Case Note & Summary
The appeal arose from an Appellate Tribunal's order denying the appellant, a suspended director of Ruchi Soya Industries Ltd. (corporate debtor), access to resolution plans and other documents for effective participation in Committee of Creditors (CoC) meetings under the Insolvency and Bankruptcy Code, 2016. The corporate debtor was admitted into insolvency in December 2017, and the CoC was constituted. The appellant attended the first meeting but alleged denial of participation in subsequent meetings. He filed an application before the NCLT, which allowed attendance but denied access to confidential documents. The Appellate Tribunal upheld this, leading to the appeal. The Supreme Court examined Sections 24(3), 25, 29, 30, 31, 60(5), 61 of the Code and Regulation 21 of the CIRP Regulations. The appellant argued that as a participant in CoC meetings, he needed documents to participate effectively, and that the resolution plan would bind him as a guarantor. The respondents contended that resolution plans are only for the CoC and that directors are information givers, not seekers. The Court held that Section 24(3) and Regulation 21 require the resolution professional to provide all relevant documents, including resolution plans, to suspended directors, subject to confidentiality. The Court noted that the appellant had executed a non-disclosure agreement, addressing confidentiality concerns. It rejected the argument that directors are not persons aggrieved, holding that they are bound by the plan and can challenge it. The Court allowed the appeal, directing that the appellant be provided with copies of resolution plans and other relevant documents, subject to confidentiality, and that the Adjudicating Authority may proceed with the resolution plan approval.
Headnote
A) Insolvency Law - Suspended Board of Directors - Right to Access Resolution Plans - Sections 24(3), 29, 30, 31, 60(5), 61 of the Insolvency and Bankruptcy Code, 2016 read with Regulation 21 of the CIRP Regulations - The appellant, a suspended director, sought access to resolution plans to participate effectively in CoC meetings. The court held that under Section 24(3) and Regulation 21, the resolution professional must provide all relevant documents, including resolution plans, to suspended directors, subject to confidentiality. The court emphasized that effective participation requires access to such documents, and that directors are bound by the resolution plan and may challenge it under Sections 60(5) and 61. (Paras 1-10) B) Insolvency Law - Committee of Creditors - Participants vs. Members - Sections 21, 24 of the Insolvency and Bankruptcy Code, 2016 - The court distinguished between 'committee' and 'participant', holding that suspended directors are participants in CoC meetings without voting rights but with a right to receive documents necessary for effective participation. The court rejected the argument that directors are only information givers, noting that they have a stake in the resolution plan as they may be personally liable as guarantors. (Paras 7-12) C) Insolvency Law - Confidentiality of Resolution Plans - Regulation 39(2) of CIRP Regulations - The court addressed the confidentiality concern, noting that the appellant had executed a non-disclosure agreement. The court held that confidentiality can be maintained through such agreements and that the resolution professional can share resolution plans with suspended directors under appropriate confidentiality obligations. (Paras 3, 10) D) Insolvency Law - Persons Aggrieved - Locus Standi - Sections 60(5), 61 of the Insolvency and Bankruptcy Code, 2016 - The court rejected the argument that suspended directors are not persons aggrieved, holding that they are bound by the resolution plan and may challenge it before the Adjudicating Authority and Appellate Tribunal. (Paras 4, 6)
Issue of Consideration
Whether members of the suspended Board of Directors of a corporate debtor are entitled to receive copies of resolution plans and other relevant documents to effectively participate in meetings of the Committee of Creditors under the Insolvency and Bankruptcy Code, 2016.
Final Decision
Appeal allowed. The resolution professional is directed to provide the appellant with copies of resolution plans and all other relevant documents for effective participation in CoC meetings, subject to the appellant executing a non-disclosure agreement. The Adjudicating Authority may proceed with the resolution plan approval.
Law Points
- Right of suspended directors to access resolution plans
- Effective participation in CoC meetings
- Interpretation of Section 24(3) and Regulation 21
- Confidentiality and non-disclosure agreements
- Persons aggrieved under Sections 60(5) and 61
