The National Company Law Appellate Tribunal (NCLAT) has directed the Insolvency and Bankruptcy Board of India (IBBI) to reconsider its decision to cancel insolvency professional Deepak Kumar Goyal’s registration, finding the punishment disproportionate to the violations established.
In its October 14, 2026 judgment, the tribunal upheld two regulatory violations concerning the handling of homebuyers’ consultations and the approval of extensions for revised resolution plans. However, it found that the record did not establish fraud, dishonesty, personal financial gain or demonstrated harm to creditors that would justify the harshest professional sanction.
NCLAT has directed IBBI to reconsider the appropriate penalty within 30 days of receiving the order. The cancellation will remain inoperative until the regulator issues fresh findings.
Why Was Goyal’s Registration Cancelled?
Goyal was appointed on July 4, 2024, as the authorised representative of homebuyers during the corporate insolvency resolution process of Revital Realty Private Limited.
According to the supplied report, the group of homebuyers grew from approximately 573 to 1,428. Together, they accounted for nearly 91% of the voting share in the committee of creditors, making the authorised representative’s responsibilities particularly significant.
On August 20, 2026, IBBI’s Disciplinary Committee cancelled Goyal’s registration. The decision followed findings that he had not maintained adequate records of consultations with homebuyers and had agreed to extensions for revised resolution plans without obtaining prior instructions from the creditors he represented.
Goyal challenged both the findings and the severity of the penalty before NCLAT.
Tribunal Upholds Record-Keeping Violation
The first issue concerned the documentation of consultations with homebuyers. Regulation 16A(10)(i), as discussed in the supplied report, requires authorised representatives to record consultation proceedings and prepare meeting minutes.
Goyal argued that emails and other communications documented the concerns and views of homebuyers. NCLAT acknowledged that these records indicated consultations had taken place, but found that the documentation did not consistently establish how many homebuyers participated or whether those involved represented the wider group.
The tribunal therefore upheld the regulatory violation. However, it characterised the issue as incomplete documentation rather than an absence of consultation or deliberate concealment.
The distinction was relevant to the tribunal’s assessment of whether cancellation of the professional registration was an appropriate response.
Prior Instructions Required for Resolution-Plan Extensions
The second violation involved Goyal’s agreement to extensions on March 17 and March 19, 2026, for submitting revised resolution plans.
NCLAT held that Section 25A(3) of the Insolvency and Bankruptcy Code requires an authorised representative to act on the prior instructions of the financial creditors represented. The tribunal rejected the argument that procedural or administrative decisions were exempt from this requirement.
At the same time, the tribunal noted the circumstances surrounding the extensions. According to the report, they were administrative in nature, with the later extension linked to a claim by the Employees’ Provident Fund Organisation (EPFO).
The tribunal found no evidence establishing that the decisions favoured a particular resolution applicant or adversely affected the homebuyers. Nevertheless, it maintained that the requirement to obtain prior instructions applied.
Why NCLAT Found Cancellation Disproportionate
Although both violations were upheld, the tribunal considered the broader circumstances before assessing the penalty.
The supplied report identifies several factors relevant to its decision:
There was no allegation or finding of fraud, dishonesty or personal financial gain.
No collusion or conflict of interest was established.
No adverse impact on creditors was identified.
Goyal had an otherwise clean disciplinary record.
This was his first assignment as an authorised representative.
Considering these factors, NCLAT concluded that cancellation—the most severe disciplinary measure available—was disproportionate to the established misconduct.
The tribunal did not itself substitute a lesser penalty. Instead, it left the decision on the appropriate sanction to IBBI, requiring the regulator to reconsider the matter in light of the appellate findings.
The decision highlights the importance of proportionality in professional regulation, where the seriousness of a violation and its demonstrated consequences can be relevant to determining the appropriate disciplinary response. Effective business advisory services can also help organisations understand governance responsibilities and strengthen compliance practices.
What Happens Next?
NCLAT has directed IBBI to reconsider the penalty within 30 days of receiving the order. The cancellation will remain inoperative until the regulator issues fresh findings.
According to the report, Goyal has undertaken not to accept new assignments during this period. His existing role as authorised representative will remain subject to the replacement resolution passed by the committee of creditors.
The next step rests with IBBI, which must determine an appropriate sanction after reconsidering the circumstances identified by the tribunal.
Key Takeaway
The ruling draws a distinction between established regulatory non-compliance and misconduct warranting the most severe professional penalty. It reinforces the importance of maintaining verifiable consultation records and obtaining prior creditor instructions, while requiring disciplinary action to reflect the seriousness and consequences of the violations.