NCLT Removes IRP from Stalled Noida Project for Hiding Disciplinary Charges

In a significant regulatory action affecting one of Noida's stalled housing projects, the National Company Law Tribunal (NCLT) has removed insolvency professional Narender Kumar Sharma from his role as Interim Resolution Professional (IRP) for the Festival City project in Sector 143B, Noida. The removal comes after allegations that Sharma failed to disclose pending disciplinary proceedings and an active investigation against him at the time he accepted the assignment — a serious compliance lapse under India's insolvency regulations.

Here's a full breakdown of what happened, why it matters, and what it means for the homebuyers still waiting on this stalled project.

What Is the Festival City Project?

Festival City is a stalled residential housing project located in Sector 143B, Noida, developed jointly by three co-developer entities: Anand Infoedge Pvt Ltd, Mist Avenue Pvt Ltd, and Mist Direct Sales Pvt Ltd. All three companies are currently corporate debtors undergoing insolvency proceedings, meaning the project has been under the supervision of a court-appointed resolution professional while efforts continue to determine whether it can be completed or must be resolved through asset liquidation or a new developer takeover.

Narender Kumar Sharma had been serving as IRP for these companies since his appointment on July 19, 2024 — meaning he had been overseeing the insolvency process for close to two years before this removal.

Why Was the IRP Removed?

The NCLT's decision followed a formal challenge to Sharma's appointment, filed by lawyer and complainant Shyam Kishan Saraf. The core allegation centered on two specific compliance failures:

1. Invalid Authorisation for Assignment (AFA) — Saraf alleged that Sharma did not hold a valid AFA on the date of his appointment, a mandatory certification required for insolvency professionals to legally accept and carry out IRP assignments
2. Non-disclosure of pending disciplinary action — Sharma had reportedly stated in an affidavit that no investigation was pending against him when he accepted the assignment, despite having undisclosed disciplinary proceedings and an active investigation pending before the IBBI (Insolvency and Bankruptcy Board of India)

This alleged non-disclosure is a direct violation of Regulation 7A of the IBBI (Insolvency Professionals) Regulations, 2016, which explicitly bars an insolvency professional from accepting an assignment if certain disciplinary or investigative actions are pending against them without proper disclosure.

After reviewing the petition, the NCLT cancelled Sharma's appointment as IRP — a clear signal that the tribunal took the non-disclosure allegations seriously enough to warrant removal rather than a lesser corrective action.

Financial Consequences for the Removed IRP

Beyond the removal itself, the NCLT's order carries real financial consequences for Sharma. The tribunal ruled that:

• Expenses incurred during his tenure — including legal expenses — will not be included in the Corporate Insolvency Resolution Process (CIRP) costs
• These costs will instead have to be borne personally by Sharma, rather than being recovered from the corporate debtor's estate as is standard practice for legitimate IRP expenses

According to the complainant, Sharma had accumulated fees of around ₹1.4 crore over approximately two years, based on an estimated monthly fee arrangement. With the NCLT's ruling, a significant portion of costs tied to his tenure may now fall outside what can be legitimately claimed from the insolvency process — a substantial financial setback stemming directly from the disclosure lapse.

Who Has Replaced Sharma as IRP?

The NCLT has appointed Sudhir Kumar Agarwal as the new Interim Resolution Professional for the Festival City insolvency proceedings. As part of the transition, the tribunal has directed Sharma to hand over all project-related papers, documents, and other material obtained during his tenure — a standard but necessary step to ensure continuity in the resolution process without loss of critical case records.

Why This Case Matters for Homebuyers and the Broader Insolvency Process

While this particular development is primarily a regulatory and procedural matter rather than a construction or funding update, it carries real implications for the Festival City project and for stalled real estate insolvency cases more broadly:

• Compliance integrity affects project timelines — an IRP's disclosure failures, even if unrelated to construction itself, can trigger legal challenges that add delay to an already-stalled project's resolution timeline
• IBBI regulations exist precisely for this scenario — Regulation 7A is designed to prevent professionals with pending disciplinary issues from taking on sensitive assignments involving public money and homebuyer interests, and this case shows the regulation being actively enforced
• Homebuyers as financial creditors have limited direct control over IRP conduct — but cases like this show that third-party legal challenges (in this instance, from a practicing lawyer) can still trigger tribunal-level accountability even without direct homebuyer litigation
• Cost recovery matters — the NCLT's decision to exclude Sharma's tenure expenses from CIRP costs reinforces that insolvency professionals bear personal risk for compliance failures, rather than being able to pass those costs onto the stressed asset's recoverable value

What Happens Next for Festival City?

With Sudhir Kumar Agarwal now in charge as the new IRP, the insolvency resolution process for Festival City's three corporate debtor entities is expected to continue from where it left off, once the handover of documents and records is complete. For homebuyers awaiting resolution of this Sector 143B project, this transition — while administratively significant — does not itself indicate a change in the project's construction status or funding position. The real markers to watch going forward will be whether a resolution plan is eventually approved, and which entity, if any, takes over to complete construction.

A Broader Pattern: NCLT's Role in Stalled NCR Projects

This case adds to a growing list of stalled Delhi-NCR housing projects that have moved through India's insolvency framework in recent years. From large-scale cases like Jaypee Infratech (where Suraksha Group's resolution plan led to delivery of thousands of units) to numerous smaller developer insolvencies across Noida and Greater Noida, the NCLT has increasingly become the central forum where homebuyers, resolution applicants, and regulatory compliance issues intersect.

For homebuyers with money tied up in any stalled project currently under NCLT proceedings, cases like Festival City's IRP removal are a reminder to actively track case filings and tribunal orders — procedural developments like this can materially affect timelines, even when they don't involve construction or funding directly.

Final Thoughts

The removal of Narender Kumar Sharma as IRP for Noida's Festival City project underscores how seriously India's insolvency framework treats disclosure obligations for resolution professionals — even in cases where the underlying project delay stems from unrelated financial distress. With Sudhir Kumar Agarwal now appointed as the new IRP and directed to take over all case documentation, the resolution process for this Sector 143B project moves into its next phase. Homebuyers and stakeholders will now be watching closely to see how quickly the new IRP can move the stalled project toward a viable resolution plan.

If you're evaluating a resale or under-construction property and want help checking whether it has any pending insolvency proceedings, IRP changes, or regulatory red flags, Orange Advisors can help you carry out that due diligence before you commit.

Frequently Asked Questions

Q1. Why was the IRP removed from Noida's Festival City project? The NCLT removed Narender Kumar Sharma after allegations that he did not hold a valid Authorisation for Assignment and failed to disclose pending disciplinary proceedings and an IBBI investigation against him at the time of his appointment.

Q2. Where is the Festival City project located? Festival City is located in Sector 143B, Noida, and is being developed by Anand Infoedge Pvt Ltd, Mist Avenue Pvt Ltd, and Mist Direct Sales Pvt Ltd.

Q3. Who is the new IRP for Festival City? Sudhir Kumar Agarwal has been appointed as the new Interim Resolution Professional, with Sharma directed to hand over all project-related documents.

Q4. Will Sharma's tenure expenses be recovered from the insolvency process? No — the NCLT ruled that expenses incurred during Sharma's tenure, including legal expenses, will not count as CIRP costs and must be borne by him personally.

Q5. Does this development affect the construction status of Festival City? Not directly — this is a regulatory and procedural change in IRP leadership. The project's construction and funding status will depend on future resolution plan developments under the new IRP.