NCLT Dismisses Liquidator’s Plea for Affidavit and Disciplinary Action Over Alleged SCC Confidentiality Breach, Rules Email Disclosure Was Accidental [Read Order]

In a recent order, the National Company Law Tribunal (NCLT), Indore Bench, dismissed an application filed by the liquidator, where he alleged a breach of confidentiality during the liquidation. The liquidator had sought directions compelling a tax officer to file an affidavit and face disciplinary action after a Stakeholders’ Consultation Committee (SCC) meeting email was inadvertently forwarded to a bidder.

The liquidator, Amresh Shukla, claimed that a tax officer had forwarded internal meeting details via email on 09.02.2024 to one of the bidders, thereby compromising the integrity of the bidding process. He sought directions, compelling the officer to file a confidentiality affidavit and requesting disciplinary action against the department.

For the liquidator, Senior counsel argued that confidentiality is a statutory safeguard under the Insolvency and Bankruptcy Code (IBC), and any leak of insider information could unfairly advantage bidders. The refusal of the officer to file an affidavit was presented as evidence of misconduct.

He relied on judicial precedents, including Vijay Kumar Jain v. Standard Chartered Bank, to stress that confidentiality obligations are not mere formalities but essential protections in insolvency matters.

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The tax department contended that the email was sent inadvertently due to auto-suggest in the mail system, and the content was not confidential but routine objections already discussed in meetings. They further argued that the liquidator had no authority to demand affidavits or disciplinary action against government officials.

The bench, Man Mohan Gupta (technical member) and Brajendra Mani Tripathi (judicial member) observed that while confidentiality is indeed critical in insolvency proceedings, the email in question contained routine objections rather than sensitive bidding strategies or financial data. The inclusion of the bidder’s address appeared accidental, not deliberate.

The tribunal also noted that it lacked jurisdiction to order disciplinary proceedings against government officials, which falls within the purview of their department. Importantly, no evidence was presented to show that the alleged lapse caused irreparable harm or unfair advantage in the liquidation process.

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The tribunal observed that “Accordingly, the present Application is disposed of with the Page 22 of 23 observation that all stakeholders, including statutory authorities and the Liquidator, shall exercise greater diligence in handling communications relating to SCC deliberations and shall ensure that the principles of confidentiality, fairness, and transparency are strictly adhered to in the ongoing liquidation process. The prayers seeking explanation, affidavit, and departmental action are liable to be declined.”

The NCLT dismissed the liquidator’s application, holding that the lapse was careless but not intentional.

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