicating Authority possesses jurisdiction to consider replacement of a Resolution Professional in appropriate circumstances, such power cannot be exercised routinely or on the basis of personal preference. The order notes that once the RP has already discharged important statutory functions culminating in admission of the insolvency proceedings, any request for replacement must be scrutinized with considerable caution.

Making an important observation, the Bench held that “replacement of the Resolution Professional can therefore be directed only when there exists cogent material demonstrating circumstances such as bias, conflict of interest, misconduct, incapacity, procedural impropriety or failure to discharge statutory obligations in a fair and impartial manner.” The Tribunal further observed that “mere dissatisfaction with the outcome of the proceedings or with the recommendation made by the Resolution Professional cannot constitute sufficient ground for substitution.”

The order records that the application failed to identify any specific act or omission by the RP that could affect the fairness or integrity of the insolvency process. Instead, the pleadings largely reflected the personal guarantor’s disagreement with the RP’s recommendations. The Tribunal held that the statutory framework of the IBC does not contemplate replacement of a Resolution Professional solely on the basis of subjective dissatisfaction of a party.

Consequently, the NCLT dismissed IA (IBC) No. 567/JPR/2025, holding that no legally sustainable ground had been made out for invoking its jurisdiction to replace the Resolution Professional. The Bench clarified that its decision was confined to the issue of substitution of the RP and would not affect the merits of the underlying insolvency proceedings.

The ruling carries significant implications for insolvency jurisprudence involving personal guarantors under Part III of the Insolvency and Bankruptcy Code. It reinforces the independence of Resolution Professionals and prevents insolvency proceedings from being delayed through replacement requests based solely on disagreement with an RP’s conclusions. The decision also strengthens the principle that insolvency professionals act as statutory functionaries whose role must remain insulated from pressure by either creditors or debtors unless serious misconduct or conflict is established.

Case Reference : Islamuddin Kagzi v. Union Bank of India