Suspended management lacks legal authority to independently commission forensic audits to challenge admitted claims during CIRP.

The Corporate Debtor (CD) was admitted into Corporate Insolvency Resolution Process (CIRP) on 27.02.2023

The Resolution Professional (RP) appointed PNAM & Co. LLP as Transaction Auditor and subsequently filed avoidance applications (IA 701/2024 and IA 1068/2024) against the Appellant-suspended management

While these were pending, the Appellant commissioned a private audit through Baker Tilly ASA India LLP, which allegedly found that the RP wrongly admitted claims worth ₹114 Cr.

The Appellant filed IA 151/2025 seeking to place this private report on record, dismiss the RP’s audit report, and direct a fresh audit

The Adjudicating Authority (NCLT Chandigarh) dismissed the application, holding that the suspended management lacked the locus to conduct such an audit

The Appellant challenged this dismissal.

Whether the suspended management of a Corporate Debtor has the legal authority or locus standi under the IBC to independently conduct a forensic audit during the CIRP

Whether a report commissioned by an interested party (suspended management) without CoC approval can be used to challenge the RP’s verification of claims or avoidance applications

The court primarily applied Section 18(1)(b) of the IBC regarding the RP's duty to receive and collate claims

Regulation 14 of the IBBI (CIRP) Regulations, 2016.

It further relied on the principle that the IBC contains no provision enabling suspended directors to bypass the Committee of Creditors (CoC) to conduct an independent "forensic audit"

The court reinforced the doctrine of the RP’s independence and the CoC’s commercial wisdom in overseeing the resolution process, noting that any challenge to claim admissions must be filed by the aggrieved creditor, not the suspended management

The Tribunal reasoned that the Baker Tilly report lacked legal sanctity as it was commissioned without CoC approval and was essentially a "ghost report" lacking signatures, stamps, or auditor particulars

The court noted that the report was replete with exhaustive disclaimers that rendered it "toothless" and unreliable

Legally, the court found that allowing suspended management to control the audit process using selective data violates confidentiality and creates an inherent conflict of interest/bias

The court observed that the RP had already followed the statutory process by forming an opinion and filing avoidance applications based on an independent auditor's report

It concluded that the Appellant’s actions were a "clever ploy" to derail the resolution process after the CoC had already approved a resolution plan with a 99.21% majority

It held that there is no provision in the IBC for suspended directors to conduct a private forensic audit, and such a report cannot be used to interfere with the CIRP

The court ruled that if any claim was wrongly admitted, the proper remedy lies with the aggrieved party, not the suspended management

No order as to costs was made